OAKVILLE, ON--(Marketwire - Oct 26, 2012) - Sarissa Resources Inc. (PINKSHEETS: SRSR) ("Sarissa"), through its wholly-owned subsidiary Nio-Star Corp. ("Nio-Star" or "the Company"), is pleased to release this update on the previously announced Letter of Intent ("LOI") signed in July.
At that time Nio-Star entered into an LOI to form a Joint Venture company (the "JV") to finance the advanced exploration of Nio-Star's Nemegosenda niobium property (the "Property"). Certain confidentiality clauses had been included in the LOI, some of which have now been waived, and the Parties involved are pleased to update shareholders with further details about the proposed JV with a Chinese mining State Owned Enterprise Company ("SOE").
Summary terms of the JV:
- Upon signing the definitive JV Agreement, the SOE will have the right to earn 51% of the new JV Company, with Nio-Star retaining 49%.
- To earn their 51% of the JV, the SOE will fund the advanced exploration of the Property to produce a Bankable Feasibility Study (the "Study"), by depositing to the JV and Nio-Star twenty million dollars (CAD$20,000,000) to be spent on the Study and the maintenance, exploration and development of the Property, and associated corporate costs.
- In addition, the SOE shall pay to Nio-Star a fee of twelve million, two hundred and fifty thousand dollars (CAD$12,250,000) as:
- One million dollars (CAD$1,000,000) within 30 days of signing a Definitive Joint Venture Agreement and having obtained approval of the appropriate Chinese government agencies.
- The balance, eleven million two hundred and fifty thousand dollars (CAD$11,250,000) within 30 days of completion of the Study.
In addition to the foregoing, once the SOE has earned its interest, industry standard dilution clauses are included should one side or the other decide not to participate in further financing of the project. In the case of Nio-Star the dilution clauses will stipulate that Nio-Star's interest may not be diluted below a 20% carried interest.
As well, the LOI made provision for the SOE to pay a fee to Nio-Star to have an exclusivity period to complete due diligence and the JV Agreement. This exclusivity period was until October 31, 2012. There were delays in obtaining travel permits for certain key people from the SOE to complete the planned activities and in order to compensate for this time delay the Parties have mutually agreed to extend the exclusivity period until February 28, 2013.
In order to advance the project during this exclusive period, Nio-Star and the SOE have worked together to collect approximately 900 kgs of rock samples from the adit area of the project's D Zone. These are being shipped to China for metallurgical and process testing. Full results from this testing program are expected to be completed over approximately 3 months. These tests may be used toward the Study, and are likely to speed up the process. Further details and interim updates on this program, as well as other ongoing corporate initiatives, will be announced as they progress.
This press release contains statements, which may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Sarissa Resources Inc. and Nio-Star Corp., as well as members of their respective management, in addition to the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. Neither Sarissa nor Nio-Star undertakes any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
About Sarissa Resources Inc.
Sarissa Resources Inc. is a junior exploration company with interests in properties in Northern Ontario, Canada. The Company is specifically focused on the development of its Nemegosenda niobium project as well as its Shining Tree gold project.