TIDMEEE
RNS Number : 1297D
Empire Metals Limited
26 October 2020
To view the announcement with the illustrative maps and diagrams
please use the following link:
http://www.rns-pdf.londonstockexchange.com/rns/1297D_1-2020-10-25.pdf
Empire Metals Limited / AIM: EEE / Sector: Natural Resources
26 October 2020
Empire Metals Limited ('Empire' or the 'Company')
Sale of Bolnisi Copper and Gold Project in Georgia for CAD 7
Million, Board and Management Changes
Empire Metals Limited, the AIM-listed mineral resource
exploration and development company, is pleased to announce that it
has concluded a definitive and binding Sale and Purchase Agreement
(subject to certain conditions) for the sale of the Company's
wholly-owned subsidiary GMC Investments Limited ('GMCIL'), to
Candelaria Mining Corporation (TSXV: CAND) ('Candelaria', 'CAND' or
the 'Buyer'), for an all-equity total consideration of 7 million
Canadian dollars ("CAD"), with an initial payment of CAD 2 million
(the 'Initial Consideration') plus additional payments subject to
certain milestones being achieved in Georgia (altogether "the
Sale"). GMCIL is the owner of a 50% interest in JSC Georgian Copper
and Gold ('GCG'), which in turn holds the rights to copper-gold
projects under a 30-year mining concession in Georgia.
Highlights
-- Sale of Georgian assets to TSXV listed company with an
excellent track record of developing projects in complex
jurisdictions
-- Initial consideration payment of CAD 2 million in shares of CAND
-- Three further payments in shares of CAND of CAD 1 million,
CAD 2 million and CAD 2 million totalling CAD 5 million on
achieving certain milestones
-- Mr. Mike Struthers to join CAND as CEO, but will remain as
Non-Executive Director of Empire and act as a consultant to the
Company
-- Dr Neil O'Brien, Non-Executive Chairman, to join the board of
CAND as a Non-Executive Director but will remain as Non-Executive
Chairman of Empire
-- Exposure to Candelaria's development projects in Mexico as
well as continued exposure to growth in Georgia via an equity
holding in CAND
-- Sale subject to a right-of-first-refusal ("ROFR") in favour
of Empire's Georgian partners, Caucasian Mining Group ("CMG"), and
also subject to shareholder approval.
Mike Struthers, CEO , said: "This is a great deal for Empire
shareholders . Candelaria is a growth story with some excellent
gold assets in Mexico, including the Pinos Gold Project which is
about to start construction and is scheduled to commence production
in 12-14 months. It has a strong technical and operations team on
the ground in Mexico. Empire shareholders will benefit from the
future production and growth of Candelaria, whilst retaining
exposure to the assets in Georgia on which we will continue with
our efforts to unlock value. Empire will continue to develop the
Eclipse Gold Project in Australia (refer recent RNSs) and will add
additional assets as new opportunities arise. The option to acquire
a 75% stake in the Eclipse Gold Project marked an exciting new
chapter in the Empire story. The Company's efforts to resolve all
of the permitting issues in Georgia will continue, and I will
personally continue to lead this effort through my new role with
Candelaria. I look forward to joining their team, to help further
develop the company into a successful junior producer in the
precious metals space, for the benefit of both Candelaria and
Empire shareholders. I'm also pleased to remain involved with
Empire to continue to help build the developing strategy."
The Transaction
The Initial Consideration of CAD 2 million is to be satisfied
via the allotment and issue of 4,000,000 new common shares in
Candelaria (based on a valuation of CAD 0.50 per share)
("Consideration Shares"). The Consideration Shares will be payable
in full on completion. Further payments ("Additional Shares")
totalling CAD 5 million will be paid by Candelaria subject to the
following milestones being achieved:
-- On approval of a reserves report (prepared in accordance with
local standards) on the Kvemo Bolnisi East project by the
Interagency Committee on Mineral Reserves in Georgia ('Milestone
1'), an additional payment of CAD 1 million to be satisfied via the
allotment and issue of common shares in the Buyer (based on a
10-day average closing price as at the date of approval)
('Milestone 1 Consideration').
-- On completion of a JORC or NI43-101 compliant Mineral
Resource on the Dambludi project ('Milestone 2'), or one other
project other than Kvemo Bolnisi East, an additional payment of CAD
2 million to be satisfied via the allotment and issue of common
shares in the Buyer (based on a 10-day average closing price as at
the date of completion) ('Milestone 2 Consideration').
-- On completion of a positive feasibility study and final
investment decision on the gold oxides at Kvemo Bolnisi East
('Milestone 3'), an additional payment of CAD 2 million to be
satisfied via the allotment and issue of Common Shares in the Buyer
(based on a previous 10-day average closing price as at the date of
completion) ('Milestone 3 Consideration).
The sale is subject to a right-of-first-refusal ("ROFR") in
favour of Empire's Georgian partners, CMG, which must be exercised
within 20 business days from Empire submitting an offer. This offer
has been submitted concurrent with this announcement.
The Consideration Shares and Additional Shares will be subject
to a hold period of 12 months from the date of the agreement.
The Sale will be subject to final approval from shareholders at
a General Meeting to be held on 11 November 2020. A Circular and
Notice of Meeting has been mailed to shareholders today and will be
available on the Company's website at www.empiremetals.co.uk
shortly. The Company has received irrevocable undertakings to vote
in favour of the Resolution from the top 3 shareholders and the
Board in respect of 77,891,842 Ordinary Shares, which represents 31
per cent. of the Ordinary Shares on issue.
Subject to the ROFR and Empire shareholder's approval, and TSX
Venture Exchange approval, the transaction is expected to close and
the Initial Consideration shares transferred to Empire on or before
7 December 2020.
Candelaria Mining Corporation
Candelaria is an exploration and mining company listed on TSX
Venture Exchange (TSXV: CAND; market capitalisation as at 22
October 2020 of CAD 65.2 million), currently developing advanced
gold projects in Mexico. Its two key assets are the Pinos Gold
Project (NI43-101 Technical Report, 13 September 2018) and Caballo
Branco (NI43-101 Technical Report, 20 April 2017). Pinos is a
low-sulphidation epithermal Au-Ag deposit located in the highly
prospective Zacatecas district (Figure 1). It is an underground
development project (Figure 2) with combined Measured and Indicated
Mineral Resources of 25,000 oz of gold and 497,000 oz of silver,
about to commence a 12-month construction period for the mine that
will generate approximately 13koz of gold per year over a 7-year
mine life for an all-in sustaining cost of US$ 835/oz (based on a
2018 PEA). Caballo Branco is an advanced exploration project with
an initial Indicated Mineral Resource of 521,000 oz gold and 2.1M
oz of silver, together with a series of other high-potential
targets within the concession (Figure 3). Agnico Eagle (TSX: AEM)
is a strategic partner in the Caballo Branco project with a holding
of 9.95% in Candelaria. Initial studies indicate that Caballo
Branco will be amenable to an open pit - heap leaching design, and
it is open in three directions and at depth. It is also only 2km
away from Azucar Minerals' El Cobre porphyry project, in which
Newcrest Mining holds a 19.99% interest.
Figure 1 - Location of Pinos Gold Project in the Zacatecas
Mining Belt - see PDF
Figure 2 - Underground Mine Layout, San Francisco Vein, Pinos -
see PDF
Figure 3 - La Pailla Resource at Caballo Branco, and Additional
Targets - see PDF
Board and Management Changes
Upon closing of the transaction Mike Struthers, Empire's CEO,
will take up the position of Chief Executive Officer of Candelaria,
and will join the board as an Executive Director, but will remain
on the Empire board as Non-Executive Director. Mr Struthers will
also enter into a consultancy agreement with the Company to provide
technical advice. Dr Neil O'Brien, Non-Executive Chairman of
Empire, will also join the board of Candelaria as a Non-Executive
Director but will remain as Non-Executive Chairman of Empire.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**S**
For further information please visit www.empiremetals.co.uk or
contact:
Mike Struthers Empire Metals Ltd Company Tel: 020 7907
9327
Ewan Leggat S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Soltan Tagiev S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Damon Heath Shard Capital Partners Joint Broker Tel: 020 7186
LLP 9950
Susie Geliher St Brides Partners Ltd PR Tel: 020 7236
1177
Beth Melluish St Brides Partners Ltd PR Tel: 020 7236
1177
About Empire Metals Limited
Empire Metals' primary focus is on the Eclipse Gold Project in
Western Australia which produced 954 tonnes @ 24.6 g/t Au for
754.25 oz Au from the Eclipse shaft which operated up to 1910. In
addition to the known mineralisation at and surrounding the Eclipse
old workings, recent geophysics and geochemistry work has
highlighted further potential mineralisation at two additional
targets north-west of Eclipse, the Houdini and Easy prospects.
The Company also has a 50% joint venture in Georgia which covers
an area of over 860 sq km and has a 30-year mining licence. The
joint venture covers a variety of targets and projects ranging from
greenfield exploration / target definition phase through
intermediate target-testing phases to more advanced projects
including Kvemo Bolnisi East which is due to advance to Feasibility
Study.
The Board continues to evaluate opportunities through which to
realise the value of its wider portfolio and reviews further assets
which meet the Company's investment criteria.
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END
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