Corporate Update – Positioned for Growth FIDELITY MINERALS:
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Corporate Update – Positioned for Growth
FIDELITY MINERALS:
• Cerro Dorado Gold Plant upgrade, commissioning and sale process on track.
• Registration of 100% owned exploration projects now complete.
• Plan to consolidate share capital to enable the company to engage investors.
Vancouver, BC, December 4th, 2019 – Fidelity Minerals Corp. (TSX-V: FMN | FSE: S5GM |
SSE: MNYC) (“ Fidelity Minerals ” or “the Company” ) is pleased to provide the following
corporate update.
Cerro Dorado Gold Plant Update
On 2 October 2019, Fidelity Minerals announced that it had signed binding agreements to sell the
Cerro Dorado project, inclusive of the gold processing plant, mine and associated infrastructure, for
gross proceeds of US$1.43 million. The sale process is progressing well, with the final capital
investments required to upgrade and commission the Cerro Dorado CIL plant in Arequipa, Peru ,
currently underway (refer Figure 1).
Figure 1: Installation of weighbridge (scales) at Cerro Dorado Site, Arequipa, Peru, November,
2019.
To date, an initial payment of US$100,000 has already been made by the Purchaser, with the
remaining US$1,330,000 payable in quarterly payments over the next 10 months. The sale proceeds
include c ertain adjustments, deductions and disbursements to settle local accounts payable and
entitlements, prior to the assumption of operatorship by the Purchaser. This transaction provides
Fidelity Minerals with funding clarity during CY2020, enabling the Company to focus on adding
value to the recently acquired project portfolio.
The indicative payment schedule of proceeds payable to Fidelity Minerals, is as follows:
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Proceeds 21-Dec-19 21-Mar-20 21-Jun-20 21-Sep-20
Gross Purchaser Payments (USD) $400,000 $300,000 $310,000 $320,000
Net Proceeds to FMN (CAD, est.) $183,650 $200,090 $318,750 $331,090
FMN expected to receive net proceeds of $1,033,600
The Net Proceeds are s ubject to foreign exchange movements at the time of payment and other
customary adjustments.
Fidelity Minerals will continue to monitor the Cerro Dorado capital improvement programme and
operations of the Cerro Dorado mill complex until the transaction completion date on 21 September
2020. In the event the Purchaser has missed a payment, and this is not remedied within 15 days, the
ultimate transfer of Cerro Dorado SAC to the Purchasers will not complete and 100% ownership of
the mill complex, mine and concessions including all improvements and on -property assets will
remain with Fidelity Minerals.
Registration of Exploration Projects
In addition to the Las Huaquillas project (FMN: 44.5%), in the last year, Fidelity Minerals has
successfully assembled a portfolio of highly prospective mineral projects in Peru, 100% owned by
the Company.
The recently acquired projects include:
• Greater Las Huaquillas (100% interest FMN, 9 concessions, 3,800 ha)
• Las Brujas (100% interest FMN, 4 concessions, 1,900 ha)
• Porphyritic Copper (100% interest FMN, 3 concessions, 1,200 ha)
• Cerro El Bronce (100% interest FMN, 2 concessions, 600 ha)
Fidelity Minerals has now completed the formal registration of the transfer of all these concessions
and is further formalising the transfer of the Greater Las Huaquillas concessions from the
Company’s nominees to a subsidiary of Fidelity Minerals.
Whilst Fidelity Minerals has received third-party interest in the recently acquired projects, including
from significant mining companies, these discussions were not materially advanced during the
period of concession transfer and registration.
Plan to Consolidate Share Capital
Despite the rise in the gold price during 2019 and the recent merger and acquisition activity at the
larger end of the resource sector, the recent exceptional underperformance of the junior resource
sector is well documented: recent trading activity in shares of the Company has declined to $0.01 .
Owing to restriction placed on the regular issuance of new shares at a price below $0.05 , the
Company faces a constraint on its ability to raise growth capital to supplement the benefits of the
Cerro Dorado sale. Following careful consideration the board has resolved to consolidate
132,294,222 pre-consolidation shares on issue on the basis of 5:1, reducing the issued shares in the
Company to 26,458,844 post-consolidation shares.
Private Placement
The board has further agreed to place up to 4,000,000 post -consolidated units with each unit
consisting of one common share and one share purchase warrant for a term of 2 years at a price of
$0.06 to parties, including existing shareholde rs, that have expressed an interest in supporting the
recapitalisation of the Company. The board is conscious of the need to preserve shareholder value ,
and has taken steps to further reduce costs, minimise dilution and position the Company for growth.
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The Company will apply for TSX Venture Exchange approval and anticipates the consolidation
process and private placement to be completed in late December 2019.
Share Lockups
As part of the pending share consolidation, the board and major shareholders representing more than
half the issued capital of the Company have provided the Company with commitments that they will
not dispose of any shares in Fidelity Minerals until at least the 31st of July 2020.
Board Change
The Company has recently been advised by Luis F. Zapata of his intention to resign from the board
of Fidelity Minerals. Luis was a co -founder of the Company, and in March 2019 transitioned to a
non-executive director role, in order to focus on his appointment with Canaccord Genuity. The board
would like to thank Luis for his valuable contributions to the Company and look s forward to
continuing to benefit from his insights into the Latin American mining sector, albeit through a less
formal arrangement. The board is actively considering a range of opportunities to broaden the
experience and skill-sets available to contribute to the board.
MANAGEMENT COMMENTARY
Director & CEO of Fidelity Minerals, Mr. Ian Graham commented: “Notwithstanding a very
difficult market for junior miners at the moment, we have been working diligently to preserve value
and to position the company to benefit from a change of sentiment. Now that we have formalised
our ownership in 4 very exciting predo minantly gold and copper projects, we plan to provide the
market with more details on our plans shortly. Despite the challenging market, given the relatively
advanced nature of some of these projects, particularly Las Brujas and Cerro El Bronce, we are
confident that with relatively low -cost exploration, we will be able to define sufficient exploration
potential to attract significant commitments from much larger industry players”.
Executive Chairman of Fidelity Minerals, Mr. Bahay Ozcakmak added: “As a board, we are
acutely focused on preserving and growing the value of the company. Following the recent collapse
in the market valuation of many junior resource companies, including Fidelity Minerals, we’ve
revisited our corporate strategy to recalibrate an d respond to the difficult operating environment.
We have not taken the decision to consolidate the share capital of the company lightly. We note,
these sorts of consolidations at times may be viewed as potentially value destructive, particularly in
the ev ent a large number of new shares are issued, and existing shareholders are diluted. In
contrast, Fidelity Minerals is planning to perform only a small capital raising immediately after the
share consolidation, to provide the Company with maximum operational and funding flexibility, as
we approach the next scheduled payment from the sale of our Cerro Dorado project”.
About Fidelity Minerals Corp.
Fidelity Minerals Corp. is assembling a portfolio of high -quality mining assets in Peru through the
implementation of our Strategic Project Generator (SPG) model. The project generator model
involves the identification and acquisition of appraisal stage opportunities with near-term valuation
catalysts, including potential for high -impact M&A. The company is backed by an experienced
management team with diverse technical, market, and commercial expertise and is supported by
committed and sophisticated investors focused on building long term value.
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On behalf of the Board of Fidelity Minerals;
Ian Graham
CEO and Director
Tel: +1.604.671.1353
Email: [email protected]
Investor Contact:
Bahay Ozcakmak
Executive Chairman
Tel: +61.414.596.007 (Australia)
Email: [email protected]
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 NEWS RELEASE.
Disclaimer & Forward -Looking Statements: This news release contains forward -looking statements.
Forward-looking statements are statements that relate to future events or future financial performance. In some
cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “intend”,
“expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the
negative of these terms or other comparable terminology. These statements speak only as of the date of this news
release. This news release may also contain inferences to future oriented financial information (“FOFI”) within
the meaning of applicable securities laws. The information in this news release has been prepared by our
management to provide a context for the acquired projects and the registration of title and to provide the reader
with an outlook for our future activities and anticipated focus projects and may not be appropriate for other
purposes. Forward-looking statements in this announcement include, (but are not limited to , anticipated cash
payments to be received from the Cerro Dorado purchaser (including anticipated exchange rates converting USD
to CAD, advancing certain key project activities that could represent important milestones which the Company
expects may represent material valuation catalys ts, such as the expectation that through the Strategic Project
Generator model Fidelity Minerals is positioning itself to be a beneficiary in this environment of increased
appetite for prospective projects in this region. Further, forward-looking statements in this release include that
the material net proceeds of the Cerro Dorado sale and a small, near term capital raise will enable the Company
to advance the rest of the high -quality project portfolio we have been able to assemble over the last 12 months,
and that these new copper and gold projects are of scale that is likely to attract industry interest and the
implication that third-party interest in a several of these projects may result in value accretive transactions. The
implication that the Company’s initiatives will individually or collectively be successful comprise forward looking
statements.