On September 6, 2008, Guyana Frontier signed a letter agreement for an option to acquire 100% interest in the Black Banana Gold property ("Black Banana"), which consists of a group of 10 medium scale prospecting permits totaling approximately 8,290 acres (3,355 hectares) located near Matthew's Ridge in northwestern Guyana. The property lies in the same stratigraphic package as the El Callao gold district in Venezuela, which hosts a combined historical production plus reserves in excess of 25 million ounces of gold.
The agreement and a subsequent amendment requires Guyana Frontier to pay Federick Obermuller US$157,500 (US$82,500 paid,) and spend US$300,000 (approximately US$280,000 has been spent) on qualified exploration expenditures over a four year period in order to acquire a 100% interest in the property, subject to a 3% NSR with a US$1.5 million buyback provision. Guyana Frontier has the option to accelerate the cash payments to reduce the expenditure requirements. The final agreement was executed on August 12, 2009, increasing the cash payout to US$157,500 with all other terms unchanged.
Guyana Frontier plans to undertake access and camp construction, further line cutting and systematic geochemical sampling and close spaced TRADO drilling of anomalies already identified on the contiguous Black Banana, Whana, Reis & Yearwood and Five Star properties.
On May 26, 2010, Guyana Frontier signed a definitive option agreement (superseding a previous agreement signed on December 1, 2008) with Mulgravian Ventures Corporation, whereby Mulgravian may acquire a 60% working interest in the Black Banana Property through a series of qualified exploration and development expenditures, and direct investments in the Company. Mulgravian's obligations under the definitive option agreement are as follows: (i) the purchase of 1,250,000 shares of Guyana Frontier by way of private placement at the price of $0.20 per share for a total purchase price of $250,000 (such purchase having closed on December 23, 2008), (ii) exploration expenditures of not less than US$500,000 to be incurred on or before the first anniversary of the date on which the TSX-V accepts the definitive agreement for filing (the "Effective Date", that date being November 29, 2010), (iii) cumulative exploration expenditures of US$1,100,000 to be incurred on or before the second anniversary of the Effective Date, and (iv) cumulative exploration expenditures of US$2,000,000 to be incurred on or before the third anniversary of the Effective Date. Any deficiency in exploration expenditures can be rectified by way of cash payment to Guyana Frontier equal to the deficiency, payable within 15 days of the date when the expenditures were due to be incurred, and any such cash payment will be deemed to represent incurred exploration expenditures.
Upon completion of this series of investments and exploration expenditures, Mulgravian shall become the beneficial owner of 60% of the capitalized shares of Black Jack Mines Inc. (a Guyana-registered holding company wholly-owned by Guyana Frontier), with the Company holding the remaining 40% of the shares. In early 2011, Mulgravian elected to act as operator of the Black Banana project and is entitled to charge a management fee equal to 10% of the qualified expenditures for the project.
