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Seqi Olivine Deposit, Greenland
Property Description and Location
During the year ended June 30, 2003, the Company acquired 100% of the mineral rights to the Seqi Olivine project after this had been released by the previous owner and was granted an exclusive Exploration Permit for the project by the Bureau of Mines and Petroleum of the Greenland Home Rule Government. The property covers an area of 14 km2 and is located 90 km north of Greenland’s capital, Nuuk. On July 7, 2004 the Company announced the expansion of its holdings in the Fiskefjord area, from 16 to 83 km2, partly as an expansion of the original Seqi license (Exploration License No 2003/02) and partly as 4 independent sub-areas (Exploration?? pg31 col 1).
Feasibility Study
During the previous year, the Company entered into an agreement with Minelco AB, a subsidiary of iron ore producer LKAB of Sweden, to develop a Bankable Feasibility Study (“BFS”) for the Olivine project. The Company was responsible for the management of drilling and for the preparation of the BFS. Minelco agreed to cover the costs of producing the BFS. Drilling on site commenced on August 16, 2003 and most work was completed on schedule by the end of March 2004.
On April 30, 2004 the Company announced that Minelco AB (“Minelco”), based on the preliminary evaluations of the feasibility study, had requested Crew to advance the Seqi Olivine project under the terms of the existing agreement with Crew Minerals AS.
In order to maximize it focus on gold projects, the Company decided to accept an offer from Minelco AB to dispose of its interest in the share capital of the Seqi project. The Company concluded this deal on June 30, 2005, when the sale proceeds of USD 10 million were received.
Future Value
In addition to the purchase price there is an annual fee to be paid by Minelco AB over 17 years based on produced tonnage. For years 3 through to 14 of production there is a guaranteed minimum royalty of USD 1 million per year based on production and subject to certain conditions. The income from this royalty will be recognised in the financial statements as it is earned.
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