TERMS OF THE DACHANG JOINT VENTURE

Under the terms of the Co-operative Joint Venture Contract, Inter-Citic can earn an 83% interest in the Joint Venture by contributing 32,830,000 RMB or the Canadian equivalent of approximately CDN $5.2 million over 3 years and making a cash payment of the equivalent of approximately 10,000,000 RMB or CDN $1.57 million upon receipt of a pre-feasibility study which demonstrates economic viability of the Joint Venture area and formal approval and grant to the Joint Venture Company of all applicable mining licenses required to bring the project into production. Contributions are staged as to the equivalent of approximately RMB 18,000,000 or CDN $2.97 million in 2004 and RMB 14,000,000 or $2.20 million in 2006. 

Inter-Citic also can acquire an additional 7% interest in the Joint Venture based on the valuation of any potential mining project contained in a Pre-feasibility Report, for a total interest of 90%. If Inter-Citic exercises this option, then QGSI will retain a carried interest of 10% in the Joint Venture.

As part of the agreement with QGSI, Inter-Citic has a right of first refusal on any mineral exploration project for which QGSI seeks foreign investment.

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