Kennecott plans to earn into four High Frontier properties

A letter of intent has been signed which, if carried to a final agreement, would allow Kennecott to earn a 40% interest in four properties owned by High Frontier Resources (VSE). Kennecott, a wholly owned unit of RTZ (London), can earn the 40% by buying one million treasury shares of High Frontier at $1.25 per share. That would include an option to purchase an additional 500,000 shares at $1.75 each for a period of 12 months.

The funds from the initial placement will be used to explore the Washington Dome property in Utah, the Township Butte and Uno properties in Arizona, and the Tokop prospect in Nevada with $350,000 of the funds held back for working capital purposes.

High Frontier will manage the initial programs and expects to do about 5,000 ft. of drilling on each property.

All further expenditures on the properties must be covered by Kennecott up to the receipt of a feasibility report. After that, the joint venture will split costs relative to their working interests, and either party can revert to a 25% net profits interest.

Kennecott may earn an additional 10% interest and become the operator in any of the properties by spending a further $1 million. For an additional $1 million, Kennecott can increase its interest to 60%.

The agreement also includes a stipulation that any land acquired by either party within one mile of a property boundary will be included in the deal.