Orosur Mining Inc. (TSXV/AIM:OMI) is pleased to announce that further to its news release of March 25, 2024, negotiations of the terms of a definitive binding SPA and ancillary documentation have been successfully completed.
The SPA has now been duly executed and, on the closing of the transaction, the Company will have 100% ownership of the Company’s flagship Anzá Gold Project (“Anzá Project”) in Colombia. Closing of the transaction is subject to customary closing conditions and the approval of the TSXV.
· Negotiations on Share Purchase Agreement (“SPA”) and ancillary documents successfully concluded
· SPA has been signed, subject to customary closing conditions and approval of the TSXV
· Company will reassume 100% ownership of its flagship Anza Gold Project in Colombia with no upfront payments
· Orosur will become operator of the Anza Gold Project
About the Anzá Project
Anzá is a gold exploration project, comprising granted exploration licences and applications for exploration licences in the prolific Mid-Cauca belt of Colombia.
The Anzá Project has been the subject of an Exploration Agreement with Venture Option (“Exploration Agreement”) with Minera Monte Águila S.A.S. (“MMA”). MMA is itself a 50/50 joint venture between Newmont Corporation (“Newmont”) and Agnico Eagle Mines Limited (“Agnico”). MMA is the current operator of the Anzá Project.
The Anzá Project is located 50km west of Medellin and is easily accessible by all-weather roads and boasts excellent infrastructure including water, power, communications as well as a large exploration camp.
Since the Company acquired the Anzá Project in December 2014, almost 48,000m of drilling has been undertaken, mostly on the central APTA prospect where a high-grade body of gold mineralisation had been discovered. The most recent drilling activities were at Pepas in the north of the Anzá Project areas where three holes returned excellent results, the best being 150.9m @ 3g/t Au from surface (hole PEP001, announced on September 6, 2022). On reassuming operatorship of the Anzá Project, the Company’s initial focus will be on the Pepas discovery.
The Company has been on site for some time with its technical staff having established a base at Pepas in order to commence necessary socialisation programs, permitting and logistical planning. This will allow the Company to expeditiously ramp up its exploration activities.
Terms of the Acquisition
Under the SPA, Orosur’s wholly owned Canadian subsidiary, Waymar Resources Ltd., will purchase all of the issued shares of MMA from wholly owned subsidiaries of Newmont and Agnico resulting in Orosur regaining 100% ownership of the Project (the “Acquisition”). No cash is payable up front, with all consideration deferred and wholly contingent upon commercial production from the Anza Project.
The agreed consideration is the NSR Royalties (as defined below) in an aggregate amount of 1.5% on all future mineral production, plus the Fixed Royalties (as defined below) of an aggregate amount of US$75 per ounce of gold or gold equivalent ounce for the first 200,000 gold equivalent ounces of mineral production (the “Fixed Royalties”).
Completion of the Acquisition is subject to customary conditions including the approval of the TSXV. Further details on the Terms of the Acquisition are set out below.
Related Party Transaction
As a substantial shareholder in Orosur, Newmont is considered to be a related party of the Company (as defined in the AIM Rules for Companies) and, accordingly, the Acquisition constitutes a related party transaction pursuant to AIM Rule 13. The board of directors of Orosur, having consulted with SP Angel Corporate Finance LLP, the Company’s Nominated Adviser, considers that the terms of the Acquisition are fair and reasonable insofar as the Company’s shareholders are concerned.
Newmont owns 14.2% of the outstanding common shares of Orosur and owns 50% of the shares of MMA and accordingly the Acquisition constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) and Policy 5.9 of the TSXV Corporate Finance Manual. An exemption from the requirements for a formal valuation of the transaction under MI 61-101 is available pursuant to Section 5.5(b) of MI 61-101 because the Company’s common shares trade solely on the TSXV. Orosur intends to rely on an exemption from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101, as the fair market value of each of (i) the NSR Royalties and the Fixed Royalties, and (ii) the shares of MMA, do not exceed 25% of the Company’s market capitalization, subject to acceptance of the use of this exemption by the TSXV.
In evaluating and approving the SPA and the Acquisition, the board of directors of the Company considered and relied upon a number of factors, including the following: (i) the opportunity for no cash payment on closing to acquire MMA’s 51% earned interest in the Anzá Project, (ii) the opportunity to effectively accelerate MMA’s dilution of its 51% earned interest in the Anzá Project without requiring the significant expenditure on the Anzá Property by Orosur that would have been required under the joint venture agreement, (iii) that the Acquisition includes a number of new applications for licences thereby increasing the potential landholdings held by the Company, (iv) the fairness of the Acquisition to the shareholders of Orosur, (v) the fact that the consideration to indirectly acquire MMA’s interest will only be payable if and when the Anzá Project reaches commercial production, (vi) the ability to buy back a portion of the NSR Royalties and the right of first refusal in favour of Minera Anza should Newmont and Agnico seek to sell their NSR Royalties to a third party, and (vii) the ability to resume operatorship of the Anzá Project as a 100% owner and the ability to seek potential partners for part or all of the Anza Project. The board of directors of the Company was unanimous in its approval of the SPA and the Acquisition
The purpose of the Acquisition is to acquire 100% of the Anzá Project through the indirect acquisition of MMA’s 51% earned interest with no cash payment at closing and to reassume operatorship of the Anzá Project.
Orosur CEO Brad George commented:
“We are thrilled to be finally getting Anzá back – an exciting project at an exciting time in the precious metals space. In anticipation of successful completion, we had already begun the field planning process, so all is now in place and we are ready to start work.”
Further AIM Rules Schedule Four Disclosures
Upon completion of the Acquisition, as set out in the SPA and described above, the parties will enter into an intercreditor agreement and a pledge agreement in respect of the NSR Royalties, the effect of which is to secure future payments of the NSR Royalties in favour of Newmont and Agnico.
The carrying value of the Anzá Project, as set out in the (unaudited) financial statements of Orosur as at February 29, 2024, was US$3.7 million. All qualifying expenditures attributable to the Anzá Project are covered by MMA under the Exploration Agreement. In the year ended December 31, 2023, MMA’s capitalised costs and investment attributable to the Anzá Project amounted to US$17.7 million.
For further information, visit www.orosur.ca, follow on X @orosurm or please contact:
Orosur Mining Inc
Louis Castro, Chairman
Brad George, CEO
Tel: +1 (778) 373-0100
