Acquisition of Production Plant in Choco, Colombia

RNS Number : 6146G

Bezant Resources PLC

31 May 2017

 

31 May 2017

Bezant Resources Plc

("Bezant" or the "Company")

Agreement for Acquisition, Commissioning & Operation of Initial Gold-Platinum Production Plant in Choco, Colombia

Bezant (AIM: BZT), the AIM quoted mineral exploration and development company, announces that yesterday, 30 May 2017 it signed an agreement with Exumax S.A.S. ("Exumax") (the "Mining Services Agreement"),encompassing the acquisition, commissioning and operation of the Company's first gold-platinum production plant  with commissioning targeted to occur during Q2/Q3 2017.  In connection with the Mining Services Agreement, the Company has also signed an agreement to acquire a Panamanian special purpose vehicle, Kellstown Investments Corp ("Kellstown") (the "Acquisition Agreement"). Kellstown via its wholly owned subsidiary owns both a processing plant and mobile test plant (the "Mining and Exploration Equipment") and certain other mining equipment (the "Equipment") which will be utilised in mining operations on the Company's FKJ-083 mining licence in Colombia. Kellstown also holds, inter alia, intellectual property rights in relation to the Mining and Exploration Equipment, and certain proprietary geological information and other data and intellectual property rights for use by Exumax in performing its services under the Mining Services Agreement.

Exumax is a private Colombian based alluvial mining company which, since September 2016, has been progressing the Company's exploration and development programme on its near surface platinum and gold assets located in the Choco Region of Colombia (the "Choco Alluvial Gold-Platinum Project").

Highlights:

·      Under the terms of the agreements signed, Bezant has acquired a fully-equipped, purpose built modern alluvial processing plant currently situated in Colombia and ready for mobilisation to site:

o  Mercury-free alluvial processing plant capable of processing up to 100m³ of material per hour (approximately 150 tonnes per hour)

o  First modern plant of its kind to be utilised on the deposit

·      In addition, engineering blue prints and all technical plans, schematics and data acquired, to enable Bezant to replicate and manufacture similar processing plants in Colombia

·     Experienced Colombian mining contractors, Exumax, will shortly commence mining operations on the Company's FKJ-083 licence area

Key objectives include:

-    Commencement of earthworks to allow mining to commence

-    Plant commissioning targeted for Q2/Q3 2017

-    Recovery of first platinum and gold within two months of commencement of mining operations

·      Exumax, established in 2010, is focused on the alluvial mining industry:

o  Senior management comprises both Australian and Colombian mining professionals

o  Over six years' experience of operating alluvial mining projects in Colombia

o  Emphasis on community relations and best practice environmental management

·      Operations will be based at the mining camp used for exploration, which includes a platinum and gold storage room and is located close to the town of Condoto and its nearby airport

Bernard Olivier, CEO of Bezant, today commented:

"Our focus on achieving initial gold-platinum production in the short-term is progressing well and this new agreement evolves our existing relationship with Exumax from being exploration partners to mining partners with their equipment, experience and personnel secured for use by Bezant. We shall now progress our first recovery plant into production over the coming months with the intention of realising a low-cost gold-platinum model that can be replicated quickly and cheaply across the Choco region. Our intention remains to generate shareholder value from a revenue producing precious metals portfolio with highly robust margins."

Pedro Martins da Costa, CEO of Exumax, today commented:

"We are delighted to be initiating the mining phase and believe this agreement reinforces the alignment between our respective companies. We look forward to achieving the first pour in the coming months and appreciate the Company's trust being placed n Exumax towards meeting a common objective."

Further Information

Mining Programme

The initial focus of Bezant's planned mining programme with Exumax (the "Mining Programme") will comprise the FKJ-083 licence area, which was historically mined between 2007 and 2012. To date, the Company has focused its exploration programme on this historic production area and the information obtained was used by independent consultants in the preparation of an independent scoping study, the results of which were announced on 8 March 2017, which projected, inter alia, a total cost of production of US$768 per ounce for platinum and gold recoveries over a 12-month operational period.

Current Operations

As announced previously, the historical mining camp office, laboratory facilities and storage area have already been renovated as part of the Company's exploration programme. Exumax will now proceed to mobilise the Mining and Exploration Equipment and its personnel to site, with earthworks targeted to commence within the next four weeks. The key objectives include the recovery of initial platinum and gold within two months of commencement of mining operations.

Summary of the Mining Services and Acquisition Agreements

As noted above, in connection with the Mining Services Agreement, Bezant has also agreed to acquire a special purpose vehicle, Kellstown, which via its wholly owned subsidiary owns the Mining and Exploration Equipment and certain associated Equipment.  The modern, New Zealand style, alluvial processing plant is capable of processing up to 100 m³ of material per hour (approximately 150 tonnes per hour). The processing plant is fully equipped and currently situated in Medellin, Colombia and ready for mobilisation to site. This zero mercury, modern processing plant will be the first of its type to be utilised on the deposit. In addition, Bezant has acquired the engineering blue prints and all technical plans, schematics and data pertaining to the processing plant which going forwards will enable it to engage Colombian engineering firms to replicate and manufacture similar processing plants locally for use on its  Colombian licence portfolio.

Acquisition Agreement

A share purchase agreement (the "SPA") has been entered into between the Company and Exumax's parent company, Verona Investment Group Inc. ("Verona").  Pursuant to the terms of the SPA, the Company is acquiring the entire issued share capital of Kellstown, whose 100% owned subsidiary, Andean Mining S.A.S. ("Andean Mining"), owns the Equipment, from Verona for an upfront cash payment of US$200,000 and initial equity consideration comprising the issue of 25 million new ordinary shares of 0.2 pence each in the capital of the Company ("Ordinary Shares") (the "Tranche One Consideration Shares") to Verona on Completion. Deferred consideration comprising of a further 15 million Ordinary Shares will be payable when the plant being acquired has for 10 consecutive scheduled work days processed 900m³ of material per day (the "Tranche Two Consideration Shares"). The Tranche One Consideration Shares and Tranche Two Consideration Shares represent approximately 11.6 per cent. of the Company's issued share capital as enlarged by the issue of such consideration shares. Post Completion, Andean Mining will owe an amount of approximately US$162,000 to Exumax being the balance due in relation to the Equipment and which is payable by 31 July 2017. Accordingly, Bezant will be assuming this agreed liability.

The acquisition of Kellstown, as well as the Equipment, provides Bezant with ownership of certain valuable proprietary data and related intellectual property rights developed by Verona, including geological information, geographic mapping information, information in relation to environmental regulations and requirements, and CAD designs in respect of the Mining and Exploration Equipment, for use by both Bezant and Exumax in conducting the planned Mining Programme. 

Pursuant to the SPA, the existing guarantee fee will continue to be payable to Verona at a rate of US$5,000 per month, for the duration of the Mining Services Agreement, in order to guarantee the performance of Exumax's basic obligations under such Mining Services Agreement, including the use of its in house team and its expertise in operating and building the Mining and Exploration Equipment.

The SPA contains various warranties, including in relation to title and capacity, of the type customarily found in agreements of this nature.

The SPA is legally binding and mobilisation of the Mining and Exploration Equipment will now commence.  Completion of the acquisition of Kellstown remains subject, inter alia, to the delivery of certain ancillary legal documentation and the issue of the Tranche One Consideration Shares.  The issue of the Tranche One Consideration Shares and completion of the acquisition is currently expected to occur by 7 June 2017 ("Completion") and a further announcement will be made in due course in this regard.

Mining Services Agreement

The Mining Services Agreement has been entered into between Exumax and Bezant's wholly owned Colombian subsidiary, Ulloa Recursos Naturales S.A.S. for a period lasting until 31 December 2019, to secure Exumax's management services and expertise for mining and exploration work, in respect of the Company's Choco Gold-Platinum Project.  Pursuant to the terms of the Mining Services Agreement, Bezant has agreed to reimburse Exumax its monthly budgeted costs plus a 10 per cent. management fee incurred in conducting the mandated Mining Programme and the provision of certain related accounting and administrative services.

For further information, please contact:

Bezant Resources Plc Bernard Olivier Chief Executive Officer Laurence Read Executive Director / Communications Officer                            Strand Hanson Limited (Nomad)  James Harris / Matthew Chandler / James Dance Beaufort Securities Limited (Broker)  Elliot Hance or visit http://www.bezantresources.com

Tel: [phone] Tel: [phone] Tel: [phone] Tel: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR").

Notes to Editors:

Exumax (www.exumax.co) is a private Colombian based alluvial mining company, with over 6 years' experience of operating mines in Colombia. It has a well-established and knowledgeable local team that, inter alia, provide and manage a turnkey mining exploration and development solution for Bezant's wholly owned Colombian subsidiary, Ulloa Recursos Naturales S.A.S. The principals of Exumax have over 50 years' of combined operating experience in the mining and construction industry in South America and have developed extensive proprietary mining expertise over this period.  The special purpose alluvial mining equipment acquired by the Company from Exumax was developed in, and imported by Exumax from, New Zealand, for use in low-cost alluvial extraction projects focused on precious metals, such as the Company's Choco Alluvial Gold-Platinum Project and the operating capacities of the Mining and Exploration Equipment were applied in developing the models used in the independent scoping study, the results of which were announced by Bezant on 8 March 2017. Exumax prioritises community relations and best practice environmental management as key components to building successful mining operations in-country.

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