Blue Lagoon Resources Inc. agreed to secure an option over the 4,425-hectare Pellaire gold project in British Columbia through the acquisition of ASIC Mining Inc.

The company said Aug. 6 that it entered into a nonbinding letter of intent to acquire ASIC by issuing 11.60 million common shares on a post 1-to-4 share-split basis.

ASIC holds an option to earn 100% of Pellaire by paying US$325,000 cash, issuing 800,000 shares and spending at least US$500,000 on the property over four years.

The vendors will also receive a 2.5% net smelter return royalty, 80% of which can be repurchased for US$2 million.

Before the option is exercised, the vendors are entitled to a 10% preproduction net smelter return royalty from mineralized material now stockpiled on the property or from bulk sampling activity.