Aya Gold & Silver Signs Binding Agreement to Acquire Algold Resources
PRESS RELEASE
Aya Gold & Silver Signs Binding Agreement to Acquire Algold Resources
Montreal, Quebec, February 19, 2021 - Aya Gold & Silver Inc. (TSX: AYA) (“Aya” or the “Corporation”)
is pleased to announce that, in the context of the Proposal made by Algold Resources Ltd. (“Algold”),
it has entered into a binding term sheet (the “Investment Agreement”) with Algold pursuant to which
Aya would fund Algold’s Proposal to its creditors (“the Proposal”) and at closing, would become the
sole shareholder of Algold (the “Transaction”).
Under the terms of the Investment Agreement, Aya will provide Algold with C$100,000 in cash and
C$2,500,000 in Aya shares to fund Algold’s Proposal. Aya will also provide C$2,400,000 in Aya shares
to be distributed to Algold current shareholders with a view to become Algold’s sole shareholder.
On January 11, 2021 , Aya announced that it had become the sole secured creditor of Algo ld by
acquiring its approximately C$10,000,000 secured debt for a consideration of 2,133,333 Aya common
shares at a then agreed-to value of C$3 a share. Since then, Aya has made several secured advances
and payments in the context of Algold’s restructuring that are expected to total approximately
C$2,900,000 at the time of closing of the Transaction.
All considered, t he Transaction values Algold at C$14,700,000, including transaction costs , which
would be paid C$2,900,000 in cash and C$11,800,000 in shares of Aya (collectively referred to as the
“Transaction Consideration”).
Transaction Rationale
• Provides a fully permitted, near-term gold asset: The Tijirit Project is fully permitted allowing
the Corporation to quickly complete a feasibility study, move to a first phase of production and
provide a second producing asset within the next 2 years.
• Well-known project and jurisdiction to Aya management: Aya technical and geological teams
are familiar with the Tijirit Project, which will enable them to quickly execute the requisite work
to move the project into construction.
• Fits within its non-silver assets: Tijirit provides a low cost, near-term, precious metals project
to add to Aya’s non-silver portfolio, which includes Boumadine, Azegour and Amizmiz.
• Exploration upside: Aya’s ability to fund exploration programs to test numerous, high -priority
targets within a 150km2 land package, which contains potential high-grade zones, provides an
opportunity to unlock value from an underexplored land package.
• Jurisdiction diversification and operational efficiencies: Tijirit offers geographic
diversification with the ability to leverage relationships with existing suppliers and employees
in Morocco in its execution.
“This transaction allows Aya to opportunistically acquire a near-term precious metals asset to add to our
non-silver portfolio of assets at an attractive cost. We believe this is a rare opportunity to leverage our
understanding of the Tijirit Project to unlock value for all shareholders through the development of the
Tijirit Project as well as a right-sized exploration program in a proven gold district,” said Benoit La Salle,
President & CEO of Aya Gold & Silver. “ We look forward to continuing our strong relationship with the
Government of Mauritania to ensure that Tijirit’s continued development benefits all stakeholders.”
Tijirit Project Highlights
Tijirit is a development -stage gold deposit located in northwestern Mauritania, approximately 275
kilometers north of the capital No uakchott and 25 kilometers southeast of the Tasiast Gold Mine.
TIREX SA, Algold’s local 75% -owned subsidiary, holds a 26 -year mining permit comprising five zones
over a 150 square-kilometer area.
Algold published an NI 43 -101 preliminary economic assessme nt (“PEA”), with an effective date of
March 9, 2018. Under its PEA, Tijirit would generate a pre-tax net present value (“NPV”) of $94.9 million
at an 8% discount rate with an internal rate of return (“IRR”) of 28.4% using a gold price of $1,250 per
ounce.
Three zones host M&I resources totaling 3.2 million tonnes (“Mt”) grading 1.64 grams per ton (g/t)
gold (“Au”) for 169,000 ounces (Eleonore 0.72Mt @ 4.08 g/t Au for 94,000 ounces Au) and 10.5Mt of
inferred resources grading 1.92 g/t Au for 649,000 ounces Au (Eleonore 3Mt @ 4.07 g/t Au for 395,000
ounces Au), as per the PEA.
Subsequent to filing the PEA, Algold has drilled an additional 23,590 meters on the property.
Tijirit Objectives
The mining permit requires the Corporation to produce a feasibility study by January 19, 2022 and
commission the first phase of production by November 19, 2022. As such, the Corporation is currently
conducting field and desk work to produce the feasibility study . Additionally, the Corporation intends
to update the Tijirit resource model shortly after the closing of the Transaction with the inclusion of an
additional 23,590 meters that have been drilled on the property since estimation of the 2018 resource.
In 2021, the Corporation intends to drill 15,000 meters on the Tijirit property with the aim of converting
resources to reserves to support the feasibility study.
In 2021, the Corporation expects to spend US$5.9 million on Tijirit, of which US$3.5 million is expected
to be on drilling and geology and US$1.5 million on engineering and field work.
Board of Directors’ Recommendations
The Investment Agreement has been unanimously approved by the independent members of the Board
of Directors of Algold. The Board of Directors of Aya has received a presentation from Sprott Capital
Partners LP that concluded that, as of the date thereof and subject to the assumptions, limitations and
qualifications set forth therein, it was of the opinion that the Transaction Consideration to be paid by
Aya under the Transaction is fair, from a financial point of view, to Aya’s shareholders. Benoit La Salle
and Yves Grou both abstained from voting on this matter. The Transaction has also been unanimously
approved by the independent non conflicted members of the Board of Directors of Aya.
Transaction Conditions and Timing
Under the Investment Agreement and as part of the Proposal , all existing shares of Algold shall be
cancelled and Aya will subscribe for 100% of the newly issued and outstanding common shares in the
capital of Algold (the “New Shares”).
The closing of the Transaction is subject to a number of Conditions Precedent, including and not
limited to:
- The approval of Algold’s Proposal by its creditors;
- The authorization and filing of a corporate reorganization of the capital structure of Algold, to
the entire satisfaction of Aya, in accordance with section 191 of the Canada Business
Corporations Act (the “CBCA”);
- The issuance of an approval order by the Court, in form and substance satisfactory to Aya ,
approving the Proposal under sections 50, 59(4) and 66(1.4) of the Bankruptcy and Insolvency
Act, which order shall include provisions regarding the CBCA Reorganization amongst others,
and which shall not have been stayed and no appeal therefrom is outstanding; and
- The Toronto Stock Exchange (TSX) approving the issuances of Aya shares provided hereunder.
The Aya shares to be issued under the Proposal and the Transaction will be subject to a hold period
expiring on the date that is four (4) months and one day from the issuance of such shares.
A meeting of Algold’s creditors will take place on March 5, 2021 during which the Proposal , which
includes a CBCA Reorganization, will be voted on by the creditors.
The Transaction is expected to close on or around April 15, 2021.
Further details regarding the Proposal can be found on the Trustee’s website at
https://www.raymondchabot.com/fr/entreprises/dossiers-publics/algold-resources-ltd/
Related-Party Transaction Exemption
Pursuant to Regulation 61 -101 Respecting Protection of Minority Security Holders in Special
Transactions ("Reg. 61 -101"), entering into the Investment Agreement is technically considered a
"related party transaction" as, even if their participation is minimal considering the overall transaction,
shares will be issued to insiders of Aya. Aya is exempt from the requirements to obtain a formal
valuation or minority shareholder approval in connection with the Transaction contemplated by the
Investment Agreement by virtue of sections 5.5(a) and 5.7(1)(a), respectively, of Reg. 61 -101, as
neither the fair market value of the subject matter of the Inv estment Agreement, nor the fair market
value of the aggregate consideration paid to the insiders exceeds 25% of the Aya’s market
capitalization as calculated in accordance with Reg 61-101.
Management Team and Board of Directors
No changes to the managemen t team or to the Board of Directors of Aya will be made with this
Transaction.
Advisors and Counsel
Dentons Canada LLP is acting as Aya’s legal advisor.
Lapointe Rosenstein Marchand Melançon LLP is acting as legal advisor to Algold. Raymond Chabot
Inc. is acting as the Proposal Trustee for Algold.
About Aya Gold & Silver Inc.
Aya Gold & Silver Inc. is a publicly traded Canadian company focused on the operation, exploration,
acquisition, and development of silver and gold deposits. Aya is currently operating mining and milling
facilities at its Zgounder Silver Mine, an 85%-15% joint venture between its subsidiary, ZMSM, and the
Office National des Hydrocarbures et des Mines (“ONHYM”) of the Kingdom of Morocco.
Its mining portfolio also includes the Boumadine polymetallic deposit located in the Anti -Atlas
Mountains of Eastern Morocco which is also a joint venture with ONHYM wherein Aya retains an 85%
ownership. Additionally, the Corporation’s portfolio includes the Amizmiz and Azegour properties, both
being 100% owned, with gold, tungsten, molybdenum and copper occurrences in the center of a
historical mining district of Morocco.
For additional information, please visit Aya’s website at www.ayagoldsilver.com.
Or contact:
Benoit La Salle, FCPA FCA
President & CEO
Alex Ball
VP, Corporate Development & IR
Forward-Looking Statements
This press release contains "forward-looking information" within the meaning of Canadian securities
legislation. All information contained herein that is not clearly historical in nature may constitute
forward-looking information. Generally, such forward-looking information can be identified by the use
of forward -looking terminology such as “would”, “expected”, “will”, “provide”, “quickly”, “upside”,
“potential”, “leverage”, “aim”, “secure”, “ intends”, “ shall”, “accelerates”, “future”, “growth”, “plan”,
“scheduled”, “momentum”, “anticipates”, “continued”, “will”, “continue”, “provide”, “present”,
“reasonable”, “established”, “has”, “demonstrate”, “potential”, “expect” or variations of such words and
phrases or state that certain actions, events or results "m ay", "could", "would" or "might". Forward-
looking information is subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of the Corporation to be
materially different from those expressed or implied by such forward -looking information, including
but not limited to: (i) volatile stock price; (ii) the general global markets and economic conditions; (iii)
the possibility of write-downs and impairments; (iv) the risk associated with exploration, development
and operations of mineral deposits including the accuracy of the current mineral reserve and mineral
resource estimates of the Corporation (including, but not limited to, ore tonnage and ore gr ade
estimates) and mine plans for the Corporation’s mining operations (including, but not limited to,
throughput and recoveries being affected by metallurgical characteristics); (v) the risk associated with
establishing title to mineral properties and assets including permitting, development, operations and
production from the Corporation’s operations being consistent with expectations and projections; (vi)
Aya’s ability to fund Algold’s Proposal to its creditors by providing Algold with C$100,000 in cash ,
C$2,500,000 in Aya shares and C$2,400,000 in Aya shares to be distributed to Algold current
shareholders; (vii) the Algold creditors voting positively on Algold’s Proposal, (viii) fluctuations in
commodity prices and other risks and factors described or re ferred to in the section entitled "Risk
Factors" in the MD&A of the Corporation and which is available at www.sedar.com, all of which should
be reviewed in conjunction with the information found in this news release.
Although the Corporation has attempted to identify important factors that could cause actual results
to differ materially from those contained in the forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended. There can be no assurance that such
forward-looking information will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such forward -looking information. Such forward -looking
information has been provided for the purpose of assisting investors in understanding the
Corporation's business, operations and exploration plans and may not be appropriate for other
purposes. Accordingly, readers should not place undue reliance on forward -looking information.
Forward-looking information is given as of the date of this press release, and the Corporation does not
undertake to update such forward-looking information except in accordance with applicable securities
laws.