TORONTO, Sept. 11, 2020 /CNW/ - Argonaut Gold
Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
is pleased to announce it has entered into a definitive agreement
for the sale of its Ana Paula gold development project located in
the Guerrero Gold belt of Mexico
(the "Ana Paula Project"). Total consideration to
Argonaut includes:
- US$30 million on closing;
- C$10 million upon the
announcement of commencement of construction;
- A 1% net smelter returns royalty; and
- 9.9% of the outstanding common shares of the acquiring company,
which will be formed by a business combination of 1252201 BC Ltd
("AP Mining") and Pinehurst Capital II Inc. ("Pinehurst"), creating
a new publicly traded gold development company (the "Resulting
Issuer").
Pete Dougherty, President and CEO
stated: "When you consider the value of Alio Gold when we announced the at-market merger
less than six months ago, you can begin to recognize the tremendous
value-creation opportunity Argonaut's board and management saw at
the time of the merger. The proceeds of this transaction
support Argonaut's focus on the development of our Magino gold
project in Ontario, Canada by
providing upfront capital while still providing Argonaut
shareholders with upside participation in the Ana Paula Project
through Argonaut's equity ownership in the Resulting Issuer, a
contingent payment upon a construction announcement and a royalty.
Bruce Bragagnolo, the CEO of the Resulting Issuer, was the
former CEO of Timmins Gold Corp., a former owner of the Ana Paula
Project."
Sale Agreement
Argonaut has entered into a definitive agreement with AP Mining
dated September 10, 2020 (the
"Argonaut Agreement") for the sale of all of the issued and
outstanding shares of Aurea Mining Inc. and its wholly-owned
subsidiary Minera Aurea S.A. de C.V. (the Ana Paula Project
holder).
AP Mining has in turn entered into a definitive agreement with
Pinehurst dated September 10, 2020 (the "AP Mining Agreement"),
pursuant to which Pinehurst and AP
Mining have agreed to complete a business combination (the
"Qualifying Transaction") whereby Pinehurst will be the parent company and 100%
of the issued and outstanding securities of AP Mining will be owned
by the Resulting Issuer, conditional on the completion by AP Mining
of the acquisition of the Ana Paula Project pursuant to the terms
of the Argonaut Agreement.
Under the terms of the Argonaut Agreement, AP Mining will
acquire all of the issued and outstanding shares of Aurea Mining
Inc. and its wholly-owned subsidiary Minera Aurea S.A. de C.V. for
an aggregate purchase price comprised of, in part, US$30 million in cash on closing, a promissory
note in the amount of C$10 million
payable on the date on which the Resulting Issuer announces the
commencement of construction at the Ana Paula Project, a 1% net
smelter returns royalty and such number of common shares of the
Resulting Issuer as is equal to 9.9% of the outstanding common
shares of the Resulting Issuer immediately following the completion
of the Qualifying Transaction. Closing of the transactions
set out in the Argonaut Agreement are subject to a number of
conditions including regulatory approval, including TSX Venture
approval, approval of the Qualifying Transaction and successful
completion of the capital raising in connection with the Qualifying
Transaction.
Upon completion of the Qualifying Transaction, Bruce Bragagnolo will serve as the Chief
Executive Officer and a director of the Resulting Issuer, with the
remaining management team and directors to be determined prior to
the completion of the Qualifying Transaction.
Mr. Bragagnolo was the co-founder and Chief Executive Officer of
Timmins Gold Corp. Mr. Bragagnolo took Timmins Gold Corp.
from its IPO to commercial production and its listing on the
NYSE-MKT. While he was CEO, Timmins Gold Corp. built the San
Francisco Mine in Mexico. Mr. Bragagnolo led the purchase of
the Ana Paula Project by Timmins Gold Corp. in 2015.
Cautionary Note Regarding Forward-looking
Statements
This press release contains certain
"forward-looking statements" and "forward-looking information"
under applicable Canadian securities laws concerning the proposed
transaction and the business, operations and financial performance
and condition of Argonaut Gold Inc. ("Argonaut" or "Argonaut
Gold"). Forward-looking statements and forward-looking
information include, but are not limited to, uncertainties related
to the Argonaut Agreement and the Qualifying Transaction and the
successful approval and completion of the transactions described
therein; commodity price volatility; uncertainty of exploration and
development; uncertainty in the estimation of Mineral Reserves and
Mineral Resources; permitting risk; mineral and surface rights;
statements with respect to estimated production and mine life of
the various mineral projects of Argonaut; the benefits of the
development potential of the properties of Argonaut; the future
price of gold, copper, and silver; the realization of mineral
reserve estimates; the timing and amount of estimated future
production; costs of production; success of exploration activities;
and currency exchange rate fluctuations. Except for
statements of historical fact relating to Argonaut, certain
information contained herein constitutes forward-looking
statements. Forward-looking statements are frequently
characterized by words such as "plan," "expect," "project,"
"intend," "believe," "anticipate", "estimate" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made, and are based on a number of assumptions and subject to a
variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those
projected in the forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of Argonaut and there is no assurance they will prove to be
correct.
Factors that could cause actual results to vary materially from
results anticipated by such forward-looking statements include
changes in market conditions; the ability to obtain regulatory
approvals and the conditions therefor; the timing and ability to
successfully complete elements of the Qualifying Transaction,
including regulatory approvals, shareholder approvals and capital
raisings; variations in ore grade or recovery rates; risks relating
to international operations; fluctuating metal prices and currency
exchange rates; possible exposure to undisclosed risks of
liabilities arising in relation to recent transactions; changes in
project parameters; the possibility of project cost overruns or
unanticipated costs and expenses; labour disputes and other risks
of the mining industry; failure of plant, equipment or processes to
operate as anticipated. Although Argonaut has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or
intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Argonaut undertakes no obligation to update
forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to
place undue reliance on forward-looking statements. Statements
concerning mineral reserve and resource estimates may also be
deemed to constitute forward-looking statements to the extent they
involve estimates of the mineralization that will be encountered if
the property is developed. Comparative market information is
as of a date prior to the date of this document.
About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration,
mine development and production. Its primary assets are the
El Castillo mine and San Agustin mine, which together form the El
Castillo Complex in Durango,
Mexico, the La Colorada
mine in Sonora, Mexico and the
Florida Canyon mine in Nevada,
USA. Advanced exploration projects include the Magino project
in Ontario, Canada, the Cerro del
Gallo project in Guanajuato,
Mexico and the Ana Paula project in Guerrero, Mexico. The Company holds
several other exploration stage projects, all of which are located
in North America.
For more information, contact:
Argonaut Gold Inc.
Dan Symons
Vice President, Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
1252201 BC Ltd.
Bruce Bragagnolo
CEO
Phone: 604-417-9517
Email: brucebrag@gmail.com
Source: Argonaut Gold Inc.
SOURCE Argonaut Gold Inc.