ACQUISITION OF HEAVY MINING EQUIPMENT
December 12, 2017
12 December 2017
Avesoro Resources Inc.
ACQUISITION OF HEAVY MINING EQUIPMENT
Avesoro Resources Inc. ('Avesoro' or the 'Company'), the TSX and AIM listed West African gold producer, is pleased to announce that further to the Company's news announcement dated 16 October 2017, its wholly owned subsidiary Bea Mountain Mining Corporation ('BMMC') has entered into further equipment finance facility agreements ('Finance Agreements') with Mapa İnşaatve Ticaret A.Ş. ('Mapa'), a related party of the Company, to facilitate the purchase of heavy mining equipment ('HME') and additional auxiliary equipment totaling approximately US$17.1 million, as anticipated in the recently updated life of mine schedule announced on 11 October 2017.
Equipment to be purchased
The Finance Agreements totaling approximately US$17.1 million, relate to the purchase of three Sandvik DP1500 surface drills, three Komatsu PC1250 excavators, eight Komatsu HD785 haul trucks, and additional auxiliary support equipment including a Komatsu GD655 grader, two Komatsu D275A dozers and two Bomag BW213 drum rollers. Delivery to New Liberty is expected to occur throughout the remainder of 2017 and early in Q1 2018.
The Finance Agreements also include the purchase of eight MTU Onsite Energy 2,290kVA diesel generators, purchased to replace the existing rented power generation facility on site at New Liberty, allowing the generation of power to be brought in-house as a part of management's commitment to reduce on-going operating costs.
The loan principal of these agreements includes a mark-up of 2.5% over the cost incurred by Mapa in procuring the equipment.
The equipment finance loans under each of the Finance Agreements are unsecured, with interest charged at 6.5% per annum on the US$ denominated loan amount of approximately US$7.3 million and 5.5% per annum on the Euro denominated loan amount of approximately €8.3 million (equivalent to approximately US$9.8 million). The loans are repayable in cash in eight equal semi-annual instalments, the first of which will fall due six months after utilisation of the loan.
Opinion of the Independent Directors
The independent directors of the Company, consisting of Mr. David Netherway, Mr. Jean-Guy Martin and Mr. Loudon Owen consider, having consulted with the Company's Nominated Adviser, that the terms of this transaction are fair and reasonable insofar as its shareholders are concerned.
Disclosure of smaller related party transactions
Further to the Company's announcement dated 16 October 2017, in accordance with the AIM Rules, the Company discloses, at this time, the following smaller related party transactions that it has entered into during the past two months with entities within the MNG Group:
Administration services provided to the Company and Avesoro Services (UK) Limited by Avesoro Services (Jersey) Limited
Over the last two months, Avesoro Services (Jersey) Limited ('ASJL'), a wholly owned subsidiary of Avesoro Jersey and part of the Avesoro Holdings Group, has provided administrative services to the Company and Avesoro Services (UK) Limited ('ASUL'), a wholly owned subsidiary of the Company, including bookkeeping, human resources administration and general administration services. These services are recharged to the Company and ASUL on a monthly basis at a cost of approximately US$15,000 per month which approximates the cost incurred by ASJL in providing these services. The total value of these services provided over the last two months is approximately US$30,000, payable in cash.
Technical and managerial services provided to ASJL by the Company and ASUL
Over the last two months, the Company and ASUL have provided technical and managerial services to ASJL to support the other gold mines operated by Avesoro Jersey, the Youga, Balogo and Kokoya gold mines. These services are recharged to ASJL on a monthly basis at a mark-up of 5% over the cost incurred by the Company and ASUL in providing these services. The total value of these services provided over the last two months is approximately US$72,000, payable in cash.
Travel services provided to BMMC by MNG Turizm ve Ticaret A.Ş.
Over the last two months, MNG Turizm ve Ticaret A.Ş. ('MNG Turizm'), a member of the MNG Group of companies, has provided travel agency services to BMMC. MNG Turizm is a commercial travel agency and the prices paid by BMMC are the same as those paid by their arms-length customers. The total value of these services provided over the last two months is approximately US$4,000, payable in cash.
Drilling services provided to BMMC by Zwedru Mining Inc.
Further to the Company's announcement dated 17 November 2017, BMMC has entered into a 14,000 metre drilling programme contract with a total value of approximately US$1 million (which will be paid in cash) with Zwedru Mining Inc., a related party to the Company.
Technical and procurement services provided to BMMC by MNG Orko Madencilik A.Ṣ.
Over the last two months, MNG Orko Madencilik A. Ṣ. ('MNG Orko'), a member of the MNG Group of companies, has provided technical and procurement services to BMMC including geological consulting, mining engineering consulting, environmental consulting services and procurement assistance. These services are recharged to BMMC on an annual basis at a mark-up of between 5 and 10% over the cost incurred by MNG Orko in providing these services. The total value of these services provided over the last two months is approximately US$100,000, payable in cash.
Charter plane services provided to BMMC by MNG Gold Liberia Inc.
Over the last two months, BMMC has chartered flights from MNG Gold Liberia Inc. ('MNGGL'), a member of the MNG Group of companies. BMMC undertook a benchmarking exercise and agreed an hourly rate to be paid to MNGGL in respect of these services and is charged US$3,000 per flying hour. The total value of these services provided over the last two months is approximately US$33,000, payable in cash.
An updated corporate presentation is now available to view on the Company's website www.avesoro.com
Avesoro Resources Inc.
Geoff Eyre / Nick Smith
Tel: +44(0) 20 3874 4740
Gordon Poole / Nick Hennis
Tel: +44(0) 20 3757 4980
Numis Securities Limited
(Nominated Adviser and Joint Broker)
John Prior / James Black / Paul Gillam
Tel: +44(0) 20 7260 1000
Hannam & Partners (Advisory) LLP
Rupert Fane / Ingo Hofmaier / Ernest Bell
Tel: +44(0) 20 7907 8500
About Avesoro Resources Inc.
The Company's assets include the New Liberty Gold Mine in Liberia (the 'New Liberty Gold Mine,' 'New Liberty' or the 'mine') which has an estimated proven and probable mineral reserve of 7.4Mt with 717,000 ounces of gold grading 3.03g/t and an estimated measured and indicated mineral resource of 9.6Mt with 985,000 ounces of gold grading 3.2g/t and an estimated inferred mineral resource of 6.4Mt with 620,000 ounces of gold grading 3.0g/t. The foregoing Mineral Reserve and Mineral Resource estimates and additional information in connection therewith will be set out in an NI 43-101 compliant Technical Report dated 1 November 2017 and entitled 'New Liberty Gold Mine, Bea Mountain Mining Licence Southern Block, Liberia, West Africa'.
The New Liberty Gold Mine is located within the Southern Block of the 100% owned Bea Mountain mining licence. This licence covers 478 km² and has a 25 year, renewable, mineral development agreement. The Bea Mountain mining license also hosts additional gold projects of Ndablama, Gondoja, Weaju and Leopard Rock which host indicated and inferred mineral resources. The Company also owns the Yambesei, Archaen West, Mabong and Mafa West licences, in addition to a gold exploration permit in Cameroon.
The Company's Qualified Person is Mark J. Pryor, who holds a BSc (Hons) in Geology & Mineralogy from Aberdeen University, United Kingdom and is a Fellow of the Geological Society of London, a Fellow of the Society of Economic Geologists and a registered Professional Natural Scientist (Pr.Sci.Nat) of the South African Council for Natural Scientific Professions. Mark Pryor is an independent technical consultant with over 25 years of global experience in exploration, mining and mine development and is a 'Qualified Person' as defined in National Instrument 43 -101 'Standards of Disclosure for Mineral Projects' of the Canadian Securities Administrators and has reviewed and approved this press release.