Para Resources Inc.
TSX VENTURE : PBR
OTC PINK : PRSRF
FRANKFURT : A14YF1

October 06, 2016 14:17 ET

Cartesian Royalty Holdings Pte. Ltd. and Para Resources Inc. Enter Into a Financing Agreement for up to US$18 Million

- Up to US$18 million financing

- First tranche comprised of US$1.0 million gold prepayment investment, and US$1.0 million equity investment

- Cartesian Capital Group is a global private equity firm managing more than US$2.4 billion

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 6, 2016) - Para Resources Inc. (the "Company" or "Para") (TSX VENTURE:PBR) (FRANKFURT WKN:A14YF1) (OTC:PRSRF) is pleased to announce that Cartesian Royalty Holdings Pte. Ltd ("CRH") has agreed to provide Para with a financing package of up to US$18 million to fund the acquisition, development and/or expansion of select gold projects on which CRH and Para mutually agree ("Partner Projects"). CRH will invest at least US$10 million and up to US$18 million, in tranches of such size and timing as mutually agreed, for Partner Projects, provided that the first tranche of US$2 million will be funded at closing of the investment ("Tranche 1"). Tranches will be structured as follows:

Tranche 1 for a total of US$2 million made up of two components:

  • US$1.0 million as a secured streaming investment in Para, and
  • US$1.0 million as an equity investment in Para.

In addition, CRH will have the right to appoint a non-executive director to Para's Board of Directors, and will have a right of first refusal on future projecting financings by Para.

Additional tranches: to be negotiated in good faith to develop Partner Projects to commercial production

Tranche 1 streaming investment component: in exchange for US$1.0 million of streaming investment, Para will deliver a secured gold stream to CRH consisting of 2,100 ounces of gold over three years from funding, in equal quarterly installments of 175 ounces. The streaming investment will be fully secured by an asset and share pledge.

Tranche 1 equity investment component: subject to the approval of the TSX Venture Exchange, in exchange for an equity investment of US$1.0 million, Para will provide to CRH units of Para at a price of CA$0.18 (the "Unit Price"). Each unit shall consist of one share and one warrant. The warrant will have a term of 18 months and a strike price at a 20% premium to the Unit Price, or CA$0.216 per share.

Tranche 1 uses of capital: continued development at the El Limon mine near the town of Zaragoza, Colombia ("El Limon"), working capital and any other use as approved by CRH.

Conditions to Tranche 1 and each subsequent tranche closing:

  • Satisfactory completion of due diligence by CRH, including site visit, on all Partner Projects that have received or are contemplated to receive capital from CRH;
  • Completion by Para and approval by CRH of strategic plan that would include budget (e.g. capex, projected operating cost and production), sources of capital, timeline of development activities (e.g. mining, processing, permitting, and site-related), management, security, existing miner adoption/institutionalization, and initial mine plan.

Net smelter royalty: CRH will be provided a one percent (1.0%) NSR on Partner Projects in which CRH has made an investment. El Limon will be considered a Partner Project, but the 1.0% NSR granted to CRH at El Limon will apply only to annual production in excess of 10,000 ounces of gold. Para may buy back the NSR for cash at fair market value, following the third anniversary of the closing of the first tranche.

Geoff Hampson, Para's CEO states, "This investment by a world class financial organization with more than US$2.4 billion in assets, provides Para with a financial partner who understands and supports the Para management team in our pursuit of building a mid-tier gold producer through the development of existing assets, and the potential acquisition of others. This type of financing is non-dilutive and allows Para to move quickly to take advantage of opportunities as they present themselves. We are very pleased to have the support of Cartesian."

Peter Yu, director of CRH commented, "Para and CRH make great partners because we are both interested in developing low cost and near-to-production assets. Geoff Hampson and his team have shown that they can not only successfully develop assets, but also that they can find attractive new projects to add to their portfolio. We are pleased to work together."

ABOUT CRH

CRH offers innovative financing structures with the goal of creating long-term growth and value in world-class gold projects around the globe. CRH is an affiliate of Cartesian Capital Group, LLC, a global private equity firm with proven expertise in assisting closely-held companies develop into global market leaders. Cartesian Capital Group manages more than US$2.4 billion in capital and has offices in New York, Sao Paulo, Shanghai, Warsaw, and Bermuda.

ABOUT EL LIMON

The El Limon property is located in the northwest part of Colombia near the town of Zaragoza, Antioquia, Colombia and is accessible via both paved highways and gravel roads. The mine is situated in the Zaragoza Gold District which extends from El Bagre to Remedios. Based on the historical alluvium mining sites with a number of primary underground gold mines, the Zaragoza Gold District is considered to be one of the most prolific gold zones in Colombia.

The El Limon mine is currently operating underground on Levels 6 and 7 where the diluted head grade continues to be high at approximately 8+ gpt Au. The vein system is open at depth but constrained at both ends by faults. Management believes the El Limon property offers multiple exploration targets that could significantly increase the life of the mine. It is management's intention to utilize some of the cash generated from mining, to drill the property to expand the number of targeted areas for mining.

Mr. Paulo J. Andrade, a Member of the Australian Institute of Geoscientists (MAIG #6136), Senior Geologist, VP and Country Manager for Para Resources, Inc., a CP/QP under NI-43-101, has reviewed and approved the scientific and technical information in this press release.

ABOUT PARA RESOURCES

Para is an exploration stage gold mining and toll milling company. Para owns approximately 70% of the El Limon project, in Colombia, which in addition to its current underground operation has toll milling opportunities, and exploration and development upside. In addition, the Company has applied for permits to commence trial mining operations at its Tucuma Project and in particular on the Angelim prospect in Para State, Brazil. Para will continue to take advantage of current market conditions to acquire and develop additional highly economic, near-term production assets that have strong exploration and development upside.

Management's production decisions for the El Limon Gold Project are not based on a feasibility study of mineral reserves demonstrating economic and technical viability. As a result, the project has a much higher risk of economic or technical failure and may adversely impact the Company's projected profits, if any. The risks associated with this decision are set forth in the Company's latest annual management's discussion and analysis available on the Company's website and the under Para's SEDAR profile on www.sedar.com.

ON BEHALF OF THE BOARD OF DIRECTORS

C. Geoffrey Hampson, Chief Executive Officer and Director

Neither TSX Venture Exchange nor its regulation service provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

All statements, analysis and other information contained in this press release about anticipated future events or results constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. Forward-looking statements are subject to business and economic risks and uncertainties and other factors that could cause actual results of operations to differ materially from those contained in the forward-looking statements. Forward-looking statements are based on estimates and opinions of management at the date the statements are made. Management believes that its estimates regarding its production plan and recovery from the El Limon mine are reasonable; however there are no assurances that the production estimates will be met for factors beyond the control of management, including the impact of proposed improvements at the mine, the impact of general business and economic conditions, fluctuating metal prices, currency exchange rates, possible variations in grade or recovery rates, changes in project parameters as plans continue to be refined, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, government regulation, environmental risks and title disputes or claims. The Company does not undertake any obligation to update forward-looking statements even if circumstances or management's estimates or opinions should change except as required by applicable laws. Investors should not place undue reliance on forward-looking statements.

Contact Information

  • Para Resources Inc.
    Andrea Laird
    +1-604-259-0302