Ser­abi to buy Coringa from An­field Gold for $22M (U.S.)

Stockwatch Daily - - MINES & METALS - Mr. Michael Hodg­son re­ports

ON NOV. 13, 2017, Ser­abi Gold PLC signed a con­di­tional ac­qui­si­tion agree­ment to ac­quire 100 per cent of the is­sued share cap­i­tal and in­ter­com­pany debt of Chap­leau Re­sources Ltd., a Cana­dian reg­is­tered com­pany wholly owned by An­field Gold Corp., which holds the Coringa gold project lo­cated in the Ta­pa­jos gold prov­ince in Para, Brazil.

Coringa hosts a min­eral re­source es­ti­mate of 376,000 ounces of gold, in­clud­ing an in­di­cated re­source of 195,000 ounces of gold with an av­er­age grade of 8.4 grams per tonne, which has been pre­pared in ac­cor­dance with the re­port­ing re­quire­ments of the stan­dards of Na­tional In­stru­ment 43 101. Es­ti­mated min­eral re­serves in­cluded with the min­eral re­source are 160,000 ounces of gold with an av­er­age grade of 8.4 g/t. Coringa is lo­cated about 70 kilo­me­tres to the south­east of the town of Novo Pro­gresso which is ap­prox­i­mately 130 kilo­me­tres by road to the south of Ser­abi’s cur­rent min­ing op­er­a­tions at Pal­ito.

Ser­abi will ac­quire the en­tire is­sued share cap­i­tal of Chap­leau to­gether with its out­stand­ing in­ter­com­pany debts owed to An­field. Ser­abi will make an ini­tial pay­ment to An­field on clos­ing of the trans­ac­tion of $5-mil­lion (U.S.) in cash. A fur­ther $5-mil­lion (U.S.) in cash is payable within three months of clos­ing and a fi­nal pay­ment of $12-mil­lion (U.S.) in cash will be due upon the ear­lier of either the first gold be­ing pro­duced or 24 months from the date of clos­ing. The to­tal pro­posed con­sid­er­a­tion for the ac­qui­si­tion amounts to $22-mil­lion (U.S.) in ag­gre­gate. The board of Ser­abi con­sid­ers that the ini­tial con­sid­er­a­tion and the first in­stal­ment of the de­ferred con­sid­er­a­tion can be set­tled from an ex­ten­sion of its ex­ist­ing loan fa­cil­i­ties and cur­rent cash hold­ings (which, as at Sept. 30, 2017, were $9.75-mil­lion (U.S.)) and is eval­u­at­ing its op­tions for the longer-term devel­op­ment fi­nance re­quire­ments of the Coringa project and the com­pany’s ex­ist­ing or­ganic growth prospects.

Michael Hodg­son, chief ex­ec­u­tive of­fi­cer of Ser­abi, com­mented:

“Coringa is an ad­vanced gold project that we have been in­ter­ested to ac­quire for some time and know well. It al­ways ap­peared to us to be an ex­cel­lent bolt-on op­por­tu­nity to ex­pand Ser­abi’s pro­duc­tion and lever­age our ex­ist­ing in­fra­struc­ture and man­age­ment. An­field’s re­cent NI 43-101-com­pli­ant fea­si­bil­ity study for Coringa shows ro­bust eco­nomics as a stand-alone project and I am sure that, with our ex­pe­ri­ence and re­sources, we can both re­duce the up­front con­struc­tion and devel­op­ment costs, as well as gen­er­ate oper­at­ing costs syn­er­gies with our ex­ist­ing op­er­a­tions.

“Last year An­field un­der­took a 26,400-me­tre in­fill drilling pro­gram at Coringa, in­clud­ing 183 ex­plo­ration holes over the prin­ci­pal Meio, Serra and Galena veins. An­field also com­pleted the ac­qui­si­tion of a 750-tonne-per-day crush­ing, milling and CIP process plant for Coringa and in­vested in essen­tial ini­tial in­fra­struc­ture in­clud­ing a 200-per­son ac­com­mo­da­tion fa­cil­ity, of­fices and lab­o­ra­tory fa­cil­i­ties.

“An­field’s fea­si­bil­ity study projects that Coringa will pro­duce an av­er­age of 32,000 ounces over the life of the minable re­serves. This in­cre­men­tal pro­duc­tion, over and above our cur­rent lev­els, makes this project work very well for us. As well as this near-term gold pro­duc­tion growth, the fea­si­bil­ity study high­lights a num­ber of other ar­eas of ge­o­log­i­cal in­ter­est within the ten­e­ment hold­ings of over 13,000 hectares. As we are find­ing with our Sao Chico and Pal­ito ore­bod­ies, I feel there is sig­nif­i­cant op­por­tu­nity to ex­pand the re­source and ex­tend the life of the op­er­a­tion well into the fu­ture.

“With An­field now in­volved in a merger with Trek Min­ing and New­cas­tle Gold, we have taken the op­por­tu­nity to ac­quire the Coringa project which, whilst no longer core for this en­larged en­tity, makes clear sense for Ser­abi of­fer­ing an ob­vi­ous op­por­tu­nity to grow.”

Chap­leau owns 100 per cent of the shares of Chap­leau Ex­plo­racao Min­eral Ltda. Chap­leau Brazil holds min­eral rights con­sist­ing of seven con­ces­sions to­talling 13,648 hectares, in­clud­ing Coringa. Chap­leau also owns 100 per cent of the shares of Chap­leau Re­sources (USA) Ltd. which holds a 10-per-cent in­ter­est in the Patty joint ven­ture cov­er­ing 616 min­ing claims in Ne­vada, United States. The other JV par­tic­i­pants are Bar­rick

Gold U.S. Inc. and McEwen Min­ing Inc. The pro­jected costs to Chap­leau USA for 2018, in re­spect of the JV, are ap­prox­i­mately $20,000 (U.S.).

An­field pro­poses to hold its share­holder meet­ing to ap­prove the pro­posed trans­ac­tion on Dec. 19, 2017, and clos­ing is an­tic­i­pated to oc­cur shortly there­after.

Ser­abi’s plans for Coringa fol­low­ing clos­ing of the ac­qui­si­tion

Ser­abi in­tends to con­tinue the work started by An­field on the per­mit­ting and li­cens­ing process and will, to any ex­tent nec­es­sary, com­plete the EIS and any sup­ple­men­tary work re­quested fol­low­ing its ini­tial sub­mis­sion to the rel­e­vant Brazil­ian gov­ern­ment de­part­ments for ap­proval. Ser­abi will re­view the cost es­ti­mates con­tained in the fea­si­bil­ity study and op­ti­mize these, pre­pare its own devel­op­ment plan, and eval­u­ate al­ter­na­tive con­struc­tion devel­op­ment and pro­cess­ing op­tions that Ser­abi’s man­age­ment could en­hance the eco­nomics of the project.

Fol­low­ing clos­ing, devel­op­ment and con­struc­tion at Coringa will be placed on care and main­te­nance whilst the per­mit­ting process is com­pleted.

We seek Safe Har­bor.

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

Hec­tor Aquiles Ale­gria Olate, Ni­co­las Ra­mon Bana­dos Lyon, Ter­ence Sean Har­vey, Michael Jonathan Hodg­son, Clive Mal­colm Line, Juan Ed­uardo Ros­selot, Felipe Swett Lira, Melvyn Wil­liams

(SBI) Shares: 698,701,772

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