Orosur Signs Anillo Option LOI for Non-Dilutive...

Orosur Signs Anillo Option LOI for Non-Dilutive Funding of Up to US$3.5 Million

Orosur Mining Inc.

Orosur Mining Inc. (“Orosur” or the “Company”) (TSX:OMI) (AIM:OMI), a South American-focused gold producer, developer and explorer is pleased to announce that it has signed a non-binding letter of intent (“LOI”) to option its interest in the Anillo project (“Anillo”) in Chile to Asset Chile Exploración Minera Fondo de Inversión Privado (“AC”).

The LOI provides for a 45 day period of exclusivity (the "Exclusivity Period") to complete due diligence and negotiate and enter into a definitive option agreement and any other required documentation (the "Option Agreement").

The LOI contemplates that the Option Agreement (if entered into) will provide that AC may earn up to a 40% interest in Orosur’s interest in Anillo (the “Transaction”) pursuant to the following phased earn-in milestones (“Option”):

                                 
      Units     Phase 1     Phase 2     Phase 3     Total  
Funding                                
Orosur Funding     US$     $100,000     $200,000     -     $300,000
AC Funding     US$     $850,000     $1,250,000     $1,375,000     $3,475,000  
Net Interest¹                                
Orosur Interest % 84% 67.5% 60% 60%
AC Interest     %     16%     32.5%     40%     40%  
Exploration                                
Drilling Metres 3,600 5,500
Timing Months 10 18
 

Note 1: Orosur’s option agreement with Corporación Nacional del Cobre de Chile (“Codelco”) enables it to earn a 65% interest in Anillo by spending in excess of US$3 million (which has now been completed) and completing a Feasibility Study (“FS”) prior to January 2020, which may be extended by Codelco for a further two years to January 2022 if Orosur has a discovery and has defined a mineral resource by 2020.

 

Ignacio Salazar, CEO of Orosur, said:

“After finalising the extension of the Codelco option term to January 2020, as announced on 5 November, 2014, we are delighted to have entered into an LOI with Asset Chile to option a minority share in our interest in the Anillo project. The Option Agreement will entail Asset Chile spending up to US$3.5 million in a three phased option and committing exploration expenditures to earn up to a 40% of Orosur’s interest. The objective of this expenditure is to make a discovery at Anillo.

This transaction is non-dilutive to Orosur shareholders and enables further exploration work to continue at Anillo with limited capital requirements by Orosur. We look forward to closing the transaction and welcoming Asset Chile as partners in our exploration efforts at Anillo.”

The LOI also contemplates that the Option Agreement (if entered into) would provide that Orosur would incorporate a new wholly owned subsidiary of Fortune Valley Resources, Inc. (“Newco”) and transfer or assign the Codelco option agreement to Newco. AC would then initially subscribe for an amount of Newco common shares (the “Shares”) equal to the 16% of the capital of the Newco for gross proceeds of US$850,000. AC would then have the option to elect to earn into up to 32.5% and up to 40%, by funding an additional US$1,250,000 and up to US$1,375,000, pursuant to the Option outlined above. Should AC not pay in full for the Shares in Phase 1, it shall be required to pay Orosur a break fee equivalent to US$250,000, unless the failure to pay is as a result of CORFO not approving the Transaction, in which case, AC shall be required to pay Orosur their accrued expenses incurred with respect to the Transaction. Should Orosur not fulfil its funding or other obligations, it would be required to pay AC a break fee equivalent to US$50,000.

Within 60 days of completion of the Phase 1 and Phase 2 exploration programmes, respectively, AC will have the obligation to notify Orosur in writing of its decision to elect to proceed. Should AC not fund the purchase of common shares in Phase 2, its interest in Newco shall be cancelled.

The Option Agreement would contain terms to provide that Orosur will remain the operator of Anillo and that each of Orosur and AC, as shareholders of Newco, will be equally represented on the Board of Directors of Newco and on the Technical Committee, each comprising four members. All funding proceeds would be used to perform exploration activities and studies as directed and agreed by the Technical Committee and shall be focused on generating a discovery at Anillo.

The LOI contemplates that Phase 1 exploration shall include a geophysics campaign and a minimum of 3,600 metres of Reverse Circulation (“RC”) drilling and have an estimated duration of up to 10 months. Phase 2 shall include an additional geophysics campaign and a minimum of 5,500 metres of RC drilling and have an estimated duration of up to 18 months. Phase 3 shall include further geophysical work and additional RC drilling and have an estimated duration of up to 18 months.

Amongst other customary conditions, closing of the Transaction shall be subject to the following conditions:

  • Completion of due diligence
  • Execution of the Option Agreement
  • CORFO accepting the Transaction.
  • Receipt of Phase 1 funding by Newco from AC and Orosur
  • Transfer of Orosur’s option agreement with Codelco into Newco
  • Regulatory approval, if any; and
  • Approval of the Board of Directors of Orosur

About Asset Chile

Asset Chile is a Chilean investment bank, market leader in mergers and acquisitions, financing and asset management group with over 30 years of experience and special emphasis in the mining, infrastructure, energy and forestry sectors. In 2011, Asset Chile created a mining exploration fund with initial funds under management of US$25 million. The fund is part of the “Fenix” program sponsored by CORFO and the Chilean Ministry of Mines. The fund’s business model is to finance exploration works of reputable mid and small size mining operators with attractive tenements.

For more information please visit www.orosur.ca.

Forward Looking Statements

This news release contains forward looking information including information as to the completion of the Transaction, funding under the Option, timing of entering into definitive documentation; and future financial or operating performance of the Company. There can be no assurance that such statements will prove to be accurate, such statements are subject to significant risks, uncertainties and other factors and actual results and future events could differ materially from those anticipated in such statements. Such factors include, among others, negotiating definitive documentation, satisfying conditions to closing the proposed Transaction, success of exploration activities; permitting time lines; the failure of plant; equipment or processes to operate as anticipated; accidents; labour disputes; requirements for additional capital, title disputes or claims and limitations on insurance coverage. The Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events and such forward-looking statements, except to the extent required by applicable law.

About Orosur Mining Inc.

Orosur Mining Inc. is a fully integrated gold producer, developer and exploration company focused on identifying and advancing gold projects in South America. The Company operates the only producing gold mine in Uruguay (San Gregorio), and has assembled an exploration portfolio of high quality assets in Uruguay, Chile and Colombia. The Company is quoted in Canada (TSX: OMI) and London (AIM: OMI).

Orosur Mining Inc.
Ignacio Salazar, + 562 2924 6800
Chief Executive Officer
info@orosur.ca
or
Cantor Fitzgerald Europe
Stewart Dickson / Jeremy Stephenson
+44 (0) 20 7894 7000
or
FTI Consulting
Ben Brewerton / Oliver Winters / Sara Powell
+44 (0) 20 3727 1000

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