Angel Gold hopes to file El Porvenir report by Jan. 15
2015-01-05 09:08 ET - Shareholders Letter
Ms. Stella Frias reports
ANGEL GOLD PRESIDENT'S LETTER TO SHAREHOLDERS
Angel Gold Corp. president Stella Frias has released a letter to the company's shareholders.
Dear Angel shareholders and friends,
With 2014 now behind us, I wanted to take a few moments to reflect on the past year, with my perspective as president and chief executive officer, and to outline our plans for the year ahead. Despite a challenging year for junior resource companies, in some ways more so for those operating in Colombia, we were able to finance the company, keep operating and make an extensive review of properties in Colombia. I want to sincerely thank you for your continuing support through this time as we sought to bring a new project into our portfolio with the potential to provide value for Angel's shareholders in the future.
After closing our financing in March, a plan to cut costs and to add a robust property to our portfolio during this market downturn was implemented. We reduced the company payroll to the minimum required to fulfill the Colombian regulations to keep operating and began working with the former employees as consultants on a daily basis according to our needs. Also, the rental of vehicles and buildings, travel, and some other business-related expenses was reduced to the absolute minimum. I spent the majority of the year in Colombia leading the efforts to identify a property that matched our strict selection criteria and expectations.
In April, as part of the cost-cutting plan and after a thorough review, it was concluded that, although the exploration program at El Cafetal did encounter gold mineralization, over all, the results did not fully meet expectations. In light of this, and coupled with the fact that a further cash payment of $100,000 (U.S.) was due, management recommended and the board approved terminating the option agreement for the El Cafetal property.
The reorganization of the mining sector by Colombian President Santos in creating the National Mining Agency, the new regulations and the turmoil created by the Paramos declaration made Colombia complicated. The huge area declared "temporal reserve" under the "precaution principle" took many properties out of the market. The government halted the issuance of new mining titles, regardless of the status of the application, forcing many companies to change plans or to leave the country.
Regardless of changes in Colombia and the world economy problems, our extensive search for properties that began in 2013 with field visits continued in 2014 with the collection of information for the legal review of numerous properties. Our first consideration was to eliminate any properties that had environmental conflicts. Authorized by the owners and under confidentiality agreements, we reviewed the legal and technical files of more than 100 properties. In some cases, the review required reading hundreds of pages of legal documents to arrive at the conclusion that negotiations for the property were not feasible.
As the review of properties advanced, the highly prospective exploration areas put on the market by Mineros SA at the 2013 Medellin Mining Conference became increasingly attractive. After reviewing technical data and meeting with the technical team, we decided to make an offer for certain mining titles and to name them the El Porvenir project. Following a number of meetings between Angel and Mineros to discuss and agree on the main terms -- option value, term, payments schedule and net smelter royalty (NSR), the first draft of the agreement was sent to the lawyers for review.
Both companies agreed that all of the measures to prevent conflicts were needed in that contract, thus each clause required work to accomplish the goal. An experienced team of civil, commercial and mining lawyers worked on a contract that, without doubt, will be a model for this kind of agreement in the future. Hours of discussion drove us to the conclusion that some of the legal wording used in the past was not correct and that we needed to look into the laws for other more secure and enforceable options.
On Nov. 24, Angel announced that as part of its acquisition strategy it had entered into an option agreement with Mineros SA, a private Colombian mining company, to acquire 100 per cent of the El Porvenir gold property, a property comprising approximately 5,945 hectares and situated within the Segovia-Remedios gold belt in the department of Antioquia, Colombia.
On Nov. 28, the trading of Angel's common shares was halted by the TSX Venture Exchange, pending a review of the company's proposed acquisition of Mineros's El Porvenir property. The acquisition of the property is a fundamental acquisition, and therefore constitutes a reviewable transaction, pursuant to the policies of the TSX-V. On Nov. 28, 2014, Angel Gold received conditional approval to the acquisition, and final approval is pending subject to the filing of certain documentation, including a National Instrument 43-101-compliant technical report.
The day after the agreement signature, a team lead by me and James G. Burns, PEng, a qualified person under NI 43-101 and a technical consultant to the company, began working on the El Porvenir project due diligence and the technical report. We anticipate filing the final draft of the report with the TSX-V on or before Jan. 15, 2015.
The El Porvenir project represents a significant exploration opportunity in the Segovia-Remedios gold belt, historically the largest gold-producing region in Colombia. It is strategically located adjacent to Gran Colombias flagship Segovia gold project, which is currently producing 80,000 ounces per year with plans to triple production by the end of 2015.
Historically, the Segovia area has produced approximately 4.6 million ounces of gold(1). The properties are cut by two major steep north-south-trending lateral faults, the Nus fault in the west and the Bagre fault in the east. The Nus fault is interpreted to have a dextral displacement, and the Bagre fault a sinistral displacement, both of the order of 50 kilometres. These faults subdivide the properties into three geological domains: the Jurassic-Cretaceous Segovia granodioritic batholith to the west, Early Cretaceous sediments and volcanics between the faults, and a Precambrian gneissic/migmatitic terrain to the east. Angel Gold's successful team of geologists completed an initial review of the property's well-documented historic exploration, quickly identifying four priority target areas. Further due diligence over the next 90 days will enable Angel Gold to establish a well-defined and well-targeted field exploration program with plans for follow-up drilling.
(1) Source: company reports
James G. Burns, PEng, a qualified person under NI 43-101 and a technical consultant to the company, has reviewed the technical content of this letter.
Due to changes in the regulations and the mining sector reorganization, the mining concession contracts for El Pino West and Heliconia, as with many other applications made by other companies and individuals, have been subject to multiple reviews by the mining authorities. The company has filed a considerable number of updates to the information provided with the applications filed on Sept. 21, 2010, and subsequent updates made in 2013.
Both the El Pino West and Heliconia have received favourable technical concept status from the Secretary of Mines of Antioquia. The minimum exploration program (format A) fulfills the given values. The legal advisors of Angel Gold Colombian subsidiary believes that there is no valid reason for the authority to further delay the granting of the mining concession contracts for these properties. The company has taken all the measures provided by the law to secure its rights, and we are hoping for a timely and favourable outcome.
Finally, our dedicated management and the main persons from our strong Colombia-based team remains intact and are now focused with our objective of having the transaction for the El Porvenir project approved and moving forward with an exploration plan.
I invite investors to contact Angel Gold's authorized shareholder communications representative at Contact Financial directly for information regarding the company and its projects.
Thank you again for your support, and I look forward to sharing future developments with you.
On behalf of Angel Gold Corp.,
Stella Frias, president and chief executive officer
We seek Safe Harbor.
© 2015 Canjex Publishing Ltd. All rights reserved.