DAMARA GOLD CORP. (TSX-V:DMR)
(“
Damara” or the “
Company”) and
Colorado Resources Ltd (“Colorado”) (TSX-V:CXO)
are pleased to announce that they have entered into a letter
agreement (the “
Agreement”) whereby Damara can
acquire a 100% interest (subject to its Back-in Right (as defined
below)) (the “
Transaction”) in Colorado’s
Kinaskan-Castle project (the “
K-C Property”)
located in the Liard Mining Division within the “Golden Triangle
Area” of northwestern British Columbia. Completion of the
Transaction is subject to the receipt of all required approvals,
including the approval of Damara’s shareholders and the approval of
the Exchange (as defined below).
The PropertyThe K-C Property is
comprised of 49 mineral claims (17,839ha) and is located
approximately 195 km north of the town of Stewart and 75 km south
of Dease Lake. The Golden Triangle area is a district which hosts
several significant gold-copper mines1 including Imperial Metals
Red Chris1 and mine development and mineral occurrences including
GJ1, Quash1, Hank1, GT Gold1 and Spectrum1.
Historical2 ExplorationPrevious work at the K-C
Property focused on the western side of the property and included
the completion of 21 diamond drillholes (4,805m) between 1988 and
2013. The mineralization at the K-C Property is associated with an
east-west striking structural and intrusive corridor that is
spatially related to a 150m x 1500m long copper and gold soil
anomaly, a coincident magnetic anomaly and IP chargeability
high.
Gold – copper mineralization noted to date
includes both broad porphyry style and higher grade vein styles as
illustrated by two intercepts in historic2 holes:
- DDH CA 13-01 with 274 m of 0.102% Cu and 0.283 g/t Au
- DDH CA 13-03 with 4 m of 2.14% Cu, 4.88 g/t Au, and 73.2 g/t Ag
contained within a 174 m interval of 0.106% Cu and 0.466 g/t
Au3
The historic data2 suggest that the gold-copper
mineralization on the K-C Property is open to the east and it
occurs in an alteration zone that has been traced over a distance
of 4.4 km to the eastern property boundary. This area has seen the
lowest density of historical drill testing.
Recent ExplorationColorado recently initiated a
preliminary exploration program which included the collection of
859 soil and 201 rock samples, 10 km2 of geological mapping, an
11-line km I.P. survey and a 150-line km airborne magnetic survey.
Damara, as part of the consideration, will bear the cost of this
initial program.
Transaction and Concurrent Financing
Rationale
- The Transaction and will provide Damara the opportunity to
become an active explorer in the Golden Triangle;
- The Concurrent Financing will broaden Damara’s shareholder
investor base and fund the exploration programs and provide working
capital for the next 12 months;
- The Transaction will allow for the combined exploration
expertise of Colorado’s and Damara’s board and management to
advance the K-C Property;
- Increased market capitalization along with the improved capital
markets are expected to boost Damara’s trading activity and
liquidity.
William Yeomans, Director of Damara, stated:
“The collaboration of Damara and Colorado is a unique opportunity
for Damara shareholders as it positions the Company favorably to
advance the K-C Property and become an explorer in the prolific
Golden Triangle Area.”
Lawrence Nagy, Chairman of Colorado, stated:
“The Transaction will give Colorado, which currently holds a 15.7%
interest in Damara, the opportunity to focus its attention on its
core assets - KSP and North ROK - while providing an opportunity to
share in any future success at the K-C Property.”
Transaction
OverviewConsideration for the Transaction includes an
aggregate $250,000 in cash payments and the issuance of 10,250,000
common shares in the capital of Damara (the “Consideration
Shares”) to Colorado, and $8,000,000 in exploration
expenditures (which includes $300,000 reimbursement of the initial
program within 5 business days of receipt of the approval of the
TSX Venture Exchange (the “Exchange”) for the
Transaction) over a three year period. Colorado will have the
exclusive right, within 45 days from the option exercise date, to
elect to exercise its back-in right (the “Back-in
Right”) wherein Colorado can acquire a 51% interest upon
incurring $8,000,000 in exploration expenditures over a two year
period with a minimum $2,000,000 in year one. In the event the
Back-in Right is exercised and the terms thereof fulfilled, the
parties have agreed to form a joint venture in which Damara will
hold a 49% interest and Colorado will hold a 51% interest. In the
event the Back-in Right is not exercised Colorado will be granted a
1% net smelter return royalty.
The Transaction is a non-arm’s length
transaction pursuant to Multilateral Instrument 61-101 – Protection
of Minority Security Holders in Special Transactions (“MI
61-101”).
In accordance with Exchange policies, the
Company will seek minority shareholder approval of the Transaction,
including the issuance of the Consideration Shares. Further
information regarding the Transaction will be contained in a
management information circular that Damara will prepare and file
in due course in connection with an annual general and special
meeting of Damara shareholders, which is expected to be held on
December 29, 2017. Closing of the Transaction is expected to occur
shortly thereafter.
Damara’s independent directors have determined
that the proposed Transaction is fair and in the best interests of
the Company and will recommend that disinterested shareholders vote
in favour of resolutions supporting the Transaction. The Board will
seek to engage a financial adviser to provide the required
valuation of MI 61-101, subject to limitations and assumptions
contained therein, and confirm that the aggregate consideration as
described in the Agreement to be paid by Damara in connection with
the Transaction is fair, from a financial point of view, to
Damara’s shareholders.
For Colorado, the Transaction would qualify as
an Exempt Transaction pursuant to the policies of the Exchange
except for the fact that the Transaction involves Non-Arm’s Length
Parties and therefor is subject to Exchange approval. Colorado is
exempt from the valuation and minority shareholder approval
requirements of MI 61-101 as the Transaction.
Concurrent FinancingThe Company
also announces it is arranging a concurrent financing (the
“Concurrent Financing”) wherein it intends to issue units (each a
“Unit”) at a price of $0.15 per Unit and
flow-through common shares (“FTS”) at a price of
$0.20 per FTS. Each Unit will consist of one common share (issued
on a non-flow-though basis) and one-half of one share purchase
warrant (each whole warrant a “Warrant”). Each
Warrant will entitle the holder to purchase an additional common
share at $0.30 per share for a period of 24 months. Completion of
the minimum Concurrent Financing is a condition of the
Transaction.
Qualified PersonWilliam
Yeomans, P. Geo., a director of the Company is the Qualified Person
as defined by National Instrument 43-101 - Standards of Disclosure
for Mineral Projects (“NI 43-101”) who reviewed the preparation of
the technical data in this news release for each of Damara and
Colorado.
About DamaraDamara Gold Corp.
is a TSX Venture listed Canadian public company with a Board of
Directors seasoned in the mineral exploration industry and with a
record of mineral deposit discovery worldwide.
|
|
|
ON BEHALF OF
THE BOARD OF DIRECTORS OF DAMARA“William
Yeomans”William Yeomans, Director |
|
ON BEHALF OF
THE BOARD OF DIRECTORSOF
COLORADO“Lawrence Nagy”Lawrence Nagy, Chairman of the
Board |
|
|
|
For additional
information visit Damara’s website at www.damaragoldcorp.com
or contact: |
|
For additional
information visit Colorado Resources' websiteat
www.coloradoresources.com or contact: |
|
|
|
Damara Gold
Corp.William YeomansPh: (250-768-1168) |
|
Colorado Resources Ltd.Lawrence
Nagy(250)-768-1511 |
NR: 17-07
Cautionary Notes1 This news
release contains information about adjacent properties on which
neither Damara nor Colorado has a right to explore or mine. Readers
are cautioned that mineral deposits on adjacent properties are not
indicative of mineral deposits on the Company’s or Colorado’s
properties.2 Historical information contained in this news
release, maps or figures regarding the Company’s or Colorado’s
projects or adjacent properties are reported for historical
reference only and cannot be relied upon as neither the Company’s
QP or Colorado’s QP, as defined under NI-43-101 has not prepared
nor verified the historical information.3 All drill intercepts
are drill indicated lengths. Insufficient technical information
exists to demonstrate the true widths of these intersections.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Statements Regarding Forward-Looking
InformationCertain statements contained in this news
release may contain forward-looking information within the meaning
of Canadian securities laws. Such forward-looking information is
identified by words such as “estimates”, “intends”, “expects”,
“believes”, “may”, “will” and include, without limitation,
statements regarding the Colorado’s or the Company’s plans or
business operations (including plans for completing the Transaction
and the Concurrent Financing, as applicable and otherwise for
progressing assets), estimates regarding mineral resources,
projections regarding mineralization and projected expenditures.
There can be no assurance that such statements will prove to be
accurate; actual results and future events could differ materially
from such statements. Factors that could cause actual results to
differ materially include, among others, metal prices, risks
inherent in the mining industry, financing risks, labour risks,
uncertainty of mineral resource estimates, equipment and supply
risks, title disputes, regulatory risks and environmental concerns.
In addition, the completion of the Transaction and the Concurrent
Financing is subject to the receipt of all required approvals,
including the approval of the Company’s shareholders and the
Exchange. Most of these factors are outside the control of Colorado
and the Company. Investors are cautioned not to put undue reliance
on forward-looking information. Except as otherwise required by
applicable securities statutes or regulation, the Company and
Colorado expressly disclaim any intent or obligation to update
publicly forward-looking information, whether as a result of new
information, future events or otherwise.
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