Canabrava options Ontario property

Canabrava Diamond (CNB-V) has signed a letter agreement to earn a 100% stake in a mineral property in the Porcupine mining division in Ontario from MacGillivray Holdings.

Under the deal, Canabrava can earn its interest in the property by paying $100,000 in cash and issuing 100,000 shares to MacGillivray over three years.

MacGillivray will retain a 2.5% gross overriding royalty on production from the property. Canabrava can buy back 2% of the royalty for $500,000 per percentage point. MacGillivray will retain at least a 0.5% royalty, on which Canabrava will retain the right of first refusal if MacGillivray elects to dispose of the royalty.

The deal is subject to regulatory approval. All shares issued to MacGillivray under the agreement will be subject to a one-year hold period.