13:10:17 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Para Resources Inc
Symbol PBR
Shares Issued 105,588,074
Close 2017-01-17 C$ 0.195
Market Cap C$ 20,589,674
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Para to acquire 80% of Nicaraguan milling outfit

2017-01-18 06:20 ET - News Release

Mr. Geoff Hampson reports

PARA SIGNS LETTER OF INTENT TO ACQUIRE 80% OF NICARAGUAN MILLING OPERATION

Para Resources Inc. has entered into a non-binding letter of intent to acquire an 80-per-cent interest in Nicaragua Milling Company Ltd., a Belize company with mining interests in the Republic of Nicaragua. The aggregate consideration payable to the vendors for the NML shares shall consist of 40 million common shares in the capital of Para at a deemed price of 20 cents per share and four million share purchase warrants of Para. Each warrant will be exercisable to acquire one common share of Para at a price of 30 cents for three years from the date of issue.

NML is owned by Randy Martin, Sergio Rios and a third minority shareholder. Mr. Martin is an officer, director and major shareholder of Para. Following the transaction, and subject to TSX Venture Exchange approval, Sergio Rios will be appointed a director of Para. Mr. Martin abstained from voting on the company's approval of the letter of intent by virtue of his conflict of interest.

The implementation of this letter of intent and the completion of the transaction are subject to the satisfaction of a number of conditions precedent on the date of closing or such earlier date specified in the letter of intent.

The conditions precedent include the following:

  • Satisfactory completion of due diligence by each party on or before May 17, 2017;
  • The parties entering into a definitive agreement in respect of the transaction on or before May 17, 2017;
  • The approval of the TSX Venture Exchange for the transaction and the listing of the Para common shares issuable thereunder;
  • The approval of the directors of Para and the Para shareholders;
  • Para entering into management agreements concerning NML, in a form acceptable to the vendors and their counsel. NML will operate as a separate entity, with day-to-day operations conducted out of the NML's offices in Managua, Nicaragua;
  • Para entering into a unanimous shareholders agreement with NML and the vendors in respect of NML, which shareholders agreement shall include such terms and conditions as are customary for agreements of such nature, including, but not limited to, concerning the operational control of NML, decision-making requirements regarding certain fundamental matters and customary buy/sell provisions, including shotgun, drag-along, tag-along and right-of-first-refusal provisions, in a form acceptable to the vendors and their counsel;
  • Para appointing Mr. Rios as a director;
  • The vendors entering a pooling agreement in respect of the shares and warrants acceptable to Para and its counsel.

By virtue of Mr. Martin being an insider of Para, the transaction is considered to be a related-party transaction as defined in TSX Venture Exchange policies and will be required to be approved by disinterested shareholders at a meeting of Para shareholders. The transaction will be exempt from the valuation requirements of those polices.

Geoff Hampson, Para's chief executive officer, stated: "The acquisition of 80 per cent of NML is a good strategic fit for Para and is consistent with our overall strategy of focusing on smaller-scale, cash-flow-positive assets that generate good returns and provide upside opportunities for growth. Based on NML's management prepared financial statements, NML has, over the last 12 months, generated over $524,000 (U.S.) of earnings before interest, taxes, depreciation and amortization on average monthly production of 864 ounces of gold. Production and financial results are expected to improve over the course of 2017 with forecasted production of over 12,000 ounces generating over $3.37-million (U.S.) of EBITDA. There are also further opportunities to leverage the NML operation in Nicaragua as the management team have excellent relationships with local miners and the government. We see Nicaragua as an excellent place to do business. The addition of NML to our operations in Colombia strengthens Para's position and puts the company well on its way to its goal of becoming a mid-tier gold producer by 2020."

Randy Martin, NML chief executive officer, stated: "The vending of 80 per cent of NML into Para, where I am already a member of the management team, on the board of directors and a major shareholder, aligns our mining interests. I see a lot of opportunities that meet Para's objectives and am sure that the acquisition of NML will only be the next step in the long-term strategy of the company. I look forward to continue contributing to the growth of Para."

About Para Resources

Para Resources is a gold-mining and toll-milling company. Para owns approximately 75 per cent 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 the necessary permits to commence trial mining operations at its Angelim prospect on the Tucuma project in Para state, Brazil.

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