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Goldgroup Mining Inc. (TSX:GGA,OTC:GGAZF) entered into an agreement with Oroco Resource Corp. (TSXV:OCO,FWB:0R6) to obtain 100% ownership of Oroco’s Cerro Prieto Project in Mexico. The Company will pay an initial cash payment of US $4.5 million to Oroco, as well as US $1 million in private placement of units in Oroco and up to an additional US $13.5 million in payments made from future gold produced at the properties.
As quoted in the press release:
Transaction Highlights
- On closing, Goldgroup will pay Oroco US$4.5 million in cash
- Goldgroup will subscribe for and purchase five million units in Oroco at a price of CDN$0.20 per unit by way of private placement, with each unit being comprised of one common share and one non-transferable share purchase warrant. Each warrant shall entitle Goldgroup to purchase one common share of Oroco for a period of two years for CDN$0.25
- Oroco will be entitled to receive up to an additional US$13.5 million through cash payments equal to US$150 for each of the first ninety thousand ounces of gold produced from the Properties paid quarterly and payments commencing no later than one year after closing of the transaction
- Goldgroup agrees to pay minimum payments of US$625,000 per quarter unless the Properties are not in production by January 1, 2014 in which case the first two minimum quarterly payments of 2014 will be US$250,000, the third minimum payment will be US$625,000 and the fourth payment will be the balance of US$2.5 million, less the three quarterly payments made
- Closing of the transaction is subject, but not limited to, the receipt of all required regulatory approvals as well as special resolution approval of Oroco shareholders
- Oroco will pay Goldgroup a break fee of US$500,000 if the transaction in not completed by June 30, 2013
Goldgroup Mining Inc. President, CEO, and Director, Dr. Hans von Michaelis said:
Cerro Prieto offers Goldgroup the opportunity to realize synergies from its current operating mine, Cerro Colorado, located a short distance away in northern Sonora State. Our focus will be to evaluate how to best use our equipment at the Cerro Colorado mine in the development of Cerro Prieto, as well as to grow Goldgroup’s resource base and production profile. We look forward to participating in the successes of Oroco through our potential ownership interest in them.
Click here to read the Goldgroup Mining Inc. (TSX:GGA,OTC:GGAZF) press release
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