Element79 Gold Corp [ELEM-CSE, ELMGF-OTC PINK, 7YS-FSE] has struck a definitive deal for the acquisition of all the outstanding shares of Calipuy Resources Inc., a privately-owned B.C. corporation which holds a portfolio of high-grade gold assets in Peru.
They include two past-producing high-grade gold-silver mines. One is the Lucero mine, which ranks among the highest-grade underground mines in Peru’s history with grades averaging 19.0 grams per tonne gold equivalent (AuEq) or 14.0 g/t gold and 373 g/t silver.
The other is the Machacala project, which boasted average production grades of 10.5 g/t AuEq (6.0 g/t gold and 340 g/t silver). Operations were suspended in 2005 at Lucero and in 1991 at Machacala due to low gold and silver prices at the time.
Element79 is a Canadian gold exploration company with a focus on the acquisition and development of high-potential gold assets located in favourable, established mining jurisdictions, including Nevada, British Columbia and Ontario.
Its assets include the “Battle Mountain Portfolio,” which consists of 15 separate projects that cover over 44,478 across 2,203 unpatented claims in five counties. The company completed an IPO in August, 2021, on the Canadian Securities Exchange.
“The acquisition of these [Calipuy] high-grade Peruvian gold assets offers Element79 Gold the opportunity to harness new avenues for near-term cash flow and take an accelerated path toward potentially operating multiple production-stage facilities,’’ said Element79 President and CEO James Tworek.
Details of the agreement were released after the close of trading on June 20, 2022, when Element79 shares rose 3% or $0.015 to 51 cents. The shares trade in a 52-week range of $1.65 and 47 cents.
Element79 has agreed to pay US$15 million or the shares of Calipuy by issuing 19.2 million Element79 common shares at an issue price of $1 per share, as well as performance bonus warrants to acquire 3.8 million common shares of the company.
Each performance bonus warrant is exercisable into one common share of the company at an exercise price of $2 per share for three years from the exercise eligibility date, subject to the achievement of a bonus performance target and other conditions.
However, the company may accelerate the expiry of the performance bonus warrants if the common shares have a closing price of greater than $3.50 for 10 consecutive trading days at any time after closing.
Holders of the performance bonus warrants cannot exercise their warrants until projects carried out on the properties have cumulatively reached a minimum production target of 9,000 tones of ore, yielding a minimum of 1,500 ounces of gold within a 30-day production period and the company provides notice of achievement of the bonus performance target by news release.
The acquisition of Calipuy is classified as a related party transaction as Calipuy CEO and director Antonios Maragakis is also a director and chief operating officer of Element79. In addition, Shane Williams, who has been nominated for election to the board of directors at the coming shareholders meeting scheduled for June 22, 2022, is a director of Calipuy.