LONDON Donner Metals Ltd. has forfeited its interest in the Bracemac-McLeod zinc-copper mine in the Matagami region of Quebec after failing to pay its share of monthly expenditures under a development and operating agreement.
The Vancouver, British Columbia-based mining company entered a metal purchase agreement in July 2011 with Sandstorm Metals & Energy Ltd., Sandstorm Metals & Energy (Canada) and Sandstorm Gold Ltd. for the mine.
Donner Metals failed to pay amounts owed under a development and operating agreement with Baar, Switzerland-based Glencore Xstrata Plc, which owns and operates the mine through a subsidiary.
Sandstorm Metals sent a letter to Donner Metals Aug. 30 saying that as of Aug. 15 it was in default of the metal purchase agreement.
Glencore Xstrata has issued a 3-percent net smelter return royalty to Sandstorm Metals on 100 percent of production from Bracemac-McLeod for the interest in Bracemac-McLeod acquired by Sandstorm Metals from Donner.
Glencore Xstrata also will gain an option to acquire 40.36 million Donner shares for $2 million and 26.5 million warrants at 10 cents per share. If Glencore Xstrata exercises its option and the warrants in full, it would own about 19.5 percent of Donners outstanding shares on a partially diluted basis.
Sandstorm Metals and Sandstorm Gold have given up their respective copper and gold streams, and Sandstorm Metals will issue 1.33 million shares to Donner Metals.
Donner still holds interests in five Matagami joint ventures, where exploration will continue.
A version of this article was first published by AMM sister publication Metal Bulletin.