VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 13, 2017) - MX Gold Corp. (TSX VENTURE:MXL)(FRANKFURT:ODV)(OTCQX:MXLGF) (the "Company" or "MX Gold") is pleased to announce the entry into a binding option agreement with American Metal Mining S.A. de C.V. ("AMM") whereby, upon certain scheduled payments totaling US$1,525,000, the Company will acquire 50% of the shares of a private Mexican corporation that holds the IDS Project. The IDS Project consists of a past-producing gold smelter, three acres of land situate around the smelter, and various equipment and permits associated therewith. Upon advancement of the initial payment of US$650,000, the Company was granted a 49.5% net profit participating interest in the IDS Project that will remain until option exercise, provided that all payments are made by the Company in accordance with the option agreement.
The acquisition includes a fully permitted smelter that was completed in 2014 for a throughput capacity of 50 tonnes per day (TPD). The smelter was built to receive and process high-grade direct ship ores and concentrates from small-scale miners across the state of Durango and beyond.
The concept was birthed by the vision of Rosa Isela De La Rocha, a state Senator for Durango. Using a central location to safely and more efficiently process daily production, the community of local miners could enhance economics and quality of life. By eliminating the need for each miner to process, or otherwise dispose of, their individual ore production, the miners are able to spend more time producing and also receive a higher return from their production.
Bert McPherson, President of MX Gold Corp., stated, "We are very excited to have secured a project that can provide a significant source of near term revenue for our company."
Furthermore, a project plan has been developed and work has begun on several fronts: contact has been made with several dozen mining groups to evaluate the supply potential from each group, including estimated average grades of what they have been producing, and purchase parameters; an analysis of the permitted flow sheet by a reputable metallurgist that has significant experience with smelter recoveries, will be commissioned to confirm the previous expectations or recommend any modifications to enhance economics.
Additionally, at the plant site, various efforts have been initiated, including; recalibrating the truck scale, rebuilding the metallurgical lab; setting up the crushing circuit; overall cleanup of the site; and the hiring of critical personnel.
To exercise the option, the Company is required to make the following payments or such amounts may be satisfied from cash flow from the project:
- US$650,000 on entry into the agreement (the "Effective Date"), which amount has been paid;
- US$425,000 on or prior to 60 days from the Effective Date;
- 3 payments of US$100,000 each on or prior to 90 days, 120 days and 240 days from the Effective Date; and
- US$150,000 on or prior to 270 days from the Effective Date.
In the event that the Company does not elect to proceed with the exercise of the option within 60 days of entering into the agreement, the Company may elect to apply the initial US$650,000 towards two other projects in Mexico that the Company is considering or may elect to convert such amount into a 5% carried net profit participation interest in the IDS Project. In the event that the IDS Project generates US$10 million in cumulative net profit, the Company has agreed to pay US$2.5 million to AMM within 90 days thereof (the "Benchmark Bonus"). Pursuant to the terms of the agreement, and following payment of the Benchmark Bonus, each of the Company and AMM will be reimbursed their initial capital expenditures incurred in connection of the IDS Project.
The Company also announces that it has entered into an unsecured loan agreement to borrow US$650,000 from a lender to finance the initial payment due under the option agreement.
MX Gold also announces that, pursuant to a consulting services agreement dated October 20, 2016 between the Company and a third party consultant, the Company has issued 1,148,562 common shares in the capital of the Company to the consultant as a finder's fee in connection with the Company's earn-in of a 50% participating ownership interest and 45% net
profit participating interest in the Magistral Del Oro tailings project located in Mexico.
The Company also announces that it has granted options to acquire 200,000 common shares in the capital of the Company (each, an "Optioned Share") at a price of $0.21 per Optioned Share for a period of five years to a consultant of the Company. The Optioned Shares vest over a nine month period with 25% of the Optioned Shares vesting as of the date of grant (the "Grant Date") and 25% of the Optioned Shares vesting every three months from the Grant Date.
About MX Gold
MX Gold Corp. is a junior mining company focused on the exploration, development and mining of advanced projects located in British Columbia and Mexico. The Company's primary focus in British Columbia is its high-grade Willa gold and copper project located 12 kilometers south of Silverton, B.C. In 2015, MX Gold Corp. completed the accretive acquisition of the Willa project and the Max Molybdenum Mine and Mill Complex. This acquisition removed major costs and shortened timelines typically associated with mine project development. The Willa mine is located 135 kilometers south of the Max Mill. MX Gold Corp. can also elect to reopen the Max Molybdenum mining operation once world Moly prices improve.
On behalf of the Board of Directors,
Akash Patel, Vice President and Director, MX Gold Corp.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements are statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and developments. Words such as "expects", "intends", "plans", "may", "could", "potential", "should", "anticipates", "likely", "believes" and words of similar import tend to identify forward-looking statements. Forward-looking statements in this news release include the closing of the option agreement and the payments contemplated therein. All of these forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, MX Gold's ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties and the availability of capital to fund the Company's projects, as well as other risks and uncertainties identified under the heading "Risk Factors" in the Company's continuous disclosure documents filed on SEDAR. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. MX Gold cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and MX Gold does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.