VANCOUVER, July 17, 2018 /CNW/ - INCA ONE GOLD CORP.
(TSXV: IO) (Frankfurt:
SU9.F) (SSEV: IOCL) ("Inca One" or the
"Company") is pleased to announce that on July 13, 2018, it entered into a definitive
purchase agreement (the "Purchase Agreement") to acquire
100% ownership of Anthem United Inc. ("Anthem"), which owns
a 90.14% interest in the 350 tonnes per day ("TPD")
Koricancha ore processing facility in Peru ("Koricancha"), from Equinox Gold
Corp. (TSXV: EQX) ("Equinox") for cash and shares
totaling approximately $16.3 million,
less any IGV tax credits collected to the benefit of Inca One.
Koricancha is located approximately 50km from Inca one's ore
processing facility and should give rise to cost synergies and
provide a platform for growth. All dollar amounts in this press
release are presented in Canadian dollars and all dollar amounts
and production numbers reflect 100% of the Koricancha operations
unless otherwise stated. The Purchase Agreement is an arms-length
transaction and there are no finder's fees payable in relation to
the Purchase Agreement.
Highlights of the Koricancha acquisition:
- Accretive acquisition before synergies: anticipated
increases in Inca One's revenues based on the three months ended
April 30, 2018 of 186% and throughput
by 150%, while increasing shares outstanding by only 75%.
- Increases revenues: historical revenues for the three
months ending April 30, 2018 for Inca
One and Koricancha were approximately US$3.5
million and US$6.5 million
respectively.
- Increases production: immediately more than doubles Inca
One's current throughput from 100 tonnes per day ("TPD") to
approximately 250 TPD.
- Cost synergies: reduction in Canadian corporate overhead
unit costs, reduction in duplicate regional offices, centralized
purchasing and operating efficiencies.
- Platform for growth: Koricancha is permitted to 350 TPD
with current throughput of 150 TPD, providing excess capacity to
increase consolidated throughput by 80% to 450 TPD.
- Diversifies production: the acquisition of Koricancha
adds a second Peruvian processing facility.
- Significant working capital addition: additional working
capital to fund ore purchases de-risks operations at both
plants.
- Enhances scale and capital markets profile: Equinox, a
new significant and supportive long-term shareholder that is a
leader in the mining space, will hold 19.99% of the common shares
of the Company post completion.
Under the terms of the Purchase Agreement, Inca One will acquire
a 90.14% ownership of Koricancha (the "Transaction") from
Equinox and certain minority shareholders and terminate the 3.5%
gold stream currently payable by Koricancha for total consideration
as follows:
- $6 million payable by the
issuance of 110,050,225 common shares of Inca One ("Inca One
Shares") on completion of the Purchase Agreement at a deemed
price of $0.055 per common share, of
which 51,269,708 Inca One Shares shall be issued to Equinox,
51,269,708 Inca One Shares shall be issued to SA Targeted Investing
Corp. ("SATIC") in consideration for the termination of the
gold stream and the remaining Inca One Shares shall be issued to
certain minority shareholders who hold an interest in
Koricancha.
- $2.5 million payment to Equinox
on the first anniversary of the completion of the Purchase
Agreement to be paid in cash or Inca One Shares at the discretion
of Inca One, based on the preceding 20-day volume weighted average
price of Inca One Shares, subject to Equinox's ownership of Inca
One Shares not exceeding 19.99% of the outstanding Inca One Shares
(the "Equinox Ownership Limit").
- $2.5 million payment to Equinox
on the second anniversary of the completion of the Purchase
Agreement to be paid in cash or Inca One Shares at the discretion
of Inca One, based on the preceding 20-day volume weighted average
price of Inca One Shares, subject to the Equinox Ownership
Limit.
- $1.5 million payment to Equinox
in cash on the second anniversary of the completion of the Purchase
Agreement.
- $2.5 million payment to Equinox
on the third anniversary of the completion of the Purchase
Agreement to be paid in cash or Inca One Shares at the discretion
of Inca One, based on the preceding 20-day volume weighted average
price of Inca One Shares, subject to the Equinox Ownership
Limit.
- Payment in cash to Equinox on or before the third anniversary
of the completion of the Purchase Agreement for the difference
between the amount of working capital at closing and US$3 million and certain payments related to
outstanding value-added taxes receivable by Koricancha, subject to
receipt. The Company estimates the amount of working capital on
closing of at least US$4 million and
therefore US$1 million ($1.3 million) estimated payable on the third
anniversary.
- As part of the Transaction, the Company is acquiring
approximately US$4.2 million in
historical IGV related to the construction of Koricancha and has
agreed to pay Equinox for 50% of amounts collected less costs to
collect, the remainder of which is for the benefit of the
Company.
In connection with the Transaction, the 3.5% gold stream
currently payable by Koricancha will be terminated and, as a
result, production from Koricancha will not be subject to any
precious metal streams or royalties thereby maximizing revenues for
our shareholders. Additionally, Equinox will be entitled to one
seat on the Company's Board of Directors and an equity
participation right equal to their ownership so long as they hold
in excess of 9.9% of Inca One's outstanding shares. Inca One will
also grant Equinox security over the non-interest bearing deferred
payments by way of a pledge of the shares of Anthem.
Koricancha is a custom built, fully operational, industrial gold
ore processing facility strategically situated in the Arequipa
region of Peru. It is located at sea level, fully serviced by
excellent infrastructure just 10 minutes from the Pan American
Highway, within the Nazca-Ocona gold belt in Southern Peru.
It is permitted for 350 TPD and currently operating at 150 TPD. In
the past six months, the Koricancha plant has produced 10,767
ounces of gold and revenue of US$14.4
million. Koricancha was first commissioned in July 2015 under the ownership of Anthem United
Ltd. and achieved commercial production on October 1, 2015. It has been servicing the
small-scale mining sector of Peru
for three years and has a stockpile of material currently being
processed. The fully integrated plant features a
carbon-in-leach (CIL) gold circuit, and it is a condition of the
Transaction that there will be at least US$3
million of existing working capital in place that Inca One
will deploy toward ore purchases as required.
Highlights upon completion of Transaction for Inca One
shareholders include:
- Establishes Inca One as the leader for publicly listed gold
processing companies in Peru, with
450 TPD permitted capacity.
- Immediately more than doubles throughput to approximately 250
TPD, which diversifies Inca One's operating platform.
- Additional 200 TPD of available capacity for future
growth.
- Establishes Inca One as a consolidator in the industry with its
second plant in operation.
- Economies-of-scale opportunities and several strategic benefits
of having two plants within a 50km radius, including the potential
for centralized purchasing, crushing, desorption and smelting
services.
- Combined working capital of over US$5
million.
- Equinox becomes a new significant shareholder.
Inca One President and CEO,
Edward Kelly, stated, "The
acquisition of the producing Koricancha Mill is a strategic and
transformative acquisition for Inca One. It instantly
elevates the Company from a small producer to a major player among
publicly traded gold processing companies. Inca One
significantly increases its permitted capacity and more than
doubles our current throughput. The transaction is aligned with our
long-term growth objectives and is an important milestone in the
consolidation we foresaw in the processing space. We look forward
to working with the operating team at Koricancha. We also welcome
Equinox as a business partner and significant shareholder in Inca
One going forward."
Christian Milau, CEO of Equinox,
commented, "We are pleased to partner with Inca One on this
transaction. While Koricancha is no longer a core asset for
Equinox, it is highly complementary to Inca One's existing
operations in Peru and will
deliver both increased scale and operating efficiencies. We intend
on being a long-term and supportive shareholder of Inca One as
their experienced team focuses on establishing the Company as an
industry leader in the Peruvian gold milling space."
The closing of the Transaction is subject to approval by the TSX
Venture Exchange and satisfaction or waiver of other customary
conditions.
Early Warning
In connection with the Transaction, Equinox will acquire
51,269,708 Inca One Shares and SATIC will acquire 51,269,708 Inca
One Shares, each representing 19.99% of the Inca One Shares that
will be issued and outstanding upon completion of the Transaction,
at a deemed price of $0.055 per
share. Prior to completion of the Transaction, neither Equinox nor
SATIC owned any Inca One Shares or other securities of Inca One.
Equinox and SATIC are acquiring the Inca One shares for investment
purposes only. Depending upon market and other conditions, or as
future circumstances may dictate, either or both of Equinox and
SATIC may, respectively, from time to time, increase or decrease
their holdings of Inca One Shares or other securities of Inca
One.
In connection with the closing of the Transaction, Equinox and
Inca One will enter into a nomination rights agreement pursuant to
which, among other things, so long as Equinox beneficially owns at
least 10% of the outstanding Inca One Shares it will have the right
to nominate one director to Inca One's board and to participate in
certain offerings of securities by Inca One to maintain its pro
rata ownership interest.
This portion of this news release is issued pursuant to National
Instrument 62-103 – The Early Warning System and Related
Take-over Bid and Insider Reporting Issues of the Canadian
Securities Administrators, which also requires an early warning
report to be filed with the applicable securities regulators
containing additional information with respect to the foregoing
matters. A copy of the early warning reports of Equinox and SATIC
will be available on Inca One's issuer profile on SEDAR at
www.sedar.com. Equinox's head office is located at Suite 730, 800
West Pender Street, Vancouver, BC
V6C 2V6 and Equinox can be contacted at 604-558-0560, attention
Pam Kinsman, to obtain a copy of its
early warning report.
About Inca One
Inca One is a Canadian-based mineral processing company.
The Company's activities consist of the production of gold and
silver from the processing of purchased minerals located in
Peru. Peru is the 6th largest producer of gold in
the world and the Peruvian government estimates the small-scale
mining sector accounts for a significant portion of all Peruvian
gold production, estimated to be valued approximately US$3 billion annually. The Company
purchases its minerals from government registered small-scale
mining producers from various regions and processes it at its Chala
One milling facility located in Chala, Southern Peru.
On behalf of the Board,
Edward Kelly,
President and CEO
INCA ONE GOLD CORP.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS NEWS RELEASE.
Statements regarding the Company which are not historical facts
are "forward-looking statements" that involve risks and
uncertainties. Such information can generally be identified by the
use of forwarding-looking wording such as "may", "expect",
"estimate", "anticipate", "intend", "believe" and "continue" or the
negative thereof or similar variations and involve statements about
future anticipated revenue, increases in production, cost synergies
and completion of the Purchase Agreement. Since
forward-looking statements address future events and conditions, by
their very nature, they involve inherent risks and
uncertainties. Actual results in each case could differ
materially from those currently anticipated in such statements due
to factors such as: (i) fluctuation of mineral prices; (ii) a
change in market conditions; (iii) reduction of supply (iv) plant
shutdowns, (iv) the fact that future operational results may not be
accurately predicted based on this limited information to date and
(v) delays in closing due to regulatory matters. Except
as required by law, the Company does not intend to update any
changes to such statements. Inca One believes the
expectations reflected in those forward-looking statements are
reasonable but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements
included herein should not be unduly relied upon.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification under
the securities laws of any such state.
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SOURCE Inca One Gold Corp.