THE CERRO VERDE/SAN JAVIER FLOTATION MILL – HERMOSILLO, MEXICO
The Company has paid the sum of USD $250,000 and has successfully acquired a 30% interest in Real de Rebeico Gold S.A. de C.V. (“Rebeico Gold”), which owns this interest in a State owned 100 ton per day flotation mill situated near the city of Hermosillo in Sonora State, Mexico. The formal option agreement with Rebeico Gold of Sonora, Mexico allows Arctic Hunter to earn the initial 30% interest for USD $250,000 (earned and vested), and an additional 20% interest (for up to a 50% interest) in Rebeico Gold for an additional USD $250,000. Rebeico Gold holds the right to operate the strategically located Cerro Verde Flotation Mill situated in the San Javier mining district and the right to receive its pro-rata production proceeds derived therefrom pursuant to an assignment agreement between Rebeico Gold and Exploracion y Desarollo del Desierto, S.A de C.V. (“EDDSA”) dated April 24, 2017. EDDSA holds the operating rights and the right to receive all proceeds from the Cerro Verde Gold & Silver Mill, and the right to conduct ancillary activities on the project site pursuant to a 10 year lease agreement between EDDSA and the state of Sonora, Mexico, dated February 24, 2015. Pursuant to a signed loan agreement dated May 2, 2017 between the Company and Rebeico Gold, the USD $250,000 advanced to Rebeico Gold is being treated as a loan to Rebeico Gold.
The Company intends to enforce the loan agreement and seeks to recover the USD $250,000 loaned to Rebeico Gold and notify all parties affiliated with the transaction, including the managing partners Alfonso Daco and Francisco Navarro of Exploracion y Desarollo del Desierto, S.A de C.V., Antejo S.A.P.I. De C.V. and the Mexican Government, of its intention to seek legal action both in Mexico and the Supreme Court of British Columbia, if funds are not returned satisfactorily. The Company is currently awaiting the fiscal 2019 and 2020 financial year end results of Rebeico Gold. The Company has not received the required accompanying Mexican Corporate Assemblies and Directors Resolutions for filing with the Mexican Government. No production results from the San Javier Mill have been reported and the loan amount to the Company remains outstanding.