THE SALE OF CERRO PRIETO: Completed August 2013
The sale of the Cerro
Prieto
Project was concluded in August of 2013. In exchange for a 100%
interest in the project
Oroco
received from
Goldgroup
Mining the following
cosideration
:
•
US $4.5 million upon closing
•
A CAD $1 million private placement in
Oroco
Common Shares ($0.20 per unit, with each unit consisting
of a common share and a share purchase warrant with an exercise price of $0.25 good for two years),
•
5,500,000 common shares in the capital of
Goldgroup
•
A promissory note (the “First Note”) in the principal amount of $1,500,000 bearing 8% simple interest
and payable in six equal monthly installments of $250,000 each, commencing on the later of either
January 31, 2015 or the first day of the month following the date the Property achieves Commercial
Production (with “Commercial Production” being any periods of production after 1,000 ounces of gold
have been produced from the Property);
•
A second promissory note (the “Second Note”) in the principal amount of $4,125,000, bearing no
interest.
The principal amount of the Second Note will be repayable on the second anniversary of the
Transaction closing date.
Goldgroup
may elect to pay the principal of the Second Note by issuing and
delivering to
Oroco
16,500,000
Goldgroup
common shares in lieu of cash.
•
In addition,
Goldgroup
agreed to pay to
Oroco
a production royalty (the “Production Royalty”) quarterly
in arrears. The Production Royalty, payable for each month in which the monthly average of the daily
PM London gold fix is in excess of $1,250 per ounce, is calculated at the rate of 20% of the dollar value
of that excess for each ounce of gold Produced from the Property:
•
the first 90,000 ounces of gold produced from the Property; or
•
all ounces of gold produced from the Property until the completion of five full years of
Commercial Production.
In January of 2014
Goldgroup
announced the successful commissioning and initial gold
production at the Cerro
Prieto
Mine.