TORONTO, June 30, 2020 /CNW/ - Karora Resources Inc. (TSX:
KRR) ("Karora" or the "Corporation") and Maverix Metals Inc. (NYSE
American & TSX: MMX) ("Maverix") are pleased to announce an
agreement to reduce the gold royalty at Karora's Beta Hunt mine
which, at closing, will create a strategic partnership aligning
both parties in unlocking the significant value at Beta Hunt for
their respective shareholders. Maverix has agreed with Karora to
reduce the royalty on Beta Hunt gold production from 7.5% to 4.75%
effective July 1, 2020. The reduced
royalty burden on the Beta Hunt mine will allow both Karora and
Maverix shareholders to benefit from a renewed focus on
exploration, development and potential future production growth at
Beta Hunt.
As consideration for the reduction, Karora will pay US$5 million in cash and issue 35.1 million
common shares at C$0.506 per share
(the "Share Consideration") to Maverix. The shares are being priced
based on the 20-day VWAP of the Karora common shares on the Toronto
Stock Exchange to the close of trading on June 26, 2020. The US$5
million in cash will be paid in two equal installments of
US$2.5 million, with the first such
payment to be made on closing and the second payment to be made in
January 2021.
Closing of the transaction is subject to the receipt of
necessary third party approvals (including of the TSX), execution
of definitive documentation and other conditions which are
customary for a transaction of this nature. The Karora common
shares to be issued pursuant to this transaction will be subject to
certain restrictions on trading during the period ending
June 30, 2021, provided that Maverix
will be subject to certain orderly disposition rights of
Karora.
Paul Andre Huet, Chairman &
CEO of Karora, commented: "Since I accepted the role of Karora CEO,
we have consistently stated that one of our goals is to reduce our
overall AISC including a reduction in royalties. As such we are
extremely pleased to have reached a mutually beneficial agreement
with Maverix to reduce the royalty burden at Beta Hunt. We see the
reduction of the Beta Hunt royalty as the next transformative
transaction following tremendous success with the former Morgan
Stanley royalty at our Higginsville property. For the first time in
over seven years, a significant portion of the royalty burden on
exploration and production has been lifted at Beta Hunt. This
transformative agreement will unlock value for both Karora and
Maverix shareholders by allowing our strong operational team to
develop Beta Hunt to its full potential. It is important to
remember that with respect to gold mining, Beta Hunt is still in an
early stage of development with vast additional exploration
potential for resource growth. We look forward to continue working
with our partner, Maverix, to exploit the exciting potential at
Beta Hunt.
Daniel O'Flaherty, CEO &
Director of Maverix, commented: "We are happy to support Karora's
long term vision of Beta Hunt and to participate in that future not
only as a continuing royalty holder, but also as a strategic
partner. We look forward to management unlocking the significant
geologic and production upside potential at Beta Hunt and are
enthused to provide additional incentive to Karora to maximize this
value for the benefit of both Maverix and Karora shareholders. We
are very pleased to be a part of a win-win transaction".
About Karora Resources
Karora is focused on growing gold production and reducing costs
at its integrated Beta Hunt Gold Mine and Higginsville Gold
Operations ("HGO") in Western
Australia. The Higginsville treatment facility is a low-cost
1.4 Mtpa processing plant which is fed at capacity from Karora's
underground Beta Hunt mine and open pit Higginsville mine. At Beta
Hunt, a robust gold mineral resource and reserve is hosted in
multiple gold shears, with gold intersections along a 4 km strike
length remaining open in multiple directions. HGO has a substantial
historical gold resource and highly prospective land package
totaling approximately 1,800 square kilometers. In addition, Karora
has a 28% interest in a nickel joint venture that owns the Dumont
Nickel-Cobalt Project located in the Abitibi region of Quebec. Dumont contains the second largest
nickel reserve and ninth largest cobalt reserve in the world.
Karora has a strong Board and management team focused on delivering
shareholder value. Karora's common shares trade on the TSX under
the symbol KRR. Karora shares also trade on the OTCQX market under
the symbol KRRGF.
About Maverix Metals
Maverix is a gold-focused royalty and streaming company with a
globally diversified portfolio of over 100 assets. Maverix's
mission is to increase per share value by continuing to add new
precious metals royalties and streams. Its shares trade on both the
NYSE American and the Toronto Stock Exchange under the symbol
"MMX".
Cautionary Statement Concerning Forward-Looking
Statements
This release contains certain "forward looking statements"
and certain "forward-looking information" as defined under
applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "should",
"expect", "intend", "estimate", "anticipate", "believe",
"continue", "plans" or similar terminology. The forward-looking
information contained herein is provided for the purpose of
assisting readers in understanding management's current
expectations and plans relating to the future. Readers are
cautioned that such information may not be appropriate for other
purposes. Forward-looking statements and information include, but
are not limited to, statements with respect to the closing of
transaction involving the reduction of the royalty on Beta Hunt
gold production and the payment of the cash
consideration.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Although Karora 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 to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
Cautionary Statement Regarding the Higginsville Mining
Operations
A production decision at the Higginsville gold operations was
made by previous operators of the mine, prior to the completion of
the acquisition of the Higginsville gold operations by Karora and
Karora made a decision to continue production subsequent to the
acquisition. This decision by Karora to continue production and, to
the knowledge of Karora, the prior production decision were not
based on a feasibility study of mineral reserves, demonstrating
economic and technical viability, and, as a result, there may be an
increased uncertainty of achieving any particular level of recovery
of minerals or the cost of such recovery, which include increased
risks associated with developing a commercially mineable deposit.
Historically, such projects have a much higher risk of economic and
technical failure. There is no guarantee that anticipated
production costs will be achieved. Failure to achieve the
anticipated production costs would have a material adverse impact
on the Corporation's cash flow and future profitability. Readers
are cautioned that there is increased uncertainty and higher risk
of economic and technical failure associated with such production
decisions.
SOURCE Karora Resources Inc.