Maudore Acquires Sleeping Giant Processing Facility and Gold Assets from North American Palladium
Owning production facility advances strategy of becoming dominant
consolidator in prime Quebec mining region
Experienced workforce and fully operational mill with tailings facility
- $18 million cash consideration, funded by borrowings under a $22 million secured credit facility by FBC Holdings Sarl, plus 1,500,000 common shares
MONTREAL, March 23, 2013 /CNW Telbec/ - Maudore Minerals Ltd. ("Maudore" or the "Company") (TSX : MAO) (US OTC : MAOMF) (Frankfurt Exchange : M6L) is pleased to announce that it has purchased the Sleeping Giant Mill and an adjacent Tailings Facility (together, the "Processing Facility") from North American Palladium Ltd. ("NAP") (TSX: PDL; AMEX: PDL) through its acquisition of all of the outstanding shares of NAP Quebec Mines Ltd. ("NAP Quebec") in accordance with a Purchase Agreement entered into on March 22, 2013 between Maudore and NAP. The Processing Facility is strategically located 60 km west of Maudore's Osbell Deposit and 150 km north of Val-d'Or, Quebec, along Highway 109, a route which continues north to Matagami, Quebec.
As a result of its acquisition of NAP Quebec, Maudore has also acquired all of NAP's Quebec-based gold assets.
In consideration for the shares of NAP Quebec, Maudore has paid to NAP a cash consideration of $18 million, which has been funded through the credit facility described below, and has issued to NAP 1,500,000 common shares. These common shares will be subject to a four-month hold period in accordance with Canadian securities laws. Neither NAP, NAP Quebec nor any of their insiders shall become an insider of Maudore as a result of the acquisition. The TSX Venture Exchange (the "TSXV") has approved the acquisition.
The consummation of this transaction allows Maudore to further advance its strategy of consolidating its position in a highly prospective yet grossly under-explored region within a globally competitive mining jurisdiction, and provides the Company with a degree of optionality as regards the development of its resources. Moreover, in addition to having a strategically important land position of 144,000 ha (1,440 km2) in the Northern Volcanic Zone of the Abitibi Greenstone Belt of Quebec, Maudore is also inheriting a highly talented workforce capable of developing its resources.
"The acquisition of the Sleeping Giant Mill and Tailings Facility run by its highly skilled and experienced work force is truly the most transformative event in the history of our Company," said Kevin Tomlinson, Chairman of Maudore. "With new mining facilities and advanced stage exploration properties contiguous to our existing properties, we now have a total land package of 144,000 ha. This represents the first in a series of planned steps for Maudore to consolidate significant holdings in the prolific Northern Abitibi region of Quebec and positions the Company to become a leading Canadian gold producer capable of delivering shareholder value through the exploration, development and production of our properties."
The Processing Facility is designed to operate at a rate of 900 tonnes per day (tpd), and is currently processing between 400-600 tpd with +/- 92% gold recovery, five days per week, treating underground ore from the Vezza gold project as it continues to ramp up to a production footing. Ore is fed through a grizzly into a crushing plant with a primary jaw crusher and two cone crushers with screening, then to a rod mill and two ball mills to produce a pulp that undergoes conventional leaching followed by a CIP (carbon in pulp) circuit, stripping facilities, electrowinning and an induction furnace to produce gold dore. In 2010, NAP determined that the Processing Facility could be upgraded in two phases from 900 to 1,250 tpd, and then from 1,250 to 1,750 tpd. NAP initiated the upgrade and later put the expansion on hold in order to focus on their palladium assets. It is expected that the adjacent Tailings Facility could last approximately 10 years at this higher throughput rate with additional expansion work within the facility and the underground operations, as indicated in a NAP Quebec internal report completed in 2012 by AMEC Amériques Ltée.
Mr. Tomlinson affirmed that "it has been our vision, since assuming responsibility for Maudore's future in July of 2012, to become the dominant consolidator in the Region, and owning our own production facility was an integral component for executing that strategy. The location of the facility, within 60 kilometers of our Osbell deposit, provides us with the opportunity to become a cost effective producer. It also fits well with our efforts to arrange a merger with Eagle Hill Exploration Corporation, whose Windfall Lake resource is well within trucking distance of the Sleeping Giant Processing Facility." Mr. Tomlinson further remarked that "we fully intend to continue to explore one of the largest continuous land packages in the Northern Abitibi and welcome our new employees and partners in the Region."
The table below sets forth current resources of Maudore after giving effect to the acquisition of NAP Quebec:
|Project||Mineral Resource Estimates||
8,463,800 tonnes at 2.0 g/t gold (Au) for 546,299
ounces indicated and 8,115,800 tonnes at 4.8 g/t Au for
1,258,990 ounces inferred (Maudore press release of
October 29, 2012).
A 2010 measured and indicated resource of 1,510,000
tonnes grading 5.9 g/t Au for 287,500 ounces and an
inferred resource of 754,000 tonnes grading 5.0 g/t Au
for 121,500 ounces Au.
|Note: Totals do not add up due to rounding. Osbell Resource Estimate for Maudore Minerals Ltd. Nov 30, 2012 by Alain Carrier, PGeo (InnovExplo Inc.), Pierre-Luc Richard, PGeo (InnovExplo Inc.), Christian D'Amours, PGeo (GeoPointCom), and Alain Dorval, Eng. (InnovExplo Inc.); Vezza Resource Estimate for North American Palladium Ltd. by Scott Wilson Roscoe Postle Associates Inc., 2010 prepared by Bernard Salmon, PEng and Petr Pelz, PGeo.|
In compliance with National Instrument 43-101 Standards for Mineral Projects ("NI 43-101"), a NI 43-101 compliant technical report in respect of the Vezza project will be prepared by the Company within the next 45 days. The Company has retained Christian D'Amours, PGeo (GeoPointCom) to prepare such report.
The table below sets forth the historical mineral resource estimates acquired with the purchase of NAP Quebec. A qualified person has not performed sufficient work to classify the historical estimates as current mineral resources; and Maudore is not treating the table of historical mineral resource estimates as current mineral resource estimates.
|Project||Historical Mineral Resource Estimates||
2008 measured resources of 3,109 tonnes grading 8.95
g/t for 895 ounces, indicated resource of 1,278,973
tonnes grading 5.74 g/t Au for 236,180 ounces and an
inferred resource of 1,545,500 tonnes grading 5.93 g/t
Au for 294,473 ounces.
A 2011 measured resource of 116,000 tonnes grading
3.25 g/t Au for 12,133 ounces Au, indicated resource of
2,707,000 tonnes grading 1.77 g/t Au for 153,998
ounces Au, and 2,199,000 tonnes grading 1.95 g/t Au
for 137,561 ounces Au.
A 2008 measured and indicated resource of 489,200
tonnes grading 9.7 g/t Au for 152,743 ounces Au.
|Note: Totals do not add up due to rounding. The subsequent section cautions readers on the relevance and reliability of historical mineral resource estimates presented in this table. Historical mineral reserves are not included.|
The Discovery historical resource estimate is sourced from "Technical Report on the Scoping Study and Mineral Resource Estimate for the Discovery Project (according to Regulation 43-101 and Form 43-101F1)" by InnovExplo Inc., prepared by Carl Pelletier, PGeo for Cadiscor Resources Inc. in 2008. The historical estimate is not relevant today because additional diamond drilling completed by NAP Quebec since 2008 must be included, and the cut-off grade applied to the resource estimate must be re-evaluated in light of present market conditions (gold price, exchange rate, and mining cost). Maudore believes that the historical estimate is reliable because Maudore has worked extensively with InnovExplo and the author since 2006, and believes that all work was completed at a high professional standard. Resource categories used in the historical estimate are in compliance with CIM Definition Standards on Mineral Resources and Mineral Reserves. Parameters used are minimum mining width of 1.6 m (horizontal thickness), cut-off grade of 3 g/t Au, capping grade of 35 g/t Au, and specific gravity of 2.82 g/cm3. Polygonal on longitudinal method used cross sections to confirm grade and thickness, which were located on a longitudinal section, where polygons were traced and the volume and grade calculated (using AutoCAD and Promine software). In order to upgrade the historical estimate new drilling must be digitized, validated, and quality control protocols checked, prior to appending to the current drill database which will then be imported to GEMs software to generate a block model and estimate a mineral resource. All work must be completed by qualified persons and evaluated to the current 43-101 Standards for Mineral Projects. A qualified person has not performed sufficient work to classify the Discovery historical estimate as a current mineral resource; and Maudore is not treating the Discovery historical mineral resource estimate as a current mineral resource estimate.
The Flordin historical resource estimate is sourced from "43-101 Technical Report and Resource Estimate on the Flordin Property (according to Regulation 43-101 and Form 43-101F1)" by InnovExplo Inc. and prepared by Pierre-Luc Richard, PGeo and Carl Pelletier, PGeo for North American Palladium Ltd in 2011, which was filed on SEDAR. The historical estimate is not relevant today because additional diamond drilling completed by NAP Quebec since 2011 must be included, and the cut-off grade applied to the resource estimate must be re-evaluated in light of present market conditions (gold price, exchange rate, and mining cost). Maudore believes that the historical estimate is reliable because Maudore has worked extensively with InnovExplo and the authors since 2006, and believes that all work was completed at a high professional standard. Resource categories used in the historical estimate are in compliance with CIM Definition Standards on Mineral Resources and Mineral Reserves. InnovExplo used the squared inverse distance method to interpolate gold grades in a block model, and a pit-shell confined portions of the model. A minimum cut-off grade of 0.5 g/t Au was used for the open pit portion of the Mineral Resource Estimate and a minimum cut-off grade of 3.50 g/t Au was used for the underground model. Drill hole intercepts were calculated to a 3.0 meter minimum true thickness and specific gravity of 2.8 t/m3 was used. In order to upgrade the historical estimate new drilling must be added to the database, validated and quality control protocols checked, prior to being appended to the current dataset for a subsequent block model, mineral resource estimate, and possible Whittle pit shell model. All work must be completed by qualified persons and evaluated to the current 43-101 Standards for Mineral Projects. A qualified person has not performed sufficient work to classify the Flordin historical estimate as a current mineral resource; and Maudore is not treating the Flordin historical mineral resource estimate as a current mineral resource estimate.
The Sleeping Giant historical resource estimate is sourced from "Technical Report, The Sleeping Giant Mine Northwestern Quebec" by Genivar LP, and prepared by Tyson Birkett, PEng, Josée Couture, PEng, and Christian Bézy, PGeo for Cadiscor Resources Inc. in 2008. The historical estimate is not relevant today for several reasons: 1) additional drilling completed by NAP Quebec since 2008 must be included; 2) material mined by NAP Quebec since 2008 must be subtracted from the historical resource estimate (prior reserve estimates are not included for this reason); 3) cut-off grade applied to the resource estimate must also be re-evaluated in light of present market conditions (gold price, exchange rate, and mining cost); 4) recent work and subsequent reporting by NAP Quebec not available to the public have demonstrated the historical estimate is out of date. Maudore believes that the historical estimate can be relied on because much of it is based on mining experience at Sleeping Giant and believes that work was conducted at a high technical standard and the author is an employee of NAP Quebec and is known to Maudore. Resource categories used in the historical estimate are in compliance with CIM Definition Standards on Mineral Resources and Mineral Reserves. Mineral resources were calculated using the polygon method on inclined longitudinal sections, which has been used in the past to yield reliable results. Capping varied from 60-250 g/t Au depending on the vein; grades, tonnage and costs derived from actual mining were integrated, and minimum mining width 1.6m applied to stopes with dip greater than 50° and minimum mining width 1.8m applied to stopes with dip less than 50°. Nominal dilution of 15% was applied, and mining recovery varied from 75-100%. In order to upgrade the historical estimate, a massive project of digitization of paper records is required, then new drilling must be added to the database, validated, and quality control protocols checked. Underground workings must be digitized and subtracted from a block model, likely generated using GEMs software, followed by a resource calculation. All work must be completed by qualified persons and evaluated to the current 43-101 Standards for Mineral Projects. A qualified person has not performed sufficient work to classify the Sleeping Giant historical estimate as a current mineral resource; and Maudore is not treating the Sleeping Giant historical mineral resource estimate as a current mineral resource estimate.
NAP QUEBEC FINANCIAL INFORMATION
The following tables set out certain financial information in respect of NAP Quebec prepared by management for the fiscal years ended December 31, 2012 and 2011. Such information has been prepared in accordance with International Financial Reporting Standards and was included in the notes to the financial statements filed by NAP on Sedar.
|The carrying values of the major classes of assets and liabilities of NAP Quebec are as follows:|
|Cash and cash equivalents||553|
|Other current assets||770|
|Accounts payable and accrued liabilities||5,908|
|Obligations under finance leases||58|
|Asset retirement obligation||6,105|
|The results of operations of NAP Quebec are as follows:|
|Mining operating expenses|
|Smelting, refining and freight costs||16||54|
|Depreciation and amortization||199||7,460|
|Gold assets impairment charge||56,023||49,210|
|Gain on disposal of equipment||(435)||(27)|
|Gold mine closure, care and maintenance costs||1,463||-|
|Total mining operating expenses||59,419||88,298|
|Loss from mining operations||(56,415)||(61,485)|
|General and administration||62||82|
|Interest expenses and other costs||130||111|
|Total other expenses||2,923||6,887|
|Loss before taxes||(59,338)||(68,372)|
|Income and mining tax recovery (expense)||4,704||(1,174)|
|Loss and comprehensive loss for the year||(54,634)||(69,546)|
$22 MILLION CREDIT FACILITY
The $18 million purchase price for the shares of NAP Quebec is fully funded by a senior secured credit facility in the amount of $22 million provided to Maudore by FBC Holdings Sarl ("FBC"), an arm's length party, on March 22, 2013 (the "Credit Facility"). The Credit Facility bears interest at the rate of 15% per annum, payable quarterly in arrears, with a maturity date of March 22, 2016. In order to secure repayment of the Credit Facility, Maudore has granted to FBC a first-ranking charge over all of its and its subsidiaries' present and future personal property and material real property, including specified mining rights.
In consideration of the commitment made by FBC under the Credit Facility and in lieu of further structuring fees, Maudore has issued to FBC 1,760,000 common shares and 880,000 common share purchase warrants. Each warrant shall entitle FBC to subscribe for one common share during a period of 2 years following the date of its issuance, at a price equal to $1.08, being the closing price of common shares of Maudore on the TSXV on March 22, 2013. The foregoing securities will be subject to a four-month hold period in accordance with Canadian securities laws. The TSXV has approved the issuance of the common shares and warrants to FBC.
EQUITY PRIVATE PLACEMENT OF UP TO $25 MILLION
The Company intends to proceed with a private placement of units on a "best efforts" basis for gross proceeds of up to $25 million (the "Private Placement"), at a price per unit to be determined in the context of the market, subject to TSXV requirements. Each unit shall be comprised of one common share of Maudore and one-half of a common share purchase warrant. Each whole warrant shall entitle its holder to subscribe for one common share during a period of two years following the date of its issuance, at a price to be determined in the context of the market, subject to TSXV requirements. The securities issued under the Private Placement will be subject to a four-month hold period in accordance with Canadian securities laws. The net proceeds of the Private Placement shall be used to explore, develop and expand existing projects and operations, to fund corporate activities with respect to growth initiatives, and for other general and corporate purposes.
A total of $13 million has been committed to the Private Placement by certain investors, including FBC for the amount of $5 million and the following related parties to Maudore (the "Related Parties") for the following amounts:
Approximately $4 million by City Securities Limited, a corporation owned
by Mr. Seager Rex Harbour, a shareholder of Maudore who controls or
directs more than 10% of the total issued and outstanding common shares
of Maudore; and
- Approximately $1 million by Kevin Tomlinson, the Chairman and CEO of Maudore.
This portion of the Private Placement is expected to close on or about April 11, 2013, subject to the receipt of all requisite regulatory approvals.
The Company has retained GMP Securities L.P. to act as its lead agent, together with a syndicate of agents, including Clarus Securities Inc. and Mirabaud Securities LLP, in connection with the Private Placement.
The Private Placement to the Related Parties shall constitute a "related party transaction" within the meaning of Multilateral Instrument 61-101 ("MI 61-101"), which is incorporated into TSXV Policy 5.9. In its consideration and approval of the Private Placement, the board of directors of Maudore determined that the Private Placement to the Related Parties will be exempt from the formal valuation and minority approval requirements of MI 61-101 on the basis that the fair market value of the Private Placement to the Related Parties is not expected to exceed 25% of the market capitalization of Maudore, in accordance with sections 5.5 and 5.7 of MI 61-101.
PRIVATE PLACEMENT OF CONVERTIBLE NOTES OF UP TO $2 MILLION
The Company may determine to proceed as well with the issuance of up to $2 million in aggregate principal amount of convertible secured notes by way of a private placement, the terms of which would be determined in the context of the market, subject to TSXV requirements. If such were to occur, FBC has committed to subscribe for the entire amount of the placement.
Kevin R. Kivi, P.Geo., of KIVI Geoscience Inc., who is Maudore's Chief Consulting Geologist, approves the technical content of this press release.
About Maudore Minerals Ltd.
Maudore is a Quebec junior gold company with more than 23 exploration projects, of which five are at an advanced stage of exploration with reported current and historical resources. The Company's projects span some 120 kilometers, east-west, of the underexplored Northern Volcanic Zone of the Abitibi Greenstone Belt and cover a total area of 144,000 hectares (1,440 km2) with the Sleeping Giant Processing Facility within trucking distance of all projects.
Quebec is consistently ranked amongst the best locations worldwide for mineral exploration and development, with low cost power, proper infrastructure, mining-oriented local communities and a skilled workforce.
Cautionary Statement Regarding Forward-Looking Statements and Third Party Information
This release and other documents filed by the Company contain forward-looking statements. All statements that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate", "believe", "expect", "estimate", "plan" and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements regarding the integration of the properties, assets and employees of NAP Quebec with those of the Company, the closing of the Private Placement, the potential merger with Eagle Hill Exploration Corporation, future results of operations, performance and achievements of the Company, including potential property acquisitions, the timing, content, cost and results of proposed work programs, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, potential mineral recovery processes and rates, business and financing plans, business trends and future operating revenues. These statements are inherently uncertain and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, financial related risks, unstable gold and metal prices, operational risks including those related to title, significant uncertainty related to inferred mineral resources, operational hazards, unexpected geological situations, unfavourable mining conditions, changing regulations and governmental policies, failure to obtain required permits and approvals from government authorities, failure to obtain any required approvals of the TSXV, failure to obtain any required shareholder approvals, failure to obtain any required financing, failure to complete any of the transactions described herein, increased competition from other companies many of which have greater financial resources, dependence on key personnel and environmental risks and the other risks described in the Company's annual information forms and other continuous disclosure filings with securities regulators available under the Company's profile at www.sedar.com. It is recommended not to place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur. The Company does not assume any obligation to update any forward-looking statements contained in this release, except as required by applicable law.
Certain information appearing in this press release pertaining to NAP, NAP Quebec, Cadiscor Resources Inc. and their respective assets and operations has been obtained by the Company from information made publicly available by NAP and Cadiscor Resources Inc. and the Company assumes no responsibility for the completeness or accuracy of such information.
Neither 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.
SOURCE Maudore Minerals Ltd.