VANCOUVER, Jan.15, 2016 /CNW/ -
Equitas Resources Corp. (TSXv: EQT) (FSE: T6UN) (US: EQTRF)
("Equitas" or the "Company") is pleased to announce that it has
entered into a binding letter agreement dated effective
January 6, 2016 to acquire (the
"Transaction") all of the issued and outstanding securities of Alta
Floresta Gold Ltd. ("Alta Floresta Gold").
Alta Floresta Gold is a private British Columbia company which holds
approximately 60% of Alta Floresta Gold
Mineração Ltd. ("Alta
Floresta Mineração"). Alta Floresta
Mineração holds six gold properties, and four production
licences, over 184,410 hectares of land in the Mato Grosso, and Para states of the Federative
Republic of Brazil. Licence
areas are highly prospective, with previous artisanal mining
activity. Alta Floresta
Mineração is focused on expanding the production
activities and defining additional gold resources at its Cajueiro
Project (the "Cajueiro Project").
"In Alta Floresta Gold, we have identified an excellent
opportunity that will allow us to leverage its current small scale,
low cost, gold production into a much larger operation in the near
future." stated Kyler Hardy,
President and Director of Equitas. "By incorporating the
highly skilled senior management team of Alta Floresta Gold into
Equitas, we gain an experienced South American operating team that
will advance the Cajueiro Project. Following closing of the
transaction, Equitas will be a stronger company with quality gold
and nickel assets as well as cash flow. This transaction is
in line with our corporate strategy to acquire exceptional property
holdings in highly prospective and proven districts. Equitas
will also continue an aggressive exploration program on its highly
prospective Garland nickel property in the Voisey's Bay district in
Labrador, Canada."
"We are very pleased to finalise this letter agreement with
Equitas, commented Chris Harris,
Executive Chairman & Director of Alta Floresta Gold. "This
transaction underlines the core value of the Alta Floresta
portfolio and especially of our fast-track gold development target
at Cajueiro which is already in production. With the depth of
our combined management team, we stand poised to create strong
value for shareholders as well as to bring employment and business
to Brazil. We intend to build on
our in-house portfolio development pipeline, by acquiring selected
value accretive neighbouring gold resources in Brazil to build a strong, cash flow
generating gold junior with attractive growth prospects."
The Cajueiro Project
The Cajueiro Project encompasses 44,768 hectares and is located
95 kilometers north of the city of Alta Floresta in the Federative
Republic of Brazil. The project straddles the border of the
Para and Mato Grosso states in the
prolific Juruena Belt of Brazil.
To date, 48 drill holes for a total of 11,292 metres have tested
four zones: Marines, Baldo, Matrincha, and Crente. At
the Crente zone, the work has outlined an indicated and an inferred
resource, while inferred resources were calculated for the Marines,
Baldo and Matrincha zones. All of these zones have near surface
oxide potential expansion. Exploration over the last five years has
identified five further anomalies within the property package that
have similar surface expression to the Crente target.
A resource estimate was prepared by Gustavson Associates of
Boulder, Colorado in accordance
with the definitions in the National Instrument 43-101 ("NI
43-101") in a report titled "NI 43-101 Technical Report on
Resources, Cajueiro Project States of Mato Grosso and Para, Brazil effective March
22, 2013.
An updated NI 43-101 Technical Report is being prepared for
Equitas and will be filed on www.sedar.com within the time periods
required under NI 43-101 and will be available on the Company's
website.
The details of the NI 43-101 Technical Report are summarized
below:
Table 1. Indicated and Inferred Resources at Crente
zone.
Indicated
Resources
|
Inferred
Resources
|
Cut off
Grade
(g/t)
|
Tonnes
(000s)
|
Gold
(g/t)
|
Contained Oz Au
(000s)
|
Cut off
Grade
(g/t)
|
Tonnes
(000s)
|
Gold
(g/t)
|
Contained Oz Au
(000s)
|
0.5
|
4,529
|
1.2
|
168.0
|
0.5
|
3.025
|
1.0
|
100.3
|
0.3
|
7,400
|
0.9
|
203.0
|
0.3
|
5,261
|
0.8
|
127.4
|
Table 2. Inferred Resources at Baldo, Matrincha and
Marines zones.
|
Inferred
Resources
|
Zone
|
Cut off
Grade
(g/t)
|
Tonnes
(000s)
|
Gold
(g/t)
|
Contained Oz
Au
(000s)
|
Baldo
|
0.3
|
1,411
|
1.3
|
61.1
|
Matrincha
|
0.3
|
1,565
|
1.1
|
52.9
|
Marines
|
0.3
|
1,167
|
0.7
|
27.2
|
Oz Au = Gold-equivalent ounces.
All quantities are rounded to the appropriate number of
significant figures; consequently sums may not add up due to
rounding. All resources reported above for the Baldo,
Matrincha and Marines zones are inferred resources. Mineral
resources are not mineral reserves and do not have demonstrated
economic viability. There is no certainty that all or any part of
the mineral resource will be converted into mineral reserves.
Alta Floresta Gold started processing alluvial gold
mineralization in the Baldo zone in June
2015 with modest gold production to date.
Equitas Resources intends to embark on a three phase development
plan at the Cajueiro Property. First, the Company plans to
install a small gravity plant to process the saprolite
mineralization at the Baldo zone.
Once permits and the necessary supply agreements are in hand,
the second phase of the plan envisions the construction of a
carbon-in-leach plant between the Baldo and Crente zones. These two
zones are less than 1 km apart. Initial metallurgical test
work indicates that in excess of 85% gold recovery can be achieved
through gravity separation and cyanide leaching.
The third phase would be to increase production at the Cajueiro
Project under a full production licence. The Company expects
that this could be funded through operating cash flow.
Everett F. Makela, P. Geo., VP
Exploration for Equitas Resources Corp., a Qualified Person as
defined by National Instrument 43-101, has approved disclosure of
the technical information in this news release.
Transaction Summary
A summary of the transaction is as follows:
- Equitas will acquire 100% of the issued and outstanding shares
of Alta Floresta Gold from its security holders in exchange for
that number of Equitas shares that is equal to 100% of the issued
and outstanding Equitas shares at closing.
- Upon closing, (i) Alta Floresta Gold will become a wholly-owned
subsidiary of Equitas, and (ii) former shareholders of Alta
Floresta Gold will hold approximately 50% of the outstanding shares
of the Company (without giving effect to any issuances of Equitas
shares prior to or concurrent with closing). No new insiders or
control persons will be created as a result of the
Transaction.
- Each unexercised stock option in Alta Floresta Gold will be
exchanged for or replaced with approximately 1.5 options of Equitas
at a price of $0.15 per share.
- Equitas Resources will segregate up to USD$1 million to be applied on closing
exclusively to advance the Alta Floresta Gold projects. Subject to
TSX Venture Exchange (the "Exchange") approval, US$300,000 of this will be advanced to Alta
Floresta Gold following completion of Equitas' technical due
diligence and licence review.
- Prior to closing, Alta Floresta Gold will use commercially
reasonable efforts to become the legal and beneficial owner of 100%
of the issued and outstanding equity interests of Alta Floresta Mineração. Alta Floresta
Gold invested in Alta Floresta Mineração in June 2014, under an investment agreement (the
"Underlying Investment Agreement") with ECI Exploration and Mining
Inc. ("ECI"), and other ECI related parties, all of which are at
arm's length to Alta Floresta Gold. Pursuant to the Underlying
Investment Agreement, Alta Floresta Gold has the right to farm-in
to Alta Floresta Mineração up to a 70% equity interest (currently
approximately 60% held), and has taken operational control of the
Alta Floresta Mineração business and board. Alta Floresta Gold has
the right of first refusal on any sale of the remaining ECI
interest, and has the ability through further un-matched
investment, to dilute the ECI interest down to a level (10%) at
which the ECI interest would convert to a 1.25% NSR.
Alta Floresta Gold will have net positive working capital at
closing of the Transaction. Equitas will be assuming long term
deferred license fees of approximately US$38,000 (as at September
30, 2015) payable by Alta Floresta Gold.
The proposed Transaction is subject to a number of terms and
conditions, including but not limited to (i) the entering into by
the parties of a definitive agreement with respect to the
Transaction (such agreement to include representations, warranties,
conditions and covenants typical for a transaction of this nature),
(ii) the absence of any material adverse change in either party,
(iii) the completion of satisfactory due diligence
investigations by both parties, (iv) the approval of the directors
of each of the Company and Alta Floresta Gold, (v) the completion
by Equitas of a private placement generating minimum proceeds of
$2,500,000 and (vi) the approval of
the Exchange.
The parties have agreed that during the period from signing the
letter agreement through to execution of the definitive agreement,
each of the parties will continue their respective operations in
the ordinary course and will not solicit or accept alternative
offers. Subject to satisfactory completion of due diligence, the
parties expect to execute the definitive agreement by January 31, 2016 and have agreed to use
their best efforts to complete the Transaction by February 19, 2016 or as soon as reasonably
practicable thereafter.
The proposed Transaction will constitute a Reviewable
Transaction pursuant to the policies of the Exchange. The
proposed Transaction is an arm's length transaction. The
Company will not be required to obtain shareholder approval of the
Transaction.
No finder's fees are payable in connection with the
Transaction.
Further details concerning the Transaction will be announced if
and when a definitive agreement is reached.
Proposed Management of the Company
Subject to Exchange approval, on completion of the Transaction,
it is proposed that the new management be constituted from the two
entities, with the new board of directors and technical management
team being as follows:
Kyler Hardy – Chairman and
Director
Mr. Hardy is a seasoned and successful entrepreneur
who has been involved in mineral exploration and the mining
industry for over 15 years. He is a founder and former CEO of
a geosciences and logistics management business which specializes
in the exploration and development of projects in remote areas. Mr.
Hardy is experienced in project generation, exploration management,
logistics, raising capital, corporate development and developing
alliances and strategic partnerships.
Chris Harris – President,
Chief Executive Officer and Director
Mr. Harris has over 29
years' experience in mining finance, energy, and commodities with
multiple principal investments and director roles and is a Fellow
Chartered Accountant (FCA). After qualifying at Ernst & Young
in London, Mr. Harris moved to
CIBC Wood Gundy in 1991, becoming Director Project Finance in the
Energy & Utilities sector. After three years at Enron Europe
where he co-ran the European Commodity Finance business, Mr. Harris
moved to BHP Billiton to run a global mining merchant investment
business for eight years. He then spent three years heading
upstream investments for GMI Resources, a shipping hedge fund. Mr.
Harris is co-founder of Alta Floresta Gold.
Alan Carter –
Director
Dr. Carter has 30 years of experience in the
minerals exploration industry. He spent seven years working for Rio
Tinto Corp. in South America and
the United Kingdom. Dr. Carter
joined Billiton Plc in 1998, and in 2000 moved from Lima, Peru to Vancouver. Following the merger of
Billiton with BHP, he assumed the role of Manager, Business
Development within the BHP Billiton Exploration Group. He was
the Chief Operating Officer of Peregrine Diamonds Ltd. from
mid-2004 to late 2006. Dr. Carter is currently CEO and Director of
Magellan Minerals Ltd, and a director of Peregrine Diamonds Ltd. He
has a B.Sc. degree in Geology from the University of Nottingham, and a Ph.D. from the University of
Southampton, U.K.
David Hodge –
Director
Mr. Hodge, President and Director of Zimtu Capital
Corp, has an extensive background in business that includes over 20
years of experience in the management and financing of
publicly-traded companies. Mr. Hodge has been a director of mineral
exploration companies since 1986, and some of his many strengths
lie in leadership and imaginative direction. His success has been
founded on a belief in team building, consultation and strong
leadership, as well as a willingness to incorporate expert advice
into a viable working enterprise.
Michael Bennett – Technical
Advisor, Director and Officer of Alta
Floresta Mineração
Mr. Bennett is a senior
geologist with 30 years of experience in the minerals exploration
industry (24 of these years in South
America). He is currently General Manager for the
Brazil Manganese Corp in Rondonia Brazil, and was VP Exploration of
ECI Exploration and Mining Inc. from 2009 to 2014. He has been
responsible for 3 gold discoveries in South America: Bolivia - Puquio North (0.5Moz);
Brazil - Coringa (1.1Moz),
and Cajueiro.
Everett Makela – VP of
Exploration
Mr. Makela brings over 30 years of exploration
experience to the team. During a career with Inco and Vale, Everett
held roles of increasing responsibility in settings ranging from
grassroots evaluations to near-mine resource definition. He excels
at target generation, design and implementation of exploration
programs, and the creation of joint venture and alliance
opportunities. Everett holds an Honours Bachelor of Science in
Geology from Laurentian University, and
is a member of APGO, PEGNL, PDAC and SEG. He retired from Vale as
Principal Geologist, North America
in 2012.
For further information please visit the Equitas Resources
website at: www.equitasresources.com.
On Behalf of the Board of Directors,
EQUITAS RESOURCES CORP.
"Kyler Hardy"
Kyler
Hardy
President
Tel: 604.681.1568
Email: info@equitasresources.com
All information contained in this news release with respect
to Equitas and Alta Floresta Gold was supplied by the parties
respectively, for inclusion herein, and Equitas and its directors
and officers have relied on Alta Floresta Gold for any information
concerning Alta Floresta Gold.
Neither TSX Venture Exchange nor it 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 statements relating
to the timing and completion of the proposed Transaction, the
future operations of the Company and other statements that are not
historical facts. Forward-looking statements are often identified
by terms such as "will", "may", "should", "anticipate", "expects"
and similar expressions. All statements other than statements of
historical fact, included in this release, including, without
limitation, statements regarding the proposed Transaction and the
future plans and objectives of the Company, are forward-looking
statements that involve risks and uncertainties. There can be no
assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual results to differ materially from the Company's expectations
include the failure to satisfy the conditions to completion of the
Transaction set forth above and other risks detailed from time to
time in the filings made by the Company with securities
regulations.
The reader is cautioned that assumptions used in the preparation
of any forward-looking information may prove to be incorrect.
Events or circumstances may cause actual results to differ
materially from those predicted, as a result of numerous known and
unknown risks, uncertainties, and other factors, many of which are
beyond the control of the Company. As a result, the Company cannot
guarantee that the proposed Transaction will be completed on the
terms and within the time disclosed herein or at all. The
reader is cautioned not to place undue reliance on any
forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement. The
forward-looking statements contained in this news release are made
as of the date of this news release and the Company will update or
revise publicly any of the included forward-looking statements as
expressly required by Canadian securities law.
SOURCE Equitas Resources Corp.