Coronet and Argus Report the Sale and Purchase of the Yanamina Gold
Project, Ancash Peru
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jun 16, 2014) -
Argus Metals Corp. ("Argus") (TSX-VENTURE:AML) and Coronet Metals
Inc. ("Coronet") (TSX-VENTURE:CRF) announce that they have signed a
definitive agreement whereby Argus will purchase the Yanamina Gold
project from Coronet. On the close of this transaction Coronet will
own 40% of Argus and have the right to maintain its ownership
through any future financings by Argus. Further details of the
transaction are found below.
Argus and its Peruvian staff have a history of negotiating and
successfully implementing community agreements in Peru and
elsewhere in Latin America. The management and board of Argus have
a depth of experience in both fundraising and mine development and
will be focusing all of the company's efforts on bringing the
Yanamina project forward to production.
The Yanamina Project is located near Carez, Ancash Department,
Peru and consists of five concessions totaling 924 ha in area. The
Yanamina Project is situated 40 km north and 120 km south of
Barrick Gold's Pierina (7.5 million ounces Au) and Alto
Chicama/Laguna's Norte (9.1 million ounces Au), respectively.
The Yanamina Project
Yanamina is an advanced-stage project with a NI 43-101 compliant
resource of 83,100 oz gold in the indicated category and 123,700 oz
gold in the inferred category at a 0.5 g/t gold cutoff. In February
2011, a Preliminary Economic Assessment ("PEA") on the Yanamina
Project was prepared for Coronet, and is summarized as follows:
- Treating 4,802,000 tonnes of ore grading 1.34 g/t gold and 5.65
g/t silver with heap leach recoveries of 73% gold and 40% silver
with projected production of 151,000 oz gold and 349,000 oz silver
at a cash cost of US$ 257/eq oz gold over a five year mine
life.
- Initial annual production of 41,000 oz gold and 95,000 oz
silver with averages of 30,000 oz gold/year and 70,000 oz
silver/year over the mine life.
- Capital expenditures (including working capital) estimated to
be US$35.5 million.
- At US$1,025/oz gold and $16.50/oz silver, the IRR is 50%, the
NPV at a 5% discount is US$40.5 million and the payback is 1.47
years from the start of operations.
- The PEA was based on a 5 year 1:1 stripping ratio open pit
mine, a 3,000t/d heap leach operation and a US$6.5 million
reclamation and closure cost.
An updated PEA study has been commissioned to be filed with the
TSX Venture Exchange (TSXV) in conjunction with this
transaction.
Purchase Terms
Argus will acquire the Yanamina Project by acquiring all of the
shares of Coronet's wholly owned Peruvian subsidiary - Coronet
Metals Peru S.A.C. ("Coronet Peru"). Under the terms of a Share
Purchase Agreement, Argus has agreed, subject to the satisfaction
of certain conditions precedent, to acquire all the shares of
Coronet Peru in consideration of:
|
(a) |
delivering to Coronet that quantity of common shares in the capital
of Argus (the "Shares") as is equal to 40% of the issued and
outstanding common shares of Argus as of the closing date. As at
today's date, Argus has 7.9 million shares issued and outstanding
so this would amount to Argus issuing 5.3 million Shares to
Coronet; and |
|
(b) |
assuming Coronet's obligations under the original agreement whereby
Coronet acquired Coronet Peru, being an agreement dated December 9,
2010, as amended, with Latin Gold Limited, pursuant to which,
Coronet has remaining obligations provided certain milestones are
reached by Coronet Peru toward putting the project into
production. |
Further, Coronet will be entitled to:
- participate up to 40% in all financing undertaken by Argus for
five years or until the Yanamina project has been brought into
production;
- nominate two board members to the Argus board of directors
until the project has been brought into production.
The obligations to be assumed by Argus under Coronet's original
agreement to the benefit of Latin Gold Limited are:
- US$1.5 million payable upon commencement of construction or a
mine, and a bonus of US$1.0 million payable at the time the
inferred resource exceeds 275,000 ounces gold;
- US$2.0 million payable upon the 12 month anniversary of the
initial gold pour;
- US$2.0 million payable upon the 24 month anniversary of the
initial gold pour; and
- common shares valued at US$2.5 million upon confirmation of an
inferred resource equal to or greater than 250,000 ounces of gold
within the Yanamina Deeps Exploration Target. The Yanamina Deeps
Exploration Target is an undrilled potential footwall extension to
the existing Yanamina resource. Latin Gold will also hold an
overriding 1.0% gross royalty on all production in excess of
200,000 ounces Au.
Argus' goal in acquiring the Yanamina Project is to work with
the local interest groups toward an agreement so as to enable the
project to be placed into production. The consideration payable to
Coronet is largely contingent upon Argus succeeding in that regard,
as the Shares issued to Coronet will be held in escrow to be
released as follows:
|
(i) |
one-third of the Shares will be released on the earlier of one year
following the closing, or upon the Company signing a production
agreement with the local communities; |
|
(ii) |
an
additional one-third of the Argus Shares will be released on the
earlier of commencement of construction of a mine and mill (if
required), or three years following the closing; and |
|
(iii) |
the remaining one-third of the Argus Shares will be released on the
earlier of commencement of production, or five years of
closing. |
If Argus is not successful in negotiating an agreement with the
local communities, or putting the project into production, the
agreement with Coronet can be unwound as to:
|
(a) |
if
an agreement with the local communities is not reached within 12
months following the closing, Argus may return the shares of
Coronet Peru to Coronet in consideration of terminating 85% of the
Shares of Argus issued to Coronet; |
|
(b) |
if
Argus is unable to commence commercial production within five years
from the closing, or if Argus reasonably determines within such
five year period that it will be unable to commence commercial
production from the project by the end of such five year period,
Argus may transfer and return the shares of Coronet Peru to Coronet
in consideration of terminating all of the Shares which have not
then been released to Coronet; or |
|
(c) |
if
an agreement with the local communities is not reached within 36
months following the closing, Coronet may return all of the Shares
to Argus in consideration of receiving from Argus all of the shares
of Coronet Peru. |
Closing of the transaction is subject to a number of conditions
precedent, including satisfactory completion of due diligence and
TSXV approval. There can be no assurance that the conditions will
be met or that the transaction will be completed as proposed or at
all.
New Directors
Argus reports Robert van Santen and Jason McLaughlin have
resigned from the Board of Directors. The Board would like to thank
each of them for their dedicated work for Argus and wish them well
in their future endeavours. Upon closing, the Board will welcome
the addition of Mr. Len Harris and Mr. Stephen Stine as
representative appointed by Coronet.
Mr. Len Harris
Mr. Len Harris retired in 1995 from acting as President and
General Manager of Newmont Peru and President and General Manager
of Newmont Latin America. Mr. Harris has been a director of Coronet
since 2012; of Sulliden Gold Corp. since September, 2003; of
Solitario Exploration & Royalty Corp. since June, 1998; of
Cardero Resources Corp. since February, 2000; and of Carnac
Resources Corp. since June, 2001. Additionally, Mr. Harris is the
Chair of Resource Development Inc., Director Emeritus of Endeavor
Silver Corp., President of B&A Mine Services, a director of JVS
Ingenieros, a consultant with H&H Metals Corp., with Indico
Resources Ltd., with Golden Arrow Resources Corp. and with
Consultant Minera Titan del Peru, as well as an advisor with Vena
Resources Corp.
Mr. Stephen Stine
Mr. Stine is a mining executive with 39 years of experience in
public/private company formation, acquisitions, turnarounds, debt
and equity financings and mine operations around the world. Mr.
Stine joined Coronet as a Director and COO in June of 2011. Mr.
Stine is a co-founder and former director of Alamos Gold where he
served as COO in charge of exploration and production. Mr. Stine
previously worked for Southern Peru Copper in Peru and speaks
Spanish. Most recently, Mr. Stine acted as Director and COO of
Etruscan Resources where he was responsible for turning around the
Youga Gold Mine in Burkina Faso, West Africa. During that time, the
mine doubled production and the cost of production was reduced by
50%.
Private Placement
Argus will be undertaking a concurrent $500,000 non-brokered
private placement in conjunction with the transaction. Proceeds
will be used for costs associated with concluding the transaction,
for community relations in Peru, for additional work on the project
to bring the Yanamina environmental impact statement into
compliance with current regulations and for general working capital
purposes.
Nature of the Transaction
The transaction with Coronet, in combination with the private
placement and related matters, will amount to a reverse take-over
(RTO) under TSXV policies. Argus intends to seek waivers to the
requirements for (i) sponsorship, and (ii) minimum prior
expenditures on the project. All of the shares issued to Coronet
will be subject to a standard three year, time-release escrow
agreement. Shareholder approval to the transaction will be
required, however Argus will be seeking approval by way of consent
resolution, and so no meeting will be held. A comprehensive filing
statement, in the form prescribed by the TSXV will be prepared and
filed on SEDAR.
Trading Halt
In accordance with TSXV policy, Argus' shares are currently
halted from trading. Trading will resume upon Argus having made
adequate filings with the Exchange, including personal information
forms for proposed new directors and an updated technical report on
the Yanamina project.
Joel Dumaresq, Chairman of the Company, stated: "Coronet is very
pleased to see a renewed and dedicated approach to community
relations that Argus will bring to the project. The Argus team has
extensive experience in establishing long-term sustainable
community solutions that comply with project objectives and
applicable regulations. Working within this context, Argus will
develop appropriate community initiatives and together with the
team's strong technical ability will move the Yanamina project
forward for the long-term benefit of the Coronet Shareholders.
Michael Collins, CEO and President of Argus stated, "The
Yanamina Gold Project hits all the right metrics, low risk capital
deployment and speedy development to production that will allow
Argus to bring this gold deposit forward in this tough capital
market."
Michael Collins P.Geo., a "qualified person" within the meaning
of NI 43-101, reviewed and participated in the preparation of the
technical information disclosed in this news release.
| ON BEHALF OF THE BOARD OF DIRECTORS |
ON BEHALF OF THE BOARD OF DIRECTORS |
|
| Michael Collins |
Joel Dumaresq |
| President and CEO |
Chairman of the Board |
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Completion of this transaction is subject to a number of
conditions, including Exchange acceptance and disinterested
Shareholder approval. The transaction cannot close until the
required Shareholder approval is obtained and all other conditions
are met. There can be no assurance that the transaction will be
completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
Filing Statement to be prepared in connection with the transaction,
any information released or received with respect to the reverse
take-over and change of business may not be accurate or complete
and should not be relied upon. Trading in the securities of Argus
Metals Corp. should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
We seek safe harbor.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This
news release includes certain "forward-looking statements" under
applicable Canadian securities legislation. Forward-looking
statements include, but are not limited to, statements with respect
to: the terms and conditions of the proposed transaction; the terms
and conditions of the proposed private placement; future
exploration and testing; use of funds; and the business and
operations of Argus after the proposed transaction. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable, are subject to known
and unknown risks, uncertainties, and other factors which may cause
the actual results and future events to differ materially from
those expressed or implied by such forward-looking statements. Such
factors include, but are not limited to: general business,
economic, competitive, political and social uncertainties; delay or
failure to receive board, shareholder or regulatory approvals; and
the results of current exploration and testing. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Argus and
Coronet disclaim any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Argus Metals Corp.501 - 525 Seymour StreetVancouver BC, V6B
3H7Telephone: +1 (604) 764-7094Website:
www.argusmetalscorp.comCoronet Metals Inc.Suite 2630-1075 West
Georgia StreetVancouver, British Columbia V6E 3C9Telephone: +1
(604) 336-3193Website: www.coronetmetals.com
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