VANCOUVER, Dec. 18, 2014 /PRNewswire/ - Goldgroup
Mining Inc. ("Goldgroup" or the "Company") (TSX:GGA, OTC:GGAZF, BMV
SIX:GGAN.MX) is pleased to announce that it has entered into a
definitive agreement (the "Agreement") to sell its 100% interest in
the Caballo Blanco Project (the "Project") to Timmins Gold Corp.
("Timmins Gold") for approximate cash and share proceeds totaling
up to US$30 million.
On Closing, Timmins Gold will pay Goldgroup US$10 million in cash and 16,065,000 Timmins Gold
shares, valued at approximately US$15
million (based on the closing price of Timmins Gold shares
on December 17, 2014) (the "Share
Consideration"). Post-Closing, Goldgroup will be entitled to
receive an additional contingent amount of US$5 million that will become payable in cash,
Timmins Gold shares, or a combination thereof (at the option of
Timmins Gold, provided that Goldgroup's ownership in Timmins Gold
will not exceed 9.9% at any time) should any of the following
events occur prior to October 31,
2019:
- The approval of the Project's Environmental Impact Statement
from SEMARNAT
- A change in beneficial ownership of Timmins Gold of greater
than 50%; or
- The removal or change, at one time, of a majority of the
current members of the Timmins Gold Board of Directors
"This sale unlocks the value of Caballo Blanco for Goldgroup
shareholders and dramatically improves our balance sheet in a time
where capital is very difficult to come by" stated Keith Piggott, Chairman and CEO of Goldgroup.
"With the proceeds of the sale, we plan to focus on advancing the
high-grade San José de Gracia
project as well as potentially look to grow our production profile
by accretive acquisition.
Timmins Gold is a proven mine builder and operator and we look
forward to our continued participation in the Caballo Blanco
project as well as sharing in the value of Timmins Gold's producing
San Francisco mine through our
retained ownership in Timmins Gold shares and through the
anticipated future receipt of the Contingent Payment."
Completion of the transaction is subject to customary closing
conditions, including receipt of required regulatory and TSX
approvals, and the Company will be restricted from trading the
Timmins Gold shares obtained in the transaction until the
expiration of the standard statutory hold period. The Company
expects to close the transaction on or before December 31, 2014. Up to 40% of the Share
Consideration will be held in escrow upon Closing, to be released
upon the earlier to occur of the completion of certain post-Closing
actions or the expiration of the standard statutory hold
period.
Goldgroup has come to an agreement with RMB Resources Inc. and
Credipresto SAPI de CV SOFM ENR to release and replace the existing
security held over the Project in order for this transaction to
proceed. As part of this agreement Goldgroup will be required
to maintain at least US$6 million
cash on hand until the escrowed shares are released to the
Company. The terms and conditions of the existing credit
agreement are otherwise unchanged.
Advisors and Legal Counsel
Maxit Capital LP ("Maxit") acted as financial advisor and Davis
LLP acted as legal counsel to Goldgroup. In addition, Maxit has
provided a fairness opinion to the Board of Directors of Goldgroup
that, subject to the assumptions, limitations, and qualifications
set out therein, the consideration received by Goldgroup is fair,
from a financial point of view to Goldgroup.
Corporate Update
Goldgroup is pleased to announce Sam Wong, CA has been appointed
as the Company's Chief Financial Officer. Mr. Wong is
currently the Chief Financial Officer of Chesapeake Gold Corp and
Lowell Copper Ltd. Prior to those positions, he was the
Corporate Controller at Luna Gold Corp where he oversaw the finance
division during Luna's transition from development through to
commercial production. Mr. Wong is a Chartered Accountant and
articled at Deloitte & Touche LLP in Vancouver, BC where he specialized in
assurance and advisory for mining companies.
Goldgroup also announces that Dustin
VanDoorselaere has resigned as Vice President,
Operations.
About Goldgroup
Goldgroup is a Canadian-based gold production, development, and
exploration Company with significant upside in a portfolio of
projects in Mexico, including a
50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of the
high-grade gold exploration project, San José de Gracia located in the state of Sinaloa. The Company also operates its
100%-owned Cerro Prieto heap-leach
gold mine, in the state of
Sonora.
Goldgroup is led by a team of highly successful and seasoned
individuals with extensive expertise in mine development, corporate
finance, and exploration in Mexico. Goldgroup's mission is to increase
gold production, mineral resources, profitability and cash flow,
building a leading gold producer in Mexico.
On behalf of the Board of Directors,
Mr. Keith
Piggott, Chairman and CEO
Tel: 1-520-247-5753
Investor Relations
Toll Free:
1-877-655-ozAu (6928)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain information contained in this news release, including
any information relating to future financial or operating
performance, may be considered "forward-looking information"
(within the meaning of applicable Canadian securities law) and
"forward-looking statements" (within the meaning of the United
States Private Securities Litigation Reform Act of 1995). These
statements relate to analyses and other information that are based
on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. Actual results could
differ materially from the conclusions, forecasts and projections
contained in such forward-looking information. These
forward-looking statements reflect Goldgroup's current internal
projections, expectations or beliefs and are based on information
currently available to Goldgroup. In some cases forward-looking
information can be identified by terminology such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe",
"estimate", "projects", "potential", "scheduled", "forecast",
"budget" or the negative of those terms or other comparable
terminology. Certain assumptions have been made regarding the
Company's plans at the Cerro
Prieto project. Many of these assumptions are based on
factors and events that are not within the control of Goldgroup and
there is no assurance they will prove to be correct.
Forward-looking information is subject to a variety of known and
unknown risks, uncertainties and other factors that could cause
actual events or results to materially differ from those reflected
in the forward-looking information, and are developed based on
assumptions about such risks, uncertainties and other factors
including, without limitation: uncertainties related to actual
capital costs, operating costs and expenditures, production
schedules and economic returns from Goldgroup's projects;
uncertainties associated with development activities; uncertainties
inherent in the estimation of mineral resources and precious metal
recoveries; uncertainties related to current global economic
conditions; fluctuations in precious and base metal prices;
uncertainties related to the availability of future financing;
potential difficulties with joint venture partners; risks that
Goldgroup's title to its property could be challenged; political
and country risk; risks associated with Goldgroup being subject to
government regulation; risks associated with surface rights;
environmental risks; Goldgroup's need to attract and retain
qualified personnel; risks associated with potential conflicts of
interest; Goldgroup's lack of experience in overseeing the
construction of a mining project; risks related to the integration
of businesses and assets acquired by Goldgroup; uncertainties
related to the competitiveness of the mining industry; risk
associated with theft; risk of water shortages and risks associated
with competition for water; uninsured risks and inadequate
insurance coverage; risks associated with potential legal
proceedings; risks associated with community relations; outside
contractor risks; risks related to archaeological sites; foreign
currency risks; risks associated with security and human rights;
and risks related to the need for reclamation activities on
Goldgroup's properties, as well as the risk factors disclosed in
Goldgroup's Annual Information Form and MD&A. Any and all of
the forward-looking information contained in this news release is
qualified by these cautionary statements. Although Goldgroup
believes that the forward-looking information contained in this
news release is based on reasonable assumptions, readers cannot be
assured that actual results will be consistent with such
statements. Accordingly, readers are cautioned against placing
undue reliance on forward-looking information. Goldgroup expressly
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, events or otherwise, except as may be required by, and
in accordance with, applicable securities laws.
SOURCE Goldgroup Mining Inc.