Lupaka Provides Update on Illegal Demonstration at Invicta , Announces Non-Brokered Private Placement , and Management Changes
Lupaka Provides Update on Illegal Demonstration at Invicta ,
Announces Non-Brokered Private Placement , and Management
Changes
VANCOUVER, BRITISH COLUMBIA, January 28, 2019 -- Lupaka Gold Corp. ("Lupaka
Gold" or the “ Company") (TSX -V: LPK, FRA: LQP) reports that despite considerable
effort to broker an end to the illegal demonstration at the Company’s Invicta Gold
Development Project (“Invicta”), the demonstration continues. As previously announced
on October 25, 2018, access to Invicta had been restricted due to an illegal blockade by
community members from the nearby community of Paran. In addition, the Company
announces that it intends to complete a non -brokered private placement of units (the
“Units”) of the Company for gross proceeds of up to $1,000,000 (the “Offering”), and has
downsized the workforce in Peru as a result of the blockade.
Illegal Demonstration Update
The demonstration at Invicta has resulted from a land conflict that exists between two of
Invicta’s neighbouring communities, Paran and Lacsanga. Based on all known information
the Company continues to believe that the community of Lacsanga is the legal owner of
the land in question , the basis which supports our existing valid community agreeme nt
with Lacsanga . Lupaka’s management team has worked diligently with the Peruvian
authorities to help broker a solution to the conflict and regain access to the Invicta
development site. However, efforts to-date have been unsuccessful at removing the
blockade. Contributing to the delay in obtaining a resolution was a change in a number of
government related positions including at all municipalities, certain key members of the
Ministry of the Interior and the counsels of most regional communities effective January
2019. Dialogues continue with the communities, and high-level officials from both the
Peruvian Ministry of Energy and Mines and Ministry of the Interior, with support from the
office of the Prime Minister and Vice -President of Peru. The Company is confident that
these continued efforts will result in a positive , meaningful, long-term solution to the
demonstration.
Due to the illegal demonstration the Company has been unable to access or inspect the
Invicta development site. Overall project development is approximately 90% complete
and the final inspection for the mining exploitation license, which was originally scheduled
for October 2018, remains outstanding. The demonstrations have resulted in : 1)
significant delays in the Company’s ability to develop and operate Invicta, 2) a loss of the
contracted toll milling capacity and 3) the ability to reach positive cash flow when originally
scheduled. Consequently this has caused the Company to delay scheduled payments on
the PLI Financing facility, the outstanding Bridge Loans and to certain vendors. According
to the terms of the PLI Financing Agreement and Bridge Loan 2 Agreement, those facilities
are technically in default as of January 2019. The Company is working with its lenders and
vendors on implementing restructured payment plans and securing necessary waivers. In
the meantime, headcount has been dramatically reduced and all non-essential employees
have been placed on leave without pay, due to force majeure or have been laid-off.
“We are extremely disappointed that th e demonstration has continued and would like to
thank our stakeholders for their continued patience as we work to achieve a positive long-
term outcome. We look forward to continuing to work to build strong relationships with
Invicta’s local communities, including Lacsanga, Santo Domingo and Paran.
While we have taken steps to rapidly reduce our short-term cash outflows, we remain
committed to completing the commissioning of Invicta. Our understanding of the
geological model was validated and greatly enhanced through the excellent results from
our underground development and sampling work performed in 2018, which included an
average channel sample grade of 9.06 g/t Au-Eq.* over a strike length of 235 m, with an
average sample width of 3.87 m , on the 3430 sublevel . These results prove the high -
grade continuous nature of the deposit and demonstrate the tremendous potential of the
Invicta project. We remain confident in the ability to grow resources and to generate cash
flow from the asset.”
Will Ansley, President and CEO of Lupaka
* Au-Eq. calculations are based on US$1250 for gold (“Au”), US$17.00 for silver (“Ag”), US$3.00 for
copper (“Cu”), US$1.25 for zinc (“Zn”), and US$1.05 for lead (“Pb”), with assumed metallurgical
recoveries of 85% for Au, 80% for Ag, 82 % for Cu and Pb, and 77% for Zn. Individual estimated grades
were 4.35 g/t Au, 57.59 g/t Ag, 1.55% Cu, 1.34% Pb, and 1.28% Zn
Private Placement
The Company will be raising up to $1,000,000 by way of a non -brokered private
placement. Each Unit will be priced at $0.10 and will consist of one common share of the
Company and one transferable common share purchase warrant (each, a “ Warrant”),
each warrant entitling the holder to acquire one common share of the Company at a price
of $0.10 for a period of 30 months from the date of the closing of the Offering. Proceeds
from the Offering are intended to be used for general working capital purposes and to
continue working with the government to resolve the blockade.
The closing of the Offering is expected to o ccur on or before February 28, 2019, subject
to receipt of approval of the TSX Venture Exchange (“TSXV”). The common shares and
Warrants issued in the Placement will be subject to a four-month hold period.
Management Changes
Lupaka also announces that Da niel Kivari, Director of Operations, is no longer with the
Company. As part of the separation agreement with Mr. Kivari, the Company intends to
issue 850,000 common shares of Lupaka to settle US$100,000 of debt. The deemed price
per Common Share is $ 0.155. This issuance of the Common Shares in this shares-for-
debt transaction is subject to review and approval from the TSXV and will be subject to a
four month hold period which will expire on the date that is four months and one day from
the date of issue.
Effective February 1, 2019 Luis Felipe Bravo will join the Company as the Country
Manager responsible for all administration and legal representation within Peru. Mr. Bravo
was previously the General Manager in Peru of a Canadian based company that operated
the San Juan Mine located south of Lima. San Juan is a high-grade, narrow-vein,
conventional underground min e operating a 750 tpd flotation and CIL mill, producing
approximately 25,000 ounces of Au per year. Mr. Bravo has a master’s degree in
Corporate Law from Lima University and performed p ostgraduate studies at Yale
University and Universidad de Salamanca. Mr. Bravo will be granted 5 00,000 incentive
stock options, for the purchase of up to 5 00,000 common shares, pursuant to the
Company's 2010 Incentive Stock Option Plan and subject to approval by the TSX Venture
Exchange. The options vest over 18 months and are exercisable on or before February 1,
2024 at a price of $0.10.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as the term
is defined in the policies of the TSX Venture Exchange) accepts responsibility for
the adequacy of this news release.
About Lupaka Gold
Lupaka is an active Canadian-based company focused on creating shareholder value
through discoveries and strategic development of its assets in some of the most prolific
mining regions of Peru.
FOR FURTHER INFORMATION PLEASE CONTACT:
Will Ansley, President & C.E.O.
Tel: (416) 862-5257
or visit the Company’s profile at www.sedar.com or its website at www.lupakagold.com
Cautionary Statements Regarding Forward Looking Information
This press release contains forward -looking statements which constitute "forward -looking
information" within the meaning of applicable securities laws, including all statements, trend
analysis and other information relative to anticipated future events or results. All statements, other
than statements of historical fact, included herein are considered forward -looking statements,
including, without limitation, statements relating to: discussions with the protesters and the Peruvian
Ministry of Energy and Mines and Ministry of the Interior ; discussions with the protesters and the
lifting of the blockade; the relationship with partner communities ; the use of proceeds of the
Offering, the receipt of regulatory approval of the Offering, the size and completion of the Offering.
Forward-looking statements are based on assumptions, estimates and opinions of management at
the date the statements are made and which the Company believes are reasonable. Such
information involves risks and uncertainties, and undue reliance should not be placed on such
information, as unknown or unpredictable factors could have material adverse effects on future
results, performance or achievements of the Company. Among the key factors that could cause
actual results to differ materially from those projected in the forward -looking information are the
following: that discussions with the protesters are not productive ; that regulatory approval of the
Offering is not received; that financing will not be available when and if needed on reasonable
terms; adverse changes in general economic conditions, changes in the financial markets and in
the demand and market price for commodities . This forward-looking information may be affected
by risks and uncertainties in the regular course of business and due to market conditions. Additional
risks are described in the Company’s annual information form, which is available on SEDAR at
www.sedar.com.
Although the Company has attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking information, there may
be other factors that cause actions, events or results to not be as anticipated, estimated or intended.
There can be no assurance that forward -looking information will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such statements. Readers
are cautioned not to place undue reliance on forward -looking information due to the inherent
uncertainty thereof. Lupaka Gold does not undertake any obligation to update forward -looking
statements except as required by applicable securities laws. Investors should not place undue
reliance on forward-looking statements.