{kanada_flagge}Max Resource Corp. (TSXV: MAX; OTC: MXROF; FRA: M1D2) is igniting the financial turbo. The company announced today that Max Resource and Endeavour Silver Corp. (TSX: EDR, NYSE: EXK) have now officially signed their previously announced collaboration agreement. The financial partnership with a major producer will enable Max Resource to significantly expand its land holdings along the 90-kilometer-long prospective Cesar copper-silver corridor in northeastern Colombia (see Max NR, Feb. 28, 2022).
Max and Endeavour have agreed to an exclusive collaboration whereby Endeavour will provide certain financial capacity required by Colombian mining authorities (“ANM”) from Max to secure mineral lease rights throughout the Cesar copper-silver basin. Max Resource will be the owner of each of these new mineral concessions. However, Endeavour will receive a royalty of 0.5% of net smelter returns. Endeavour’s royalty will cover new mineral concessions only. The licenses already held by Max Resource are not affected.
In connection with the agreement, Endeavour has subscribed for 6,600,000 share units for an equivalent value of CAD1.71 million as part of the capital increase currently underway. As a result, Endeavour will own approximately 5% of the issued and outstanding shares of Max upon completion of the private placement. Endeavour has agreed to maintain its 5% interest and has the right to participate in future share placements to maintain this position. Endeavour has also agreed not to sell any of the shares acquired in the private placement for a period of two years following the closing of the private placement. In addition, a trust agreement exists whereby all shares of Max held by Endeavour will vote in favor of management’s recommendations at any shareholder meeting.
CAD 7.76 million private placement nearing completion
Max is nearing completion of its non-brokered private placement of 29,500,000 units for gross proceeds of CAD 7.76 million. Each unit was offered at a price of CAD 0.26 per unit, with each unit consisting of one common share of Max and one-half of one transferable share purchase warrant. Each whole warrant is exercisable to purchase one additional share at an exercise price of CAD 0.36 per share for a period of 24 months from the date of issuance.
Brett Matich, CEO of Max Resource stated, “Max is very pleased to have the strategic support of long-time producer Endeavour Silver, both in terms of financial and technical expertise. This partnership will greatly enhance Max’s goal of delivering long-term value to Max’s shareholders.”
Dan Dickson, CEO of Endeavour Silver added, “As a major shareholder of Max Resource, Endeavour Silver looks forward to this partnership with the goal of unlocking the true value of the Cesar project, which we believe could be the largest undeveloped copper-silver property in the world.”
Bottom line: it’s what you call a win-win constellation. With comparatively little money (CAD 1.71 million) Endeavour Silver secures the chance to be there if Max Resource confirms its thesis of the “largest undeveloped copper-silver area in the world”. In addition to the direct interest of about 5 percent, there is a royalty of 0.5 percent for new properties. This royalty can be worth a lot of money later on. On the other hand, the amount of the royalty is low enough to preserve the upside of the Max Resource share to the full extent. The real added value of the cooperation is that the Colombian authorities can now be sure that they are not handing over promising properties to a financial dwarf, but that a large partner is ready and waiting if the worst comes to the worst.
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