News ALO
Alio receives $3.5M from Goldcorp exercise of warrants
2017-10-19 07:48 ET - News Release
Mr. Greg McCunn reports
ALIO GOLD RECEIVES C$3.5 MILLION FROM WARRANT EXERCISE AND BUYS BACK 1% ANA PAULA ROYALTY
Goldcorp Inc. has exercised its warrants that expire on Oct. 19, 2017, for total proceeds to Alio Gold Inc. of $3.5-million. The Company has also exercised a buy-back right from Goldcorp of a 1% net smelter royalty ("NSR") on its Ana Paula project located in Guerrero, Mexico for US$2.9 million.
"As we continue to advance the high grade, high margin Ana Paula project, the buy back of the 1% NSR is immediately accretive to the project and will deliver significant value to our shareholders over the long term," said Greg McCunn, Chief Executive Officer. "We are advancing the Definitive Feasibility Study for the Project towards completion in Q2 2018 when we expect to make an investment decision to start construction. In parallel, we have initiated an exciting US$18 million exploration program at Ana Paula to investigate the extension of high-grade mineralization below the proposed open pit. Positive exploration results are expected to enhance already robust project economics, and it therefore made sense for us to exercise our buy-back right on the 1% NSR now. We would like to thank Goldcorp for their continued support of the Company through the exercise of the warrants."
Under the terms of the original asset transfer agreement dated May 11, 2010, there was a 3% NSR on Ana Paula that Goldcorp held with the option for Alio Gold to buy back one-third (1%) for a fixed fee calculated on Measured and Indicated Resources. After analyzing the cost of paying the 1% NSR based on the current mine life, management and the Board of Directors determined that the NSR buyback has substantially greater value and cancellation of the 1% NSR is beneficial to the Company's shareholders and the economics of the Ana Paula project. After the buy-back, the NSR held by Goldcorp on Ana Paula is now 2%.
Goldcorp has exercised 1.0 million warrants at a price of C$3.50 per common share for a total exercise price of C$3.5 million. Accordingly, Goldcorp acquired ownership of 1.0 million common shares. Following the exercise, Goldcorp owns 2.45 million common shares, representing 5.48% of the issued and outstanding shares. The Company now has 44.67 million common shares issued and outstanding.