VANCOUVER, BC, May 12, 2021 /CNW/ - Barsele Minerals
Corp. – (TSXV: BME) (the "Company" or "Barsele")
is pleased to announce that it has executed a non-binding
letter of intent ("LOI") with Agnico Eagle Mines Limited
("Agnico Eagle") to acquire Agnico Eagle's indirect 55%
interest in the Barsele Project (the "Proposed
Transaction"). The Company currently holds the remaining
45% interest in the Barsele Project and upon completion of the
Proposed Transaction, would consolidate control of the Barsele
Project. The completion of the Proposed Transaction will be
governed by the terms of a definitive agreement to be entered into
between Barsele and Agnico Eagle.
Gary Cope, President, CEO and a
director of the Company commented, "The opportunity to acquire a
100% controlling interest in the Barsele Project represents a
tremendous milestone for Barsele. We plan to significantly
increase the drilling activity on the project with the goal of
growing the current mineral resource estimates. We are
excited to start a new chapter in the development of the Barsele
Project and are thankful to our joint venture partner Agnico Eagle
for the work we have completed together. We now look forward to
having Agnico Eagle as our largest shareholder."
Sean Boyd, Chief Executive
Officer of Agnico Eagle commented, "We see Barsele's consolidation
of the Barsele Project as a positive outcome for all
stakeholders. The monetization of our interest in the Barsele
Project will allow Agnico Eagle to focus on the most advanced
projects in our exploration and development pipeline, while
retaining an interest in the Barsele Project as a significant
equity investor and royalty holder. We wish Barsele success
as they undertake the next phase of exploration at the project and
are confident that they have the required skill set to continue to
advance the project."
Guy Gosselin, Senior Vice
President, Exploration of Agnico Eagle added, "Agnico Eagle's
Swedish exploration team significantly increased the mineral
resources and geological understanding of the project, while also
building strong social acceptance of the project during this phase
of exploration. I am proud and thankful for what our team has
accomplished and look forward to closing the Proposed Transaction
and watching Barsele's future success at the project."
Terms of the LOI
The LOI provides that the Company and Agnico Eagle will
negotiate and enter into a definitive purchase and sale agreement
containing customary terms and conditions for a transaction of its
nature, whereby Barsele will acquire Agnico Eagle's 55% indirect
interest in Gunnarn Mining AB (which holds the Barsele
Project). The purchase price payable by Barsele to Agnico
Eagle will consist of the following: (i) a cash payment of
US$45,000,000 (the "Cash
Amount"), with the option, at Barsele's election, to settle a
portion of the Cash Amount through a vendor-take-back note; (ii)
the issuance of common shares of Barsele such that Agnico Eagle
will hold 14.9% of Barsele's common shares upon the closing of the
Proposed Transaction (the "Consideration Shares"); (iii) the
issuance of warrants exercisable into 6,000,000 common shares of
Barsele (the "Warrants"); (iv) a 2% net smelter return
royalty on all minerals produced from the Barsele Project (the
"NSR"); and (v) a contingent value right with respect to
future gold mineral reserves and mineral resources identified at
the Barsele Project (the "CVR"). Each Warrant will have a
five year term and will entitle Agnico Eagle to purchase one common
share of Barsele at an exercise price equal to the greater of: (i)
C$1.25, (ii) a 20% premium to the
twenty-day volume weighted average price of the Barsele common
shares immediately prior to the date of issuance of the Warrant,
and (iii) in the event that Barsele issues convertible debt in
connection with its financing of the Cash Amount, the conversion
price of such convertible debt.
The NSR is expected to contain customary terms and conditions,
and Barsele will be able to repurchase 1.0% of the NSR at any time
for US$15 million. There is an
existing 2.0% net smelter return royalty on the Barsele Project
pursuant to an agreement dated June 11,
2015 between Orex Minerals Inc., Gunnarn Mining AB, Agnico
Eagle Sweden AB and Agnico Eagle (the "Existing NSR"), which
includes a repurchase right for US$5,000,000. The LOI anticipates that the
Existing NSR, including the repurchase right, will be assigned and
assumed by Barsele at closing of the Proposed Transaction.
Upon closing of the Proposed Transaction, Barsele will grant
Agnico Eagle the CVR whereby Barsele will agree to pay Agnico Eagle
US$2,500,000 for each additional
1,000,000 ounces of gold mineral reserves and mineral resources
identified at the Barsele Project above the Barsele Project's
current mineral reserves and mineral resources. The CVR will
run with the Barsele Project, but not be payable until the earliest
to occur of: (i) a construction decision on the Barsele Project is
made, (ii) a change of control of Barsele, or (iii) the
10th anniversary of the closing of the Proposed
Transaction. Payments under the CVR will be capped at an
aggregate maximum of US$20,000,000
over the CVR's 20-year term. Also, Barsele may satisfy the
first US$5,000,000 of any future CVR
payments by applying such amount to the repurchase of the Existing
NSR rather than payment of the CVR.
Upon closing of the Proposed Transaction, Agnico Eagle and
Barsele will enter into an investor rights agreement that will
grant Agnico Eagle a participation right in certain future
financings to maintain its pro rata or 14.9% (and following
the exercise of the warrants, 19.9%), whichever is greater,
interest in Barsele, grant Agnico Eagle certain information rights
and grant Barsele a placement right in connection with certain
proposals by Agnico Eagle to sell Barsele common shares.
Barsele intends to finance all or a portion of the Cash Amount
through the issuance of debt and/or equity. Barsele has also
agreed that upon closing of the Proposed Transaction, it will have
no less than C$5,000,000 in working
capital available net of any costs associated with the Proposed
Transaction. Barsele has agreed to use its best efforts to
complete such financings as soon as practicable.
Barsele and Agnico Eagle have agreed to an exclusivity period
ending on July 30, 2021, with a view
to settling the definitive documentation for the Proposed
Transaction by such date. Such exclusivity period may be
extended for an additional 31 days in certain circumstances.
The LOI is non-binding and there can be no assurance that the
Proposed Transaction will be completed as proposed or at all.
The definitive agreements are expected to contain other
representations, warranties, covenants and conditions as are
customary for a transaction of this nature. The closing of
the Proposed Transaction is subject to the completion of due
diligence; the negotiation of the definitive agreement and other
final documentation; compliance with applicable laws in
Sweden relating to the transfer of
the Barsele Project; and corporate and regulatory approvals,
including the approval of the TSX Venture Exchange. 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 news release. The Consideration Shares and
Warrants to be issued to Agnico Eagle are expected to be subject to
a four-month and one day statutory hold period in accordance with
applicable securities law.
Advisors and Counsel
BMO Capital Markets is acting as financial advisor to Barsele in
connection with the Proposed Transaction and Stikeman Elliott LLP
is acting as Barsele's legal advisor.
About the Barsele Project
The Barsele Project is located on the western end of the
Proterozoic "Skellefte Trend", a prolific volcanogenic massive
sulphide deposits belt, that intersects with the "Gold Line" in
Northern Sweden. Both polymetallic deposits and intrusive
hosted orogenic gold deposits are present in this region and on the
property. Current and past producers in the region include
Boliden, Kristineberg, Bjorkdal, Svartliden and Storliden.
About Barsele Minerals Corp.
Barsele is a Canadian-based junior exploration company managed
by the Belcarra Group, comprised of highly qualified mining
professionals. Barsele's main property is the Barsele Gold
Project in Västerbottens Län, Sweden, a joint venture with Agnico
Eagle. An amended NI 43-101 Technical Report on the Barsele
Project with an effective date of February
21, 2019, was filed on SEDAR on December 16, 2020.
Technical Information and Qualified Person
Art Freeze, P.Geo. is a Qualified
Persons as defined in NI 43-101 and takes responsibility for the
technical disclosure contained within this news release.
On Behalf of the Board of
Directors
Gary Cope
President and CEO
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 release.
Forward Looking Statements
This news release contains forward-looking information under
the provisions of applicable Canadian securities legislation.
All statements in this news release, other than statements of
historical fact, are forward-looking information with respect to
Barsele including but not limited to: comments regarding the terms
upon which the Proposed Transaction will be completed; the
potential effects of the Proposed Transaction; potential financings
that will occur in respect of and following the Proposed
Transaction; and the repurchase of the Existing NSR.
Forward-looking information is necessarily based upon a
number of factors and assumptions that, if untrue, could cause the
actual results, performances or achievements of the Company to be
materially different from future results, performances or
achievements expressed or implied by such statements. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which the Company will operate in the future,
including the price of gold, anticipated costs and ability to
achieve goals. In respect of the forward-looking statements
concerning the anticipated completion of the Proposed Transaction,
Barsele has provided them in reliance on certain assumptions that
they believe are reasonable at this time, including assumptions as
to the time required to negotiate a definitive agreement and
complete matters relating to the Proposed Transaction; the ability
of the parties to receive, in a timely manner, the necessary
regulatory, corporate and other third party approvals; and the
ability of the parties to satisfy, in a timely manner, the other
conditions to the closing of the Proposed Transaction.
Forward-looking statements address future events and conditions and
therefore involve inherent risks and uncertainties. Such
factors include, among other things: risks and uncertainties
relating to the Proposed Transaction not closing when planned or at
all or on terms and conditions set forth in the LOI; the failure to
obtain necessary regulatory and third party approvals in order to
proceed with the Proposed Transaction; the benefit of the Proposed
Transaction not being realized; the ability of the Company to
obtain additional financing, the need to comply with environmental
and governmental regulations, fluctuations in the prices of
commodities, operating hazards and risks, competition and other
risks and uncertainties, including those described in the Company's
financial statements, management discussion and analysis
("MD&A") and current annual information form available
on www.sedar.com. The risk factors identified in the
financial statements, MD&A and annual information form are not
intended to represent a complete list of factors that could affect
the Company. Actual results may differ materially from those
currently anticipated in such statements and the Company undertakes
no obligation to update such statements, except as required by
law.
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SOURCE Barsele Minerals Corp.
