Para Resources Inc. (TSX-V: PBR) (WKN: A14YF1) (OTC: PRSRF) announces it has entered into Definitive Agreements with Mineros, S.A. to acquire 100% of its wholly owned subsidiary Operadora Mineras S.A.S. for US$5.5 million. Operadora owns 100% of the La Ye Gold Operations and associated mineral rights. During its due diligence enquiries Para was able to confirm, based on financial statements audited by Deloitte and Touche, Ltda, that the Operadora mine has been profitable in the last two years. The Management team that has operated the mine since startup will remain and continue to manage the combined Colombian operations.
Para President and CEO, Mr. Javier Cordova states, “I look forward to the fresh start in Colombia, with a strong balance sheet and an accretive acquisition which will we expect will turn the Company’s operations profitable with a significant holding of underexplored and drill ready land package that is located in one of the most prolific gold areas in the world. The Operadora acquisition adds an operating and profitable mine and mill with proven management and increases the Company’s contiguous concession package. In addition, we will immediately be able to take advantage of the Company’s strong local community relations and couple it with the experienced exploration team from Operadora. We expect exploration drilling to commence immediately. This transaction puts Para into a solid growth trajectory.”
Operadora S.A.S. – Summary of the Assets
Operadora’s principal assets are the El Bagre underground gold operation (including on-site processing plant) and the Nechi gold exploration project. Additionally, this acquisition includes numerous other mineral properties, mining assets, mining and environmental permits, exploration equipment, data, inventory, and administrative assets.
A summary of El Bagre as documented in “Technical Report on the El Bagre Underground Gold Operation and the Nechi Gold Project, Department of Antioquia, Colombia” dated July 31, 2019, and prepared by Roscoe Postle Associates Inc. follows.
The technical report referenced herein (the Technical) will be filed on SEDAR (www.sedar.com) and on the Company’s website) within 45 days. As mineral reserves are being disclosed in the technical report, the technical report will be a prefeasibility study per CIM Definition Standards of the Canadian Institute of Mining, Metallurgy and Petroleum.
The Company proposes to complete a consolidation of its issued and outstanding shares on the basis of 10 old shares for every one new share, and change its name to “Soma Gold Corp.” as part of its overall reorganization and restructuring plans. Para’s outstanding 303,933,649 common shares will be consolidated into approximately 30,393,365 common shares (subject to adjustments from rounding). All outstanding share purchase warrants, stock options and other convertible securities will be adjusted accordingly.
Convertible Debt Financing
The Company also announces that it will complete a private placement of convertible debentures for gross proceeds of $3,000,000. US$1,000,000 of such proceeds will be used to pay the first installment payment to Mineros described above. The remaining proceeds will be for general working capital and to pay various accounts payable.
The debentures will have a three-year term and bear simple interest of 10% per annum. Interest will be payable quarterly in arrears, with the first interest payment commencing December 31, 2020 and then payable March 31, June 30, September 30 and December 31 thereafter. The debentures will be convertible at the option of the holder, following one year from issuance of the debentures, at a per share conversion price equal to the greater of: (i) CDN $0.15 per share (post-consolidation), and (ii) a 20% discount to the then closing market price (based on a 5-day VWAP before the date of exercise). Further, for each $1,000 principal amount of debenture, it will have a maturity value of $1,250 provided that the debenture remains unconverted for at least 24 months from the date of issuance (the “Threshold Date”). If the debenture is converted on or prior to the Threshold Date, only the principal amount shall be due and owing and no bonus shall be accrued or payable.
Finder’s fees may be paid, as permitted by the policies of the TSX Venture Exchange in connection with the convertible debt financing.
Completion of each of the Mineros transaction, the share consolidation and name change and the convertible debt financing, is subject to the Company’s filing requirements with the TSXV and applicable TSXV approvals.
Paulo J. Andrade, BSc Senior Geologist, VP Exploration for Para Resources is the Qualified Person, who is responsible for the technical information contained in this news release.
ABOUT PARA RESOURCES:
Para Resources Inc. is a junior gold mining and exploration company. The Company owns the El Limon project that includes existing or near-term mining and milling operations as well as highly prospective exploration properties. The Company has acquired fully permitted mines and facilities with adjacent properties that have either been past producers or where there is an abundance of small-scale artisanal miners, dramatically reducing the exploration risk. It is anticipated that the operating mines will be profitable in the short term, providing a return on capital, as stand-alone entities and funding regional exploration to expand resources.
Para is unique in that the Insiders have invested more than US$30 million of their own capital and own approximately 70% of the Company’s equity.
Para’s management team is seasoned and proven, having discovered, built, managed and sold several different mines over the last 40 years.
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We acknowledge the [financial] support of the Government of Canada.