TIDMCNR
RNS Number : 1869S
Condor Gold PLC
15 March 2021
Condor Gold plc
7/8 Innovation Place
Douglas Drive
Godalming
Surrey
GU7 1JX
Tel: +44 (0) 207 493 2784
15 March 2021
Condor Gold Plc
("Condor", "Condor Gold" or the "Company")
Purchase of New SAG Mill from First Majestic Silver Corp
Condor Gold (AIM: CNR; TSX: COG) is pleased to announce that it
has entered into an agreement to purchase a complete new
Semiautogenenuous Mill ("SAG Mill") package from First Majestic
Silver Corp ("First Majestic") (TSX:FR). The purchase consideration
is approximately US$6.5 million, including US$3.0 million payable
in shares of the Company (the "Consideration Shares"). The SAG Mill
package represents a key item of the plant required to bring the
Company's La India Project into production. The SAG Mill is
estimated by Metso Outotec's technical support group to have a
throughput of up to 2,300 tonnes per day ("tpd") or 0.8 million
tonnes per annum ("tpa") on a sustained basis, based on the
metallurgical characteristics of the ore and mineralised material
at Condor's La India Project. Based on internal technical studies
and mining dilution studies conducted by SRK Consulting (UK)
Limited, initial production is expected to be 80,000 - 100,000 oz
gold per annum.
Highlights
-- Condor purchases a complete new SAG Mill package for approximately US$6.5 million
-- US$3.0 million worth of Consideration Shares is to be issued
immediately at a price of 50 pence per Consideration Share to First
Majestic as part consideration. The balance of approximately US$3.5
million to be paid in cash over the next 3-4 months
-- SAG Mill and parts are 90% ready to be shipped
-- 2,300 tpd capacity or 0.8 Mtpa form Stage 1 of production
with capacity to be expanded materially after 2 to 3 years of
production
-- Initial production expected to be 80,000 - 100,000 oz gold per annum
-- Reduces order time of this key long lead item by 12 months
-- Sizes the SAG Mill and fast tracks the La India Project to production
-- Possibility of increasing throughput by 22% to 2,850tpd by installing a larger motor
Mark Child, Chairman and CEO commented:
"The key message is Condor has purchased and sized the mill at
2,300tpd, significantly shortened the mill delivery time, set a
trajectory for detailed project design and an accelerated path to
production. What's more, Condor has acquired a state of the art,
complete new SAG Mill package with warrantees, manufactured and
supplied by Metso Outotec, the premier manufacturer of grinding
mills and entire grinding systems for the global mining industry.
Metso Outotec's technical support group has estimated a throughput
of 2,300 tpd or 0.8Mtpa on a sustained basis using the existing
motor. Increasing the motor size would increase throughput to 2,850
tpd. Initial gold production is expected to be between 80,000 to
100,000 oz gold per annum. The new SAG Mill forms stage 1 of
production, the aim is to materially expand production capacity
after 2-3 years.
I am also delighted that First Majestic Silver Corp has given a
vote of confidence to Condor's management team and endorsed a new
mine at the fully permitted La India Project by accepting part
payment in Condor's shares at 50p. The Board joins me in welcoming
them as a shareholder."
Background
First Majestic ordered a complete new SAG Mill package which is
now superfluous to their requirements. Condor contacted Metso
Outotec www.mogroup.com , who design and manufacture a
comprehensive line of grinding mills and entire grinding systems
for mining companies around the world, to enquire about ordering a
new mill for La India Project. During the discussions, it emerged
that First Majestic had ordered a new Mill from Metso Outotec which
it no longer required. Condor has subsequently reached a definitive
agreement to purchase the new SAG Mill from First Majestic. The
warranties for the new Mill will be assigned to Condor.
Manufacturing of the SAG Mill and component parts are approximately
90% complete and ready to ship. The lead time to produce detailed
engineering designs for a new purpose built mill is approximately
12-16 weeks. Lead times for the manufacture of a new mill is
currently estimated to be approximately 40-45 weeks. Condor's
purchase of this new mill from First Majestic reduces the time for
delivery of a SAG Mill to La India Project by approximately 12
months.
Purchase Consideration
The purchase consideration of US$6,500,208 is to be satisfied as
follows:
-- US$3.0 million by the issue to First Majestic of new ordinary
shares of Condor Gold Plc at an issue price of 0.50 pence per
ordinary share: being 4,304,778 Consideration Shares, which will be
admitted to trading on AIM on or around 18 March 2021.
-- US$1,448,570 in cash on completion, being defined as the date of the acquisition agreement.
-- US$2,051, 638 in a deferred cash consideration upon certain
milestones including shipment and delivery of the SAG Mill and
associated equipment. Payment is expected to be made over the next
3-4 months.
The Consideration Shares will rank pari passu with the existing
ordinary shares in the capital of the Company, including the right
to receive all dividends and other distributions declared after the
date of their issue.
Application has been made for admission of the Consideration
Shares to trading on AIM ("Admission"). Following Admission, the
Company will have 134,824,179 ordinary shares of 20p each in issue
with voting rights and admitted to trading on AIM and this figure
may be used by shareholders in the Company as the denominator for
the calculation by which they will determine if they are required
to notify their interest in, or a change to their interest in, the
share capital of the Company under the Financial Conduct
Authority's Disclosure and Transparency Rules.
The cash component of the purchase consideration will be funded
from internal resources. Following the placement raising GBP4
million in February 2021, Condor had a net cash position of
approximately US$11 million at the end February 2021.
Details of the complete SAG Mill package
The SAG Mill has a mill diameter of 24 feet and an Effective
Grinding Length ("EGL) of 18.5 feet and a structural charge mass of
315 metric tonnes. The structural design ball charge is 11% with a
structural design load volume of 35%. Specific gravity of the
material is 2.55. The structural steel liner mass is 240 metric
tonnes; however, with the use of lighter composite liners the
weight and corresponding power requirement can be reduced
significantly to 120 metric tonnes.
The complete SAG Mill package manufacturered and supplied by
Metso Outotec includes:
-- Mill shell fabricated in 8x90deg segments
-- Mill heads cast in 4x90deg segments with demountable trunnions
-- Ductile ring gear and carbonized pinion shaft
-- Pinion shaft assembly equipment
-- Erection cradles
-- Bracket, coupling and guard
-- Pinion bearings-2-pad polymer hydrostatic bearings
-- Transformer for the mill
-- Gear unit, steelguard and fasteners
-- Allen Bradley variable speed drive
-- Allen Bradley PLC mill local panel
-- 3300kW WEG SCIM (motor)
-- Bearing housing
-- Torque limiter and hubs
-- Complete feed assembly. "Rock box" feed chute with replaceable steel wear liners
-- Complete discharge assembly. Fabricated discharge cone (no
trommel screen) with replaceable rubber wear liners
-- Discharge trunnion liner with replaceable rubber wear liners
-- Installation materials and some spares
-- Trunnion Bearing
-- Hydraulic torque wrench kit
-- Liner handler
-- Howard Marten lubrication systems (trunnion oil lube,
reducer/pinion oil lube, gear spray grease lube)
The SAG Mill is paired with a motor with a maximum power rating
of 3,300kW. Using a power load of 2,800kW (500kW under the
installed power), a 4.5% ball charge, the daily throughput is
estimated a 2,300tpd. It is assumed that a pebble crusher will be
used in the comminution circuit to provide some additional grinding
power and to manage critical size fraction material. The SAG Mill
is equipped with a variable speed drive which will allow the mill
to operate between 1,500tpd and 2,300tpd. Furthermore, it is
possible to increase the daily throughput by increasing the motor
size. Preliminary studies have shown that installation of a larger
4,100 kW motor could allow a daily throughput rate to increase by
22% to 2,850tpd, which potentially allows gold production to
increase by a similar amount.
Mill Feed and Initial Production Range of 80k to 100k oz gold
per annum
Condor has 3 open pits permitted for extraction. The highlights
from a RNS dated 6 May 2020 (see announcement for full details) are
copied below:
-- 1.12 million oz gold open pit Mineral Resources, including
Mineral Reserves permitted for extraction and production from 3
open pits
-- The permitted La India open pit which hosts 8,377Kt at a
grade of 3.1 g/t gold (837,000 oz contained gold) in the Indicated
Mineral Resource category and 883Kt at grade of 2.4 g/t gold
(68,000 oz contained gold) in the Inferred Mineral Resource
category
-- The America open pit hosts 114 Kt at a grade of 8.1 g/t gold
(30,000 oz contained gold) in the Indicated Mineral Resource
category and 677Kt at a grade of 3.1 g/t gold (67,000 oz contained
gold) in the Inferred Mineral Resource category
-- The permitted Mestiza open pit hosts 92Kt at a grade of 12.1
g/t gold (36,000 oz contained gold) in the Indicated Mineral
Resource category and 341Kt at a grade of 7.7 g/t gold (85,000 oz
contained gold) in the Inferred Mineral Resource category
-- America open pit permitted to deliver robust diluted tonnage
of 649Kt at 3.83g/t gold for 80,000 oz gold, complimenting the
recently permitted Mestiza open pit permitted to deliver mill feed
of 600Kt at 5.76 g/t gold for 111,100 oz gold (See RNS 4 March
2020)
-- The addition of a third permitted high grade open pit adds
flexibility to the mine schedule, potentially improving project
economics and extending the life of mine
Condor's strategic planning has included running a number of
mining scenarios including a high grade mining scenario for the 3
permitted pits. Mining dilution studies have been completed by SRK
Consulting (UK) Limited. See RNS dated 4 March 2020 for full
details, one of the highlights is:
-- "High grade open pit mining scenario delivers a robust
diluted tonnage of 1,637Kt at 4.65g/t gold for diluted head grade
of 245,000 oz gold derived from the previously reported Indicated
and Inferred Mineral Resources".
Condor currently has 2 drill rigs operating in the La India
Starter pits, see RNS dated 9 March 2021 for infill drilling
updated and drill results. The circa 3,500 m drill programme is on
25 m x 25 m drill spacing. The La India Starter pits are designed
pits. Using a 2.0g/t cut-off grade, the mill feed is estimated at
445Kt at 4.17g/t gold for 59,700 oz gold with a 6.8 to 1 strip
ratio. (See RNS for full details).
The purchase of a complete new SAG Mill Package sizes the mill
at 2,300tpd or 0.8Mtpa with the existing motor. The installation of
a larger 4,100 kW motor could allow a daily throughput rate to
increase by 22% to 2,850tpd.
Canadian Securities Considerations
The Consideration Shares will also be listed on the Toronto
Stock Exchange ("TSX") and will be subject to a four-month and
one-day hold period, expiring on 16 July 2021. The Company has
received conditional Approval from the Toronto Stock Exchange for
the issuance of the Consideration Shares and for which the Company
is relying on the exemption under Section 602.1 of the TSX Company
Manual.
- Ends -
For further information please visit www.condorgold.com or
contact:
Condor Gold plc Mark Child, Chairman and CEO
+44 (0) 20 7493 2784
Beaumont Cornish Limited Roland Cornish and James Biddle
+44 (0) 20 7628 3396
SP Angel Corporate
Finance LLP Ewan Leggat
+44 (0) 20 3470 0470
Blytheweigh Tim Blythe and Megan Ray
+44 (0) 20 7138 3204
About Condor Gold plc:
Condor Gold plc was admitted to AIM in May 2006 and dual listed
on the TSX in January 2018. The Company is a gold exploration and
development company with a focus on Nicaragua.
In August 2018, the Company announced that the Ministry of the
Environment in Nicaragua had granted the Environmental Permit
("EP") for the development, construction and operation of a
processing plant with capacity to process up to 2,800 tonnes per
day at its wholly-owned La India gold project ("La India Project").
The EP is considered the master permit for mining operations in
Nicaragua. Condor Gold published a Pre-Feasibility Study ("PFS") on
the project in December 2014, summarised in the Technical Report,
as defined below. The PFS details an open pit gold Mineral Reserve
in the Probable category of 6.9 Mt at 3.0 g/t gold for 675,000 oz
gold, producing 80,000 oz gold per annum for 7 years. La India
Project contains a Mineral Resource of 9,850 Kt at 3.6 g/t gold for
1.14 Moz gold in the Indicated category and 8,479 Kt at 4.3 g/t
gold for 1.18 Moz gold in the Inferred category. The Indicated
Mineral Resource is inclusive of the Mineral Reserve. A gold price
of $1,500/oz and a cut-off grade of 0.5 g/t and 2.0 g/t gold were
assumed for open pit and underground resources, respectively. A
cut-off grade of 1.5 g/t gold was furthermore applied within a part
of the Inferred Resource. Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability. There is
no certainty that any part of the Mineral Resources will be
converted to Mineral Reserves.
Environmental Permits were granted in April and May 2020 for the
Mestiza and America open pits respectively, both located close to
La India. The Mestiza open pit hosts 92 Kt at a grade of 12.1 g/t
gold (36,000 oz contained gold) in the Indicated Mineral Resource
category and 341 Kt at a grade of 7.7 g/t gold (85,000 oz contained
gold) in the Inferred Mineral Resource category . The America open
pit hosts 114 Kt at a grade of 8.1 g/t gold (30,000 oz) in the
Indicated Mineral Resource category and 677 Kt at a grade of 3.1
g/t gold (67,000 oz) in the Inferred Mineral Resource category.
Following the permitting of the Mestiza and America open pits,
together with the La India open pit Condor has 1.12 Moz gold open
pit Mineral Resources permitted for extraction, inclusive of a
Mineral Reserve of 6.9 Mt at 3.0 g/t gold for 675,000 oz gold.
Disclaimer
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
Qualified Persons
The Mineral Resource Estimate has been completed by Ben Parsons,
a Principal Consultant (Resource Geology) with SRK Consulting
(U.S.), Inc, who is a Member of the Australian Institute of Mining
and Metallurgy, MAusIMM(CP). He has some nineteen years' experience
in the exploration, definition and mining of precious and base
metals. Ben Parsons is a full-time employee of SRK Consulting
(U.S.), Inc, an independent consultancy, and has sufficient
experience which is relevant to the style of mineralisation and
type of deposit under consideration, and to the type of activity
which he is undertaking to qualify as a "qualified person" as
defined under National Instrument 43-101 - Standards of Disclosure
for Mineral Projects ("NI 43-101") of the Canadian Securities
Administrators and as required by the June 2009 Edition of the AIM
Note for Mining and Oil & Gas Companies. Ben Parsons consents
to the inclusion in the announcement of the matters based on their
information in the form and context in which it appears and
confirms that this information is accurate and not false or
misleading.
The technical and scientific information in this press release
has been reviewed, verified and approved by Gerald D. Crawford,
P.E., who is a "qualified person" as defined by NI 43-101 and is
the Chief Technical Officer of Condor Gold plc.
The technical and scientific information in this press release
has been reviewed, verified and approved by Andrew Cheatle, P.Geo.,
who is a "qualified person" as defined by NI 43-101 .
Technical Information
Certain disclosure contained in this news release of a
scientific or technical nature has been summarised or extracted
from the technical report entitled "Technical Report on the La
India Gold Project, Nicaragua, December 2014", dated November 13,
2017 with an effective date of December 21, 2014 (the "Technical
Report"), prepared in accordance with NI 43-101. The Technical
Report was prepared by or under the supervision of Tim Lucks,
Principal Consultant (Geology & Project Management), Gabor
Bacsfalusi, Principal Consultant (Mining), Benjamin Parsons,
Principal Consultant (Resource Geology), each of SRK Consulting
(UK) Limited, and Neil Lincoln of Lycopodium Minerals Canada Ltd.,
each of whom is an independent "qualified person" as defined by NI
43-101 .
Forward Looking Statements
All statements in this press release, other than statements of
historical fact, are 'forward-looking information' with respect to
the Company within the meaning of applicable securities laws,
including statements with respect to: the purchase of equipment and
future production rates, and the incorporation of same into any
mining production schedule, future development and production plans
at La India Project. Forward-looking information is often, but not
always, identified by the use of words such as: "seek",
"anticipate", "plan", "continue", "strategies", "estimate",
"expect", "project", "predict", "potential", "targeting",
"intends", "believe", "potential", "could", "might", "will" and
similar expressions. Forward-looking information is not a guarantee
of future performance and is based upon a number of estimates and
assumptions of management at the date the statements are made
including, among others, assumptions regarding: future commodity
prices and royalty regimes; availability of skilled labour; timing
and amount of capital expenditures; future currency exchange and
interest rates; the impact of increasing competition; general
conditions in economic and financial markets; availability of
drilling and related equipment; effects of regulation by
governmental agencies; the receipt of required permits; royalty
rates; future tax rates; future operating costs; availability of
future sources of funding; ability to obtain financing and
assumptions underlying estimates related to adjusted funds from
operations. Many assumptions are based on factors and events that
are not within the control of the Company and there is no assurance
they will prove to be correct.
Such forward-looking information involves known and unknown
risks, which may cause the actual results to be materially
different from any future results expressed or implied by such
forward-looking information, including, risks related to: mineral
exploration, development and operating risks; estimation of
mineralisation, resources and reserves; environmental, health and
safety regulations of the resource industry; competitive
conditions; operational risks; liquidity and financing risks;
funding risk; exploration costs; uninsurable risks; conflicts of
interest; risks of operating in Nicaragua; government policy
changes; ownership risks; permitting and licencing risks; artisanal
miners and community relations; difficulty in enforcement of
judgments; market conditions; stress in the global economy; current
global financial condition; exchange rate and currency risks;
commodity prices; reliance on key personnel; dilution risk; payment
of dividends; as well as those factors discussed under the heading
"Risk Factors" in the Company's annual information form for the
fiscal year ended December 31, 2019 dated March 31, 2020 and
available under the Company's SEDAR profile at www.sedar.com .
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. The Company disclaims any intention
or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
unless required by law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
MSCJIMMTMTJBTTB
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