Salazar And Guangshou Group Announce Letter-Of-Intent To Advance The Curipamba Project In Ecuador
VANCOUVER, BRITISH COLUMBIA - Salazar Resources Ltd.(TSX.V:SRL; FSE: CCG) Salazar Resources Ltd. (“the Company”) and Guangshou Group Co. Ltd. (“Guangshou”), a privately-held Chinese international mining conglomerate, announce that they have entered into a letter-of-intent (“LOI”) for a Joint Venture to develop the Curipamba Project and advance the El Domo deposit to commercial production. The LOI sets out certain terms and conditions pursuant to which Guangshou will finance development of the El Domo deposit to commercial production, with a commitment to invest $50 Million to earn a 60% equity interest in Curimining S.A., an Ecuador corporation that is a wholly-owned subsidiary of Salazar, all of which is subject to the negotiation of a definitive development and shareholders agreement (“Definitive Agreement”) between Guangshou and Salazar.
The El Domo deposit lies within the “Las Naves” concession, which is one of the 7 concessions that make up the Curipamba project (30,327.18 hectares) in the Bolivar and Los Rios Provinces in central Ecuador. El Domo is a high-grade, VMS-type deposit, with the following indicated and inferred resources as announced in the Preliminary Economic Assessment (PEA) in March 2014:
Basic Terms of the Letter-of-Intent:
Under the LOI, and subject to approval of the applicable regulatory authorities, Guangshou is purchasing 4,545,455 units of the Company at $0.22 per unit, with each unit consisting of one common share and one-half of a share purchase warrant, with each full warrant being exercisable to acquire one additional common share of the Company at an exercise price of $0.35 per share for a period of 18 months. Thereafter, subject to finalizing the Definitive Agreement, Guangshou will have the right to earn a 60% interest in the Curipamba project by funding $50 million of development costs to bring the project into commercial production, in accordance with medium scale mining laws of Ecuador, within three years of material development permits. If development costs exceed $50 million, then Guangshou will provide the Company’s share of required funding by way of loans, to be repaid with interest, from production profits. The Definitive Agreement will include other standard clauses, for transactions of this nature.
The letter of intent also states that once the Definitive Agreement is finalized, Guangshou will provide additional corporate funding to the Company of up to $1 million per year over the next three years, beginning in 2015, by way of private placement. In addition, Guangshou will, on signing of the Definitive Agreement, reimburse the Company $500,000 for certain land tenure payments and contributions to administrative overhead expenses previously incurred by the Company, and will also reimburse the Company for any project-related expenditures incurred between the date of the LOI and date the Definitive Agreement is finalized.
Mr. Fredy Salazar, CEO of Salazar Resources, stated "We are pleased to sign this letter of intent, which we feel is in the best interests of our shareholders. The LOI allows us to advance El Domo to commercial production while pursuing new opportunities that will add value to our shareholders.”
Mr. Huang Guoqin, Chairman of Guangshou Group Co. Ltd, stated "We look forward to using our 20+ years of mining experience, including in Ecuador, to work with Salazar to advance the El Domo deposit to commercial production under the medium scale mining provisions of Ecuadorian Mining Law.”
More news regarding this transaction is expected as negotiations advance towards the “Definitive Agreement”. The Parties have agreed to a 60-day completion period under the LOI, during which time the Parties will work to finalize the Definitive Agreement and the detailed terms of the proposed transaction.
A Finder’s Fee will be payable to Scarsdale Equities LLC on this transaction.
About Guangshou Group Ltd.
The Guangshou Group (Guangshou) is a privately-held Chinese international mining conglomerate registered and approved by the State Administration for Industry and Commerce. Guangshou is mainly involved in mine development, smelting, trading engineering construction, and real estate development. It has over 20 holding and joint stock companies. The parent company - Guangshou Group Co., Ltd. - has total assets of RMB 2.7 billion Yuan (USD $450 million), net assets of RMB 1.1 billion Yuan (USD $180 million), and annual revenues of approximately RMB 3 billion (USD $500 million).
With over 20 years of mine exploration and investment development experience, Guangshou has established enterprises engaged in the exploration and development of precious metals, nonferrous metals, and coal mines in Guizhou, Sichuan, Guangxi, Fujian, Yunnan in China, and North Korea, Indonesia, Thailand, Burma and Ecuador overseas.
About Salazar Resources Limited
Salazar Resources Ltd. is a publicly-listed (TSX.V: SRL; FSE: CCG) mineral resource company engaged in the exploration and development of new highly-prospective areas in Ecuador. Led by a senior Ecuadorian management team and most notably by its namesake Fredy Salazar, this team has been instrumental in other major discoveries throughout Ecuador. Being based in Ecuador, thus having thorough knowledge of local human and environmental issues, gives the company a strategic advantage, enabling it to complete exploration at a rapid pace. With an excellent property portfolio (3 projects- 42,900 hectares), good geopolitical positioning and a number of strategic corporate and financial partnerships, Salazar has positioned itself to be a strategic player in Ecuador and throughout South America.
ON BEHALF OF THE BOARD OF SALAZAR RESOURCES LIMITED
President & CEO
Salazar Resources Limited
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This press release contains “forward-looking information” within the meaning of applicable Canadian securities laws. All statements included herein, other than statements of historical fact, are forward- looking information and such information involves various risks and uncertainties. Forward-looking information herein includes, but is not limited to, statements that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as the successful completion of the PEA and the timing of completion of the PEA. Such forward- looking information is based on a number of material factors and assumptions, including that contracted parties provide services on the agreed timeframes and that laboratory and other related services are available and perform as contracted. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward- looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company's disclosure documents on the SEDAR website at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information except in accordance with applicable securities laws.