Cerro Grande Mining Corporation Announces Letter of Intent to acquire the Assets relating to the Pimentón Copper Gold Mining Project - Seite 3

If any of the Purchase Price installments indicated in (ii) and (iii) above is not timely and fully paid to Tamidak, the APA will be automatically terminated and CEG must return all the Assets and the rights and obligations under the FQM Agreement to Tamidak. In such case Tamidak shall retain all payments previously made to it under the APA as compensatory damages, without prejudice to any other damages that Tamidak may be entitled to by law.

During the term of the LOI parties will negotiate in good faith the final exact amount of the Purchase Price.

The execution of the APA and the completion of the transactions thereunder is subject to following conditions precedent: (i) the negotiation of a final execution ready form of  APA between the parties; (ii) satisfactory completion of legal and technical due diligence by CEG in its sole discretion; (iii) there being no material adverse change in the business, results of operations, prospects, condition (financial or otherwise), as applicable, relating to the assets and the mining concessions to be purchased according to the APA and the FQM Agreement and (iii) obtaining all applicable corporate, legal, shareholder and/or stock exchange approvals or permits.

To the extent, the parties negotiate a final execution ready form of APA and agree to complete the acquisition contemplated thereby, such acquisition will constitute a related party transaction for CEG.  As such, the Company intends to seek minority approval of shareholders for the transaction in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).  Pursuant to MI 61-101, the transaction would not be subject to the formal valuation requirement because the common shares of the Company are not listed on a specified market being those markets described in section 5.5(b) of MI 61-101.

The LOI will automatically terminate and be of no further force and effect upon the earlier of: (a) the execution of the APA by the parties; (b) mutual agreement of the parties; or (c) October 13, 2020.  Tamidak has agreed that, until such time as the LOI has terminated as aforementioned, it will not initiate, solicit, entertain, negotiate, accept or discuss, directly or indirectly, any proposal or offer from any person or group of persons other than CEG and its affiliates to directly acquire all or any portion of the assets and the mining concessions to be purchased according to the APA and/or the rights and obligations of Tamidak under the FQM Agreement or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the transactions set forth in the LOI with the Company.