Mr. Dan Omeniuk reports
MX GOLD CORP. SIGNS LOI TO ACQUIRE A 50% INTEREST IN THE DURANGO SMELTER PROJECT IN MEXICO
MX Gold Corp. has entered into a binding option agreement with American Metal Mining SA de CV whereby, upon certain scheduled payments totalling $1,525,000 (U.S.), the company will acquire 50 per cent of the shares of a private Mexican corporation that holds the IDS project. The IDS project consists of a past-producing gold smelter, three acres of land situated around the smelter, and various equipment and permits associated therewith. Upon advancement of the initial payment of $650,000 (U.S.), the company was granted a 49.5-per-cent net profit participating interest in the IDS project that will remain until option exercise, provided that all payments are made by the company in accordance with the option agreement.
The acquisition includes a fully permitted smelter that was completed in 2014 for a throughput capacity of 50 tonnes per day. The smelter was built to receive and process high-grade direct-ship ores and concentrates from small-scale miners across the state of Durango and beyond.
The concept was birthed by the vision of Rosa Isela De La Rocha, a state senator for Durango. Using a central location to safely and more efficiently process daily production, the community of local miners could enhance economics and quality of life. By eliminating the need for each miner to process, or otherwise dispose of, its individual ore production, the miners are able to spend more time producing and also receive a higher return from their production.
Bert McPherson, president of MX Gold, stated, “We are very excited to have secured a project that can provide a significant source of near-term revenue for our company.”
Furthermore, a project plan has been developed, and work has begun on several fronts: Contact has been made with several dozen mining groups to evaluate the supply potential from each group, including estimated average grades of what they have been producing, and purchase parameters; an analysis of the permitted flow sheet by a reputable metallurgist that has significant experience with smelter recoveries will be commissioned to confirm the previous expectations or recommend any modifications to enhance economics.
Additionally, at the plant site, various efforts have been initiated, including recalibrating the truck scale, rebuilding the metallurgical lab, setting up the crushing circuit, overall cleanup of the site and the hiring of critical staff.
To exercise the option, the company is required to make the following payments, or such amounts may be satisfied from cash flow from the project:
- $650,000 (U.S.) on entry into the agreement, which amount has been paid;
- $425,000 (U.S.) on or prior to 60 days from the effective date;
- Three payments of $100,000 (U.S.) each on or prior to 90 days, 120 days and 240 days from the effective date;
- $150,000 (U.S.) on or prior to 270 days from the effective date.
In the event that the company does not elect to proceed with the exercise of the option within 60 days of entering into the agreement, the company may elect to apply the initial $650,000 (U.S.) toward two other projects in Mexico that the company is considering or may elect to convert such amount into a 5-per-cent carried net profit participation interest in the IDS project. In the event that the IDS project generates $10-million (U.S.) in cumulative net profit, the company has agreed to pay $2.5-million (U.S.) to AMM within 90 days thereof. Pursuant to the terms of the agreement, and following payment of the benchmark bonus, each of the company and AMM will be reimbursed its initial capital expenditures incurred in connection of the IDS project.
The company also announces that it has entered into an unsecured loan agreement to borrow $650,000 (U.S.) from a lender to finance the initial payment due under the option agreement.
MX Gold also announces that, pursuant to a consulting services agreement dated Oct. 20, 2016, between the company and a third party consultant, the company has issued 1,148,562 common shares in the capital of the company to the consultant as a finder’s fee in connection with the company’s earn-in of a 50-per-cent participating ownership interest and 45-per-cent net profit participating interest in the Magistral Del Oro tailings project located in Mexico.
The company also announces that it has granted options to acquire 200,000 common shares in the capital of the company at a price of 21 cents per optioned share for a period of five years to a consultant of the company. The optioned shares vest over a nine-month period, with 25 per cent of the optioned shares vesting as of the date of grant and 25 per cent of the optioned shares vesting every three months from the grant date.
About MX Gold Corp.
MX Gold is a junior mining company focused on the exploration, development and mining of advanced projects located in British Columbia and Mexico. The company’s primary focus in British Columbia is its high-grade Willa gold and copper project, located 12 kilometres south of Silverton, B.C. In 2015, MX Gold completed the accretive acquisition of the Willa project, and the Max molybdenum mine and mill complex.
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