Aloro Mining options Los Venados to Alamos Gold
2020-10-20 08:51 ET - News Release
Mr. Thomas Doyle reports
ALORO ENTERS INTO AN OPTION AGREEMENT WITH ALAMOS GOLD INC.
Aloro Mining Corp. has entered into an option agreement with Alamos Gold Inc., a Toronto Stock Exchange and New York Stock Exchange listed issuer. Alamos may acquire a 70-per-cent interest from Aloro by incurring an aggregate of $5-million (U.S.) in exploration expenditures and making certain cash payments over the course of three years in two mining concessions (title Nos. 244241 and 246230), commonly known as the Los Venados project located in the municipality of Sahuaripa, in the state of Sonora, Mexico.
About the transaction
Concurrent to the entry of the option agreement, Alamos's wholly owned subsidiary, Minas de Oro Nacional SA de CVA (MON) and Exploraciones Aloro SA de CV, a wholly owned Mexican subsidiary of Aloro, have entered into an option agreement, pursuant to which MON must make certain exploration expenditures and cash payments on behalf of Exploraciones prior to acquiring a 70-per-cent interest in the project.
Pursuant to the terms of the Mexican agreement, MON has the option to acquire a 70-per-cent interest in the project by incurring an aggregate of $5-million (U.S.) in exploration expenditures in accordance with the schedule set out in the "Exploration expenditures" table.
EXPLORATION EXPENDITURES Payment date Expenditures On or before the first anniversary of the Mexican agreement USD$500,000 (mandatory) On or before the second anniversary of the Mexican agreement USD$1,500,000 (optional) On or before the third anniversary of the Mexican agreement USD$3,000,000 (optional)
Provided the Mexican agreement remains in good standing on the applicable anniversary date, Alamos will, in accordance with the terms of the option agreement, pay the amounts in cash, in the "Payments" table, to the company.
PAYMENTS Payment date Cash payment Upon entry into of the Mexican agreement USD$50,000 On or before the first anniversary of the Mexican agreement USD$125,000 On or before the second anniversary of the Mexican agreement USD$150,000
In addition, Alamos will make certain cash payments to the underlying optionor to match Aloro's payment obligations pursuant to an underlying option agreement for Los Venados 1 mineral concession (title No. 244241). Such payments will be made on the company's behalf as such payments become due and payable in accordance with the terms of the underlying option agreement, provided the Mexican agreement is in good standing on the dates in the "Underlying optionor payment" table.
UNDERLYING OPTIONOR PAYMENT Payment date Cash payment Upon entry into of the Mexican agreement CAD$20,000 (mandatory) + IVA On or before Oct. 6, 2021 CAD$60,000 + IVA
MON will also be responsible for the payment of the semi-annual mineral taxes due on both of the concessions within the project, provided the Mexican agreement is in good standing.
Once MON has acquired the 70-per-cent interest in the project, MON and Exploraciones have agreed to contribute to further exploration and development work on the project on a pro rata basis according to their respective interests in the project. Should either party decide not to contribute any part of its pro rata portion of any further work, then its interest will be diluted on a pro rata basis using a formula based on the total expenditures on the project.
Net smelter returns royalty
Upon completion of making the necessary payments and incurring the expenditures, MON may exercise the option and, upon doing so, will have earned a 70-per-cent interest in the project and the Los Venados 1 mineral concession (title No. 246230) will be subject to a 2-per-cent net smelter return royalty in favour of Aloro, of which 1 per cent can be repurchased by MON for $1.5-million (U.S.).
Thomas A. Doyle, president and chief executive officer of the company, commented: "I am happy to have reached an agreement with Alamos after many months of discussions and negotiations. Alamos has extensive knowledge of the geology in the immediate area with their operation of the Estrella pit which is approximately 600 metres from our common border. Alamos has the experience, technical expertise, technical equipment, staff and large camp with airstrip, basically onsite. If a discovery is found on the Los Venados project, they have the infrastructure in place. I am sure that Alamos will do a thorough job of exploring the large 32 square km project."
About Aloro Mining Corp.
Aloro controls the 3,199-hectare Los Venados project which is located in the central part of the Mulatos gold district and is directly adjacent to the active Mulatos open pit of Alamos Gold and shares common borders to the south, east and portions of the north. The western border is shared with Agnico Eagle Mines Ltd. where it operates the La India open pit. The known mineralization within the Mulatos district is gold-dominant, with accessory silver and copper.