Serengeti Announces Kwanika Deal Closing With POSCO DAEWOO Corp., Receipt of Initial $1.2 Million Investment
Marketwired
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 6, 2016) - Serengeti Resources Inc. (TSX VENTURE:SIR)(34S.F) is very pleased to report that it has successfully closed its deal with DAEWOO Minerals Canada Corp. ("DMC"), a 100% owned Canadian subsidiary of POSCO DAEWOO Corp, one of South Korea's leading trading corporations, whereby POSCO DAEWOO may earn up to a 35% interest in Serengeti's Kwanika copper-gold project by providing funding of $ 8.2 million. The initial $1.2 million investment has been paid into the joint venture account from which Serengeti will receive an up-front cash operating fee of $400,000.
"This transaction is a game changer for Serengeti, enabling renewed activity on our principal project, while allowing the Company to maintain a majority interest in Kwanika and potentially securing the bulk of our general operating funds for the next several years. In the context of the current junior mining market, we believe this is a great deal for Serengeti and our shareholders and we are excited by the prospect of once again being able to move the project forward while mitigating risk and reducing future dilution to our shareholder's interests," stated David W Moore, Serengeti's President & CEO.
The principal business terms of the deal are as follows:
DMC is committed to fund $1.2 million in expenditures in the first year to earn an initial 5% interest in the Kwanika project (1) of which $0.8 million will be for project expenditures and $0.4 million paid directly to Serengeti as an operator's fee.
DMC may earn an additional 30% interest in the project by funding an additional $7 million over the subsequent two years for aggregate expenditures of $8.2 million over three years to earn an aggregate 35% project interest.
Other terms include:
Serengeti remains as project operator, so long as it maintains a majority interest and is entitled to charge a 10% operator's fee on expenditures beyond the initial $1.2 million investment by DMC.
Serengeti, in addition to maintaining its project interest, would be granted a 1% NSR royalty if its project interest is diluted below 50% and an additional 0.5% NSR royalty if its interest is diluted below 33 1/3 %, subject to partial buyback provisions to DMC.
DMC to have certain concentrate offtake rights from production on the project, subject to Serengeti's ability to enter into separate streaming arrangements.
On proceeding with the second stage Kwanika earn-in, DMC has the right to select and earn into one of Serengeti's other exploration properties by funding additional expenditures, which property would be nominated at Serengeti's sole discretion.
Work on the project this year will include a re-evaluation of the previously completed resource estimate and scoping level PEA study. The objective is to develop the best model for copper and gold grade distribution-particularly within the higher grade Central Zone-and to identify and optimize the mining extraction method to maximize project economics. In addition, a number of high quality exploration targets will be tested in the immediate deposit area in a 2200 meter drill program scheduled for the 2016 field season. Success on any one of these initiatives, could have positive implications for the project.
(1) Kwanika, Kwanika East, Smoke, Germansen, Valleau and Rottacker properties
About Serengeti Resources Inc.
Serengeti is a mineral exploration company managed by an experienced team of professionals with a solid track record of exploration success. The Company is currently advancing its Kwanika copper-gold project and exploring its extensive portfolio of properties in the highly prospective Quesnel Trough of British Columbia. A number of these other projects are available for option-joint venture and additional information can be found on the Company's website at www.serengetiresources.com. Serengeti currently has 63.1 million shares issued and outstanding or 81.1 million shares on a fully diluted basis.
About POSCO DAEWOO Corp.
POSCO DAEWOO Corp. (previously Daewoo International Corp.), a member of the POSCO Family, is a leading international trader, investor, and project organizer in Korea. It has 109 overseas units in 58 countries. POSCO DAEWOO is actively participating in the natural resources sector, with investments in dozens of global projects including Block A-1/A-3 gas field (operator) in Myanmar, Ambatovy nickel project in Madagascar and Narrabri Coal in Australia.
ON BEHALF OF THE BOARD
David W. Moore, P. Geo., President, CEO and Director
Cautionary Statement
This document contains "forward-looking statements" within the meaning of applicable Canadian securities regulations. All statements other than statements of historical fact herein, including, without limitation, statements regarding exploration plans and other future plans and objectives, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations as well as a comprehensive list of risk factors are disclosed in the Company's documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates change, other than as required by law and readers are further advised not to place undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
