Kermode Resources: Private Placement
This coming week I will be alerting a bunch of my well-heeled friends to the opportunity to put money into Kermode Resources’ (KLM.V) $100,000 private placement. I thought it worthwhile to alert my substack subscribers as well.
Why would anyone put hard dollars into an illiquid, microcap trading at $0.015 with a bunch of options on deeply under explored properties? Sure, you get a share and a warrant for another share at $0.05, a price Kermode has never fetched. But why would you do it?
Peter Bell, a friend, is the CEO and Peter has come up with what may be a winning formula in the very early stage exploration sector: acquire options on prospective properties for no cash and pay the prospector/owners to work on the properties on a shares for service basis.
KLM is the very definition of a “bootstrapping” operation. But will it work? I wrote about KLM a few weeks ago and that article really gives the flavour of what Peter and his prospectors are up to. What that article does not do is give a sense of the scope of KLM’s activities. I am putting a lightly edited list of the properties at the end of this article. 13 separate projects as of the publication of the Interim MD&A back in March.
Copper, gold, silver, zinc, graphite projects are in play and being sampled, backpack drilled, trenched, mapped and, in one case, rock is being crushed and run through what amounts to a backyard gravity circuit. At Mt. Sicker just outside Duncan on Vancouver Island, 911 Exploration’s Justin Deveault and his crew are picking up so many samples of massive sulphides that they have practically turned freshly cut logging roads into bulk sampling operations.
What the proposed raise will do is allow KLM to fund assays on the samples and core already stockpiled on a number of the KLM projects. Labs do not take shares for service. While XRF scans have been done on some of the samples taken, the reality is that to proceed to, for example, a bulk sample at one of the Mt. Sicker locations, KLM needs to have a better idea of the grades likely to be encountered.
Right now there is a lot of excitement down in Idaho and Oregon about the possibility that there may be potentially rich copper porphyry clusters 300 meters from surface. A lot of the material grades less than 1% copper.
At Mt. Sicker there are tens of meters along strike of massive sulphides which have been exposed by the logging roads. Even being limited to drilling with a backpack drill, Deveault and KLM are in the process of drilling and developing a potentially large copper deposit beginning at surface at Mt. Sicker. The question is the grade. The XRF scans have run as high as 25% copper with unknown quantities of gold. It might be bulk sampled and mined tomorrow with a CAPEX of a contract excavator and a couple of trucks. There are, in fact, two logging roads, one two hundred meters above the other and each road has similar geology. It seems to be a sort of “copper blanket” dropped on the side of Mt. Sicker. And that is just one of KLM’s thirteen projects.
The private placement is very inexpensive relative to the potential KLM’s projects represent. But, my well-heeled friends are going to ask, what about management? The KLM project list and the work achieved on each of the projects speak very well to Peter Bell’s management capacity.
Peter took on a hostile reverse takeover, cleaned up Kermode, did the necessary 10:1 share rollback and has found prospectors with very attractive properties willing to work their properties in exchange for shares in KLM. To a very large degree, Peter’s management style is to make sure the back office (CFO, audit, required filings) is taken care of, make sure that KLM’s option agreements on particular projects are watertight and then let his prospectors do what they do best. All the while talking to other companies which may have an interest in one or more of the KLM projects.
Building a portfolio of assets with no cash is a striking achievement. What, of course, will crown that achievement, is spinning off one or more of the projects to more established companies in exchange for shares and cash. When that happens it will be a significant liquidity event for KLM’s shareholders.
Given the price of the private placement, even though the risk is significant, the opportunity is too. Bell has already taken the first tranche of $10,000 personally.
$1500 will get you 100,000 shares and 100,000 warrants.
Call Peter. (250-588-6939) Tell him I sent you!
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Kermode Resources:
Projects and Progress from Interim MD&A filed March 22, 2024
Mineral Projects and Exploration The following is a description of the properties for which the Company has not abandoned the agreements:
1) Bamfield Copper, British Columbia On December 20, 2023, the Company entered into a non-binding letter of intent option agreement to acquire a 100% interest in the Bamfield Copper project in British Columbia. The transaction has not closed. To complete the acquisition, the Company is required to issue 3,600,000 common shares as follows: a. 900,000 common shares on the Exchange approval date; b. an additional 1,200,000 Shares on or before 12 months following the Exchange approval date; c. an additional 1,500,000 Shares on or before 24 months following the Exchange approval date; The property is subject to a Net Smelter Return royalty (“NSR”) of 3% with a $3,000,000 buy-down option.
2) Black Panther, British Columbia On August 10, 2023, the Company entered into an option agreement to acquire a 100% interest in the Black Panther project on Vancouver Island, British Columbia. To complete the acquisition, the Company is required to issue 4,800,000 common shares as follows: a. 1,200,000 common shares on the Effective Date (issued August 11, 2023, valued at $120,000); b. an additional 1,200,000 Shares on or before 12 months following the Effective Date; c. an additional 1,200,000 Shares on or before 24 months following the Effective Date; d. an additional 1,200,000 Shares on or before 36 months following the Effective Date; The property is subject to a Net Smelter Return royalty (“NSR”) of 3% with a $6,000,000 buy-down and a Sale Participation Right of 30% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
3) Caycuse Copper, British Columbia On December 9, 2022, the Company entered into an option agreement to acquire a 100% interest in the Caycuse Copper project located in British Columbia pursuant to which the Company issued 1,500,000 common shares valued at $150,000. In order to complete the acquisition, the Company is required to issue 500,000 common shares annually for the next nine years. On October 17, 2023, the Company issued 500,000 shares as the 1st anniversary payment. As at October 31, 2023, the project’s acquisition cost is $162,500. The property is subject to a NSR of 1% with a $1,000,000 buy-down and a Sale Participation Right of 10% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
4) Gold Rush Project, British Columbia On January 11, 2024, the Company entered into an option agreement to acquire a 100% interest in the Gold Rush project comprised of mineral claims located in British Columbia. Pursuant to the option agreement, the Company must pay cash of $50,000 on or before the second anniversary and additional cash of $100,000 on or before the fourth anniversary of closing. The property is subject to a NSR of 1% subject to a $1,000,000 buy-down and a Sale Participation Right of 10% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
5) Khrysos & Silver Bell Project, British Columbia On, May 26, 2023, the Company entered into an option agreement with Aurum Vena Mineral Resources Corp. to acquire a 100% interest in the Khrysos and Silver Bell projects located in British Columbia. For the three months ended January 31, 2024 May 26, 2023, the Company issued 1,500,000 common shares valued at $150,000 and is required to issue an additional 1,500,000 on or before May 2028. The property is subject to a Sale Participation Right of 10% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
6) Lucky Strike, British Columbia On July 20, 2022, the Company entered into an option agreement to acquire a 100% interest in the Lucky Strike Copper project in British Columbia. Pursuant to the option agreement, the Company issued 900,000 common shares valued at $135,000 in fiscal 2022 and 900,000 common shares valued at $90,000 in fiscal 2023. To exercise the option the Company must issue an additional 900,000 common shares on or before July 2024. The Project land position covers 2,739 hectares. There are no work commitments for the Company. There shall be a 2% “Net Smelter Return Royalty” payable to the vendor group, where each one percent can be bought down for $1,000,000.
7) Mt. Sicker, British Columbia On October 25, 2023, the Company entered into the option agreement to acquire a 100% interest in the Mt. Sicker project located in British Columbia. To complete the acquisition, the Company is required to pay $210,000 and issue 20,000,000 common shares as follows: Timing Exchange Approval Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total Cash $Nil $Nil $10,000 $20,000 $30,000 $50,000 $100,000 $210,000 Securities Nil 2,500,000 2,000,000 2,500,000 3,000,000 4,000,000 6,000,000 20,000,000 Exploration or Other Work Commitments $Nil $Nil $Nil $Nil $Nil $Nil $Nil $Nil The property is subject to a NSR of 2% with a $1,000,000 buy-down and a Sale Participation Right of 5% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
8) Santa Anna Project, British Columbia On September 20, 2023, entered into an option agreement to acquire a 100% interest in the Santa Anna project in British Columbia. Pursuant to the option agreement, the Company issued 2,100,000 common shares valued at $210,000 on September 20, 2023. To exercise the option, the Company must issue an additional 2,800,000 common shares within 24 months and 3,500,000 common shares within 60 months of closing. For the three months ended January 31, 2024 The property is subject to a NSR of 2% with a $3,500,000 buy-down and a Sale Participation Right of 7% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
9) Slesse Project, British Columbia On June 22, 2023, the Company entered into an option agreement to acquire a 100% interest in the Slesse Creek project located in British Columbia. Pursuant to the option agreement, the Company issued 400,000 common shares valued at $40,000. To exercise the option, the Company must issue an additional 400,000 common shares within 12 months and 900,000 common shares within 24 months of closing. The property is subject to a NSR of 1% with a $1,000,000 buy-down and a Sale Participation Right of 10% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
10) Tonya, Nevada, USA On August 16, 2023, the Company initiated an option agreement to lease certain unpatented mining claims owned by Gold Range LLC in Pershing County, Nevada, USA, called the Tonya project. The option provides Kermode with the right but not the obligation to undertake a lease of the property. Kermode will not issue any shares under the transaction at any time. The first phase of the deal is the option, where Kermode begins with a one-year term that can be renewed for additional one-year periods by mutual consent of the counterparties so long as Kermode is paying or causing to be paid all annual claim maintenance fees and holding costs. Prior to completing any drilling activities on the property Kermode will first be required to enter into the lease agreement contemplated in the Option Agreement. The second phase of the deal is a lease, where Kermode commits to a schedule of annual cash advance royalty payments, starting at US$5,000 in the first year and increasing to US$250,000 on the eighth anniversary and thereafter. In addition, there is a total five percent (5%) NSR Production Royalty where (i) a two percent royalty (2%) has no buy-down provision; and (ii) a three percent (3%) royalty with a five million US$5,000,000 buy-down prior to the earlier of production or the Fifth Anniversary. In addition, there is also a thirty percent (30%) future sales interest.
11) Trio, British Columbia On July 24, 2023, the Company entered into an option agreement to acquire a 100% interest in the Silverbell Trio project located on Vancouver Island, British Columbia. To earn a 100% interest in the project, the Company assigned the vendors a NSR of 2% with a $2,000,000 buy-down and a Sale Participation Right of 20% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
12) Vigh Graphite Project, British Columbia On December 7, 2023, the Company entered into an option agreement to acquire a 100% interest in the Vigh Graphite project comprised of mineral claims located in British Columbia. Pursuant to the option agreement, the Company issued 1,500,000 common shares values at $30,000 based on the closing price of the Company’s stock on the TSX-V on the date of issuance. To exercise the option, the Company must issue an additional 1,500,000 common shares within 36 months of closing. The property is subject to a NSR of 5% of which 3% is subject to a $3,000,000 buy-down and a Sale Participation Right of 10% of gross proceeds received by the Company from any future sale of disposition of any interest in the property in the next ten years.
13) Eastgate BC Project, British Columbia On June 22, 2023, the Company entered into an option to acquire a 100% interest in the Eastgate project located in British Columbia. On February 16, 2024, the deal terms for the Eastgate BC property were amended, such that to earn a 100% interest in the project, the Company assigned the vendors a NSR of 1% with a $1,000,000 buy-down and a Sale Participation Right of 60% of gross proceeds received by the Company from any future sale of disposition of any interest in the property for a period of ten years.
(Disclaimer: I own shares in KLM.V and Peter Bell is a friend. I may buy or sell at any time. Do your own due diligence. Call Peter.)