Azarga Metals Exercises Call Option to Acquire Remaining 40% of Unkur Copper-Silver Project and Bridge Loan
AZARGA METALS CORP.
UNIT 1 – 15782 MARINE DRIVE, WHITE ROCK, B.C. V4B 1E6, CANADA
www.azargametals.com
FOR IMMEDIATE RELEASE
December 11, 2017 TSX-V: AZR
AZARGA METALS EXERCISES CALL OPTION TO ACQUIRE REMAINING 40% OF
UNKUR COPPER-SILVER PROJECT AND BRIDGE LOAN
Azarga Metals Corp. (“Azarga Metals” or the “ Company”) has exercised its call option
to increase its ownership of the Unkur Copper-Silver Project from the current 60% interest
to 100%. The project vendors have also agreed to cancel the remaining US$1.6 million
owed to them by the Company in the form of deferred consideration payments associated
with the original 60% purchase. Further, the Company has also arranged a bridge loan to
complete various strategic initiatives.
Commenting on the transactions, Dorian L. (Dusty) Nicol, the Company’s president and
CEO said, “I’m very happy to have been able to exercise the call option to
consolidate Azarga Metals’ 100% ownership of Unkur early. I believe there is a great
deal more c opper and silver mineralization to be found at Unkur and the cleaner
ownership structure makes Azarga a lot more attractive.” He then went on to say,
“The Project Vendors are supportive shareholders including contributions to our
capital raisings since the original project acquisition and I believe their agreement
to our option exercise and cancellation of deferred cash consideration reflects their
alignment with us on the long-term strategy for Unkur.”
The Unkur Copper -Silver Project in the Zabaikalsky administrative region of eastern
Russia is already the Azarga Metals’ principal asset. 60% of it was acquired in mid-2016
and the Company completed an initial physical exploration program including 16 diamond
core drill holes (4,580 meters), together with trenching and a ground magnetic survey.
The initial exploration program was highly successful , resulting in a maiden Mineral
Resource estimate (see April 4, 2017 news release), of an Inferred Mineral Resource of
42 million tonnes at 0.52% copper and 38g/t silver, containing 220,000 tonnes (ie, 480
million pounds) of copper and 52 million ounces of silver. This equates to approximately
380,000 tonnes (ie, 840 million pounds) of copper equivalent at 0.90% or approximately
124 million ounces of silver equival ent at 91g/t, assuming a copper price of US$3.00/lb,
silver price of US$20/oz and 100% recovery.
On December 8, 2017, t he Company signed a binding letter agreement (the “ Letter
Agreement”) with the eight holders of the indirect 40% interest (the “ Project Vendors”)
whereby the parties agreed to amend the terms of the shareholders agreement dated
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May 31, 2016 (the “SH Agreement”) among the Company, the Project Vendors and the
intermediate holding company Azarga Metals Limited (“ Azarga BVI ”) (collectively the
“Parties”). Three of the Sellers are directors of the Company and they declared their
conflict and abstained from voting on approval of the Letter Agreement.
In addition to agreeing to the exercise of the Company’s call option, pursuant to the Letter
Agreement the Project Vendors have also agreed to waive and cancel US$1.6 million
deferred cash consideration payments associated with the original acquisition of the
Unkur Copper-Silver Project (together the “ Project Consolidation Transaction ”). The
Parties have agreed payment for the Project Consolidation Transaction to be 42,000,000
shares in Azarga Metals.
The issue of all shares is subject to the approval of the TSX Venture Exchange, and which
may require disinterested shareholder approval.
Azarga Metals has recently been engaged in moving forward a number of initiatives that
currently remain incomplete, including: (a) engaging with a number of potential strategic
partners at both the Unkur project and parent level; (b) re -interpretation of the results of
the 2016 -2017 exploration program to refine plans for upcoming physical exploration
works; (c) discussions with technical consultants regarding the potential for early
preparation of a Preliminary Economic Assessment for Unkur based on the data already
acquired; and (d) reviewing potentially attractive acquisitions in the broader Kodar -
Udokan geological district within which Unkur is situated. As a result, certain of the
directors and other shareholders of the Company have agreed to provide th e Company
with a bridge loan facility in order to pursue some or all of these initiatives to completion
in the near term. The bridge loan facility will be for C$400,000 to be drawn in four equal
advances over the next 9 months. Advances will bear interest at the rate of 10% per
annum and all advances must be repaid within twelve months of the first advance. The
loan is intended to bridge the Company’s activities until an equity placement is conducted
in the new year. In addition, under certain conditions, the same lenders will make available
an additional C$150,000 to the Company on the same terms.
The bridge loan is subject to the approval of the TSX Venture Exchange.
Qualified Person
The Company’s President and Chief Executive Officer, Dorian L. (Dusty ) Nicol, B.Sc.
Geo, MA Geo, a Qualified Person as defined by NI 43 -101, has reviewed and approved
the exploration information disclosures contained in this Press Release.
AZARGA METALS CORP.
"Alex Molyneux"
Alexander Molyneux, Chair
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For further information please contact: Doris Meyer, at +1 604 536-2711 ext 6, or visit
www.azargametals.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Cautionary Statement:
This news release contains forward -looking statements that are based on the Corporation's current
expectations and estimates. Forward -looking statements are freque ntly characterized by words such as
"plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar
words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that could cause actual events or results
to differ materially from estimated or anticipated events or results implied or expressed in such forward -
looking statements. Such factors inclu de, among others: the actual results of current planned exploration
activities; conclusions of economic evaluations; changes in project parameters as plans to continue to be
refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices .
There may be other factors that cause actions, events or results not to be as anticipated, estimated or
intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may
be required by applicable securities laws, the Corporation disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new inf ormation, future events or results or otherwise.
Forward-looking statements are not guarantees of future performance and accordingly undue reliance
should not be put on such statements due to the inherent uncertainty therein.