Gold, copper, Nickel, PGE

Property description

The Duval property is composed of one block totaling 46 claims covering a total area of 2,458.92 hectares and covers a distance of about 7 kilometres along a SW-NE axis. The Duval block is contiguous to the Valiquette block to the northeast. It lies about two kilometres south of the Route du Nord and is served by a Hydro Quebec power line and a gravel road, which cross the southern half of the block in a southeasterly direction. The Duval block can be accessed by the road leading to Lac des Montagnes and then by boat. An old winter road along the SE shore of Lac des Montagnes has been refurbished and can be used for winter drilling on the property.

The Duval project offers strong lithium potential in a well-established area. The lithium pegmatites tend to occur in swarms in the volcano-sedimentary units. The Duval property covers a large part of the regional volcano-sedimentary unit, a favourable unit that hosts Nemaska Lithium's Wabouchi deposit and the Lemarre showing.

Located in the northeastern part of the Superior geological province, and more specifically in the northeastern part of the Lac des Montagnes Formation, the Lac des Montagnes volcano-sedimentary belt is a sequence of aluminous metasediments and amphibolites containing basalts and ultramafic sills.

These rocks are highly sheared and cut by 20% late granitoids (leucogranite and biotite pegmatite).

On July 6, 2016 the Company and Natan Resources Ltd. has entered into an option agreement ("Agreement") that gives the right to Natan to acquire up to a 70% interest in the Duval project.

 

Terms of the transaction

Under the Agreement, Natan will earn its interest in Duval by way of a farm-in arrangement. The key terms of theAgreement are detailed below:

 

Grant of first option

Critical Elements hereby grants to Natan the exclusive right and option to acquire, on or before December 31, 2017 an initial 50% Earned Interest in the Property (the “First Option”) by issuing to Critical an aggregate of 19.9% of the common shares of Natan, by paying $15,000 cash and by incurring or funding Exploration Expenditures for a total amount of $750,000 on the Property, as follows:

  • paying to Critical $15,000 cash within a delay of five (5) days following the execution of this Agreement (non-refundable);
  • issuing to Critical 19.9% common shares of Natan Resources Ltd immediately following the receipt of the required approvals from the Exchange; and
  • incurring or funding Exploration Expenditures aggregating not less than $750,000 on the Property, of which an amount of $350,000 must be incurred or funded before December 31, 2016 and an amount of $400,000 before December 31, 2017.

Grant of second option

Subject to Natan having exercised the First Option in accordance with the Agreement, Critical hereby also grants to Natan the exclusive right and option to increase its undivided interest in and to the Property from 50% to 70% by paying to Critical an additional amount of $350,000, incurring or funding additional Exploration Expenditures of $1,250,000 and by delivering a NI 43-101 compliant resource estimate on the Property prepared by a Qualified Person independent of Natan and Critical, for the period commencing on the delivery of notice of the exercise of the First Option by Natan (the “First Option Exercise Notice”) and ending December 31, 2018, as follows:

  • on the date of delivery of the First Option Exercise Notice, paying to Critical an amount of $350,000, in cash or in common shares of Natan at the sole discretion of Natan;
  • on or before December 31, 2018, incurring or funding additional Exploration Expenditures for an amount of $1,250,000; and
  • on or before December 31, 2018, delivering the Resource Estimate to Critical.

Milestone Payments

Subject to Natan's right to withdraw from and terminate the First Option, Natan agrees to make the following milestone payments to Critical, payable at any time following the exercise of the First Option:

  • On the estimation of a drilled defined resource (NI 43-101 compliant) of 5,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $500,000, payable in cash or in common shares of Natan at the sole discretion of Natan;
  • On the estimation of a drilled defined resource (NI 43-101 compliant) of 10,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $750,000, payable in cash or in common shares of Natan at the sole discretion of Natan;
  • On the estimation of a drilled defined resource (Ni 43-101 compliant) of 15,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $1,000,000, payable in cash or in common shares of Natan at the sole discretion of Natan; and
  • On the estimation of a drilled defined resource (NI 43-101 compliant) of 20,000,000 tonnes at a cut-off grade of 0.6% Li2O (all categories) a payment of CAD $1,500,000, payable in cash or in common shares of Natan at the sole discretion of Natan.

 

Royalty

Following the exercise of the First Option by Natan and in addition to the amounts paid, common shares issued andExploration Expenditures incurred or funded by Natan under the First Option and thereafter under the Second Option, as applicable, Critical shall receive a royalty equal to 2% net smelter returns resulting from the extraction and production of any Minerals on the Property.

The Royalty, including the right of Natan to purchase a portion thereof (1%).

Geology

The property is located in the middle part of the Lac des Montagnes volcano-sedimentary formation. In the vicinity of the Duval block the formation width is about 8 km and its orientation NE. It is locally composed of amphibolite quartz-rich paragneiss, biotite and sillimanite-bearing schist, pegmatite, basalt and ultramafic intrusives. Geophysical surveys show the signature and extent of ultramafic intrusions and iron formations, with some of them confirmed by historical drilling.

Mineralization

As the Duval property is located in the same geological environment than the Valiquette property, it is currently recognized for its magmatic nickel (Ni), copper (Cu) and platinum group elements (PGE) potential.

Technical Report

NI 43-101 (Lac des Montagnes - 18 octobre 2010)