Serabi to buy Coringa from Anfield Gold for $22M (U.S.)
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 (firstname.lastname@example.org).
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