Minera Alamos Announces $2 Million of Early Funding Under Its Royalty Facility with Osisko Gold Royalties for the La Fortuna Gold Project, Durango, Mexico
Minera Alamos Announces $2 Million of Early Funding
Under Its Royalty Facility with Osisko Gold Royalties for
the La Fortuna Gold Project, Durango, Mexico
Toronto, Ontario and Vancouver, British Columbia--(Newsfile Corp. - December 12, 2018) -
Minera Alamos Inc.
(TSXV
: MAI)
("Minera Alamos"
or the "Company"
)
is pleased to announce it has obtained $2 million of early funding in connection with its
previously announced royalty agreement (the "Royalty Option Agreement") through the execution of a secured senior convertible
loan agreement (the "Loan" or "Loan Agreement") with Osisko Gold Royalties Ltd (TSX: OR) ("Osisko").
T
he Loan may be
converted into a 1% NSR on the La Fortuna gold project pursuant to the
R
oyalty
O
ption
A
greement
entered into with
Osisko in May 2017, as detailed below.
Further to the Company's news release dated November 21
st
, 2018 ("
Minera Alamos Receives Positive Notice Regarding
Permit Applications for La Fortuna Gold Project in Durango, Mexico
"), the majority of the new funds are destined for a change
of land use payment requested by the Mexican authorities (Secretaria de Medio Ambiente y Recursos Naturales -
"SEMARNAT") in conjunction with the La Fortuna gold project permit applications.
Following the completion of the change of
land use payment, SEMARNAT will then be in a position to issue the formal approval documentation for the La Fortuna project.
"As stated previously, the receipt of formal permit notifications for the La Fortuna gold project represents a major milestone for
the Company. We are appreciative of the support provided by Osisko Gold Royalties allowing for us to meet the permitting
payment deadlines," stated Minera Alamos CEO Darren Koningen.
"We can now look forward to 2019 and the beginning of site
preparation work leading to a construction decision later in the year."
"We are pleased to provide continuing support to the efforts of the Minera Alamos team as they successfully advance the La
Fortuna gold project through permitting and toward a production decision," stated Sean Roosen, Chairman and Chief Executive
Officer of Osisko Gold Royalties. "The progress that Minera Alamos has made this year is a testimony to their ability to advance
their development portfolio and we look forward to working with them as they transition to a gold producer."
$
2
MILLION
SENIOR
SECURED LOAN
Under the terms of the Loan Agreement, Osisko has provided Minera Alamos with a $2 million (the "Principal Amount") loan.
The Loan has a maturity date of 18 months from the date of issue and interest shall be payable on the Principal Amount at a rate
per annum that is equal to LIBOR plus 8.5%, compounded monthly.
Accrued interest shall be payable at maturity.
At Osisko's
election, the Principal Amount may be converted in to a 1% NSR on the La Fortuna gold project pursuant to the Royalty Option
Agreement (
see press release dated May 30
th
,
2017).
In addition, at the sole discretion of Osisko, the maturity date of the Loan
could be advanced earlier than 18 months subject to providing 60 days notice to Minera Alamos. While the Loan is outstanding,
it is secured by substantially all of the assets of Minera Alamos.
The Company has also issued 200,000 common share purchase warrants (the "Warrants") to Osisko.
Each Warrant entitles
Osisko to acquire one common share at a price of $0.30 during the term of Loan.
The loan will be used for the change of land use payment required as part of the recent notice received by the Company
regarding the Company's ETJ-MAI permit applications for the proposed La Fortuna gold project and for other Project
development purposes such as site preparation work in advance of the arrival of the Company's previously acquired 2,000 tpd
mill.
The entering into the Loan Agreement, the Amendment of the Royalty Option Agreement, the issue of the Warrants, the granting
of the Security and the other transactions contemplated by the Loan Agreement, are considered to be a "related party
transaction" under
Multilateral Instrument
61-101
- Protection of Minority Security Holders in
Special Transactions
("MI 61-
101") as a result of Osisko owning 46,080,000 (~15.3%) of the common shares of the Company.
Notwithstanding the foregoing,
the transactions are exempt from the requirement to obtain a formal valuation pursuant to section 5.5(b) of MI 61-101, as the
common shares of Minera Alamos are not listed on any of the specified markets and exempt from the requirement to obtain
minority approval pursuant to 5.5(a) of MI 61-101, as at the time the transactions were agreed to, neither the fair market value of
the subject matter of, nor the fair market value of the consideration for the transactions, insofar as it involves interested parties,
exceeded 25 per cent of the Company's market capitalization.
The material change report to be issued in connection herewith is
being filed less than 21 days in advance of the closing of the Loan as the Company requires the consideration it will receive in
connection with the Loan immediately to make certain property payments.
ROYALTY
OPTION
AGREEMENT
AND INVESTMENT AGREEMENT
Further to a Strategic Partnership entered into between Minera Alamos and Osisko in May 2017, Osisko was provided certain
rights that included:
Royalty Option:
Osisko was granted an option to purchase up to a 4.0% NSR royalty on the La Fortuna Property ("
La
Fortuna
") for total consideration of $9 million.
Royalty/Stream Right:
As long as Osisko holds common shares equal to at least 10% of the issued and outstanding
common shares of Minera Alamos, on a non-diluted basis (as determined in accordance with the terms of the Investment
Agreement), Osisko will have a participation right on any and all royalties, streams, or similar interests granted on
properties belonging to Minera Alamos.
Additional Rights:
Osisko has (i) the right to participate in half of any buybacks of existing La Fortuna royalties, and (ii)
the right to acquire (at fair market value) a 2.0% NSR on any property acquired within a 250 km radius of La Fortuna.
As part of the early funding arrangement, the Royalty Option Agreement was amended to provide the earlier conversion of the
loan into a 1% NSR royalty that provides the Company increased flexibility. In addition, amendments were made to provide for
liquidated damages and pursuant to the Investment Agreement to remove the 10% shareholding requirement in relation to the
rights granted to Osisko under the Royalty Option Agreement as noted above.
For Further Information Please Contact:
Minera Alamos Inc.
Doug Ramshaw, President
Tel: 604-600-4423
Email:
Website:
www.mineraalamos.com
About
Minera Alamos
Minera Alamos is an advanced-stage exploration and development company with a growing portfolio of high-quality Mexican
assets, including the La Fortuna open-pit gold project in Durango with positive PEA completed, the Santana open-pit heap-
leach development project in Sonora with test mining and processing completed and the Guadalupe de Los Reyes open-pit
gold-silver project in Sinaloa with mine planning in progress.
The Company is awaiting the pending approval of permit
applications related to the commercial production of gold at both the Santana and Fortuna projects.
The Company's strategy is to develop low capex assets while expanding the project resources and pursue complementary
strategic acquisitions.
Mr. Darren Koningen, P. Eng., Minera Alamos' CEO, is the Qualified Person responsible for the technical content of this press
release under National Instrument 43-101. Mr. Koningen has supervised the preparation of, and approved the scientific and
technical disclosures in this news release.
Caution Regarding Forward-Looking Statements
This news release may contain forward-looking information and Minera Alamos cautions readers that forward-looking
information is based on certain assumptions and risk factors that could cause actual results to differ materially from the
expectations of Minera Alamos included in this news release. This news release includes certain "forward-looking statements",
which often, but not always, can be identified by the use of words such as "believes", "anticipates", "expects", "estimates",
"may", "could", "would", "will", or "plan". These statements are based on information currently available to Minera Alamos and
Minera Alamos provides no assurance that actual results will meet management's expectations. Forward-looking statements
include estimates and statements with respect to Minera Alamos' future plans with respect to the Projects, objectives or goals, to
the effect that Minera Alamos or management expects a stated condition or result to occur and the expected timing for release
of a resource and reserve estimate on the Projects. Since forward-looking statements are based on assumptions and address
future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among
other things, results of exploration, the economics of processing methods, project development, reclamation and capital costs of
Minera Alamos' mineral properties, the ability to complete a preliminary economic assessment which supports the technical and
economic viability of mineral production could differ materially from those currently anticipated in such statements for many
reasons. Minera Alamos' financial condition and prospects could differ materially from those currently anticipated in such
statements for many reasons such as: an inability to finance and/or complete an updated resource and reserve estimate and a
preliminary economic assessment which supports the technical and economic viability of mineral production; changes in general
economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative,
environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties
encountered in connection with Minera Alamos' activities; and other matters discussed in this news release and in filings made
with securities regulators. This list is not exhaustive of the factors that may affect any of Minera Alamos' forward-looking
statements. These and other factors should be considered carefully and readers should not place undue reliance on Minera
Alamos' forward-looking statements. Minera Alamos does not undertake to update any forward-looking statement that may be
made from time to time by Minera Alamos or on its behalf, except in accordance with applicable securities laws.
NEITHER 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.