Item 1.01 Entry Into a Material Definitive Agreement
On January 25, 2017, Diamante Minerals Inc. (the “
Company
”) entered into an amended and restated joint venture agreement (the “
Amended and Restated Joint Venture Agreement
”) with Mineracao Batovi Ltda. (“
Mineracao Batovi
”) and Dr. Charles Fipke in his capacity as the shareholder of Mineracao Batovi. The Amended and Restated Joint Venture Agreement supersedes the Joint Venture Agreement between the Company and Mineracao Batovi dated November 20, 2014, as previously amended by our Company's letter agreement dated February 27, 2015, which became effective upon its acceptance by Mineracao Batovi and Kel-Ex Development Ltd. (“
Kel-Ex
”) on March 9, 2015 (as so amended, the “
Joint Venture Agreement
”).
The Joint Venture Agreement originally contemplated the establishment of a new joint venture company to be formed in Brazil. As initially reported in the Company’s quarterly report on Form 10-Q for the period ended April 30, 2015 (as filed with the SEC on June 22, 2015), due to certain regulatory requirements in Brazil, the Company and Mineracao Batovi determined that it is preferable to use Mineracao Batovi as the joint venture company since it holds the mineral claims underlying the Batovi Diamond Project. The Amended and Restated Joint Venture Agreement now formally contemplates the Company acquiring an interest in Mineracao Batovi to develop, finance and operate the Batovi Diamond Project.
The Amended and Restated Joint Venture Agreement contemplates that we will acquire a 17.6% equity interest in Mineracao Batovi - which is in addition to our existing 2.4% equity interest - in consideration of a cash contribution to Mineracao Batovi of $1,000,000, but such cash consideration must now be made no later than June 30, 2017. Under the Amended and Restated Joint Venture Agreement if we only contribute a portion of the $1,000,000 by June 30, 2017 we will acquire a pro rata portion of the 17.6% equity interest in Mineracao Batovi.
We continue to be entitled to earn an additional 29% equity interest in Mineracao Batovi by funding a further $2,000,000 of exploration expenses. We also are entitled to earn a pro rata portion of the additional 29% equity interest if we only fund a portion of the $2,000,000. The Joint Venture Agreement originally provided that our right was contingent on us funding such additional exploration expenses no later than November 20, 2017; that date has been extended to November 20, 2019 under the Amended and Restated Joint Venture Agreement.
The Amended and Restated Joint Venture Agreement now provides that, during the period from the date we acquire some portion of the initial 17.6% equity interest in Mineracao Batovia until the expiry of the period during which we can earn the additional 29% equity interest in Mineracao Batovi and from then on in circumstances where we holds at least a 40% equity interest in Mineracao Batovi, Mineracao Batovi shall be managed by a board of directors comprised of two (2) representatives from each of our Company and the existing shareholder Mineracao Batovi Shareholder. In circumstances where our interest in Mineracao Batovi at the end of the period during which we can earn the additional 29% equity interest is greater than 10% but less than 40%, the board of directors shall thereafter be comprised of three (3) representatives of the existing shareholder of Mineracao Batovi and one (1) of our Company. The board of directors shall be similarly constituted during the period which we can earn the additional 29% equity interest as long as the interest in Mineracao Batovi held by our Company is less than 10%. If at any time following the expiry of the period during which we can earn the additional 29% equity interest our interest in Mineracao Batovi is reduced to 10% or less, our Company shall thereafter not be entitled to any representation on the board of directors of Mineracao Batovi.
Certain specified matters continue to be subject to the approval of at least three of the four members of Mineracao Batovi's board of directors, including the adoption of the project's annual budget and any amendments thereto, the scope and purpose of a feasibility study for the Batovi Project (including the determination that the study is positive), and the decision to mine and commence commercial production.
Until we earn the additional 29% equity interest in Mineracao Batovi or the right to earn such interest ends, and so long as we elect to participate in the joint venture, we will bear 100% of Mineracao Batovi's expenses provided that all such expenses are first approved in writing by our Company's representatives on Mineracao Batovi's board of directors.
Under the Amended and Restated Joint Venture Agreement, upon funding our initial $1,000,000 contribution, our Company would be engaged to act as operator of the Batovi Diamond Project on terms whereby our Company will be entitled to charge a 10% administration fee on all exploration expenditures incurred under $50,000 and 5% on all exploration expenditures incurred over $50,000. Our Company has discretion to subcontract with third parties, including Kel-Ex, to enable it to fulfill its role as operator. Kel-Ex is a privately-held British Columbia corporation that is under common control with Mineracao Batovi, .
A copy of the Amended and Restated Joint Venture Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K.