Minera Alamos Announces US$25 million Construction Financing Package Termsheet Executed for Cerro de Oro Gold Project; Q1 Financial Results
Minera Alamos Announces US$25 million
Construction Financing Package Termsheet
Executed for Cerro de Oro Gold Project; Q1
Financial Results
Toronto, Ontario--(Newsfile Corp. - May 31, 2023) -
Minera Alamos Inc.
(TSXV: MAI)
(the
"Company" or "Minera Alamos")
is pleased to announce the conclusion of discussions with lenders
regarding a funding package tailored for the limited capital requirements associated with the planned
construction of the Cerro de Oro gold mine that is currently anticipated to begin next year.
The Company
has signed a termsheet for a US$15 million Loan Facility and US$10 million Royalty that is expected to
close on or around July 14
th
upon signing of definitive documentation as well as board and regulatory
approvals.
"We are delighted to have entered into this agreement, which provides a fully funded and single source
solution to meet the capital expenditure requirements for the Company's planned new gold mine upon
the successful receipt of permits. The low capital cost of the Cerro de Oro project has allowed us to
consider less covenant heavy terms that provide for increased flexibility in the lead up and during
construction of our second mine." Stated Doug Ramshaw, President, Minera Alamos. "In addition, the
termsheet provides the ability to draw down a modest portion of the total package ahead of permit
receipt that will support the pre-construction activities planned for Cerro de Oro in 2023. This allows our
existing treasury to continue to support operational activities elsewhere including the drill campaign
currently underway and other corporate initiatives".
Key aspects of the financing package are detailed below:
Loan Package (US$15 million)
Loan Term - 3 years
Loan upfront fee - 2% on closing
Loan security - comprising share pledges over the Cerro de Oro and La Fortuna operating
subsidiaries
Interest charged at 1.25% per month on any drawn amount of the loan
Interim Funding - US$5 million under the loan facility will be available to draw down immediately
following closing to fund pre-permit activities related to the Cerro de Oro mine. The remaining
US$10 million will be available upon receipt of construction permits.
Royalty Package (US$10 million)
2.75% NSR on all metal production from the Cerro de Oro mine
Royalty Buyback - for a period of 30 months post royalty closing, Minera can buy back 2% of the
2.75% NSR by delivering a minimum of 3200 oz of gold related to the NSR and a payment of
US$6.3 million. In the event Minera exercises the royalty buyback at an earlier date than the expiry
date (30 months from closing), a credit of 100oz of gold per full month will be given against the
minimum threshold.
The royalty holder will retain the option to sell the remaining 0.75% to Minera for US$3.7 million.
Minera and all its operating Subsidiaries will enter into a purchase and sale agreement for a
minimum of 100% of its gold production to be sold at market rates for a period of no less than 36
months from closing.
Closing remains conditional upon the completion of satisfactory technical due diligence, completion of
satisfactory documentation including but not limited to the entering into of the security documents,
appropriate legal opinions and any other required conditions that are standard for a facility of this type.
Closing is anticipated to take place around July 14
th
, 2023 at which time the Interim Funding may be
drawn with the remaining Loan facility and Royalty Facility available to the Company upon receipt of
permits.
Operations Update
The Company continued to focus on development activities at Santana in Q1 in advance of the transition
to mining at the Nicho Main zone.
Some early material from the Nicho Main zone has been stacked on
the pad and further material from the new and much larger deposit is expected to compliment ounces
from the Nicho Norte starter pit through the rest of the year. This initial material mined from the Main zone
pit has been successfully utilized for a new battery of crushing system tests and blasting optimization
studies, a path that was very productive in the early days of development of the starter pit.
The Company will continue to utilize existing pad capacity for increased mining, stacking and leaching
activities while waiting for permit amendment approvals that will allow a substantial new area of pad
availability for what is anticipated to be a stronger second half of gold production. As the Company
prepares to expand its mining activities with its mining contractor, a significant reduction in accounts
payable was undertaken in Q1 reducing accounts payable to the lowest level since operations began.
Exploration drilling continues at Santana with a first round of holes drilled into the previously identified
Benjamin Hill target now logged with assays pending. The Company's drill has been relocated to the
Zata target that despite good surface gold grades from several rounds of sampling has never been
drilled. The Company is currently on its second drill hole at Zata and more details and results will be
available in future corporate updates.
Selected Financial Data:
The following selected financial data is summarized from the Company's unaudited condensed interim
consolidated financial statements and related notes thereto (the "Interim Financial Statements') for the
three months ended March 31st, 2023, and the Management's Discussion and Analysis ("MD&A") for
the three months ended March 31st, 2023 (all numbers in Canadian dollars unless otherwise stated). A
copy of the Financial Statements and MD&A is available on SEDAR at
www.sedar.com
.
In accordance with the adoption of the Amendment to International Accounting Standard ("IAS") 16
Property, Plant & Equipment, Proceeds Before Intended Use, the Company is providing revenues and
costs of goods sold for the period ending March 31st, 2023.
A more thorough explanation of this new
accounting rule is outlined in the financial statements (note that the comparable prior year costs of good
sold, pursuant to the IFRS accounting rule for their treatment do not factor in depletion).
First quarter financials were reflective of the decision to prioritize waste and development activities
(
see news releases dated January 31
st
, 2023 and May 2
nd
, 2023
). Revenues totalled $6,784,379
with cost of goods sold amounting to $3,954,831 compared to revenues of $5,160,026 with costs
of goods sold of $2,255,305 in the corresponding Q1 2022 (
Note: Reflected in the revenues is an
accounting of $5,514,069 of deferred revenue from the quarter ending Dec 31
st
2022. A total of
$2,460,659 of quarterly revenue from Q1 2023 is treated as deferred revenue and will be
accounted for in Q2 2023 financials
).
Net income of $1,485,884 for the quarter amounted to $0.003/share compared to Net income of
$1,067,853 or $0.002/share in the corresponding quarter of 2022.
Cash and Cash Equivalents totalled $10,200,029 compared to $6,106,610 as of March 31
st
2022
(S13,153,828 at Dec 31
st
2022).
Accounts Payable were reduced year on year by $2,315,849 to $1,623,036 as of March 31
st
2023
($3,699,024 as of Dec 31
st
2022).
Working capital totalled $19,890,807 compared to $15,456,020 as of March 31
st
2022
($18,284,236 at Dec 31
st
2022).
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.
For Further Information Please Contact:
Minera Alamos Inc.
Doug Ramshaw, President
Victoria Vargas de Szarzynski, VP Investor Relations
Tel: 604-600-4423
Tel: 289-242-3599
Email:
Email:
Website:
www.mineraalamos.com
About Minera Alamos Inc.
Minera Alamos is a gold production and development Company undergoing the operational startup of its
first gold mine that produced its first gold in October 2021. The Company has a portfolio of high-quality
Mexican assets, including the 100%-owned Santana open-pit, heap-leach mine in Sonora that is
currently going through its operational ramp up. The 100%-owned Cerro de Oro oxide gold project in
northern Zacatecas has considerable past drilling and metallurgical work completed with plans to enter
the permitting process. The La Fortuna open pit gold project in Durango (100%-owned) has a robust and
positive preliminary economic assessment (PEA) completed and the main Federal permits in place.
Minera Alamos is built around its operating team that together brought 3 mines into successful
production in Mexico over the last 13 years.
The Company's strategy is to develop very low capex assets while expanding the projects' resources
and continuing to pursue complementary strategic acquisitions.
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.
The Company does not have a feasibility study of mineral reserves, demonstrating economic and
technical viability for the Santana project, and, as a result, there may be an increased uncertainty of
achieving any particular level of recovery of minerals or the cost of such recovery, including increased
risks associated with developing a commercially mineable deposit.
Historically, such projects have a
much higher risk of economic and technical failure. Failure to commence production would have a
material adverse impact on the Company's ability to generate revenue and cash flow to fund operations.
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.
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https://www.newsfilecorp.com/release/168160