17:04:15 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Lupaka Gold Corp
Symbol LPK
Shares Issued 122,009,860
Close 2019-01-28 C$ 0.07
Market Cap C$ 8,540,690
Recent Sedar Documents

Lupaka Gold downsizes Peru work force

2019-01-28 08:30 ET - News Release

Mr. Will Ansley reports

LUPAKA PROVIDES UPDATE ON ILLEGAL DEMONSTRATION AT INVICTA, ANNOUNCES NON-BROKERED PRIVATE PLACEMENT, AND MANAGEMENT CHANGES

Despite considerable effort to broker an end to the illegal demonstration at Lupaka Gold Corp.'s Invicta gold development project, the demonstration continues. As previously announced on Oct. 25, 2018, access to Invicta had been restricted due to an illegal blockade by community members from the nearby community of Paran. In addition, the company announces that it intends to complete a non-brokered private placement of units of the company for gross proceeds of up to $1-million, and has downsized the work force in Peru as a result of the blockade.

Illegal demonstration update

The demonstration at Invicta has resulted from a land conflict that exists between two of Invicta's neighbouring communities, Paran and Lacsanga. Based on all known information the company continues to believe that the community of Lacsanga is the legal owner of the land in question, the basis which supports the company's existing valid community agreement with Lacsanga. Lupaka's management team has worked diligently with the Peruvian authorities to help broker a solution to the conflict and regain access to the Invicta development site. However, efforts to date have been unsuccessful at removing the blockade. Contributing to the delay in obtaining a resolution was a change in a number of government related positions including at all municipalities, certain key members of the Ministry of the Interior and the counsels of most regional communities effective January, 2019. Dialogues continue with the communities, and high-level officials from both the Peruvian Ministry of Energy and Mines and Ministry of the Interior, with support from the office of the Prime Minister and Vice-President of Peru. The company is confident that these continued efforts will result in a positive, meaningful, long-term solution to the demonstration.

Due to the illegal demonstration the company has been unable to access or inspect the Invicta development site. Overall project development is approximately 90 per cent complete and the final inspection for the mining exploitation licence, which was originally scheduled for October, 2018, remains outstanding. The demonstrations have resulted in: 1) significant delays in the company's ability to develop and operate Invicta, 2) a loss of the contracted toll milling capacity and 3) the ability to reach positive cash flow when originally scheduled. Consequently this has caused the company to delay scheduled payments on the PLI financing facility, the outstanding bridge loans and to certain vendors. According to the terms of the PLI financing agreement and bridge loan 2 agreement, those facilities are technically in default as of January, 2019. The company is working with its lenders and vendors on implementing restructured payment plans and securing necessary waivers. In the meantime, head count has been dramatically reduced and all non-essential employees have been placed on leave without pay, due to force majeure, or have been laid off.

"We are extremely disappointed that the demonstration has continued and would like to thank our stakeholders for their continued patience as we work to achieve a positive long-term outcome. We look forward to continuing to work to build strong relationships with Invicta's local communities, including Lacsanga, Santo Domingo and Paran.

"While we have taken steps to rapidly reduce our short-term cash outflows, we remain committed to completing the commissioning of Invicta. Our understanding of the geological model was validated and greatly enhanced through the excellent results from our underground development and sampling work performed in 2018, which included an average channel sample grade of 9.06 g/t AuEq* over a strike length of 235 m, with an average sample width of 3.87 m, on the 3430 sublevel. These results prove the high-grade continuous nature of the deposit and demonstrate the tremendous potential of the Invicta project. We remain confident in the ability to grow resources and to generate cash flow from the asset," said Will Ansley, president and chief executive officer of Lupaka.

* Gold equivalent calculations are based on $1,250 (U.S.) for gold, $17 (U.S.) for silver, $3 (U.S.) for copper, $1.25 (U.S.) for zinc and $1.05 (U.S.) for lead, with assumed metallurgical recoveries of 85 per cent for Au, 80 per cent for Ag, 82 per cent for Cu and Pb, and 77 per cent for Zn. Individual estimated grades were 4.35 g/t Au, 57.59 g/t Ag, 1.55 per cent Cu, 1.34 per cent Pb and 1.28 per cent Zn.

Private placement

The company will be raising up to $1-million by way of a non-brokered private placement. Each unit will be priced at 10 cents and will consist of one common share of the company and one transferable common share purchase warrant, each warrant entitling the holder to acquire one common share of the company at a price of 10 cents for a period of 30 months from the date of the closing of the offering. Proceeds from the offering are intended to be used for general working capital purposes and to continue working with the government to resolve the blockade.

The closing of the offering is expected to occur on or before Feb. 28, 2019, subject to receipt of approval of the TSX Venture Exchange. The common shares and warrants issued in the placement will be subject to a four-month hold period.

Management changes

Lupaka also announces that Daniel Kivari, director of operations, is no longer with the company. As part of the separation agreement with Mr. Kivari, the company intends to issue 850,000 common shares of Lupaka to settle $100,000 (U.S.) of debt. The deemed price per common share is 15.5 cents. This issuance of the common shares in this shares-for-debt transaction is subject to review and approval from the TSX Venture Exchange and will be subject to a four-month hold period which will expire on the date that is four months and one day from the date of issue.

Effective Feb. 1, 2019, Luis Felipe Bravo will join the company as the country manager responsible for all administration and legal representation within Peru. Mr. Bravo was previously the general manager in Peru of a Canadian-based company that operated the San Juan mine located south of Lima. San Juan is a high-grade, narrow-vein, conventional underground mine operating a 750-tonne-per-day flotation and CIL mill, producing approximately 25,000 ounces of Au per year. Mr. Bravo has a master's degree in corporate law from Lima University and performed postgraduate studies at Yale University and Universidad de Salamanca. Mr. Bravo will be granted 500,000 incentive stock options, for the purchase of up to 500,000 common shares, pursuant to the company's 2010 incentive stock option plan and subject to approval by the TSX Venture Exchange. The options vest over 18 months and are exercisable on or before Feb. 1, 2024, at a price of 10 cents.

About Lupaka Gold Corp.

Lupaka is an active Canadian-based company focused on creating shareholder value through discoveries and strategic development of its assets in some of the most prolific mining regions of Peru.

We seek Safe Harbor.

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