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Adriana Resources completes C$92 million joint venture agreement with WISCO

Date Closed

January 12, 2012

Lead Office



92.00 Million CAD

On January 12, 2012, Adriana Resources Inc. announced that it had successfully closed the transactions contemplated by the Joint Venture Agreement, as previously announced by Adriana on December 19, 2011, with a wholly owned subsidiary of WISCO International Resources Development & Investment Limited to engage in the development and operation of Adriana's Lac Otelnuk and December Lake iron ore properties in Nunavik, Québec.

Pursuant to the JV Agreement, WISCO has funded an aggregate of C$91,633,611 of which C$51,633,611 was paid directly to Adriana and the remaining C$40 million was injected into a joint venture company, Lac Otelnuk Mining Ltd.  Adriana has transferred its interest in the Lac Otelnuk Project into LOM. WISCO has acquired a 60% interest in LOM while Adriana holds the remaining 40% interest. WISCO has agreed to use commercial best efforts to assist LOM to obtain project financing for 70% of the development and construction costs for the Lac Otelnuk Project, the size and scope of which will be determined by a bankable Feasibility Study. Under the terms of the JV Agreement, WISCO may provide dilution protection to Adriana by providing funding assistance of up to a maximum of C$200 million for a term of up to 12 months in the event that Adriana has difficulty in funding its share of any cash call prior to the achievement of commercial production. Adriana and WISCO have agreed to purchase from LOM all the production from the Lac Otelnuk Project at fair market value in proportion to their respective equity interests. Mr. Palmiere has been appointed as the CEO of LOM.  Adriana has the right to appoint two of the five directors of LOM and Wisco has the right to appoint three of the five directors of LOM. LOM will reimburse Adriana for certain expenditures incurred on the Lac Otelnuk Project since January 17, 2011, the date Adriana and WISCO entered into the original Framework Agreement. A finder's fee in the amount of C$6,763,361 will be paid by Adriana in full satisfaction of the previously disclosed agreement with an arm's length third party.

WISCO is one of the major subsidiaries of Wuhan Iron & Steel (Group) Corporation, headquartered in Wuhan in the province of Hubei in the People's Republic of China.

Adriana Resources is an iron ore producer, headquartered in Toronto.

McCarthy Tétrault LLP represented WISCO, with a team led by Joyce Lee.