Max and Endeavour have agreed to work together exclusively, with Endeavour providing certain financial capacity required by the National Mining Authority of Colombia for Max to secure properties throughout the Cesar Copper-Silver Basin. Max will own these new concessions with Endeavour holding a royalty of 0.5% of net smelter returns. Max's current concessions are not subject to this royalty from Endeavour.
As an initial investment, Endeavour has agreed to participate in a non-brokered private placement of up to 26,000,000 units of Max at a price of CDN$0.26 per unit, which will provide Endeavour with 5.0% of the outstanding shares of Max upon closing. Endeavour has agreed to maintain its 5.0% interest and has the right to participate in future share placements to maintain its 5.0% position. Endeavour has also agreed not to dispose of the shares acquired in the placement for a period of two years following closing and to enter into a trust agreement whereby it will vote all shares of Max held by Endeavour in favor of management's recommendations at any shareholder meeting.
Brett Matich, CEO of Max said, "Max is privileged to have the strategic support of Endeavour Silver, whose expertise spans from discovery to production. We believe Endeavour's strategic involvement is very validating of our efforts to date in Colombia. The ultimate goal of the collaboration agreement is for Max to consolidate its land holdings in the Cesar Basin, which we believe could be the largest undeveloped copper-silver area in the world," said.
Dan Dickson, CEO of Endeavour Silver stated, "While Endeavour Silver is a significant producer, it also has a track record of discovering new deposits. We really appreciate what Max Resource has accomplished to this point. We are pleased to take an equity stake in Max and provide our strong balance sheet to help Max secure more minerals in this world-class copper-silver district."
The bottom line is that Endeavour Silver today has a market capitalization of nearly one billion CAD, while Max Resource currently has a valuation of just 36 million CAD. That says something about scale today and explains why Max benefits from the financial strength of its partner. After all, the authorities want to be sure that they are not granting licenses to a company that will run out of steam tomorrow. The cooperation with Endeavour could be described as "minimally invasive" in terms of an operation: Max is giving up a 0.5% royalty exclusively on future licenses. All properties that the company already owns today continue to be free of royalties. Above all, Endeavour's entry represents a great endorsement of Max's bold exploration thesis. Certainly, institutional investors in Toronto will no longer dismiss it as mere fantasy, but will listen closely when Max talks about developing "the largest undeveloped copper-silver area in the world." If this is successful, the proportions of the two partners could one day be reversed. We are excited for Max Resource and stay tuned to the story.
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