Orosur Mining Inc. - Colombia
update
·
Negotiations on
Share Purchase Agreement ("SPA") and ancillary documents
successfully concluded
·
SPA has been
signed, subject to customary closing conditions and approval of the
TSXV
·
Company will
reassume 100% ownership of its flagship Anza Gold Project in
Colombia with no upfront payments
·
Orosur will
become operator of the Anza Gold Project
London, September 10th ,
2024. Orosur Mining Inc. ("Orosur" or the "Company") (TSXV/AIM:OMI) is pleased to announce
that further to its news release of March 25, 2024, negotiations of
the terms of a definitive binding SPA and ancillary documentation
have been successfully completed. The SPA has now been duly
executed and, on the closing of the transaction, the Company will
have 100% ownership of the Company's flagship Anzá Gold Project
("Anzá Project") in Colombia. Closing of the transaction is subject
to customary closing conditions and the approval of the
TSXV.
About the Anzá Project
Anzá is a gold exploration project,
comprising granted exploration licences and applications for
exploration licences in the prolific Mid-Cauca belt of
Colombia.
The Anzá Project has been the
subject of an Exploration Agreement with Venture Option
("Exploration Agreement") with Minera Monte Águila S.A.S. ("MMA").
MMA is itself a 50/50 joint venture between Newmont Corporation
("Newmont") and Agnico Eagle Mines Limited ("Agnico"). MMA is the
current operator of the Anzá Project.
The Anzá Project is located 50km
west of Medellin and is easily accessible by all-weather roads and
boasts excellent infrastructure including water, power,
communications as well as a large exploration
camp.
Since the Company acquired the Anzá
Project in December 2014, almost 48,000m of drilling has been
undertaken, mostly on the central APTA prospect where a high-grade
body of gold mineralisation had been discovered. The most recent
drilling activities were at Pepas in the north of the Anzá Project
areas where three holes returned excellent results, the best being
150.9m @ 3g/t Au from surface (hole PEP001, announced on September
6, 2022). On reassuming operatorship of the Anzá Project, the
Company's initial focus will be on the Pepas discovery.
The Company has been on site for
some time with its technical staff having established a base at
Pepas in order to commence necessary socialisation programs,
permitting and logistical planning. This will allow the Company to
expeditiously ramp up its exploration activities.
Terms of the Acquisition
Under the SPA, Orosur's wholly owned
Canadian subsidiary, Waymar Resources Ltd., will purchase all of
the issued shares of MMA from wholly owned subsidiaries of Newmont
and Agnico resulting in Orosur regaining 100% ownership of the
Project (the "Acquisition"). No cash is payable up front, with all
consideration deferred and wholly contingent upon commercial
production from the Anza Project.
The agreed consideration is the NSR
Royalties (as defined below) in an aggregate amount of 1.5% on all
future mineral production, plus the Fixed Royalties (as defined
below) of an aggregate amount of US$75 per ounce of gold or gold
equivalent ounce for the first 200,000 gold equivalent ounces of
mineral production (the "Fixed Royalties").
Completion of the Acquisition is
subject to customary conditions including the approval of the TSXV.
Further details on the Terms of the Acquisition are set out
below.
Related Party Transaction
As a substantial shareholder in
Orosur, Newmont is considered to be a related party of the Company
(as defined in the AIM Rules for Companies) and, accordingly, the
Acquisition constitutes a related party transaction pursuant to AIM
Rule 13. The board of directors of Orosur, having consulted
with SP Angel Corporate Finance LLP, the Company's Nominated
Adviser, considers that the terms of the Acquisition are fair and
reasonable insofar as the Company's shareholders are
concerned.
Newmont owns 14.2% of the
outstanding common shares of Orosur and owns 50% of the shares of
MMA and accordingly the Acquisition constitutes a "related party
transaction" within the meaning of Multilateral Instrument 61-101 -
Protection of Minority Security
Holders in Special Transactions ("MI 61-101") and Policy 5.9
of the TSXV Corporate Finance Manual. An exemption from the
requirements for a formal valuation of the transaction under MI
61-101 is available pursuant to Section 5.5(b) of MI 61-101 because
the Company's common shares trade solely on the TSXV. Orosur
intends to rely on an exemption from the minority shareholder
approval requirements of MI 61-101 by virtue of the exemption
contained in Section 5.7(1)(a) of MI 61-101, as the fair market
value of each of (i) the NSR Royalties and the Fixed Royalties, and
(ii) the shares of MMA, do not exceed 25% of the Company's market
capitalization, subject to acceptance of the use of this exemption
by the TSXV.
In evaluating and approving the SPA
and the Acquisition, the board of directors of the Company
considered and relied upon a number of factors, including the
following: (i) the opportunity for no cash payment on closing to
acquire MMA's 51% earned interest in the Anzá Project, (ii) the
opportunity to effectively accelerate MMA's dilution of its 51%
earned interest in the Anzá Project without requiring the
significant expenditure on the Anzá Property by Orosur that would
have been required under the joint venture agreement, (iii) that
the Acquisition includes a number of new applications for licences
thereby increasing the potential landholdings held by the Company,
(iv) the fairness of the Acquisition to the shareholders of Orosur,
(v) the fact that the consideration to indirectly acquire MMA's
interest will only be payable if and when the Anzá Project reaches
commercial production, (vi) the ability to buy back a portion of
the NSR Royalties and the right of first refusal in favour of
Minera Anza should Newmont and Agnico seek to sell their NSR
Royalties to a third party, and (vii) the ability to resume
operatorship of the Anzá Project as a 100% owner and the ability to
seek potential partners for part or all of the Anza Project. The
board of directors of the Company was unanimous in its approval of
the SPA and the Acquisition
The purpose of the Acquisition is to
acquire 100% of the Anzá Project through the indirect acquisition
of MMA's 51% earned interest with no cash payment at closing and to
reassume operatorship of the Anzá Project.
Orosur CEO Brad George commented:
"We are thrilled to be finally
getting Anzá back - an exciting project at an exciting time in the
precious metals space. In anticipation of successful
completion, we had already begun the field planning process, so all
is now in place and we are ready to start work."
Further details of the Terms of the
Acquisition
On September 9th, 2024,
2754465 Ontario Inc. ("Agnico Subco"), Agnico, Newmont Overseas
Exploration Limited ("Newmont Subco"), Newmont, Orosur, Waymar
Resources Ltd.., Minera Anzá S.A. (Colombia Branch) ("Minera Anzá")
and Minera Anzá S.A. (a BVI corporation) entered into the SPA.
Under the SPA, Orosur's wholly-owned Canadian subsidiary, Waymar
Resources Ltd., will purchase all of the issued shares of MMA from
Newmont Subco and Agnico Subco, being wholly-owned subsidiaries of
Newmont and Agnico respectively resulting in Orosur, indirectly,
regaining 100% ownership of the Anzá Project. No cash is
payable at closing of the Acquisition, with all consideration
deferred and wholly contingent upon commercial production from the
Anzá Project.
Consideration for the Acquisition
will be comprised of the grant to each of Newmont and Agnico of:
(i) a 0.75% net smelter return royalty ("NSR Royalty") on all
future mineral production (1.5% in aggregate) and (ii) a fixed
royalty of US$37.5 per ounce of gold or gold equivalent ounce
(US$75 per ounce in aggregate) on the first 200,000 ounces of
mineral production ("Fixed Royalty"). Each NSR Royalty will be
subject to a right of first refusal in favour of Minera Anzá in the
event that Newmont or Agnico wish to sell their respective NSR
Royalty to a third party. Minera Anzá will also have (i) a right to
buyback a 0.25% interest of each 0.75% NSR Royalty and (ii) a right
to buyback an additional 0.25% interest of each then 0.50%
remaining NSR Royalty, which in both cases, will be required to be
exercised concurrently with Newmont and Agnico. The amount payable
for the buyback of each 0.25% interest will be US$5 million. If all
buyback rights are exercised the aggregate cost would be US$20
million and would reduce each NSR Royalty to 0.25%. Each of Newmont
and Agnico will enter into separate NSR Royalty agreements and
separate Fixed Royalty agreements with Minera Anzá, Minera Anzá
S.A., MMA and Orosur. Orosur has agreed to guarantee the
obligations of Minera Anzá, Minera Anzá S.A. and each of its
Affiliates party to the NSR Royalty agreements and the Fixed
Royalty agreements. The Fixed Royalty agreements will not have
first rights of refusal.
To secure the payments and
performance of obligations of Minera Anzá under the NSR Royalty
agreements, Minera Anzá, Minera Anzá S.A. and MMA will grant a
pledge to Agnico Subco as collateral agent for Newmont Subco and
Agnico Subco pursuant to a pledge agreement over the Anzá Project
mining titles and the right to explore and exploit the mining
titles. Obligations under the Fixed Royalty agreements will not be
secured.
In connection with the pledge
agreement, Minera Anzá, Minera Anzá S.A., MMA, Newmont Subco and
Agnico Subco will enter into an intercreditor agreement to: (i)
provide for the appointment of a collateral agent acting for
Newmont Subco and Agnico Subco (ii) set forth certain
responsibilities and obligations of the collateral agent; (iii) set
forth certain responsibilities and obligations of the obligors with
respect to the collateral; and (iv) establish rights among Newmont
Subco and Agnico Subco with respect to payments that may be
received by the collateral agent in respect of the
collateral.
Completion of the Acquisition is
subject to a number of conditions including, representations and
warranties being true and correct on closing, compliance with
covenants, delivery of financial statements of MMA, the approval of
the TSXV (including shareholder approval if required by the TSXV),
registration of the pledge agreement and no orders of a
governmental body prohibiting consummation of the
transaction.
Further AIM Rules Schedule Four Disclosures
Upon completion of the Acquisition,
as set out in the SPA and described above, the parties will enter
into an intercreditor agreement and a pledge agreement in respect
of the NSR Royalties, the effect of which is to secure future
payments of the NSR Royalties in favour of Newmont and
Agnico.
The carrying value of the Anzá
Project, as set out in the (unaudited) financial statements of
Orosur as at February 29, 2024, was US$3.7 million. All
qualifying expenditures attributable to the Anzá Project are
covered by MMA under the Exploration Agreement. In the year ended
December 31, 2023, MMA's capitalised costs and investment
attributable to the Anzá Project amounted to US$17.7
million.
For further information, visit
www.orosur.ca, follow on X @orosurm or please contact:
Orosur Mining Inc
Louis Castro, Chairman
Brad George, CEO
info@orosur.ca
Tel: +1 (778) 373-0100
SP Angel Corporate Finance LLP -
Nomad & Broker
Jeff Keating / Caroline
Rowe
Tel: +44 (0) 20 3 470 0470
Turner Pope Investments (TPI)
Ltd - Joint Broker
Andy Thacker/James Pope
Tel: +44 (0)20 3657 0050
Flagstaff Communications
Tim Thompson
Mark Edwards
Fergus Mellon
orosur@flagstaffcomms.com
Tel: +44 (0)207 129 1474
The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ('MAR') which has been incorporated into UK law by the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this
inside information is now considered to be in the public
domain.
Neither TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
About the Anzá Project
Anzá is a gold exploration project,
comprising a number of granted exploration licences and
applications in the prolific Mid-Cauca belt of Colombia.
Orosur's interest in the Anzá
Project is currently held via its subsidiary, Minera Anzá
S.A.
The project is located 50km west of
Medellin and is easily accessible by all-weather roads and boasts
excellent infrastructure including water, power, communications and
large exploration camp.
The Anzá Project is subject to an
Exploration Agreement with Venture Option dated September 7th,
2018, as announced on September 10th, 2018, between Orosur's 100%
subsidiary Minera Anzá S.A ("Minera Anzá") and Minera Monte
Águila SAS ("Monte Águila"), a 50/50 joint venture between
Newmont Corporation ("Newmont") and Agnico Eagle Mines Limited
("Agnico").
Qualified Persons Statement
The information in this news release
was compiled, reviewed and verified by Mr. Brad George, BSc hons
(Geology and Geophysics), MBA, Member of the Australian Institute
of Geoscientists (MAIG), CEO of Orosur Mining Inc. and a qualified
person as defined by National Instrument 43-101.
Forward Looking Statements
All statements, other than
statements of historical fact, contained in this news release
constitute "forward looking statements" within the meaning of
applicable securities laws, including but not limited to the "safe
harbour" provisions of the United States Private Securities
Litigation Reform Act of 1995 and are based on expectations
estimates and projections as of the date of this news
release.
Forward-looking statements include,
without limitation, completion of the Acquisition, approval of the
TSXV of the acquisition, Orosur becoming operator of the Anzá
Project, the expected focus on the Pepas prospect, the exploration
plans in Colombia and the funding of those plans, and other events
or conditions that may occur in the future. There can be no
assurance that such statements will prove to be accurate. Actual
results and future events could differ materially from those
anticipated in such forward-looking statements. Such statements are
subject to significant risks and uncertainties including, but not
limited to, obtaining conditional approval of the TSXV and meeting
other conditions to closing the Acquisition, timing of closing of
the Acquisition and those as described in Section "Risks Factors"
of the Company's MD&A for the year ended May 31, 2023. The
Company disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events and such forward-looking statements,
except to the extent required by applicable law. The Company's
continuance as a going concern is dependent upon its ability to
obtain adequate financing, to reach profitable levels of operations
and to reach a satisfactory closure of the Creditor´s Agreement in
Uruguay. These material uncertainties may cast significant doubt
upon the Company's ability to realize its assets and discharge its
liabilities in the normal course of business and accordingly the
appropriateness of the use of accounting principles applicable to a
going concern.