Forge Lake Project
Forge Lake is 14 km south of the Richmont Gold Mine and Mill, and has previously undergone a surface sampling program, an airborne magnetic survey and two diamond drill programs. Seventeen holes were drilled in November 2011 and intersected 3.25g/t Au over 12.7 m. In April-June 2012 twelve holes were drilled designed to test for continuity of mineralization between the two main areas previously drilled, and intersected 7.07 g/t Au over 5.5 m. The exploration to date indicates that the gold-bearing quartz vein system is continuous and can contain high grade gold intersections, with a strike length of 650 m and a dip extent of 350 m.
Zara acquired Forge Lake from Hudson River Minerals by the purchase of all the rights, title and interest to that certain Mineral Exploration License Agreement dated November 1, 2011 (“the License”) between Hudson River and 3011650 Nova Scotia Ltd (“Licensor”). The License is subject to an original term of 5 years, a renewal term of a further 5 years and the right to convert from a license into a lease with rights to enter into commercial production. If Forge Lake goes into production there is a 3.0% royalty, of which the first 1.0% can be re-purchased for $1 million and the second 1.0% can be re-purchased for $1 million for each 0.5%.
As consideration, Zara issued to Hudson River 5,715,780 common shares of Zara (the “Consideration Shares”) at a deemed price of $0.10 per common share of Zara. In accordance with the terms of the LOI, Hudson River will be required to distribute the Consideration Shares to its shareholders on a pro rata basis (the “Distribution”) within 18 months of closing or the Consideration Shares will be cancelled. However, if the Distribution is not effected within 18 months, the Consideration Shares will not be cancelled if the failure to effect the Distribution is a result of (a) the Distribution not being able to be made in a manner that is exempt from the prospectus requirements under applicable law; or (b) the Distribution would be contrary to applicable law. Hudson River is restricted from selling, transferring or otherwise disposing of the Consideration Shares for a period of 18 months following the closing. As a condition to the completion of the sale of the Forge Lake Property, Hudson River entered into a voting trust agreement with Danny Wettreich, CEO of Zara, pursuant to which Mr. Wettreich will be able to exercise the voting rights attached to the Consideration Shares until the earlier of (a) 18 months following the closing of the transaction; and (b) the date of the Distribution. In addition to the consideration payable to Hudson River, Zara issued 2% of the value of the deal to the Licensor, or $11,431.56 payable by 114,316 newly issued Zara shares, and will guarantee three years of license and tax payments to the Licensor.
On May 21, 2013. Zara announced that it has received a NI43-101 Technical Report (the “Report”) on its Forge Lake gold property. The Report was prepared by the Sibley Basin Group and authored by Alan Aubut P.Geo.The Report describes the geology and work done to date on Forge Lake and concludes that the property has very good potential for hosting an economic gold deposit that could be amenable to mining by open pit methods. The Report recommends that an Induced Polarization survey be done over the property to be followed by a further diamond drilling program with a proposed total budget of $1,OOO,OOO. The full Report is available on this website under “Filings”.
The qualified person responsible for the disclosure of the scientific and technical information about the Company’s mineral projects is Alan Aubut P.Geo.