Acquisition in Columbia Sandspring signs LOIs to acquire project in Colombia
2018-06-12 07:47 ET - News Release
Mr. Richard Munson reports
SANDSPRING RESOURCES TO ACQUIRE INTEREST IN SILVER -- GOLD PROJECT IN THE SEGOVIA-REMEDIOS MINING DISTRICT OF ANTIOQUIA, COLOMBIA AND ANNOUNCES PRIVATE PLACEMENT
Sandspring Resources Ltd. has entered into letters of intent with GA Mine Corp. and Gran Colombia Gold Corp., and its subsidiary Gran Colombia Gold Segovia SA, pursuant to which the company proposes to acquire all exploration, development and mining rights to a 386-hectare area in the Segovia-Remedios mining district of Antioquia, Colombia, that includes the historic silver-gold-producing Guia Antigua mine.
The project area lies within a mining title in the Segovia area that has been and will continue to be held by Gran Colombia. However, the project area lies outside of the areas of Gran Colombia's principal mining operations in the Segovia area. The Guia Antigua vein that is the current focus of the project appears to be similar in geology, structure, vein style and mineralogy to other veins in the Segovia mining district.
The project area is presently held through an unincorporated joint venture arrangement between Industrias Argentum SAS, a Colombian company, and an affiliate of Gran Colombia, Gran Colombia Gold Segovia SA. GA Mine, through Arcadian Mineral Corp., has the right to acquire the 70-per-cent interest in the joint venture held by Argentum. The 30-per-cent interest held by Gran Colombia is a carried interest in that Argentum, as the operator of the joint venture, is responsible for exploration, development, mining, processing and commercialization activities, at its sole expense, and Argentum and Gran Colombia participate in the results on a 70/30 basis, respectively.
Pursuant to the first letter of intent between the company and GA Mine, the company intends to acquire all of the share capital of GA Mine and its subsidiary Arcadian in order to acquire the 70-per-cent interest in the joint venture currently held by Argentum. In consideration for the acquisition of GA Mine, the company will issue 21 million common shares to GA Mine and make a cash payment of $1.1-million (U.S.) to GA Mine on closing of the transaction. GA Mine will also have the right to nominate a member of the board of directors of the company upon completion of the transaction.
Pursuant to the second letter of intent between the company and Gran Colombia, the company intends to acquire the 30-per-cent carried interest of Gran Colombia in the joint venture. In consideration for the acquisition of the Gran Colombia carried interest, the company is required to issue 15 million common shares on closing of the transaction. Gran Colombia will further subscribe for and purchase, on closing of the transaction, $4-million of the units to be offered by the company as described below.
The company is not obligated to complete either transaction unless upon completion of the transaction it acquires 100-per-cent control of the project/project area which is commonly referred to as the Chicharron project.
The project is the subject of a technical report, with an effective date of May 14, 2018, entitled "National Instrument 43-101 technical report for the Chicharron gold-silver project, Segovia, department of Antioquia, Colombia," by Dr. Stewart D. Redwood. The Chicharron report notes that historical mining operations at the Guia Antigua mine, located in the project area, focused on the Guia Antigua gold-silver vein. As also noted in the Chicharron Report, 1,056 channel samples were collected by the previous operator of the Guia Antigua mine between 2011 and 2016 and reported average grades of 521.6 grams per tonne of silver and 8.08 g/t of gold; however, the original data are not available and the data cannot be verified.
The Chicharron report also notes that in April, 2018, Gran Colombia carried out systematic check channel sampling of the Guia Antigua mine, with 155 samples in 32 vertical channels. These confirm high grades with individual sample values up to 133.7 g/t gold and 10,381 g/t silver. These are accompanied by up to 10.31 per cent lead, 3.58 per cent zinc and 1.48 per cent arsenic, a potentially deleterious element. The highest length-weighted channel sample grade for gold is 60.1 g/t and 1,392.1 g/t silver over 2.04 m, and for silver is 17.2 g/t gold and 3,635.0 g/t silver over 0.60 metre. The length-weighted average of all channel samples is 7.6 g/t gold and 335.1 g/t silver.
The Chicharron report concludes that the Chicharron project warrants further exploration with a suggested program to test the continuation of the Guia Antigua vein at depth and along strike.
The Chicharron report notes that there has not been any drilling at the Chicharron project and that there is no declared resource.
Rich Munson, president and chief executive officer of the company, stated: "This is a unique opportunity to acquire a silver-gold project in the Segovia region of Colombia. The Chicharron project diversifies Sandspring opportunities and creates the potential to provide revenue as we continue to advance the Toroparu project in Guyana. While the acquisition of the 70-per-cent interest in the Chicharron project currently held by Argentum was an attractive opportunity, the additional acquisition of the carried interest held by Gran Colombia significantly enhances the potential financial returns from future silver-gold mining operations at the Chicharron project. We are very pleased that Gran Colombia, with its extensive experience and expertise in the gold sector, has elected to become a shareholder of Sandspring upon the completion of the transaction and appoint a member of the board of directors of the company to provide guidance in our efforts to advance the Chicharron project and develop Toroparu."
The company also announces that it intends to conduct a non-brokered private placement of up to 36 million units at a price 25 cents per unit. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase one additional share at 40 cents for a period of 60 months. The company expects that insiders will subscribe for a portion of the private placement. The company anticipates paying finders' fees to certain eligible parties who introduce subscribers to the private placement.
The company intends to use the proceeds of the private placement to provide the working capital needed to complete the transaction (approximately $1.5-million), to develop and advance an exploration program for the Chicharron project (approximately $500,000), maintenance of property position for the Chicharron project ($650,000), complete the final feasibility study for both the Toroparu project (approximately $2.25-million) and the run-of-river hydroelectric project on the Kurupung River approximately 50 kilometres southwest of Toroparu (approximately 1.25-million), local partner payment and land rentals (approximately $1.5-million), and for general corporate and working capital purposes (approximately $1.2-million).
Completion of the transaction is subject to a number of conditions, including the completion of due diligence, the negotiation of definitive documentation, completion of the private placement and the approval of the TSX Venture Exchange. The transaction cannot be completed until these conditions are satisfied, and there can be no assurance that the transaction will be completed in a timely fashion, or at all. All securities issued in connection with the transaction and the private placement will be subject to a four-month-and-one-day statutory hold period.
About Sandspring Resources Ltd.
Sandspring Resources is a Canadian junior mining company currently moving toward a definitive feasibility study for the multimillion-ounce Toroparu project in Guyana, South America. A prefeasibility study completed in May, 2013, "National Instrument 43-101 technical report, prefeasibility study, Toroparu gold project, upper Puruni river area, Guyana," dated May 24, 2013, completed by SRK Consulting Inc. and available on SEDAR, outlined the design of an open-pit mine producing more than 200,000 ounces of gold annually over an initial 16-year mine life. Sandspring and Silver Wheaton have entered into a gold and silver purchase agreement for the Toroparu project.