Newcrest to Acquire Indirect 19.9% Interest IN El Cobre Through Investment of CAD$19 Million; Almadex to Spin-Out Mineral Exploration and Royalty Assets
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NEWS RELEASE
February 26, 2018
Trading Symbols:
TSX-V: AMZ; OTCQX: AXDDF
www.almadexminerals.com
NEWCREST TO ACQUIRE INDIRECT 19.9% INTEREST IN EL COBRE THROUGH
INVESTMENT OF CAD$19 MILLION;
ALMADEX TO SPIN-OUT MINERAL EXPLORATION AND ROYALTY ASSETS
VANCOUVER, B.C. Almadex Minerals Limited ("Almadex" or the "Company") (TSX -V: AMZ;
OTCQX: AXDDF) is pleased to announce that its Board of Directors has unanimously approved
a strategic reorganization of its business. Almadex's early stage exploration projects, royalty
interests and certain other non-core assets will be transferred to a newly incorporated c ompany
(“Spinco”). Almadex s hareholders will receive shares in Spinco in proportion to their
shareholdings in Almadex (the “Spin-out”). Spinco will hold the following key assets:
a portfolio consisting of interests in 18 exploration projects;
a 1.75% Net Smelter Return (“NSR”) royalty on the Company’s El Cobre property in
Mexico;
a 2% NSR royalty on the Tuligtic property in Mexico, which hosts the Ixtaca gold-silver
development project which is operated by Almaden Minerals Ltd.;
a portfolio of 15 additional NSR royalties on exploration projects in Mexico, Canada and
the United States identified through the Company’s past prospect generator activities;
up to 4 million shares of Almadex; and,
at a minimum, sufficient working capital to satisfy stock exchange requirements.
The El Cobre gold/copper porphyry project will remain in Almadex.
As part of the reorganization, Almadex's current shareholders will receive shares of Spinco by
way of a share exchange, pursuant to which each existing share of Almadex is exchanged for
one “new” share of Almadex and one share of Spinco.
Warrantholders and optionholders of Almadex will receive warrants and options, respectively, of
Spinco which are proportionate to, and reflective of the terms of, their existing warrants and
options, respectively. The reorganization will be effected by way of a plan of arrangement under
the Business Corporations Act (British Columbia). The Company intends to apply for a listing of
the shares of Spinco on the TSX Venture Exchange ("TSX -V"). Any such listing will be subject
to Spinco fulfilling all of the requirements of the TSX-V.
The Company is undertaking the reorganization in order to focus on the develo pment of its El
Cobre gold-copper porphyry project, which is l ocated in the state of Veracruz, Mexico. The
spinout transaction allow s the Company to raise funding necessary to advance the El Cobre
project without diluting shareholders’ interests in the oth er assets in the portfolio (see details on
the Newcrest private placement below). The spin-out transaction should also unlock value for a
group of assets that have gone largely unrecognized by allowing the market to value the
Company's El Cobre project independently of its early stage mineral exploration and royalty
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business. In addition to allowing the Company to con tinue to focus efforts on developing El
Cobre, the Company is confident that having a separately funded and managed mineral
exploration and ro yalty business will accelerate development of th e exploration projects in
Spinco.
Spinco will be managed by Almadex’s current team of officers and its Board of Directors will
initially be comprised of the same individuals as the Company’s board.
The strategic reorganization remains conditional on the approval of final documentation by the
Board of Directors of Almadex , approval of the strategic reorganization by the TSX -V, approval
by an affirmative vote of 66 2/3% of shareholders of Almadex in attendance at a shareholders’
meeting, and approval of the Supreme Court of British Columbia, among other things.
Additional details of the spin -out transaction will be included in an information circular to be
mailed to shareholders of Almadex in March 2018 in connection with the Company’s
shareholders meeting referred to above. That shareholders’ meeting is expected to be held in
April 2018 and the strategic reorganization is expected to close in May 2018.
Investment by Newcrest Mining Limited
The Company is also pleased to report that it has entered into a subscription agreement with
Newcrest International Pty Ltd, a wholly owned subsidiary of Newcrest Mining Limited
(“Newcrest”, ASX: NCM) pursuant to which Newcrest has agreed to acquire 14,025,312
Common Shares of Almadex by way of a non-brokered private placement at a price of $1.36 per
share for aggregate gross proceeds of $19,074,425 (the “Private Placement”) . The Private
Placement will close in conjunction with the proposed spinout transaction referred to above ,
subject to customary conditions of closing including the completion of the Spin -out transaction.
Newcrest has completed its due diligence in regards to the Private Placement. Upon completion
of the Private Placement, Newcrest will hold 19.9% of the issued shares of Almadex, and will
have no ownership interest in Spinco.
Newcrest is one of the world’s largest gold mining companies, operating mines in Australia and
Asia–Pacific and Africa regions . Newcrest has extensive experience developing and operating
successful mines in culturally and geographically diverse environments , and also seeks to
identify and secure large mineral districts, or provinces, in order to establish long term mining
operations. Newcrest has extensive experience in exploring and operating gold and copper
porphyry deposits through its ownership of the Cadia Hill operation in NSW, Australia, and its
interest in the Wafi-Golpu project in Papua New Guinea.
J. Duane Poliquin, Chairman of Almadex, commented, “Participation of Newcrest in El Cobre
further validates the potential of the district and enables Almadex to conduct the work program
at El Cobre which our recent programs have clearly demonstrated is justif ied. We look forward
to working with Newcrest which has extensive experience internationally in similar geological
environments as we conduct further exploration at El Cobre”.
The subscription agreement contemplates that Newcrest and the Company will enter into an
investor rights agreement providing, among other things, a standstill and lock-up on customary
terms and conditions, participation rights in favour of Newcrest to maintain its pro-rata interest in
the Company, and the right of Newcrest to designate one nominee to the board of directors of
Almadex.
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About Almadex
Almadex Minerals Limited is an exploration company that holds a large mineral portfolio
consisting of projects and NSR royalties in Ca nada, the U.S., and Mexico. This portfolio is the
direct result of over 35 years of prospecting and deal -making by Almadex's predecessor
company, Almaden Minerals Ltd. Almadex is currently focused on exploration at its El Cobre
gold/copper porphyry project in Veracruz, Mexico, in which it holds a 100% interest, subject to a
sliding-scale net smelter returns royalty (“NSR”) equivalent to 0.5% in the event that production
from the property exceeds 10,001 tonnes per day of ore. This NSR can be reduced to 0.25% at
this production rate through the payment of US$3.0 million.
On behalf of the Board of Directors,
“Morgan Poliquin”
Morgan J. Poliquin, Ph.D., P.Eng.
President, CEO and Director
Almadex Minerals Limited
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
This news release includes forward -looking statements that are subject to risks and
uncertainties. All statements within it, other than statements of historical fact, are to be
considered forward looking. Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ materially from
those in forward -looking statements. Factors that could cause ac tual results to differ materially
from those in forward -looking statements include market prices, exploitation and exploration
successes, continued availability of capital and financing, and general economic, market or
business conditions. There can be no assurances that such statements will prove accurate and,
therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not
assume any obligation to update any forward -looking statements, other than as required
pursuant to applicable securities laws.
Contact Information:
Almadex Minerals Limited
Tel. 604.689.7644
Email: [email protected]
http://www.almadexminerals.com/