Genius Properties Ltd. Announces Proposed Transaction with Cerro De Pasco Resources S.A. and filing of NI 43 -101 Technical Report
Genius Properties Ltd. Announces Proposed Transaction with
Cerro De Pasco Resources S.A. and filing of NI 43 -101 Technical
Report
MONTRÉAL, QUÉBEC--(Marketwired – November 9, 2017) -
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES
Genius Properties Ltd. (CSE:GNI)(CSE:GNI.CN)(CNSX:GNI) ("Genius" or the "Corporation") is pleased to
announce that it has entered into a merger agreement dated November 9, 2017 (the “Merger Agreement”) with
Cerro De Pasco Resources S.A. ("Cerro De Pasco") setting out the terms of a transaction which will result in a
merger of Genius and Cerro de Pasco (the "Proposed Transaction").
About Cerro De Pasco
Cerro De Pasco is a corporation incorporated under the laws of Peru. Its main asset is an option to acquire a
100% interest in the El Metalurgista Concession (where the so -called Quiulacocha Tailings and Excelsior
Stockpile are located), located in Peru (the " Property"). Upon exercise of such option, Cerro de Pasco will
become the Property's sole legal and beneficial owner.
Imminent filing of a NI 43-101 Technical Report
Genius also wishes to announce that it has completed a Technical Report (“NI 43-101 Report”) prepared in
accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) dated
November 9, 2017 and entitled “The Excelsior Property: The Excelsior Mineral Pile (EMP) and Quiulacocha
Tailings (QT) associated with the Cerro de Pasco Mine, Cerro de Pasco District, Altiplano Region, North-Central
Peru Highlights of the NI 43-101 Report are as follows:
The property is known as the Excelsior and consists of the Excelsior Mineral Pile ( “EMP”) and Quiulacocha
Tailings (“QT”) forming residues generated by the processing of the Cerro de Pasco Mine Pb -Zn-Ag-Cu ore
located 310 km from Lima, in east-central Peru.
The EMP occupies an area of 94 ha and contains 26,400,000 m3 of fragmentary rocks forming terraces composed
of sulfide-rich rocks, sericitized volcanic and carbonate (dolomitic) rocks. Metal -bearing minerals consist of
sphalerite (Zn), tennantite (Cu), cerussite (Pb), enargite (Cu) and galena (Pb, Ag -rich). The more reliable
Historical Resources Estimate generated 42.89 Mt @ 0.09 wt. % Cu (85.1 M lb), 0.73 wt. % Pb (690.3 M lb),
1.59 wt. % Zn (1696.1 M lb) and 66.1 g/t Ag (91.1 M oz) with Pb+Zn= 2.33 wt. %*.
The QT cover a surface of 114 ha and contain approximately 79 Mt of pyrite -bearing tailings of two different
types: Cu-rich and Zn-Pb-rich sulphides. The best Historical Resources Estimate generated a total of 2.94 Mt @
43.1 g/t Ag (4.1 M oz), 418 ppm Cu, 0.79 wt. % Pb (51.2 M lb) and 1.43 wt. % Zn (92.7 M lb)*.
* The estimates presented above are detailed and discussed in the NI 43-101 Report. They are treated as historic
information and have not been verified for economic evaluation by the Corporation. These are considered
Historical Mineral Resources and do not refer to any category of sections 1.2 and 1.3 of the NI 43-101 Instrument
such as Mineral Resources or Mineral Reserves as stated in the 2010 CIM Definition Standards on Mineral
Resources and Mineral Reserves. A Qualified Person (within the meaning of NI 43-101) has not done sufficient
work to classify the historical estimate as current Mineral Resources or Mineral Reserves. The explanation lies
in the inability by the QP to fully verify the data acquired by the various historical drilling campaigns and other
sampling works. Further drilling would be required to upgrade or verity the historical resources. However, the
QP has read the documents pertaining to the description of the different methods used in the historical evaluation
of the Mineral Resources and is of the opinion they are reliable, but need to be updated to fully conform to the
NI 43-101 or CIM norms. Furthermore, no Mineral Resources were calculated on the Excelsior property since
2013.
Summary of the Proposed Transaction
The Proposed Transaction is an arm’s length fundamental change of the Corporation within the meaning of
Policy 8 – Fundamental Changes & Changes of Business of the Canadian Securities Exchange (the “Exchange”)
and is subject to a number of conditions precedent, including the rece ipt of all requisite regulatory, corporate
and shareholder approvals, including that of the Exchange.
Cerro de Pasco and Genius shall effect the Proposed Transaction by merging Cerro de Pasco with a branch of
Genius to be established under Peruvian laws (“ BranchCo”), such that existing security holders of Cerro de
Pasco will become security holders of Genius. In accordance with the terms of the Proposed Transaction, Genius
shall (i) issue a sufficient number of common shares of its share capital to allow the current shareholders of
Cerro De Pasco (“Cerro Shareholders”) to hold, after such issuance, in the aggregate, 75% (subject to an
increase as described below) of the total number of common shares of the Corporation issued and outstanding
after the Proposed Transaction and (ii) make a cash contribution in the form a loan (the “Cash Contribution”)
to Cerro de Pasco in an aggregate amount of US$2,500,000, of which US$250,000 have already been made.
The Cash Contribution will be expended, based on the joint determination of Genius and Cerro de Pasco (each
acting reasonably), on the development of the Property, for metallurgical test ing and to cover capital
requirements related to community relations, permitting and general and administrative expenses.
The percentage of common shares to be held by the Cerro Shareholders may be increased pro rata if the Cash
Contribution made by Genius is of a total amount of less than US$2,500,000.
As a result of the Proposed Transaction, the board of directors of Genius shall be comprised of six directors, four
of which will be appointed by Cerro de Pasco and two of which will be current directors of Genius.
Spin-Off of Genius Properties
As part of the Proposed Transaction, prior to issuing securities to the Cerro Shareholders, Genius will spin off
all of its current mining properties (the “Genius Properties”) into two new wholly-owned Canadian subsidiaries
(the “Reorganization”). Genius intends to continue the exploration and development of the Genius Properties
through these new subsidiaries, to re -distribute the common shares of these subsidiaries to its current
shareholders and to list them on a stock exchange.
Specific conditions related to the closing
The specific conditions that must be met in relation to the closing of the Proposed Transaction are: (i) the
completion of the Reorganization by Genius; (ii) the approval of the Proposed Transaction by the board of
directors and the shareholders of both parties; (iii) the approval of the Proposed Transaction by the Exchange;
and (iv) the absence of material change in the business and operations of Cerro De Pasco and Genius.
Shareholders of Genius will be asked to consider and, if deemed appropriate, approve a resolution allowing
Genius to proceed with the Proposed Transaction and related transactions at a special meeting of the shareholders
to be held in early 2018. The Proposed Transaction is expected to be completed in or around February 2018.
Certain Risks associated with the Proposed Transaction
Should Genius not be able to make a Cash Contribution in a minimum aggregate amount of US$1,000,000 by
February 28, 2018 (the “Deadline”), the Proposed Transaction may be abandoned by the parties, in which case
Genius would lose of the Cash Contribution made to Cerro de Pasco before the Deadline. Genius has already
contributed for US$250,000.
Under Peruvian mining regulations, a mining concession such as the Property is independent from the surface
land on which it is located. Therefore, prior to the beginning of any reprocessing activity on the Property, an
agreement will have to be reached with the owner of the surface land where the Property is located.
In accordance with Peruvian legal requirements, a notice of the Merger Agreement will be published in order to
offer creditors of Cerro de Pasco the possibility to object to the Proposed Transaction within 30 days of said
publication.
About Genius Properties Ltd.
Genius is a Canadian mineral exploration company focused on developing projects with some of the world's
most critical metals and minerals.
Qualified Person
The technical content of this press release was approved by Dr. Michel Boily, PhD, geo, a qualified person (QP)
as defined by National Instrument 43-101.
Forward-Looking Statements and Disclaimer
Certain statements in this news release may be forward-looking. Such statements include those with respect to
the Corporation's ability to complete the Proposed Transaction as well as those with respect to estimates relating
to the Property and the NI 43-101 Report. Although the Corporation believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no assurances that its expectations
will be achieved. Factors that could cause actual results to differ materially from expectations include (i) the
inability or unwillingness of Cerro de Pasco to fulfill its contractual obligations under the Merger Agreement ,
in whole or in part, (ii) the Corporation's failure to fulfill its contractual obligations under the Merger
Agreement, (iii) the Corporation's inability to obtain the necessary regulatory approvals for the Proposed
Transaction, and (iv) generally, the Corporation's inability to develop and implement a successful business plan
for any reason. A description of other risks affecting Genius’ business and activities appears in its annual
management's discussion and analysis, which is available on SEDAR at www.sedar.com. No assurance can be
given that any events anticipated by the forward-looking information in this news release will occur, or if any of
them do so, what benefits that Genius will derive therefrom. In particular, no assurance can be given as to th e
future financial performance of Genius. Genius does not undertake any obligation to update or revise any
forward-looking statements, except as required under applicable law. The reader is warned against undue
reliance on these forward-looking statements.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange
acceptance and disinterested shareholder approval. Where applicable, the transaction cannot close until the
required shareholder approval is obtained. There can be no assurance that the transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or listing statement to
be prepared in connection with the transaction, any information released or received with respect to the
transaction may not be accurate or complete. Trading in the securities of Genius should be considered highly
speculative.
The CSE has in no way passed upon the merits of the proposed transaction and has neither approved nor
disapproved the contents of this news release.
Neither the Canadian Securities Exchange nor its Regulation Services Provider accepts responsibility for the
adequacy or accuracy of this release.
Contact Information
Genius Properties Ltd.
Guy Goulet
President & CEO