In an effort to muscle into South America, gold giant American Barrick Resources (TSE) has agreed to a strategic and financial relationship with Canarc Resource (VSE).
The deal follows on the heels of two other Barrick alliances — one with Power Corp. (TSE) in China, the other in Indonesia with Bre-X Minerals (ASE). Under the Canarc deal, Barrick will invest $10 million through the purchase of 1.1 million units at $4.57 each (a unit includes a share and a share purchase warrant exerciseable for one year).
Canarc will use the funds to acquire and explore gold properties in Venezuela, Guyana and Suriname. Canarc President Bradford Cook said the junior has already established a foothold in each of those countries and is now the largest foreign employer in Venezuela’s Bolivar state. “Our strategy was to team up with an established local partner to secure a geologically prospective land package in each of these South American countries,” Cooke said. “We think the ability to do business in those countries is an important asset for us and for Barrick, particularly as we are still in the acquisition mode.”
Barrick has the “right of first opportunity,” for a period of three years, to participate directly in project development, should Canarc seek a partner, sell or otherwise develop any of its property interests.
Cooke is “very pleased” with the agreement and confirms that Barrick is Canarc’s partner of choice for any future operation. He said the deal gives Barrick a shot at any properties Canarc wishes to joint-venture but does not obligate the latter in any way.
Barrick can extend its right of first opportunity beyond the 3-year period by increasing its Canarc shareholding to 10% and maintaining it there. Not counting the Barrick placement, Canarc has 22.8 million shares outstanding on a fully diluted basis.
Canarc has active gold projects in Canada, the U.S., Costa Rica, Venezuela, Guyana and Suriname. Cooke said Canarc will continue to operate its exploration programs but will have the benefit of having Alex Davidson (Barrick’s vice-president of exploration) on its board of directors.
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