The Ottawa-based company said it’s signed the agreement to transfer its 60-per-cent interest in Bottle Creek Exploration LLC into a new B.C.-incorporated company called Red Ore Gold Inc., a move Galahad had announced in early February.
As part of the deal, Galahad will receive 8,838,938 common shares of Red Ore at a deemed price of 50 cents each. The value of the shares represents the amount Galahad has spent to date in exploration, property staking and payment costs at the property.
Bottle Creek Exploration is Galahad’s joint venture with Golden Gryphon USA Inc. The joint venture holds 1,772 claims in the Bottle Creek, Nev. gold mine and surrounding areas.
Galahad CEO Robin Dow earlier said that the company was spinning out the project because it believed it wasn’t receiving any recognition in the public markets for the property.
“The significant Bottle Creek holdings, which encompass over 900 claims, are a very exciting drill-ready project, with a 2011 budget of $1.6 million in drilling and sampling programs,” Mr. Dow said.
Once the companies have received approval for the transaction from the TSX Venture Exchange and other required regulatory bodies, Red Ore plans to raise up to $1 million for working capital and to fund exploration activities, by selling up to two million units at 50 cents each in a private placement.
The newly created company also intends to complete an initial public offering and list its shares on the TSX Venture Exchange. Galahad noted it will keep the consideration shares instead of distributing them to shareholders to create an orderly and balanced after-market for the IPO shares.
Red Ore added it’s appointed veteran mining executive Paul Pitman – whose experience includes several other Ottawa-based junior mining firms, such as Aura Silver Resources Inc. and Patrician Diamonds – as its new president, while Garry Smith will become vice-president of exploration.