VI Mining plc
(the "Company" or "VI Mining"; NEX: VIM)
(1) New partnership with established operator to start commercial operations in Peru
§ Heads of agreement signed with an established Peruvian operator (the "Partner"):
- Cushuro - the Partner and the Company to form a new partnership for the joint development of the Cushuro mining concession and commence commercial operations in Q2 2020
- Oro Pesa - the Partner and the Company to form a new partnership for the completion of the Oro Pesa plant and commence commercial operations in Q3 2020
(2) Minaspampa and Rosario de Belen cancellation with a buy back option
§ Heads of agreement signed with the vendors of Minaspampa and Rosario de Belen:
- Ownership of the Minaspampa and Rosario de Belen mining concessions and assets to be returned to the original vendors
- Payment obligation by the Company of US$42.2 million to be cancelled
- The Company to have a six month renewable buy back option to re-purchase the Minaspampa and Rosario de Belen concessions
Definitive contracts are in process and are targeted to be completed by 31 January 2020.
Partnership with established operator to start commercial operations in Peru
The Directors are pleased to announce that on 30 December 2019, the Company signed head of agreement for a new partnership with an established Peruvian mining operator (the "New Partnership"). The Partner will lead commercial operations in Peru.
Cushuro - joint development of mining project
On 28 January 2019, the Company acquired the entire issued share capital of Karmin Peru SAC, which owns the Cushuro Gold Project located immediately adjacent to Minaspampa, from Karmin Exploration Inc.
The Cushuro Gold Project consists--- of ﬁve mining concession: Gaby 2, Gaby 3, Gaby 8, Pandereta 007 and Corona 3113. The Gaby 2, Gaby 3 and Gaby 8 concessions comprise three contiguous claims totaling 2,477 hectares.
This project is green-ﬁeld and has never been explored or commercially exploited.
Cushuro - new partnership for commercialisation
Under the proposed New Partnership:
· the Company and the Partner will form a new Cushuro joint venture company owned 50% by each party;
· Karmin Peru SAC will transfer all of the Cushuro mining concessions into the new joint venture company;
· the Company will contribute US$550,000 for working capital;
· the Partner will fund and operate the Cushuro joint venture with the objective of mining activities starting in Q2 2020; and
· Mineral will be processed at the Partner's nearby tolling facility with profits shared 50% to VI Mining and 50% to the Partner.
Oro Pesa - new partnership in tolling
In August 2016, the Company, through its subsidiary Minera Tres Valle SAC, acquired the Oro Pesa mining concession and land. It subsequently commenced construction of a gold processing plant, which is estimated to be 80% complete, to service the needs of local artisanal miners.
Oro Pesa - new partnership for commercialisation
· The Partner will direct and operate the Oro Pesa joint venture, completing the construction of the plant and the formalisation process for tolling operations to start in Q3 2020;
· The Company to contribute US$500,000 for the completion of the capital expenditure and US$750,000 for the pre-operation mineral purchase and working capital; and
· The Partner to manage and fund all other operational activities with profits shared 50% to VIM and 50% to the Partner.
Tassili loan facility repayment plan
The Company currently owes Tassili Jewellery LLC ("Tassili") US$1.5 million which the Company intends to repay during 2020. Tassili also has first right of refusal over the first 24,000 oz of gold production (at a 4% discount). Gold production from Cushuro and Oro Pesa operations will also be applied to Tassili's first right of refusal. The discount will be at the cost solely of VI Mining and not the partner.
Minaspampa and Rosario de Belen - contract cancellation with a buy back option
In addition, the Directors are pleased to announce that on 30 December 2019, the Company signed heads of terms for a variation agreement with the vendors of Minaspampa and Rosario de Belen.
On 2 February 2018 the Company's wholly owned subsidiary, One‐Valley Peru SAC ("OVP"), entered into an acquisition agreement for the purchase of the Minaspampa and Rosario de Belen projects. Payment of the consideration was secured by a charge over the whole of the share capital of OVP and the obligations of OVP were guaranteed by the Company.
The total purchase consideration of US$64 million was US$51.3 million payable in cash and £10 million in new ordinary shares of the Company, comprising 2,000,000 shares issued at the placing price on the Company's Admission to the NEX Growth Market on 8 March 2018.
As at 30 December 2019, the 2,000,000 shares had been issued, US$9.1 million had been paid to the vendors and US$42.2 million remained outstanding.
Contract cancellation and buy back option
Under the proposed variation:
· the Minaspampa and Rosario de Belen mining concessions and purchased mining assets will be transferred back to the original vendors;
· the unpaid consideration of US$42.2 million will be cancelled;
· the Company will be granted a six month buy-back option to re-acquire the Minaspampa and Rosario de Belen concessions and mining assets for a cash payment comprising (i) US$42.2 million; and (ii) 2,000,000 multiplied by the difference between the share price on the date of exercise of the Purchase Option and the VI Mining IPO price of £5.00 per share (the "Purchase Option"). The Purchase Option is renewable by mutual agreement.
· The Company will retain ownership of OVP and be responsible for payment of all creditor liabilities - currently totaling US$1.5 million.
David Sumner, Chairman, commented "I am delighted to announce the agreement of terms for this new partnership. This joint venture will enable us to bring Cushuro and Oro Pesa into production during 2020. These operations will enable cash generation, underpinning the Company's future strategy for growth throughout the region. I would also like to personally thank the Vendors for their continued support and confidence in me and the Company and granting us the option to re-purchase the Minaspampa and Rosario assets on refinancing."
VI Mining plc
Allan Rowley, CEO
tel: +511 475 2363/+44 20 3744 2200
VSA Capital Limited
Andrew Raca / Pascal Wiese
020 3005 5000