Indicator, Munic Gems signs agreement

Indicator Minerals Inc. has entered into a Letter Agreement outlining a long-term strategic partnership with Munic Gems N.V. (Munic Gems), one of the world’s leading diamantaires based in Antwerp, Belgium.

The goal of the partnership is to identify, acquire and develop diamond projects globally by coupling Indicator’s experienced management and strong technical expertise with Munic Gems’ extensive network of contacts and financial capabilities. The terms of the Agreement can best be highlighted by subdividing it into two categories: projects brought to Indicator by Munic Gems and projects acquired or generated by Indicator.

Projects brought to Indicator by Munic Gems

Munic Gems will use its best efforts to bring project opportunities to Indicator for review with a particular focus on India and Brazil. Munic Gems will retain the following rights on certain projects that they have brought to Indicator:

- The right to act as agent on the sale of 50% of Indicator’s share of diamond production at a commission of 5%

- A Net Profits Interest (NPI) of 5%

Projects acquired or generated by Indicator

Indicator will continue to generate and acquire projects through its own efforts. Munic Gems will have the following rights on these projects as long as it earns and maintains a 9.9% ownership interest in the common shares of Indicator:

- The right to act as agent on 20% of Indicator’s share of diamond production at a commission of 5%

- The first right-of-offer to underwrite 100% of Indicator’s share of debt financing for capital costs incurred after the completion of a bankable feasibility study. In exchange, Munic Gems will have the right to market 100% of Indicator’s share of diamond production for the term of the debt at a commission of 5%

Under the terms of the Agreement, Munic Gems is required to earn a 9.9% ownership interest in Indicator through Private Placement financings at IME’s discretion, beginning with the purchase of 2.5 million units of Indicator within 60 days of the Agreement being signed. Each unit will consist of one common share and one warrant to purchase one common share. Each unit in the initial financing will be priced at $0.29, a 20% premium to the ten-day volume-weighted average of the trading price of the common shares of Indicator ending on the day preceding the date of execution of the Agreement. The exercise price of the warrant will be $0.36, a 50% premium to the ten-day volume weighted average of the trading price of the common shares of Indicator ending on the day preceding the date of execution of the Letter Agreement.

Once Munic Gems has earned a 9.9% interest in Indicator it will maintain that ownership through the exercise of an anti-dilution right on subsequent financings. Munic Gems will maintain the anti-dilution right so long as it does not skip more than three financings in total and does not skip two consecutively.

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