Emerita to ac­quire Salo­bro zinc project for US$6.5M

Emerita Re­sources Corp. has agreed to ac­quire the Salo­bro zinc project in Brazil for $6.5-mil­lion (U.S.). The com­pany will pay the pur­chase price in cash over seven years to Vale SA.

Stockwatch Daily - - FRONT PAGE - Mr. Joaquin Merino re­ports

EMERITA RE­SOURCES Corp. has en­tered into a de­fin­i­tive agree­ment with Vale SA and IMS En­gen­haria Min­eral Ltda., pur­suant to which Emerita has agreed to ac­quire the Salo­bro zinc project, lo­cated in the mu­nic­i­pal­ity of Porteinha, Mi­nas Gerais state, Brazil.

The Salo­bro project

The Salo­bro project com­prises two min­ing ap­pli­ca­tions cov­er­ing 1,209.75 hectares. The thick­est in­ter­cept to date is 13.92 me­tres grad­ing 10.39 per cent zinc and 2.13 per cent lead. The known min­er­al­iza­tion oc­curs in three lenses, all of which re­main open for ex­pan­sion by fur­ther drilling. A sum­mary of the his­tor­i­cal re­source es­ti­mate can be found on the com­pany’s web­site. Ac­cord­ing to the re­port, the Salo­bro project de­posit is es­ti­mated to con­tain 8.3 mil­lion tonnes grad­ing 7.12 per cent zinc plus lead.

The de­fin­i­tive agree­ment:

Pur­suant to the de­fin­i­tive agree­ment, Emerita agrees to pay $6.5-mil­lion (U.S.) in cash to Vale. The cash pay­ments will be made by Emerita over seven years on the fol­low­ing sched­ule:

• $350,000 (U.S.) within 30 days from the date that the re­quest for as­sign­ment of the min­ing rights, which com­prise the Salo­bro project, to Pur­chaseCo is filed by IMS or Emerita with the DNPM, Brazil’s na­tional min­ing agency, and sub­se­quent to Vale its pend­ing claims against IMS;

• $1.65-mil­lion (U.S.) on or be­fore the first an­niver­sary of the de­fin­i­tive agree­ment;

• $1.5-mil­lion (U.S.) on or be­fore the third an­niver­sary of the de­fin­i­tive agree­ment;

• $3-mil­lion (U.S.) on or be­fore the sev­enth an­niver­sary of the de­fin­i­tive agree­ment.

The rights to the Salo­bro project are cur­rently sub­ject to lit­i­ga­tion be­tween Vale and IMS. In con­nec­tion with this trans­ac­tion, Vale will with­draw its claims pe nd­ing against IMS in the Civil Court of Belo Hor­i­zonte in re­spect of the amounts Vale claims are ow­ing to it in re­la­tion to IMS’s pre­vi­ous ac­qui­si­tion of the Salo­bro project. Such claims cur­rently are reg­is­tered as en­cum­brances on the min­ing rights. Emerita will pay Vale’s le­gal fees and court costs in con­nec­tion with with­draw­ing such claims. Vale’s le­gal fees are 750,000 Brazil­ian reais (ap­prox­i­mately $300,000), and its court costs are es­ti­mated to be 10,000 Brazil­ian reais (ap­prox­i­mately $245,000 (U.S.), or $315,000, in to­tal). Pur­chaseCo shall hold the Salo­bro project in trust for Vale un­til the con­sid­er­a­tion has been fully paid by Emerita.

The IMS bind­ing let­ter of in­tent

Emerita and IMS have en­tered into the bind­ing let­ter of in­tent pur­suant to which Emerita has agreed to in­cor­po­rate and or­ga­nize Pur­chaseCo. Emerita will own 75 per cent of the vot­ing se­cu­ri­ties of Pur­chaseCo and IMS will own 25 per cent of the vot­ing se­cu­ri­ties of Pur­chaseCo.

As con­sid­er­a­tion for IMS trans­fer­ring the rights to the Salo­bro project to Pur­chaseCo, Emerita shall is­sue one mil­lion com­mon shares in the cap i tal of Emerita to IMS or its nom­i­nee on the date the DNPM ap­proves the trans­fer of the min­ing rights from IMS to Pur­chaseCo.

Emerita has the right to ac­quire IMS’s 25-per-cent in­ter­est in Pur­chaseCo, up to 48 months from the date of de­fin­i­tive agree­ment ex­e­cu­tion, by pay­ing $2-mil­lion in cash to IMS or its nom­i­nee and is­su­ing an ad­di­tional one mil­lion Emerita shares to IMS or its nom­i­nee. Emerita and IMS ex­pect to sign a de­fin­i­tive agree­ment within the next 90 days.

David Gower, chair­man of Emerita, com­mented: “Emerita is ex­cited to com­mence work on such an ex­cit­ing zinc project. The Salo­bro de­posit min­er­al­iza­tion was de­lin­eated by the highly re­spected tech­ni­cal group of Vale and re­mains open for fu­ture ex­pan­sion. The project is lo­cated in an area with ex­cel­lent in­fra­struc­ture and a sup­port­ive en­vi­ron­ment for re­spon­si­ble mine de­vel­op­ment. Emerita has an ex­cep-

tional tech­ni­cal team in Brazil and is ready to ad­vance the project quickly.”

Joaquin Merino, pres­i­dent and chief ex­ec­u­tive of­fi­cer of Emerita, stated: “This is an ex­cep­tional op­por­tu­nity for Emerita given the suc­cess­ful drilling to date by the pre­vi­ous op­er­a­tors. Emerita also con­tin­ues to be fully com­mit­ted to ac­quir­ing the Az­nal­col lar zinc pro ject in Spain and, with suc­cess, will have a very strong, ad­vanced zinc project port­fo­lio go­ing for­ward.”

The com­pany also an­nounces that the non-bind­ing let­ter of in­tent with a large min­ing com­pany re­gard­ing the pro­posed ac­qui­si­tion of the Masa Valverde project by the com pany has bee n ter­mi­nated.

We seek Safe Har­bor.

Erika Flores con­densed this news re­lease (erikaf@stock­watch.com).

Mar­ilia Bento, David Pa­trick Gower, Joaquin Merino-Mar­quez, David Michael Pat­ter­son, Cather­ine Stretch, Colin David Watt

(EMO) Shares: 95,919,829

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