SANP Santo Mining Corporation (CE)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 16, 2014

SANTO MINING CORP.

(Exact name of registrant as specified in its charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see  General Instruction A.2. below):

o         Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o         Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

o         Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

o         Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On September 15, 2014, Santo Mining Corp, (the “Company”) signed a new mining contract (the “Mexico Agreement”) in Mexico with Compania Minera Angeles Del Desierto SA de CV. The contract provides the Company with exclusive rights to extract, process, ship and refine an unlimited amount of mineral ore from three concessions totaling 7.468 square Kilometers. Term is 15 years with provision for a 10 year extension. 

During the last two years the Company has conducted surface exploration focused on a mineralized hill. Samples collected at the crown and around the base of the hill were pretreated and sent to Inspectorate labs in Tucson.  The average grades of all the samples were Gold 3.17 g/t and Silver 57.3 g/t.  Other laboratory testing has repeatedly verified these results.

In 2011 samples were analyzed for Platinum at the University of Nueva Leon, Monterrey. Early results from this non-commercial lab using a hydrofluoric acid digestion were positive.  Following the recommendation by a senior geologist, the Company decided to suspend platinum group metal metals exploration and focus on the gold and silver components.  According to the seasoned geologist, it was unusual to find Platinum and gold mineralization sharing the same geological setting.  Considering this and to preserve our credibility we decided to focus on Gold and Silver and postpone platinum testing.

However, in 2014 the Company resumed platinum testing following a positive result by a certified assayer in Arizona. The assayer used a propriety procedure using nickel instead of lead in the fire assay process.  The first sample batch assayed for Platinum at 0.379 ounces per ton. This was verified using a fresh sample batch with an impressive 0.449 ounces per ton result.  At current Platinum prices this represents an in the ground value of $511 to $606 per ton of the mineral ore, from which must be deducted extraction, transport, refining, costs etc.  

All surface rights, entitlements, extractive permits and environmental license are in force except for a forestry permit which costs approximately $100,000 and is typically issued in 60-90 days.  The concession has good truck access, is very remote with no social or community issues, good experienced labor pool and open-pit operation with no overburden.

Operationally the Company is responsible for the cost of permitting, extraction, trucking and loading the ore on board railcars at nearby Monclova.  From there it will shipped to various toll refineries / smelters for processing.  The cost of shipping beyond Monclova will be advanced by the Company and later reimbursed from proceeds. Net profits from operations will be split 50/50 with the concessionaire. Meanwhile, consultants will evaluate the cost effectiveness of concentrating the mineral ore either at the mine or in Monclova. 

As a result of these positive “bonus” Platinum assays, the Company is planning to move its entire operations from the Dominican Republic to Mexico and focus 100% on financing and this near-term production opportunity.

Reference is made to the disclosure set forth under Items 2.01 of this this Current Report on Form 8-K (this “Report”), which disclosure is incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On July 16, 2014, the Company closed on an agreement (the “Purchase and Sale Agreement”) with Precipitate Gold Corp.  (“Precipitate”) and Gexplo S.R.L. (“Gexplo,” and, together with the Company, the “Vendor”), dated June 30, 2014, whereby Precipitate acquired a 100% interest in two concession applications in the Dominican Republic known as “Richard” and “David,” which cover an area of 220 and 1,400 hectares respectively. The David concession is located on the north central border of Precipitate’s Juan de Herrera concession within the Tireo Gold Camp and greatly increases Precipitate’s prospective Tireo landholdings. In exchange, Precipitate granted the Vendor (1)  a 2% net smelter royalty (“NSR”) on each of the concessions. The NSR can be purchased by Precipitate for the price of US$500,000 per 0.5% for a total purchase price of US$2,000,000; and (2) 100,000 share purchase warrants (“Warrants”) allowing the Vendor to purchase up to 100,000 shares of Precipitate’s common stock  at an exercise price of $0.30 per share for up to 3 months from the date of grant. Should the Vendor exercise any of the Warrants and thereafter seek to sell some or all of the shares, it must notify Precipitate and allow Precipitate at least 10 calendar days to arrange buyers of the shares. Any warrant shares purchased by the Vendor will be subject to a four month hold period.

The foregoing descriptions of the Purchase and Sale Agreement is qualified in its entirety by reference to the provisions of the Purchase and Sale Agreement filed as exhibit 10.1 to this Report, respectively, which are incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: September 18, 2014

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Exhibit 10.1

PROPERTY PURCHASE  AND SALE  AGREEMENT 

DAVID  &  RICHARD  PROPERTIES  –  DOMINICAN  REPUBLIC 

THIS  AGREEMENT  is  dated the      30 day  of  June,  2014. 

BETWEEN:     CORPORACION  MINERA  SAN  JUAN, S.R.L., 

Calle  Manuel de  Jesus  Troncoso  #38,  apto.  A21,  Edificio  El Escorial,  Piantini. 

Santo  Domingo  1000  Dominican  Republic 

(“CMSJ”) 

AND:                 Each  of  GEXPLO  S.R.L.  (“Gexplo”) and  SANTO  MINING  CORP.  (“SANP”) 

Ave.  Sarasota  #20,  Torre  Empresarial,  Suite  1103,  Santo  Dominigo, 

Dominican  Republic 

(Gexplo  and  SANP  together the  “Vendor”) 

WHEREAS  Gexplo  and  SANP  together  hold  a  100%  interest in  those two  mineral  exploration concession applications  for  the  mineral  properties  known  as  the  David  and  Richard  properties  (the  “Properties”),  as  more particularly  described  in  Schedule  “A”  hereto; 

AND  WHEREAS  CMSJ  has  agreed  to  purchase  and  the  Vendor  has  agreed  to  sell  all  of  the  Vendor’s  interest 

in  the  Properties  in  accordance  with  the  terms  of  this  Agreement; 

AND  WHEREAS  CMSJ  is  the  wholly  owned  subsidiary  of  Precipitate  Gold  Corp.  (“PRG”),  a  public company  listed  on  the  TSX  Venture  Exchange; 

NOW  THEREFORE  THIS  AGREEMENT  WITNESSES  that  in  consideration  of  the  mutual  covenants  and agreements  herein  contained,  and  for purposes  of  documenting  the  mutual  understanding  among  the  parties, each  jointly  and  severally  agrees  as  follows, 

1.          DEFINITIONS 

1.1         In  this  Agreement and  in  the  Schedules  and  the  recitals  hereto: 

“Applications”  mean  the  applications  made  by  the  Vendor  for  two  exploration  concessions  with  respect  to  the Properties,  as  made  to  the  Ministry  of  Industry  and  Commerce  of  the  Dominican  Republic,  or  such  other  rights and  interests the  Vendor may  have  with  respect to  the  Properties. 

“Encumbrance”  means  any  encumbrance,  lien,  charge,  pledge,  mortgage,  title  retention  agreement,  security interest  of  any  nature,  adverse  claim,  exception,  restriction,  reservation,  option,  pre-emptive  right  or  privilege of  any  nature  or kind  whatsoever or any  contract  to  create  any  of  the  foregoing. 

“Environmental  Laws”  means  any  statute,  bylaw  or  regulation  relating  to  protection  of  the  environment,  or any  lawful  order  under  any  of  them  and  any  common  law rule  giving  rise  to  liability  in  connection  with pollution. 

“Exchange”  means  the  TSX  Venture  Exchange. 

“Hazardous  Materials”  means  any  contaminant,  pollutant,  waste,  hazardous  material,  toxic substance, radioactive  substance,  petroleum  and  its  derivatives  and  by  products  and  other  hydrocarbons,  dangerous substances  and  dangerous  goods,  all as  identified  or defined  in  any  Environmental Laws. 

“Properties”  means  those  two  mineral  claim  blocks  known  as  David  (comprising  1,400  hectares  more  or  less) and  Richard  (comprising  220  hectares  more  or  less),  (each  of  the  Properties  being  a  “Property”),  which  are  to form  the  basis  of  two  exploration  concessions  to  which  the  Applications  pertain;  all  as more particularly described  in  Schedule  “A”  hereto,  together  with  all  prospecting,  research,  exploration,  exploitation,  operating and  mining  permits,  licences  and  leases  associated  therewith,  mineral,  surface,  water  and  ancillary or appurtenant  rights  attached  or  accruing  thereto,  and  any  mining  licence  or  other  form  of  substitute  or  successor mineral  title  or  interest  granted,  obtained  or  issued  in  connection  with  or  in  place  of  or  in  substitution  for  any such  Properties  (including,  without  limitation,  any  Properties  issued  to  cover  any  internal  gaps  or  fractions  in respect of  such  ground). 

“Property  Information”  means  all maps,  drill hole  logs,  assay  results,  reports,  data   and  other information compiled  or  prepared  by  or  on  behalf  of  the  Vendor  with  respect  to  work  on  or  with  respect  to  the  Properties, and  all core,  samples  and  sample  pulps  and  rejects. 

2.          ACQUISITION  AND  DISPOSITION  OF  THE  PROPERTY 

2.1         The  Vendor  hereby  agrees  to  sell,  transfer  and  assign  to  CMSJ  all  of  the  Vendor’s  right,  title  and interest in  and  to  the  Applications  and  the  Properties  for and  in  consideration  of  CMSJ:

     (a)       assuming  all of  the  Vendor’s  obligations  under its  Applications; 
 

(b)       granting  to  the  Vendor  a  2.0%  net  smelter  return  royalty  in  any  future  production  from  the 

Properties calculated  in  accordance  with  Schedule  “B”  hereto  (the  “Royalty”); and 

(c)       delivering  to  the  Vendor  a  total  of  100,000  common  share  purchase  warrants  in  the  capital  of  PRG 

(“Warrants”); 

(collectively  the  “Purchase  Price”); to  be assumed,  granted,  issued  and  delivered  within  five  business  days following completion  of  all conditions  precedent  set out in  section  4.1  hereto. 

2.2         As  to  CMSJ’s  assumption  of  the  Vendor’s  obligations  under  its  Applications,  CMSJ  agrees  to  assume the  Vendor’s  exploration  budget  obligations  included  in  the  Vendor’s  current  Applications  or  amend  the  same to  include a exploration budget  that  will  be acceptable to  the  Ministry of  Industry and  Commerce of  the Dominican  Republic. 

2.3        As  to  the  Royalty,  (i)  it  will  apply  to  all  base  and  precious  metals,  rare  earth  minerals  and  gems produced  from  the  Properties,  (ii)  at  any  time,  CMSJ  may  purchase  some  or  all  of  the  Royalty  for  the  price  of US$500,000for  each  one-quarter  of  the  Royalty  (0.5%  NSR)  acquired  (total  purchase  price  of  US$2,000,000); and  (ii)  the  Vendor  will  advise  CMSJ  as  to  the  allocation  between  Gexplo  and  SANC  of  payments  to  be  made by  CMSJ  under the  Royalty. 

2.4         The  Vendor  will  advise  CMSJ  as  to  the  allocation  between Gexplo  and  SANC  of  the  Warrants  to  be issued  pursuant  to  section  2.1(c).   Each  Warrant  will  entitle the holder  to  acquire one common share in the capital  of  PRG  (“Warrant  Shares”)  at  the  exercise  price  of  C$0.30  per  share  for  a  period  of  three  months from  the  date  of  issue.  The  certificates  representing  the  Warrants  will,  among  other  things,  include  provisions for  the  appropriate  adjustment  in  the  class,  number  and  price  of  the  shares  issued  on  exercise  of  the  Warrants upon  the  occurrence  of  certain  events,  including  any  subsequent  subdivision,  consolidation  or  reclassification of  PRG’s common  shares,  the  payment of  stock  dividends  or any  business  reorganization  of  PRG. 

2.5         Should  the  Vendor  exercise  any  of  the  Warrants  and  thereafter  seek  to  sell  some  or  all  of  the  Warrant Shares,  it will first notify  PRG  of  the  same  and  allow  PRG  at  least  10  calendar  days  to  arrange  for  buyers  of the  Warrant Shares.   The  purpose  of  this  section  to  allow  PRG  to  manage  the  market  for  its  common  shares; and  PRG  will not  be  obliged  to  arrange  buyers  for  the  Warrant  Shares  and  the  Vendor  will  not  be  obliged  to accept any  offer to  buy  the  same. 

3.          REPRESENTATIONS  AND  COVENANTS  OF  THE  PARTIES 

3.1       The  Vendor  hereby  represents  and  covenants  to  CMSJ  that: 

(a)      Gexplo  is  a  company  duly  incorporated  under  the  laws  of  the  Dominican  Republic,  and  is  a  valid  and subsisting  company  in  good  standing  with  all applicable  governmental  authorities. 

(b)     SANC  is  a  company  duly  incorporated  under  the  laws  of  Nevada,  USA,  and  is  a  valid  and  subsisting company  in  good  standing  with  all applicable  governmental  authorities. 

(b)    It  has  the  full  power,  capacity  and  authority  to  enter  into  and  perform  its  obligations  under  this 

Agreement and  any  agreement or instrument referred  to  or contemplated  herein. 

(c)      Neither  the  execution  and  delivery  of  this  Agreement  nor  any  of  the  agreements  referred  to  herein  or contemplated  hereby,  nor  the  consummation  of  the  transactions  hereby  contemplated  conflict with, result  in  the  breach  of  or  accelerate  the  performance  required  by,  any  agreement  to  which  either Gexplo  or SANC  is  a  party. 

(d)     The  Vendor  is  the  sole  holder  of  all  right,  title  and  interest  in  and  to  the  Applications;  and  there  are  no adverse  claims  or  challenges  against  or  to  the  ownership  or  title  to  either  the  Applications  or  rights  to the Property  areas,  nor to  the  best of  the  Vendor’s  knowledge  is  there  any  basis  therefor. 

(e)      There  are  no  Encumbrances  affecting  either  of  the  Applications  or  the  Properties  (other  than  surface rights held  by third  parties,  and  royalties,  duties,  assessments and  amounts paid  to  governmental authorities  in  the  normal course). 

(f)      To  the  Vendor’s  knowledge,  the  Applications  have  been  duly  and  properly  prepared  and  submitted  in accordance  with  applicable  mining  law  in  the  Dominican  Republic. 

(g)      There  is  no  litigation,  claim  or  proceeding,  including  appeals  or  applications  for  review,  in  progress  or (to  the  best  of  the  Vendor’s  knowledge)  pending  or  threatened  against  or  relating  to  either  Gexplo  or SANC,  or  affecting  the  Applications  or  the  Vendor’s  interests  in  the  Properties  before  any  domestic court,  governmental  department,  commission,  board,  bureau  or  agency,  or  arbitration  panel,  and  there is  not  presently  outstanding  against  Gexplo,  SANC  or  the  Properties  any  judgment,  decree,  injunction, rule  or  order  of  any  court,  governmental  department,  commission,  agency  or  arbitrator which materially  adversely  affects  the  Applications  or the  Properties.