Avesoro Resources Inc. (AIM: ASO / TSX: ASO) ('Avesoro' or the 'Company'), is pleased to announce that it has entered into a conditional agreement to acquire the Youga Gold Mine and Balogo Gold Mine (the 'Assets') in Burkina Faso through the acquisition of the entire issued share capital of MNG Gold Burkina SARL, Cayman Burkina Mines Ltd., MNG Gold Exploration Ltd., AAA Exploration Burkina Ltd. and Jersey Netiana Mining Ltd. and their subsidiaries (the 'Acquired Entities' which collectively hold the Assets) from Avesoro Jersey Limited ('Avesoro Jersey'), a related party being the majority (73.5%) shareholder of the Company, for a total consideration of US$69.5 million (the 'Acquisition').
The Company has today conditionally raised approximately GBP15.2 million (approximately US$20.0 million) through a placing of new Common Shares in the Company ('Placing Shares') to new and existing sophisticated and accredited investors at a placing price of 1.9 pence per Placing Share (the 'Placing Price') (the 'Placing'). Of the proceeds from the Placing, US$18.5 million will be used to fund the cash component of the Acquisition consideration and the remainder will be used for general working capital purposes. Up to a further US$2.5 million (gross) may be raised for working capital purposes by way of a Broker Option (the 'Broker Option'), as determined by the Brokers, which will remain open for exercise by the Brokers until 5.00 p.m. London Time on 31 October 2017.
Highlights of the Acquisition
US$69.5 million acquisition consideration to be funded through:
US$51.0 million of Common Shares issued to Avesoro Jersey at the Placing Price being 2,033,492,822 new Common Shares ('Consideration Shares') and
US$18.5 million of cash raised via the Placing.
Transformational acquisition for the Company which will add two producing mines to the Company's portfolio; The transaction will simplify the management structure by bringing two mines into the Company from the wider Avesoro Jersey group. Following the Acquisition, Avesoro Jersey's shareholding in the Company will remain at approximately 73 per cent; Positive diversification of project and country risk; Significant exploration upside added to the Company's portfolio and Continuation of the Company's long-term plan to become a premier mid-tier African gold producer.
Increases forecast proforma 2017 gold production to 180-190koz; Proforma 2017 year to date cash costs of US$660/oz; Increases forecast combined gold production for 2018 by approximately 60% to 230koz; Assets being acquired at attractive valuation of 0.57x NAV1; Assets already well understood by management who have managed them for the last 18 months under an owner operator mining model and Addition of 0.5Moz of Proven & Probable Mineral Reserves and 0.7Moz Inferred Mineral Resources, representing an increase of 72 per cent. and 50 per cent. respectively to the Company's Mineral Resource and Reserve portfolio.
The Company has conditionally raised approximately GBP15.2 million (approximately US$20.0 million) from institutional investors through a placing of 797,449,000 Placing Shares at a price of 1.9 pence per Placing Share, representing approximately 15.0 per cent. of the Company's existing issued share capital. The Placing Price represents a discount of approximately 1.3 per cent. to the closing price of the Company's shares on 30 October 2017, being the latest practicable date before publication of this announcement. Under the terms of the Broker Option, the Company may also issue up to a further 99,681,021 new Common Shares at the Placing Price to sophisticated and accredited investors if exercised by the Agents.
Serhan Umurhan, Chief Executive Officer of Avesoro, commented: 'I am delighted to announce that we have entered into an agreement with Avesoro Jersey Ltd to acquire the Youga Gold Mine and Balogo Gold Mine in Burkina Faso. The Assets will provide Avesoro with geographic diversity within West Africa and are highly complementary to our existing New Liberty mine, significantly increasing Avesoro's gold production, in addition to adding high quality exploration upside that will provide for further future organic growth. In conjunction with the turnaround at New Liberty, this acquisition marks a significant next step in achieving our long-term plan to become a premier mid-tier African gold producer.'
The Acquisition is subject to stock exchange and minority shareholder approvals, as described further in this announcement. Closing is anticipated on or around 18 December 2017, as soon as practicable after shareholder approval is obtained when the Placing will also complete.
In addition, the Company intends to propose, subject to shareholder approval, a share consolidation (or reverse stock split) of the issued and outstanding Common Shares (the 'Share Consolidation') at a share consolidation ratio of one (1) post-consolidation Common Share for every hundred (100) pre-consolidation Common Shares. The actual timing for implementation, if any, of the Share Consolidation would be determined by the Board of Directors based upon its evaluation as to when such action would be most advantageous to the Company and its shareholders, and would be expected to occur in early 2018.
The Company will in due course send a circular to shareholders convening a Special Meeting to seek minority shareholder approval for the Acquisition and shareholder approval of the Share Consolidation to be completed in 2018. In conjunction with the Acquisition, an independent committee of directors was created in July 2017 consisting of Mr David Netherway, Mr Jean-Guy Martin and Mr Loudon Owen (the 'Independent Committee') to supervise the negotiation of the Acquisition and the preparation of an independent formal valuation required by Canadian securities laws.
The Independent Committee considers, having consulted with the Company's Nominated Advisor, that the terms of the Acquisition are fair and reasonable insofar as its shareholders are concerned.
The Independent Committee has unanimously recommended the approval of the Acquisition to the board of directors of the Company (the 'Board'). Accordingly, and based on the recommendation of the Independent Committee, the Board intends to recommend that the Company's minority shareholders vote in favour of the resolution in respect of the Acquisition to be proposed at the Special Meeting.
This summary should be read in conjunction with the full text of the following Announcement and its Appendices.
1Purchase price of US$69.5m divided by discounted equity NPV (as per the latest NI 43-101) of the Youga Gold Mine and the Balogo Gold Mine adjusted for US$13.1m depletion of the ore bodies arising from production since the Mineral Reserve and Mineral Resource reporting date of 28 February 2017.
Tel: +44(0) 20 3874 4740
About Avesoro Resources Inc
Avesoro Resources Inc. is a west Africa focussed gold mining, development and exploration company listed on the Toronto Stock Exchange ('TSX') and the AIM market operated by the London Stock Exchange ('AIM').
The Company's assets include the New Liberty Gold Mine in Liberia (the 'New Liberty Gold Mine' or 'New Liberty') which has an estimated Proven and Probable Mineral Reserve of 7.4 Mt with 717,000 ounces of gold grading 3.03 g/t and an estimated Measured and Indicated Mineral Resource of 9.6 Mt with 985,000 ounces of gold grading 3.2 g/t and an estimated Inferred Mineral Resource of 6.4 Mt with 620,000 ounces of gold grading 3.0 g/t.
The New Liberty Gold Mine is located within the Southern Block of the 100% owned Bea Mountain mining licence. This licence covers 478 km-2 and has a 25 year, renewable, mineral development agreement. The Bea Mountain mining license also hosts additional gold projects of Ndablama, Gondoja, Weaju and Leopard Rock which host Indicated and Inferred Mineral Resources. The Company also owns the adjacent Yambesei, Archaen West, Mabong and Mafa West licences, in addition to a gold exploration permit in Cameroon.
The information in this announcement relating to the Mineral Resource and Mineral Reserves Estimates for the New Liberty Gold mine has been prepared under the supervision of Dr Mike Armitage C Geol., C Eng., who is a Member of the Institute of Materials, Minerals and Mining and a Fellow of the Geological Society.
Youga and Balogo
The information in this announcement relating to the Mineral Resource Estimates for the Youga Gold mine, Ouare deposit and Balogo Gold Mine has been prepared by Malcolm Titley, who is a Member of the Australian Institute of Geologists. Mr Titley is a full-time employee of CSA Global (UK) Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a 'Qualified Person' as defined in National Instrument 43-101 'Standards of Disclosure for Mineral Projects' of the Canadian Securities Administrators. Mr Titley has reviewed and approved this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which this appears.
The information in this announcement relating to the Mineral Reserve Estimates for the Youga Gold Mine, Ouare deposit and Balogo Gold Mine has been prepared by Dr Matthew Randall, who is a registered Fellow of the Institute of Materials, Minerals and Mining. Dr Randall is an associate consultant to CSA Global (UK) Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a 'Qualified Person' as defined in National Instrument 43-101 'Standards of Disclosure for Mineral Projects' of the Canadian Securities Administrators. Dr Randall has reviewed and approved this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which this appears.
An independent NI 43-101 technical report with respect to each of the Youga Gold Mine and Balogo Gold mine will be filed on SEDAR concurrently with the posting of the circular for the Special Meeting.
Forward Looking Statements
Certain information contained in this announcement constitutes forward looking information or forward looking statements with the meaning of applicable securities laws. This information or statements may relate to future events, facts, or circumstances or the Company's future financial or operating performance or other future events or circumstances. All information other than historical fact is forward looking information and involves known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different from any future results, performance, events or circumstances expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as 'anticipate', 'plan', 'continue', 'estimate', 'expect', 'may', 'will', 'would', 'project', 'should', 'believe', 'target', 'predict' and 'potential'. No assurance can be given that this information will prove to be correct and such forward looking information included in this announcement should not be unduly relied upon. Forward looking information and statements speaks only as of the date of this announcement.
Forward looking statements or information in this announcement include, among other things, statements regarding the completion of the Acquisition and the Placing; the receipt of shareholder and regulatory approvals; forecast proforma 2017 gold production of 180-190koz; increase of forecast combined gold production for 2018 by approximately 60% to 230koz; the combined Youga & Balogo average Life of Mine production of 54koz per annum at average Cash Cost and All-in Sustaining Cost of US$870/oz and US$962/oz respectively; proforma year to date cash costs of US$660/oz and that significant exploration upside will be added to Avesoro portfolio.
In making the forward looking information or statements contained in this announcement, assumptions have been made regarding, among other things: general business, economic and mining industry conditions; interest rates and foreign exchange rates; the continuing accuracy of Mineral Resource and Reserve estimates; geological and metallurgical conditions (including with respect to the size, grade and recoverability of Mineral Resources and Reserves) and cost estimates on which the Mineral Resource and Reserve estimates are based; the supply and demand for commodities and precious and base metals and the level and volatility of the prices of gold; market competition; the ability of the Company to raise sufficient funds from capital markets and/or debt to meet its future obligations and planned activities and that unforeseen events do not impact the ability of the Company to use existing funds to fund future plans and projects as currently contemplated; the stability and predictability of the political environments and legal and regulatory frameworks including with respect to, among other things, the ability of the Company to obtain, maintain, renew and/or extend required permits, licences, authorizations and/or approvals from the appropriate regulatory authorities; that contractual counterparties perform as agreed and the ability of the Company to continue to obtain qualified staff and equipment in a timely and cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in the forward looking information or statements contained in this announcement as a result of risks and uncertainties (both foreseen and unforeseen), and should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether or not such results will be achieved. These risks and uncertainties include the risks normally incidental to exploration and development of mineral projects and the conduct of mining operations (including exploration failure, cost overruns or increases, and operational difficulties resulting from plant or equipment failure, among others); the inability of the Company to obtain required financing when needed and/or on acceptable terms or at all; risks related to operating in West Africa, including potentially more limited infrastructure and/or less developed legal and regulatory regimes; health risks associated with the mining workforce in West Africa; risks related to the Company's title to its mineral properties; the risk of adverse changes in commodity prices; the risk that the Company's exploration for and development of mineral deposits may not be successful; the inability of the Company to obtain, maintain, renew and/or extend required licences, permits, authorizations and/or approvals from the appropriate regulatory authorities and other risks relating to the legal and regulatory frameworks in jurisdictions where the Company operates, including adverse or arbitrary changes in applicable laws or regulations or in their enforcement; competitive conditions in the mineral exploration and mining industry; risks related to obtaining insurance or adequate levels of insurance for the Company's operations; that Mineral Resource and Reserve estimates are only estimates and actual metal produced may be less than estimated in a Mineral Resource or Reserve estimate; the risk that the Company will be unable to delineate additional Mineral Resources; risks related to environmental regulations and cost of compliance, as well as costs associated with possible breaches of such regulations; uncertainties in the interpretation of results from drilling; risks related to the tax residency of the Company; the possibility that future exploration, development or mining results will not be consistent with expectations; the risk of delays in construction resulting from, among others, the failure to obtain materials in a timely manner or on a delayed schedule; inflation pressures which may increase the cost of production or of consumables beyond what is estimated in studies and forecasts; changes in exchange and interest rates; risks related to the activities of artisanal miners, whose activities could delay or hinder exploration or mining operations; the risk that third parties to contracts may not perform as contracted or may breach their agreements; the risk that plant, equipment or labour may not be available at a reasonable cost or at all, or cease to be available, or in the case of labour, may undertake strike or other labour actions; the inability to attract and retain key management and personnel and the risk of political uncertainty, terrorism, civil strife, or war in the jurisdictions in which the Company operates, or in neighbouring jurisdictions which could impact on the Company's exploration, development and operating activities.
This announcement also contains Mineral Resource and Mineral Reserve estimates. Information relating to Mineral Resource and Mineral Reserve contained in this announcement is considered forward looking information in nature, as such estimates are estimates only, and that involve the implied assessment of the amount of minerals that may be economically extracted in a given area based on certain judgments and assumptions made by qualified persons, including the future economic viability of the deposit based on, among other things, future estimates of commodity prices. Such estimates are expressions of judgment and opinion based on the knowledge, mining experience, analysis of drilling results and industry practices of the qualified persons making the estimate. Valid estimates made at a given time may significantly change when new information becomes available, and may have to change as a result of numerous factors, including changes in the prevailing price of gold. By their nature, Mineral Resource and Mineral Reserve estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such Mineral Resource and Mineral Reserve estimates are inaccurate or are reduced in the future (including through changes in grade or tonnage), this could have a material adverse impact on the Company and its operating and financial performance. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Due to the uncertainty that may be attached to inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration.
Although the forward-looking statements contained in this announcement are based upon what management believes are reasonable assumptions, the Company cannot provide assurance that actual results or performance will be consistent with these forward-looking statements. The forward looking information and statements included in this announcement are expressly qualified by this cautionary statement and are made only as of the date of this announcement. The Company does not undertake any obligation to publicly update or revise any forward looking information except as required by applicable securities laws.