TORONTO, Sept. 12, 2019 /CNW/ - GK Resources Ltd. ("GK" or
the "Company") (TSX-V:NIKL) is pleased to announce that it has
entered into a letter of intent (the "LOI") dated September 9, 2019 for the acquisition of
interests in (i) Guaporé Mineração Ltda. ("Guaporé") from Mineração
Tanagra Ltda. ("Tanagra") and Anglo American Níquel Brasil
Ltda.("Anglo American", and together with Tanagra, the "Sellers")
and (ii) the rights to the outstanding balance of the existing
loans owed by Guaporé to Anglo
American, currently in the amount of, approximately,
US$ 125,000, and all rights and
obligations in connection therewith ("Transaction"). The LOI is
effective from the date of its execution until the earlier of (i)
the execution of a definitive share purchase agreement (the
"Purchase Agreement") in connection with the Transaction and (ii)
15 November 2019. The LOI will be filed under GK's profile on
SEDAR (www.sedar.com). The Purchase Agreement will also to be filed
with the regulatory authorities in accordance with applicable laws
of Brazil and Canada. The Company is arm's length from the
Sellers.
Guaporé currently holds two nickel laterite deposits in
Brazil, the Morro sem Boné ("MSB")
and Morro do Leme ("MDL", and together with MSB, the "Mineral
Rights"), and a 7,413-hectares property on the surface of the MSB
deposit (the "Property", and together with the Mineral Rights, the
"Norwest Nickel Project").
Main terms of the Transaction as set out in the LOI are as
follows:
- Total cash consideration will be in aggregate of US$ 13,000,000, to paid as detailed below:
-
- US$ 1,000,000, payable by GK to
the Sellers upon the execution of the Purchase Agreement and
ancillary transaction documents;
- US$ 2,000,000, payable by GK to
the Sellers on the earlier of (i) obtaining the Installation
License for any of the Mineral Rights from the Mato Grosso State
Environmental Agency ("SEMA"); (ii) obtaining a provisory mining
permit ("Guia de Utilização") for any of the Mineral Rights
and (iii) December 31, 2024;
- US$ 2,000,000 payable by GK to
the Sellers on the earlier of (i) obtaining the Operation License
for any of the Mineral Rights from SEMA; (ii) obtaining a provisory
mining permit ("Guia de Utilização") for any of the Mineral
Rights and (iii) December 31, 2026;
and
- US$ 8,000,000, to be paid by GK
to the Sellers within 6 months of the first sale, use or disposal
of products derived from the Mineral Rights.
- In addition to the cash payments described above, GK will enter
or cause Guaporé to enter as the case may be, into a NSR payment
agreement with the Sellers, pursuant to the following terms:
-
- GK will pay the equivalent to 1% of the net smelter returns on
all product derived from the Mineral Rights that is sold, used or
otherwise disposed of by Guaporé or any affiliate or subsidiary
(the "NSR Payment");
- If the Norwest Nickel Project is not in production by
December 31, 2025, GK will pay the
Sellers a yearly amount of US$
100,000, commencing January 1,
2026 until January 1, 2030,
inclusive, and a yearly amount of US$
200,000 starting from January 1,
2031, each of which will be capitalized and deducted from
the NSR Payment.
- The Transaction is subject to the following conditions
precedent:
-
- approval by the TSX Venture Exchange ("TSX-V"), as per the
TSX-V listing rules, in Canada;
and
- the receipt of regulatory approvals in Brazil including national defense regulatory
requirements.
- If conditions precedent are not met by November 15, 2021 ("Long Stop Date"), the
transaction shall terminate and all amounts eventually paid by GK
shall be returned by the Sellers, except the US$1,000,000 paid on the signing of the SPA. The
Long Stop Date may be extended for another year provided that GK
demonstrate best efforts to satisfy the conditions precedent.
Ian McDonald, President and CEO
of GK, stated:
"We are very pleased to be able to
announce this transformative transaction for GK and its
shareholders. The acquisition is compelling and establishes GK as a
significant nickel developer player from the onset. The transaction
is well timed as nickel has been gaining strength in response to
favorable market fundamentals.
Our immediate goal is to bring the
technical information to National Instrument 43-101 ("NI 43-101")
compliant standards and prepare a preliminary economic assessment
with our own view of project development strategy, size and
timeline".
Along with the signing of the LOI, GK is also pleased to
announce the appointment of Wagner Lourenço as Chief Operating
Officer ("COO") of the Company.
Mr. Lourenço is a highly seasoned mining professional with over
25 years of experience in base metals mining and metallurgy
industries, particularly nickel production.
Mr. Lourenço has worked for 15 years with Nexa Resources S.A.,
where he was Director of Operations responsible for the Nickel
Business Unit, which included three industrial facilities - mines
and metallurgy plants - and their respective corporate teams
comprising the departments of Marketing & Sales, Engineering
& Technology Development, and Capex/Opex management.
Mr. Lourenço says:
"I am very happy and motivated to
join GK Resources for the development of the Norwest Nickel
Project. I believe that we have the potential to develop a superior
nickel project as we will now devote our efforts to rapidly
advance into our own optimized economic studies.
The process route for FeNi
production is traditionally known and employed in Brazil, with solid operations by large local
companies, which helps to expedite the attraction and retention of
talented engineering professionals and technical contractors with
experience in similar operations in order to move promptly to the
next steps of project development.
In the coming months, our target
is to prepare and refine the required studies, as well as focusing
on identifying project upsides. Alternative and complementary
process routes will be evaluated as such as project Capex and Opex
optimization opportunities. I believe that the Norwest Nickel
Project has all the attributes to build a success case story to the
benefit to all GK's stakeholders".
About Morro Sem Boné and Morro Do Leme Deposits
The MSB deposit is approximately 90 km far from the municipality
of Comodoro and 630 km from Cuiabá, capital of Mato Grosso. MDL deposit is located 35km from
the MSB deposit, separated by a relatively flat valley region. GK
believes that its 7,413-hectare Property which is at the surface of
the MSB deposit will be sufficient to conduct future mining
activities, including waste pile area and installation of plant
facilities.
In GK's view, the highlights of both MSB and MDL deposits are as
follows:
- High Average Nickel Content – High average Ni grade
(%) of nickel content from both deposits compared to similar nickel
projects with RKEF technology.
- Adequate Distribution of Metal Throughout the Historical
Resource Area – Occurrence of higher Ni contents (up to
~16% in certain cases) in regions with superior sample densities
with continuous physical aspect, which is favorable for mining
process and optimization of mining schedule at higher than average
grades in the early years of a potential operation.
The potential grade is derived from historical mineral resource
estimates, as described elsewhere in this press release, and thus
conceptual nature. There has been insufficient exploration to
define a mineral resource and it is uncertain if further
exploration will result in the target being delineated as a mineral
resource.
- Adequate Chemical Characteristics for Pyrometallurgical
Process - Iron (Fe) grade and SiO2/MgO ratio within the
adequate range to meet the requirements for a pyrometallurgical
process.
- Complementary Upside Potential from Nearby Lowland
Regions – Relevant potential to increase historical
mineral resources by exploring nearby lowland regions and western
side of MSB area.
- Processing Route - On GK's view, the deposits are
suitable for proven Rotary Kiln Electric Furnace (RKEF) processing
route, which has been commonly used in similar Ferro-Nickel
projects in Brazil.
- Land Ownership - Acquisition package also includes
land ownership over the surface of flagship deposit MSB with a
total area of 7,413 ha. An independent valuation commissioned by GK
valued the land at approximately C$ 4.8
million.
Historical Mineral Resources Statement
To date, GK has not conducted any exploration work on the
Norwest Nickel Project. All the existing exploration works on the
mineral properties were carried out initially by the Brazilian
Geological Survey (CPRM) and, subsequently, in an extensive manner,
by Guaporé
A total of 1,372 Reverse Circulation (RC) drill holes for 43,490
linear-metres and 19 diamond (DD) holes for 2,934.60 linear-metres
were completed on Norwest Nickel Project during the period between
1992 up to 2012 along the Morro Sem Bone and Morro do Leme
deposits. The drilling program started with a 200 m x 50 m spaced
pattern and was, subsequently, followed with a coverage at
100 m x 50
m in some portions of the deposits.
In accordance with the historical work developed by Guaporé, and
reviewed independently by GK, the historical mineral resources
(indicated and Inferred), using a 0.9% Ni cut-off, are estimated at
40,287 Kt grading 1.79% Ni and 17,716 Kt grading 1.73% Ni for Morro
Sem Bone and Morro do Leme deposits, respectively. A qualified
person has not done sufficient work to classify the historical
estimate as current mineral resources, and GK is not treating the
historical estimate as current mineral resources. Additional
information with respect to historical estimates is located
below.
Additional work is required before the historical estimates can
be confirmed. The Company is not treating the historical
resources as current resources under National Instrument 43-101
Standards of Disclosure for Mineral Projects, or resources verified
by an independent qualified person. The data underlying the
historical estimates has been reviewed by an independent qualified
person, but no independent investigation was carried out to verify
its accuracy or completeness. The independent qualified
person completed a site visit, pursuant to which data collection
procedures were observed and believed to be satisfactory, and the
database integrity had been favourably tested. Limitations on
the verification procedures include a lack of access to raw data,
which prevent independent investigation of the underlying
information.
Historical Mineral Inventory of Morro Sem Bone (2013), by
Acid and Basic mineral composition and total (Cut-off 0.9%
Ni).
Mineral
Type
|
Category
|
Tonnage
Kt
|
Grade
(%)
|
SiO2/MgO
|
Ni/Co
|
Contained
Metal (t)
|
Ni
|
Fe
|
SiO2
|
MgO
|
Basic +
Acid
|
Indicated
|
16,606
|
1.92
|
11.05
|
44.76
|
24.54
|
1.82
|
30.41
|
318,159
|
Inferred
|
23,680
|
1.71
|
13.65
|
42.85
|
22.32
|
1.92
|
32.44
|
404,828
|
TOTAL
|
40,287
|
1.79
|
12.58
|
43.64
|
23.23
|
1.88
|
31.51
|
722,987
|
Cut-off 0.90%
Ni
|
Historical Mineral Inventory of Morro do Leme (2013), by Acid
and Basic mineral and total (Cut-off 0.9% Ni).
Mineral
Type
|
Category
|
Tonnage
Kt
|
Grade
(%)
|
SiO2/MgO
|
Ni/Co
|
Contained
Metal (t)
|
Ni
|
Fe
|
SiO2
|
MgO
|
Basic +
Acid
|
Indicated
|
5,279
|
1.91
|
12.80
|
45.17
|
21.42
|
2.11
|
35.00
|
100,914
|
Inferred
|
12,438
|
1.65
|
13.50
|
45.23
|
20.49
|
2.21
|
35.00
|
205,239
|
TOTAL
|
17,716
|
1.73
|
13.29
|
45.21
|
20.77
|
2.18
|
35.00
|
306,153
|
Cut-off 0.90%
Ni
|
Historical Mineral Inventory for Morro Sem Bone (2013) and
Morro do Leme (2013) Ni laterite deposits
Areas
|
Mineral
Type
|
Category
|
Tonnage
Kt
|
Grade
(%)
|
Contained
Metal (t)
|
Ni
|
Fe
|
SiO2
|
MgO
|
MSB +
MDL
|
Basic +
Acid
|
Indicated
|
21,885
|
1.92
|
11.47
|
44.86
|
23.79
|
419,073
|
Inferred
|
36,118
|
1.69
|
13.60
|
43.67
|
21.69
|
610,067
|
TOTAL
|
17,716
|
1.78
|
12.80
|
44.12
|
22.48
|
1,029,140
|
Cut-off 0.90%
Ni
Numbers are
rounded
|
Note: Notwithstanding the above, there is no assurance that the
historical resources can be converted to current mineral resources
or that they will successfully convert to mineral reserves and
demonstrate economic viability supported by either a preliminary
economic assessment, prefeasibility study or feasibility
study.
Technical Information
Disclosures of a scientific or technical nature in this news
release have been reviewed on behalf of GK by the independent
senior geologist, Mr. Paulo I. Brito,
BSc (Geology), a "Qualified Person" as defined by Canadian
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects ("NI 43-101").
Mr. Brito is a senior geologist, member of the Australian
Institute of Geoscientists (MAIG), works as a full time independent
consultant. Mr. Brito has sufficient experience, which is relevant
to the style of mineralization and type style of deposit under
consideration and to the activity which he has undertaken to
qualify as a Competent Person, as defined in the JORC Code and a
Qualified Person as defined by the NI43-101 instrument.
The information in this news release that relates to historical
estimates for the Norwest Nickel Project is based on information
compiled from the following documents and data sets produced and
property of Guaporé:
- "Mineral Inventory Evaluation – Morro Sem Bone Project", which
is an internal report from Guaporé, dated from August 2015. This document contains information
about local geology/mineralization, existing drilling database,
geological modelling and mineral internal resources estimates;
- "Morro Sem Bone Pre-feasibility
Study Report – Draft Version" prepared by Guaporé and dated from
November 2006'
- "Appraisal Study Report for Morro Sem Bone Project" prepared by
Fiprogen on behalf of Guaporé and dated from September 2003; and
Database of technical information maintained by Guaporé as it
relates to the Norwest Nickel Project.
Transaction Structure
GK will acquire a 49% interest in Guaporé trough its Brazilian
entity GK Brasil Mineração Eireli ("GKBR"), and ANC Mineração Ltda.
will acquire the remaining 51% from the Sellers.
About GK Resources Ltd.
GK Resources Ltd. is a mineral property exploration company that
completed its initial public offering on March 21, 2019. On March
25, 2019, the shares of the Company began trading on the TSX
Venture Exchange under the stock symbol NIKL.
Forward Looking Information
The information in this news release includes certain
information and statements about management's view of future
events, expectations, plans and prospects that constitute forward
looking statements. These statements are based upon assumptions
that are subject to significant risks and uncertainties. Because of
these risks and uncertainties and as a result of a variety of
factors, the actual results, expectations, achievements or
performance may differ materially from those anticipated and
indicated by these forward looking statements. Forward-looking
statements in this news release include, but are not limited to,
the completion of the Transaction, the ability of the Company to
finance the Transaction, the adequacy of planned nickel processing
methods, and the estimated targets for production. Any number of
factors could cause actual results to differ materially from these
forward-looking statements as well as future results. Although the
Company believes that the expectations reflected in forward looking
statements are reasonable, it can give no assurances that the
expectations of any forward looking statements will prove to be
correct. Except as required by law, the Company disclaims any
intention and assumes no obligation to update or revise any forward
looking statements to reflect actual results, whether as a result
of new information, future events, changes in assumptions, changes
in factors affecting such forward looking statements or
otherwise.
Further Cautionary Statement
Completion of the Transaction is subject to a number of
conditions, including but not limited to, the TSX Venture Exchange
acceptance, the Brazilian National Defense Council approval, GK and
Sellers corporate and shareholders approvals. The Transaction
cannot close until the required conditions and regulatory approvals
are obtained. There can be no assurance that the Transaction will
be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular to be prepared in connection with
the Transaction, any information released or received with respect
to the Transaction may not be accurate or complete and should not
be relied upon. Trading in securities of GK should be considered
highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the Transaction and has neither approved nor disapproved
the contents of this news release.
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 THE RELEASE.
SOURCE GK Resources Ltd.