Medoro to acquire high grade Frontino Gold Mines in Colombia
Wed Mar 31, 5:23 PM
ca.news.finance.yahoo.com
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Medoro's Marmato Project and Frontino Gold Mines are located in the two most prolific gold producing areas of Colombia
TORONTO, March 31 /CNW/ - Medoro Resources Ltd. (TSX-V: MRS.V) is pleased to announce that it has signed an asset purchase agreement (the "Agreement") with Frontino Gold Mines Ltd. ("Frontino") represented by its duly appointed and legally confirmed liquidator and legal representative, Mr. Luis Fernando Alvarado, to acquire all of the assets of Frontino, located near the city of Segovia, approximately 220 kms north of Medellin in Antioquia, Colombia. The Agreement has been authorized and approved by the advisory board of Frontino, which includes the Liquidator.
Frontino Gold Mines
- Frontino has been in production for approximately 155 years during
which time it has produced over 4.5 million ounces of gold, using
relatively unsophisticated mining technology for many of those years.
- There are three existing underground gold mines at Frontino: El
Silencio, Providencia and Sandra K, of which only Providencia is
currently being mined on a regular basis; in 2009, it produced
approximately 44,000 ounces of gold with an average grade of 8.0 grams
per tonne, processing approximately 450 tonnes of ore per day (based
on information received from Frontino).
- The Frontino license area covers 2,871 hectares between the Segovia
and Remedios Districts in Antioquia.
- Frontino ceased exploration drilling for new resources and reserves
in 1989 and Medoro believes that there is significant potential to
expand the deposit and production from the mines; however no
feasibility study to determine the economic viability of the
operations has been completed.
- Frontino has been in liquidation since September 2004, as a result
there has been little or no exploration undertaken and minimal
sustaining capital spent on the mines, hence the closure of El
Silencio and Sandra K.
- Historically, the average grades of gold mined at El Silencio,
Providencia and Sandra K, were 8.0 g/t Au, 12 g/t Au and 6.0 g/t Au,
respectively.
Key Terms of the Agreement
- A total cash purchase price of COP380,000,000,000 (approximately
US$200,000,000), of which US$7,500,000 has been paid today as a
deposit and placed in escrow until closing. This deposit is refundable
with interest under certain conditions, and applicable against the
purchase price on closing.
- The purchase is scheduled to close four months from the date of the
Agreement ("Closing").
- The purchase price will be utilized to liquidate Frontino;
specifically, to establish a fund to pay for all of Frontino's
existing pension liabilities and to pay Frontino's other liabilities.
Medoro will have no further liability for any historical pension
liabilities, severance costs and other liabilities.
- Medoro has agreed to offer new terms of employment in the mines to
1,600 persons, which employment will be guaranteed for one year from
the date on which the rights for the exploration and exploitation of
gold are transferred to Medoro.
- Medoro will have the four months until Closing to conduct any and all
such due diligence and other work as it deems appropriate, including
legal and technical due diligence.
- Up to the end of the first two months from the date of the Agreement,
Medoro has the right to terminate the Agreement and have its entire
deposit refunded, plus accrued interest thereon, if any of certain due
diligence conditions are determined by Medoro in its sole discretion
to exist, including: title defects, claims for historical
environmental damages or certain other conditions that could prevent
or delay Medoro's ability to access, free from all encumbrances, all
of the Frontino assets, immediately on Closing.
- After the end of the first two months from the date of the Agreement
to Closing Medoro may, in its sole discretion, terminate the Agreement
on forfeiture of its deposit.
Prior to Closing, Medoro intends to complete a National Instrument 43-101 compliant resource estimate for Frontino. Completion of the acquisition is subject to Medoro obtaining Canadian regulatory approval.
Medoro also announces that it has entered into an agreement in principle with an arm's length company ("JVCo") controlled by Mr. Serafino Iacono and certain of his associates, whereby JVCo will, pursuant to a joint venture or other arrangement with Medoro, acquire prior to Closing, a 50% interest in the Frontino assets for consideration equal to one-half of the consideration paid or payable by Medoro (including the deposit). JVCo shall also be responsible for one-half of the costs of any and all due diligence or other work performed by Medoro prior to Closing. Regardless of the form of JVCo's participation, Medoro will be the operator of the Frontino assets. After Closing, Medoro and JVCo will be responsible for any and all new capital required on a 50/50 basis. A success fee of US$4.0 million will also be payable, upon Closing, to a company of which Mr. Iacono is a principal in recognition of the services rendered by Mr. Iacono and his associates in negotiating and completing the acquisition of Frontino. US$2.5 million of this fee will be payable by JVCo.
"Combined with the Company's existing significant gold resources and the producing Mineros Mine at Marmato, the purchase of these high grade gold assets, including an operating underground mine at Frontino, will establish Medoro as a leading gold producer in Colombia, with exceptional upside potential. With new capital, improved technology and highly skilled mining personnel we believe Medoro will be in a position to liberate the potential at Marmato and Frontino, the two principal gold producing areas in Colombia," said John Hick, President and CEO of Medoro.
Financing of the Transaction
The Company has paid the deposit, one-half of which will be paid by JVCo, from existing funds and is currently reviewing with its financial advisors, GMP Securities L.P., various funding alternatives for the balance of its 50% share of the purchase price.
About Medoro Resources
The Company strives to enhance shareholder value through the exploration for, and development and production of gold on its existing Marmato Project in Colombia and other projects which have the potential to enhance shareholder value. The Company's primary focus is on Colombia where it has rapidly and successfully implemented its strategy to consolidate the historically prolific gold producing area of Marmato. As a result of this consolidation strategy at Marmato, the Company now owns substantial gold resources in Colombia with a current resource estimate for the Marmato Project of approximately 7.5 million ounces of gold in the measured and indicated categories and a further 2.2 million ounces of gold in the inferred category, as well as the Mineros underground mine in Zona Baja at Marmato, which produces approximately 25,000 ounces of gold per year. The Marmato resource estimates are based on over 80,000 metres of diamond drilling in 379 holes and using a cutoff grade of 0.3 g/t Au. (See the table below.) The Company believes that with its strong asset base and relationships in Colombia its strategy is achievable and offers an attractive risk-reward ratio.
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MARMATO MEASURED AND INDICATED GOLD AND SILVER MINERAL RESOURCES
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MEASURED RESOURCES
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GOLD SILVER
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Cut off grade Type Tonnes Grade g/t Ounces Grade g/t Ounces
g/t Au (000s) Au (000s) Ag (000s)
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0.30 Gold 37,222 1.04 1,242 7.99 9,559
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INDICATED RESOURCES
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0.30 Gold 207,887 0.93 6,249 5.75 38,398
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TOTAL MARMATO MEASURED AND INDICATED MINERAL RESOURCES
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0.30 Gold 245,109 0.95 7,490 6.09 47,956
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TOTAL MARMATO INFERRED MINERAL RESOURCES
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GOLD SILVER
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Cut off grade Type Tonnes Grade g/t Ounces Grade g/t Ounces
g/t Au (000s) Au (000s) Ag (000s)
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0.30 Gold 75,810 0.92 2,232 5.51 13,432
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The Company also holds a 100% interest in the Lo Increible 4A and 4B Concessions in Venezuela, for which the Company has reported estimates of measured resources of approximately 4.2 million tonnes (Mt) at a mean grade of 2.3 g/t Au and indicated resources of approximately 9.2 Mt at a mean grade of 2.1 g/t Au for a combined total of 940,000 ounces Au, estimated using a cut-off grade of 0.5 g/t Au. The Company is continuing its efforts to obtain an exploitation permit to allow development of its Lo Increible properties in Venezuela when circumstances there allow.
Medoro has ceased expending its funds on exploration activities on its Mali exploration properties, while it seeks possible joint venture partners to finance further exploration of these properties.
Qualified Persons
Scott Wilson of Scott E. Wilson Consulting, Inc. of Englewood, Colorado prepared the Marmato Project resource estimates and also prepared the National Instrument 43-101 technical reports for each of the three individual properties comprising Medoro's Marmato Project as follows: "Technical Report, Medoro Resources Ltd., Marmato Project, Mineros Nacionales, Zona Baja Property, Department of Caldas, Republic of Colombia" dated as of January 20, 2010; "Technical Report, Colombia Goldfields Ltd., Marmato Project, Zona Alta Property, Department of Caldas, Republic of Colombia", dated October 14, 2009; and "Technical Report, Medoro Resources Ltd., Marmato Project, Echandia Property, Department of Caldas, Republic of Colombia" dated November 9, 2009 (the "Marmato Technical Reports"). Mr. Wilson is an independent qualified person as defined by NI 43-101 and has prepared or reviewed the preparation of the information which forms the basis of the scientific and technical disclosure in respect of the Marmato Project properties contained in this press release. He is a Certified Professional Geologist and member of the American Institute of Professional Geologists (CPG No.10965) and a Registered Member (No.4025107) of the Society of Mining and Metallurgy and Exploration, Inc., a professional association and designation recognized by the Canadian regulatory authorities. For more information, please see Medoro's press release dated March 8, 2010, and the Marmato Technical Reports, all of which are filed on SEDAR at and available on the Company's website.
Dr. Mike Armitage, C. Eng., C. Geol., PhD and member of the Institution of Materials Mining and Metallurgy, of SRK Consulting (UK) authored the "Updated Independent Technical Review of the Lo Increible Gold Prospect, Bolivar State, Venezuela", dated April 27, 2009 (the "Increible Report"). Dr. Armitage is an independent qualified person as defined by NI 43-101 and has prepared or reviewed the preparation of the information which forms the basis of the scientific and technical disclosure in respect of the Increible Concessions contained in this press release. For more information, please see the Increible Technical Report, which is filed on SEDAR at and available on the Company's website.
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of Medoro and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Medoro to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Medoro disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. 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. In particular, there can be no assurance that Medoro will be able to obtain financing for its share of the purchase price on terms satisfactory to Medoro, or at all. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
Neither 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.
Contacts
John Hick
President & CEO
(416) 603-4653
jhick@medororesources.com
Linda Dorrington
Director
Investor Relations
(416) 603-4653
ldorrington@medororesources.com |
