VANCOUVER, Sept. 22, 2014 /PRNewswire/ - Goldgroup Mining
Inc. ("Goldgroup" or the "Company") (TSX:GGA, OTC:GGAZF, BMV
SIX:GGAN.MX) is pleased to announce that the Company closed an
agreement with two lenders (the "Lenders"), RMB Resources Inc.
("RMB") and Credipresto SAPI de CV SOFOM ENR ("Credipresto"), for a
USD $10 million secured medium term
loan facility (the "Facility"). The Facility is being funded
80% by RMB and 20% by Credipresto. Javier
Reyes, a director of Goldgroup, is a principal of
Credipresto.
The Facility will be available for drawdown through December 18, 2016, with an initial drawdown being
used to repay in full all amounts outstanding on the Company's
current loan facility, amounting to CDN $2,189,677. A second drawdown is intended
to occur shortly, subject to the satisfaction of certain
market-standard security requirements in Mexico. The amount
of the second drawdown will be the balance of USD $6,000,000 less the amount of the initial
drawdown. The second drawdown will be used for ongoing
development work at the Cerro Prieto Project ("Cerro Prieto")
including for additional crushing equipment and leach pad
expansions as well as other working capital purposes. The Facility
is secured against certain assets of the Company including
Cerro Prieto and the Caballo
Blanco Project.
The outstanding principal amount of the Facility shall accrue
interest, in arrears, at an annualized rate of 15% on the portion
of the Facility that is drawn down. The portion of the Facility
which is not drawn down shall accrue interest, in arrears, at an
annualized rate at 2% until December
18, 2016. The Facility matures on September 18, 2017 and is repayable in the amount
of 25% of the outstanding amounts drawn (plus accrued interest)
every three months commencing December 18,
2016. The Company will have the option to cancel any amount
of the Facility not drawn at any time prior to December 18, 2016 without penalty, and will also
have the option to prepay without penalty any outstanding drawn
amount at any time subject to ten (10) days' notice, payment of
adjustment costs and minimum prepayment amounts of USD $500,000. A structuring fee equal to 6% of
the amount made available under the Facility shall be payable to
the Lenders upon the second drawdown of the Facility.
In addition, the Company issued to the Lenders three forms of
Share Purchase Warrants (the "Warrants") with each Warrant
entitling the Lender to acquire one (1) common share in the capital
of the Company, exercisable for a period of 42 months (subject to
the statutory hold period expiring January
20, 2015), as follows:
- 3,000,000 Warrants (the "First Warrants") will have a forced
exercise mechanism at the option of Goldgroup. The First
Warrants will have an exercise price of CDN $0.19 per common share. Goldgroup will have
the right to force conversion of the First Warrants if the average
share price of the Company at the close of 20 consecutive TSX
trading days is at least CDN $0.38.
- 3,000,000 Warrants (the "Second Warrants") will be cancellable
by the Company if Goldgroup does not draw more than USD
$7.5 million under the Facility by
December 18, 2016, but in all other
respects will have the same terms as the First Warrants.
- 6,000,000 Warrants (the "Third Warrants") will not have a
forced exercise mechanism. The Third Warrants will have an
exercise price equal to CDN $0.23.
Keith Piggott, Chairman & CEO
of Goldgroup, commented: "This expanded Facility gives Goldgroup
capital to advance our operations at Cerro Prieto allowing us the ability to
generate cash flow to support further development of our other more
substantial gold assets in Mexico. Having the support of RMB
and Credipresto validates our objectives and ability to execute on
them. Credipresto is a Mexican finance company and is working
with Fideicomiso de Fomento Minero (FIFOMI), which together with
the state and municipal governments help finance and develop mining
projects throughout Mexico."
Goldgroup has also reached an agreement in principle (the
"Agreement") with Oroco Resource Corp. ("Oroco") whereby Oroco will
assign to Goldgroup its rights to refunds stemming from certain
Mexican Value Added Tax paid by Minas de Oroco S.A. de C.V. ("MOR")
between 2008 to 2012 ("VAT Refunds"). The rights to the VAT
Refunds were previously assigned by MOR to Oroco prior to the
Company's purchase of MOR from Oroco on August 30, 2013 as part of the acquisition of
Cerro Prieto. Under the terms of the Agreement, in
consideration for the assignment Goldgroup will issue to Oroco
1,200,000 common shares and will pay Oroco 50% of any future
amounts of VAT Refunds recovered in excess of CDN $400,000, which Goldgroup may elect to settle by
issuing common shares to be valued at the 5-day VWAP at the time of
payment. In addition, if the amount of VAT Refunds recovered
by August 30, 2015 is less than CDN
$400,000, then Oroco will reimburse
Goldgroup 60% of the difference between the amount actually
recovered and CDN $400,000, and Oroco
will be entitled to be repaid any reimbursed amounts if future VAT
Refunds are realized.
Closing of the Agreement is conditional upon receipt of all
necessary regulatory approvals, including the approval of the
Toronto Stock Exchange.
The Company wishes to make clear that it is not basing its
production decision on a preliminary economic assessment ("PEA")
demonstrating the potential viability of mineral resources or a
feasibility study ("FS") of mineral reserves demonstrating economic
and technical viability, and as a result there is increased
uncertainty and multiple technical and economic risks of failure
which are associated with this production decision. These risks,
among others, include areas that would be analyzed in more detail
in a PEA or FS, such as applying economic analysis to resources or
reserves and more detailed metallurgy.
About Goldgroup
Goldgroup is a Canadian-based gold production, development, and
exploration Company with significant upside in a portfolio of
projects in Mexico, including its
flagship 100%-owned advanced stage gold development project Caballo
Blanco in the state of Veracruz,
and a 50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of the
high-grade gold exploration project, San José de Gracia located in the state of Sinaloa. The Company also operates its
100%-owned Cerro Prieto and
Cerro Colorado heap-leach gold
mines, both in the state of
Sonora.
Goldgroup is led by a team of highly successful and seasoned
individuals with extensive expertise in mine development, corporate
finance, and exploration in Mexico. Goldgroup's mission is to increase
gold production, mineral resources, profitability and cash flow,
building a leading gold producer in Mexico.
For further information on Goldgroup, please
visit www.goldgroupmining.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
INFORMATION
Certain information contained in this news release, including
any information relating to future financial or operating
performance, may be considered "forward-looking information"
(within the meaning of applicable Canadian securities law) and
"forward-looking statements" (within the meaning of the United
States Private Securities Litigation Reform Act of 1995). These
statements relate to analyses and other information that are based
on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. Actual results could
differ materially from the conclusions, forecasts and projections
contained in such forward-looking information. These
forward-looking statements reflect Goldgroup's current internal
projections, expectations or beliefs and are based on information
currently available to Goldgroup. In some cases forward-looking
information can be identified by terminology such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe",
"estimate", "projects", "potential", "scheduled", "forecast",
"budget" or the negative of those terms or other comparable
terminology. Certain assumptions have been made regarding the
Company's plans at the Cerro
Prieto project. Many of these assumptions are based on
factors and events that are not within the control of Goldgroup and
there is no assurance they will prove to be correct.
Forward-looking information is subject to a variety of known and
unknown risks, uncertainties and other factors that could cause
actual events or results to materially differ from those reflected
in the forward-looking information, and are developed based on
assumptions about such risks, uncertainties and other factors
including, without limitation: uncertainties related to actual
capital costs, operating costs and expenditures, production
schedules and economic returns from Goldgroup's projects;
uncertainties associated with development activities; uncertainties
inherent in the estimation of mineral resources and precious metal
recoveries; uncertainties related to current global economic
conditions; fluctuations in precious and base metal prices;
uncertainties related to the availability of future financing;
potential difficulties with joint venture partners; risks that
Goldgroup's title to its property could be challenged; political
and country risk; risks associated with Goldgroup being subject to
government regulation; risks associated with surface rights;
environmental risks; Goldgroup's need to attract and retain
qualified personnel; risks associated with potential conflicts of
interest; Goldgroup's lack of experience in overseeing the
construction of a mining project; risks related to the integration
of businesses and assets acquired by Goldgroup; uncertainties
related to the competitiveness of the mining industry; risk
associated with theft; risk of water shortages and risks associated
with competition for water; uninsured risks and inadequate
insurance coverage; risks associated with potential legal
proceedings; risks associated with community relations; outside
contractor risks; risks related to archaeological sites; foreign
currency risks; risks associated with security and human rights;
and risks related to the need for reclamation activities on
Goldgroup's properties, as well as the risk factors disclosed in
Goldgroup's Annual Information Form and MD&A. Any and all of
the forward-looking information contained in this news release is
qualified by these cautionary statements. Although Goldgroup
believes that the forward-looking information contained in this
news release is based on reasonable assumptions, readers cannot be
assured that actual results will be consistent with such
statements. Accordingly, readers are cautioned against placing
undue reliance on forward-looking information. Goldgroup expressly
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, events or otherwise, except as may be required by, and
in accordance with, applicable securities laws.
SOURCE Goldgroup Mining Inc.