Toronto, Ontario (July 9, 2020) - Pasofino Gold Limited (TSXV: VEIN) (FSE: N071) (“Pasofino” or the “Company”) is pleased to announce that further to its press release dated June 11, 2020, Pasofino has entered into an agreement to acquire all the outstanding shares of ARX Resources Limited (“ARX”) (the “Transaction”).
Pursuant to the Transaction, Pasofino will issue an aggregate of 132,415,974 shares (the “Consideration Shares”) to the shareholders of ARX (the “Vendors”). Upon completion of the Transaction, the Consideration Shares issued to the Vendors will represent 49% of the outstanding shares of Pasofino. No Vendor will hold more than 9.9% of the issued and outstanding common shares of Pasofino following the completion of the Transaction. The Consideration Shares issued to the Vendors will be subject to a contractual lock-up, released in 25% installments every 6 months, with the release of the first 25% of the Consideration Shares to occur 6 months from the closing date of the Transaction. The number of Consideration Shares issued to the Vendors is subject to adjustment in the event the Company issues additional common shares prior to the closing of the Transaction.
ARX Earn-in Agreement
ARX and Hummingbird Resources plc ("Hummingbird") (AIM:HUM) are parties to an earn-in agreement (the “Earn-in”) in respect of the Hummingbird's Dugbe Gold Project ("Dugbe" or the "Project"), located in Liberia. The Earn-in entitles ARX to earn up to a 49% interest in the Project (excluding the 10% carried interest of the Government).
The key terms of the Earn-in agreement are:
1. The payment of a non-refundable US$2 million deposit (the "Initial Deposit") by ARX to Hummingbird for a three-month extendable exclusivity period.
2. Subject to ARX demonstrating initial funding of at least US$10 million (including the US$2 million Initial Deposit) within the exclusivity period, ARX has the right to operate the Project under the oversight of a joint management committee and to earn into a 49 per cent economic interest in the Project (net of any interests of the Government of Liberia and Anglo Pacific Group Plc) over a two year period through:
a) Completing a Feasibility Study, under joint management committee oversight, on the Project with the objective of being able to attract funding for the development of the Project;
b) Undertaking a mutually agreed exploration programme (estimated to be US$10 million) with the objective of materially increasing the known resource base of the Project; and
c) Covering the overhead and operating costs associated with the Project during the 2 year earn in period. (together the "Earn-in Conditions")
Subject to meeting the Earn-in Conditions, ARX has the right to be granted the 49 per cent economic interest in the Project.
3. On being granted the 49 per cent economic interest in the Project, the parties undertake to enter into a customary joint venture agreement, as well as both having the right, subject to certain protections and the receipt of all required approvals, to convert Hummingbird’s 51 per cent controlling interest in the Project into a 51 per cent controlling interest in ARX or any then listed parent company.
Whilst the Company has confidence in the ability of ARX to meet the funding conditions referred to above, there is no guarantee it will be able to, and therefore no guarantee that the Earn-in Agreement will proceed as intended.
About ARX
ARX Resources Limited is a private BVI incorporated company. ARX was founded by Stephen Dattels, a seasoned senior mining executive and resource financier who has been successful for over 30 years in numerous mining ventures, and Michael Beck, a former partner of N. M. Rothschild & Sons, who formed a partnership in the mid 1990's to jointly fund and develop resource projects in developing countries involving the full suite of mineral resources and oil & gas. Since that time they have both been involved in financings, project development and transactions involving billions of dollars on several continents in a myriad of resources including: gold, nickel, chromite, coal, iron ore, copper, uranium, lithium, cobalt, potash, titanium, industrial minerals and oil & gas.
ARX brings to the Company both a successful mine finance group and a world class operating team. The ARX team consists of Ian Stalker and members of his technical team. Ian has been responsible for developing multiple mines over several decades. He has been involved in bringing into production multiple successful African gold mines and operating same including: the Obuasi expansion for Ashanti Goldfields in Ghana, the Siguri Mine in Guinea, the Bibiani Gold Mine in Ghana and the Geita Gold Mine in Tanzania.
Mr. Stalker is an international mining executive with over forty plus years of "hands on" experience in mine development and operations in Europe, Africa and Australia. Mr. Stalker was a Vice President of Gold Fields Ltd., which at one point was the world's fourth largest gold
producer. He has successfully overseen the development of several mineral projects in Africa from defined resources through feasibility study into operational mines and thereafter continued to manage ongoing operations and expansions.
About the Dugbe Gold Project
The Dugbe Project is located in southern Liberia and situated within ‘Birimian’ aged rocks which are host to the majority of West African gold deposits. The deposits are located within 4 km of the Dugbe Shear Zone which is thought to have played a role in large scale gold mineralisation in the area. The Dugbe Gold Project comprises an area of 2,355 km2. Hummingbird carried out a large amount of exploration in the area between 2006 and 2014 including 74,497 m of diamond coring. 70,700 m of this was at the Dugbe F and Tuzon deposits, discovered by Hummingbird in 2009 and 2011 respectively. To date over $70 million has been spent by Hummingbird on the Project.
A resource estimate for Dugbe F was prepared by Wardell Armstrong International (“WAI”) in 2013 and for Tuzon an estimate was prepared by SRK Consulting (UK) Limited (“SRK”) in 2014. Work is underway to bring them current; this will require an updated pit optimisation to be carried out and a review of the support data and estimates so that a Technical Report for the project may be completed. In the interim period the resource estimates for these deposits are considered historical estimates as per NI 43-101 and are presented in Table 1. The Qualified Person has not verified the quantum of the historical estimates nor their original classification, but believes they were prepared satisfactorily by reputable mining consultants. The Qualified Person has not done sufficient work to classify the estimates as current mineral resources and so they are considered historical estimates. The Company is not treating the historical estimate as current mineral resources or mineral reserves.
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