Aura Energy Limited (AURA.L) signs C$4.5m gold funding deal term sheet

Aura Energy Limited (AEE) is pleased to advise that it has signed a C$4.5 million (A$4.8 million) funding term sheet for the creation of a joint venture vehicle with TSX-listed Chilean Metals Inc (“Chilean Metals or Chilean”) for Aura’s gold, base and battery metal tenements in Mauritania. The deal is subject to due diligence and as such is non-binding.

Aura’s Tasiast South tenements over 435 km2 are in a highly prospective area lying on two lightly explored mineralised greenstone belts in Mauritania (See Fig 3). The areas lie along strike from Kinross’ giant +20 Moz Tasiast Gold Mine, where Kinross has recently announced that it will expand gold production to 530,000 ounces per year.

Aura maintains that these tenements, also with strong base and battery metal results, represent some of the best under-explored greenstone belt targets in the world.

The transaction, which remains subject to due diligence, will see Aura progressively vend its Mauritanian gold and base metal licences into a joint venture vehicle (PubCo) with Chilean contributing four scheduled cash payments totalling C$4.5 million before October 2021. The third and fourth Chilean payments will be at their election.

Assuming Chilean invests C$4.5 million in cash into PubCo, Aura will own 50% of PubCo and Chilean will own 50%. Aura will also receive 1,000,000 shares in Chilean Metals as part of the transaction. Chilean may source the required funding from its own corporate sources or individual investors with the payment schedule by Chilean into the new vehicle as follows:

· C$1.5 million – On or before 31st August 2020 (on execution of binding documentation)

· C$1.0 million – 30 January 2021 (or sooner)

· C$1.0 million – 1 June 2021 (at Chilean’s election)

· C$1.0 million – 1 October 2021 (at Chilean’s election)

Given the non-binding nature of this agreement, there can be no assurance at this stage that the transaction will proceed.

Aura Energy Executive Chairman Mr Peter Reeve said “Aura has maintained an exceptionally strong belief in these extremely under-explored greenstone belts given the high-quality preliminary gold and base metal exploration results achieved. This substantial funding package from a group of seasoned resource investors/developers will help reveal their true potential. With the Tasiast Gold Mine (+400,000 ozs pa) on the same belt just north of our project, the potential for multi-million-ounce discoveries is, in the eyes of our technical people, very conceivable”.

“The excellent base metal indications also revealed on these properties, particularly nickel and high-grade cobalt, also highlights the broader potential of these properties on a similar basis as the Kalgoorlie region in Western Australia where significant gold and base metal discoveries have been made in similar Archean Greenstone settings.

“Aura is very pleased that Chilean Metals has recognised the attributes of this geological belt and welcomes Chilean into this project. Chilean’s understanding of what it takes to enable mineral discovery and their connection to important gold investment sources will be important ingredients in this transaction. The current global economic environment is driving the gold price and provides the perfect environment for a separate vehicle to hold these strongly undervalued assets”.

The key terms of the deal are as follows:

· Chilean invests C$4.5 million before October 2021 into PubCo

· Aura contribute 100% of its gold and base metal tenements

· Aura receive 1,000,000 shares in Chilean Metals

· Aura and Chilean will eventually hold 50% each in the JV vehicle

· Aura will hold 3 board seats in PubCo and Chilean 2 board seats

· It is intended that PubCo will be listed on the TSX-V exchange

· Aura will provide the management and technical team for the vehicle

· Aura will receive a mutually agreed management fee for operating the vehicle

· The deal remains subject to due diligence and will remain non-binding until the definitive agreement is executed.

Aura and Chilean will seek to finalise a definitive agreement for the transaction no later than 31St August 2020.


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