Goldgroup Signs Agreement to Acquire the Cerro Prieto Gold Project
VANCOUVER, Jan. 28, 2013 /PRNewswire/ - Goldgroup Mining Inc. ("Goldgroup") (TSX:GGA, OTC:GGAZF, BMV SIC:GGAN.MX) is pleased to announce that it has entered into a binding agreement with Oroco Resource Corp. ("Oroco") (TSXV:OCO, Frankfurt: 0R6) whereby Goldgroup will acquire 100% interest in Oroco's Cerro Prieto Project (the "Properties") in Sonora State, Mexico for an initial cash payment of US$4.5 million, US$1 million private placement of units in Oroco and up to an additional US$13.5 million in payments made from future gold produced at the Properties, subject to receipt of regulatory and Oroco shareholder approvals.
Cerro Prieto is a principally permitted, gold and silver project located in northern Sonora State, Mexico, with mineral concessions totaling an area of approximately 7,000 hectares, containing approximately 17.5 kilometers of strike length of the mineralized structure hosting the current resource. In early 2012 Oroco announced the receipt of the Environment Impact Statement (Manifestacion de Impacto Ambiental) and the Authorization of Change of Land Use (Estudio Tecnico Justificativo para Cambio de Uso de Suelo) for the Cerro Prieto project.
- On closing, Goldgroup will pay Oroco US$4.5 million in cash
- Goldgroup will subscribe for and purchase five million units in Oroco at a price of CDN$0.20 per unit by way of private placement, with each unit being comprised of one common share and one non-transferable share purchase warrant. Each warrant shall entitle Goldgroup to purchase one common share of Oroco for a period of two years for CDN$0.25
- Oroco will be entitled to receive up to an additional US$13.5 million through cash payments equal to US$150 for each of the first ninety thousand ounces of gold produced from the Properties paid quarterly and payments commencing no later than one year after closing of the transaction
- Goldgroup agrees to pay minimum payments of US$625,000 per quarter unless the Properties are not in production by January 1, 2014 in which case the first two minimum quarterly payments of 2014 will be US$250,000, the third minimum payment will be US$625,000 and the fourth payment will be the balance of US$2.5 million, less the three quarterly payments made
- Closing of the transaction is subject, but not limited to, the receipt of all required regulatory approvals as well as special resolution approval of Oroco shareholders
- Oroco will pay Goldgroup a break fee of US$500,000 if the transaction in not completed by June 30, 2013
Goldgroup Plans for Cerro Prieto
- Goldgroup plans to complete detailed evaluation of the Properties resources in order to develop its own development and growth plan and to provide 2013 guidance on construction and budgets after closing
- Due to Cerro Prieto's close proximity to the Cerro Colorado mine, Goldgroup has the opportunity to realize future synergies between these projects
Dr. Hans von Michaelis, President, CEO & Director of Goldgroup commentedTM: "Cerro Prieto offers Goldgroup the opportunity to realize synergies from its current operating mine, Cerro Colorado, located a short distance away in northern Sonora State. Our focus will be to evaluate how to best use our equipment at the Cerro Colorado mine in the development of Cerro Prieto, as well as to grow Goldgroup's resource base and production profile. We look forward to participating in the successes of Oroco through our potential ownership interest in them."
About Goldgroup Mining Inc.
Goldgroup is a well-funded Canadian-based gold production, development, and exploration Company with significant upside in a portfolio of projects in Mexico, including its flagship 100%-owned advanced stage gold development project Caballo Blanco in the state of Veracruz, and a 50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of the high-grade gold exploration project, San José de Gracia located in the state of Sinaloa. The Company also operates its 100%-owned Cerro Colorado gold mine in the state of Sonora.
Goldgroup remains in a flexible financial position with a strong cash balance, no debt and no gold hedging. The Company is led by a team of highly successful and seasoned individuals with extensive expertise in mine development, corporate finance, and exploration in Mexico. Goldgroup's mission is to increase gold production, mineral resources, profitability and cash flow, building a leading gold producer in Mexico.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain information contained in this news release, including any
information relating to future financial or operating performance, may
be considered "forward-looking information" (within the meaning of
applicable Canadian securities law) and "forward-looking statements"
(within the meaning of the United States Private Securities Litigation
Reform Act of 1995). These statements relate to analyses and other
information that are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions of management. Actual
results could differ materially from the conclusions, forecasts and
projections contained in such forward-looking information. These
forward-looking statements reflect Goldgroup's current internal
projections, expectations or beliefs and are based on information
currently available to Goldgroup. In some cases forward-looking
information can be identified by terminology such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe",
"estimate", "projects", "potential", "scheduled", "forecast", "budget"
or the negative of those terms or other comparable terminology. Certain
assumptions have been made regarding the Company's plans at the Caballo
Blanco project. Many of these assumptions are based on factors and
events that are not within the control of Goldgroup and there is no
assurance they will prove to be correct. Forward-looking information is
subject to a variety of known and unknown risks, uncertainties and
other factors that could cause actual events or results to materially
differ from those reflected in the forward-looking information, and are
developed based on assumptions about such risks, uncertainties and
other factors including, without limitation: uncertainties related to
actual capital costs, operating costs and expenditures, production
schedules and economic returns from Goldgroup's projects; uncertainties
associated with development activities; uncertainties inherent in the
estimation of mineral resources and precious metal recoveries; risks
related to the continued operation of the Cerro Colorado mine without a
current economic analysis; risks related to the planned expansion of
the Cerro Colorado mine; uncertainties related to current global
economic conditions; fluctuations in precious and base metal prices;
uncertainties related to the availability of future financing;
potential difficulties with joint venture partners; risks that
Goldgroup's title to its property could be challenged; political and
country risk; risks associated with Goldgroup being subject to
government regulation; risks associated with surface rights;
environmental risks; Goldgroup's need to attract and retain qualified
personnel; risks associated with operating hazards at the Cerro
Colorado mine; risks associated with potential conflicts of interest;
Goldgroup's lack of experience in overseeing the construction of a
mining project; risks related to the integration of businesses and
assets acquired by Goldgroup; uncertainties related to the
competitiveness of the mining industry; risk associated with theft;
risk of water shortages and risks associated with competition for
water; uninsured risks and inadequate insurance coverage; risks
associated with potential legal proceedings; risks associated with
community relations; outside contractor risks; risks related to
archaeological sites; foreign currency risks; risks associated with
security and human rights; and risks related to the need for
reclamation activities on Goldgroup's properties, as well as the risk
factors disclosed in Goldgroup's Annual Information Form and MD&A. Any
and all of the forward-looking information contained in this news
release is qualified by these cautionary statements. Although Goldgroup
believes that the forward-looking information contained in this news
release is based on reasonable assumptions, readers cannot be assured
that actual results will be consistent with such statements.
Accordingly, readers are cautioned against placing undue reliance on
forward-looking information. Goldgroup expressly disclaims any
intention or obligation to update or revise any forward-looking
information, whether as a result of new information, events or
otherwise, except as ay be required by, and in accordance with,
applicable securities laws.
SOURCE Goldgroup Mining Inc.