Condor Gold PLC (CNR.TSX.L) Purchase of New SAG Mill from First Majestic Silver Corp

Condor Gold (AIM: CNR; TSX: COG) is pleased to announce that it has entered into an agreement to purchase a complete new Semiautogenenuous Mill (“SAG Mill”) package from First Majestic Silver Corp (“First Majestic”) (TSX:FR).

The purchase consideration is approximately US$6.5 million, including US$3.0 million payable in shares of the Company (the “Consideration Shares”). The SAG Mill package represents a key item of the plant required to bring the Company’s La India Project into production. The SAG Mill is estimated by Metso Outotec’s technical support group to have a throughput of up to 2,300 tonnes per day (“tpd”) or 0.8 million tonnes per annum (“tpa”) on a sustained basis, based on the metallurgical characteristics of the ore and mineralised material at Condor’s La India Project. Based on internal technical studies and mining dilution studies conducted by SRK Consulting (UK) Limited, initial production is expected to be 80,000 – 100,000 oz gold per annum.


· Condor purchases a complete new SAG Mill package for approximately US$6.5 million

· US$3.0 million worth of Consideration Shares is to be issued immediately at a price of 50 pence per Consideration Share to First Majestic as part consideration. The balance of approximately US$3.5 million to be paid in cash over the next 3-4 months

· SAG Mill and parts are 90% ready to be shipped

· 2,300 tpd capacity or 0.8 Mtpa form Stage 1 of production with capacity to be expanded materially after 2 to 3 years of production

· Initial production expected to be 80,000 – 100,000 oz gold per annum

· Reduces order time of this key long lead item by 12 months

· Sizes the SAG Mill and fast tracks the La India Project to production

· Possibility of increasing throughput by 22% to 2,850tpd by installing a larger motor

Mark Child, Chairman and CEO commented:

“The key message is Condor has purchased and sized the mill at 2,300tpd, significantly shortened the mill delivery time, set a trajectory for detailed project design and an accelerated path to production. What’s more, Condor has acquired a state of the art, complete new SAG Mill package with warrantees, manufactured and supplied by Metso Outotec, the premier manufacturer of grinding mills and entire grinding systems for the global mining industry. Metso Outotec’s technical support group has estimated a throughput of 2,300 tpd or 0.8Mtpa on a sustained basis using the existing motor. Increasing the motor size would increase throughput to 2,850 tpd. Initial gold production is expected to be between 80,000 to 100,000 oz gold per annum. The new SAG Mill forms stage 1 of production, the aim is to materially expand production capacity after 2-3 years.

I am also delighted that First Majestic Silver Corp has given a vote of confidence to Condor’s management team and endorsed a new mine at the fully permitted La India Project by accepting part payment in Condor’s shares at 50p. The Board joins me in welcoming them as a shareholder.”


First Majestic ordered a complete new SAG Mill package which is now superfluous to their requirements. Condor contacted Metso Outotec, who design and manufacture a comprehensive line of grinding mills and entire grinding systems for mining companies around the world, to enquire about ordering a new mill for La India Project. During the discussions, it emerged that First Majestic had ordered a new Mill from Metso Outotec which it no longer required. Condor has subsequently reached a definitive agreement to purchase the new SAG Mill from First Majestic. The warranties for the new Mill will be assigned to Condor. Manufacturing of the SAG Mill and component parts are approximately 90% complete and ready to ship. The lead time to produce detailed engineering designs for a new purpose built mill is approximately 12-16 weeks. Lead times for the manufacture of a new mill is currently estimated to be approximately 40-45 weeks. Condor’s purchase of this new mill from First Majestic reduces the time for delivery of a SAG Mill to La India Project by approximately 12 months.

Purchase Consideration

The purchase consideration of US$6,500,208 is to be satisfied as follows:

· US$3.0 million by the issue to First Majestic of new ordinary shares of Condor Gold Plc at an issue price of 0.50 pence per ordinary share: being 4,304,778 Consideration Shares, which will be admitted to trading on AIM on or around 18 March 2021.

· US$1,448,570 in cash on completion, being defined as the date of the acquisition agreement.

· US$2,051, 638 in a deferred cash consideration upon certain milestones including shipment and delivery of the SAG Mill and associated equipment. Payment is expected to be made over the next 3-4 months.

The Consideration Shares will rank pari passu with the existing ordinary shares in the capital of the Company, including the right to receive all dividends and other distributions declared after the date of their issue.

Application has been made for admission of the Consideration Shares to trading on AIM (“Admission”). Following Admission, the Company will have 134,824,179 ordinary shares of 20p each in issue with voting rights and admitted to trading on AIM and this figure may be used by shareholders in the Company as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

The cash component of the purchase consideration will be funded from internal resources. Following the placement raising £4 million in February 2021, Condor had a net cash position of approximately US$11 million at the end February 2021.

Details of the complete SAG Mill package

The SAG Mill has a mill diameter of 24 feet and an Effective Grinding Length (“EGL) of 18.5 feet and a structural charge mass of 315 metric tonnes. The structural design ball charge is 11% with a structural design load volume of 35%. Specific gravity of the material is 2.55. The structural steel liner mass is 240 metric tonnes; however, with the use of lighter composite liners the weight and corresponding power requirement can be reduced significantly to 120 metric tonnes.

The complete SAG Mill package manufacturered and supplied by Metso Outotec includes:

· Mill shell fabricated in 8×90° segments

· Mill heads cast in 4×90° segments with demountable trunnions

· Ductile ring gear and carbonized pinion shaft

· Pinion shaft assembly equipment

· Erection cradles

· Bracket, coupling and guard

· Pinion bearings-2-pad polymer hydrostatic bearings

· Transformer for the mill

· Gear unit, steelguard and fasteners

· Allen Bradley variable speed drive

· Allen Bradley PLC mill local panel

· 3300kW WEG SCIM (motor)

· Bearing housing

· Torque limiter and hubs

· Complete feed assembly. “Rock box” feed chute with replaceable steel wear liners

· Complete discharge assembly. Fabricated discharge cone (no trommel screen) with replaceable rubber wear liners

· Discharge trunnion liner with replaceable rubber wear liners

· Installation materials and some spares

· Trunnion Bearing

· Hydraulic torque wrench kit

· Liner handler

· Howard Marten lubrication systems (trunnion oil lube, reducer/pinion oil lube, gear spray grease lube)

The SAG Mill is paired with a motor with a maximum power rating of 3,300kW. Using a power load of 2,800kW (500kW under the installed power), a 4.5% ball charge, the daily throughput is estimated a 2,300tpd. It is assumed that a pebble crusher will be used in the comminution circuit to provide some additional grinding power and to manage critical size fraction material. The SAG Mill is equipped with a variable speed drive which will allow the mill to operate between 1,500tpd and 2,300tpd. Furthermore, it is possible to increase the daily throughput by increasing the motor size. Preliminary studies have shown that installation of a larger 4,100 kW motor could allow a daily throughput rate to increase by 22% to 2,850tpd, which potentially allows gold production to increase by a similar amount.

Mill Feed and Initial Production Range of 80k to 100k oz gold per annum

Condor has 3 open pits permitted for extraction. The highlights from a RNS dated 6 May 2020 (see announcement for full details) are copied below:

· 1.12 million oz gold open pit Mineral Resources, including Mineral Reserves permitted for extraction and production from 3 open pits

· The permitted La India open pit which hosts 8,377Kt at a grade of 3.1 g/t gold (837,000 oz contained gold) in the Indicated Mineral Resource category and 883Kt at grade of 2.4 g/t gold (68,000 oz contained gold) in the Inferred Mineral Resource category

· The America open pit hosts 114 Kt at a grade of 8.1 g/t gold (30,000 oz contained gold) in the Indicated Mineral Resource category and 677Kt at a grade of 3.1 g/t gold (67,000 oz contained gold) in the Inferred Mineral Resource category

· The permitted Mestiza open pit hosts 92Kt at a grade of 12.1 g/t gold (36,000 oz contained gold) in the Indicated Mineral Resource category and 341Kt at a grade of 7.7 g/t gold (85,000 oz contained gold) in the Inferred Mineral Resource category

· America open pit permitted to deliver robust diluted tonnage of 649Kt at 3.83g/t gold for 80,000 oz gold, complimenting the recently permitted Mestiza open pit permitted to deliver mill feed of 600Kt at 5.76 g/t gold for 111,100 oz gold (See RNS 4 March 2020)

· The addition of a third permitted high grade open pit adds flexibility to the mine schedule, potentially improving project economics and extending the life of mine

Condor’s strategic planning has included running a number of mining scenarios including a high grade mining scenario for the 3 permitted pits. Mining dilution studies have been completed by SRK Consulting (UK) Limited. See RNS dated 4 March 2020 for full details, one of the highlights is:

· “High grade open pit mining scenario delivers a robust diluted tonnage of 1,637Kt at 4.65g/t gold for diluted head grade of 245,000 oz gold derived from the previously reported Indicated and Inferred Mineral Resources”.

Condor currently has 2 drill rigs operating in the La India Starter pits, see RNS dated 9 March 2021 for infill drilling updated and drill results. The circa 3,500 m drill programme is on 25 m x 25 m drill spacing. The La India Starter pits are designed pits. Using a 2.0g/t cut-off grade, the mill feed is estimated at 445Kt at 4.17g/t gold for 59,700 oz gold with a 6.8 to 1 strip ratio. (See RNS for full details).

The purchase of a complete new SAG Mill Package sizes the mill at 2,300tpd or 0.8Mtpa with the existing motor. The installation of a larger 4,100 kW motor could allow a daily throughput rate to increase by 22% to 2,850tpd.

Canadian Securities Considerations

The Consideration Shares will also be listed on the Toronto Stock Exchange (“TSX”) and will be subject to a four-month and one-day hold period, expiring on 16 July 2021. The Company has received conditional Approval from the Toronto Stock Exchange for the issuance of the Consideration Shares and for which the Company is relying on the exemption under Section 602.1 of the TSX Company Manual.

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