22 November 2021
The Company has also entered into a subscription agreement with Newmont to complete a strategic investment in the Company for gross proceeds of C$1.5 million (7,142,857 common shares of the Company at a price of C$0.21 per share), resulting in Newmont holding less than five percent (5%) of the issued and outstanding common shares of the Company. The proceeds from this investment are expected to be used primarily for exploration expenditures on the Con Mine Property. It is expected that the closing of the investment will occur on or about November 26, 2021, and is subject to the satisfaction of certain conditions, including receipt of acceptance of the TSX Venture Exchange
The Option Agreement provides the Company with an option to purchase 100% of MNML, the owner of the past-producing high-grade gold Con Mine, which produced more than 6.1 Moz along the Campbell Shear structure. The Option Agreement will immediately replace and supersede the initial Exploration Agreement (the "Exploration Agreement") dated September 4, 2020 (as announced by the Company on September 8, 2020) and will allow Gold Terra to fully explore 100% of the Campbell Shear structure at the Con Mine and south of it.
Gerald Panneton, Executive Chairman of Gold Terra, commented, "This new Option Agreement to acquire 100% of MNML's Con Mine is a significant step for Gold Terra to increase our resource base with high-grade ounces along the prolific Campbell Shear structure and to add to our current inferred mineral resource, which currently stands at 1.21 M oz (March 16, 2021 News Release).We are pleased to have developed an excellent relationship with Newmont and welcome them as shareholders of Gold Terra, which illustrates commitment and support for the future. The additional land package along the Campbell Shear, and all the surface access assets and associated infrastructure will allow Gold Terra to accelerate its exploration strategy with the aim of adding a target of 2 M oz of high-grade resources base to sustain the development of the project in the future."
The closing of the Transaction will then be completed with Gold Terra making a final cash payment of C$8,000,000.
Upon exercise of the option, Gold Terra shareholders would benefit in owning 100% of the Con Mine Property including the following:
Mr. Panneton further stated: "We see considerable efficiencies through the optionality to acquire all of MNML's assets which comprise multiple valuable mining assets including the 1,950-metres deep Robertson shaft, and 100% of the Campbell Shear which remains open to the south and at depth. Also, with this option we will be able to test some areas of the past-producing Con Mine that were left behind after closure in 2003 at a time of sustained low gold prices. These are included in the historical 2003 mineral reserves statement in addition to some mineral inventory that could amount to approximately one million ounces of gold. In combination with Gold Terra's existing inferred mineral resource estimate of 1.2 M oz north of Yellowknife, 100% ownership of the existing and potential high-grade deposit at and surrounding the Con Mine will better support a balanced operation in the future."
Newmont will retain a 2% net smelter returns royalty (the "NSR") on minerals produced from the Con Mine Property. The NSR may be reduced by 50% by the Company paying Newmont the sum of C$10,000,000, for a period of two (2) years following the announcement of commercial production.
After Gold Terra exercises its option, Newmont will have a period of two (2) years to exercise its back-in right of a 51% participating interest in MNML and the Con Mine Property, which can be triggered by Gold Terra delineating a minimum of five (5) million ounces of gold in the measured and indicated mineral resource categories supported by a National Instrument NI 43-101 technical report. To be eligible to exercise the back-in right, Newmont will:
If exercised, the back-in right is expected to be completed by a new joint venture led by Newmont. At such time, the 2% NSR would also be eliminated.
Figure 1: Con Mine Option Location
The Transaction will consolidate the Company's strategic land position in the prolific Yellowknife Gold Belt and provide potential future development optionality. The former Con Mine is a world-class gold deposit and part of the prolific Yellowknife mining camp where 6.1 M ounces of high-grade gold were recovered from the underground operation from both the Con Shear and Campbell Shear.
The acquisition of the Con Mine Property is part of the Company's strategy to add additional ounces to its current mineral resource estimate and compliments its current drilling program to delineate additional ounces from the Yellorex zone on the Campbell Shear. In addition, the Transaction will provide the Company with access to additional high potential gold zones, that were not included in the Company's previous Exploration Agreement with Newmont (see September 8, 2020 press release).
The Company believes that drilling could potentially delineate 1 to 1.5 M ounces on the overall Con Mine Property. The Con Mine was shut down in 2003 following multiple years of low gold prices. Historically, a total of 6.1 M ounces of high-grade gold were recovered from the underground Con Mine operation. Remaining historic mineral reserves based on a US$370/oz gold price at the Con Mine as of January 1, 2003, are shown in the following table:
Table 1: Historic Mineral Reserves as of January 1, 2003 (Source: Miramar Mining Corp Limited 2003)
The mineral Reserves and Resources quoted above are historical in nature and are not NI 43-101 compliant. They were compiled and reported by MNML during its operation and closure of the Con Mine (2003). The historical estimates are historical in nature and should not be relied upon, however, they do give indications of mineralization on the property. The Qualified Person has not done sufficient work to classify them as current Mineral Resources or Mineral Reserves and Gold Terra is not treating the historical estimates as current Mineral Resources or Mineral Reserves.
Gold production at the Con Mine started in 1938 after the discovery of a large group of veins associated with a wide shear zone. The mine was owned and operated by Cominco Limited from 1939 to 1986. The Campbell Shear was discovered in 1946 by Neil Campbell and brought into production in 1956, and all production after 1963 came from this very rich zone. In 1977, the Robertson Shaft was sunk to access new reserves to a depth of 6,000 feet or more. In 1986, Cominco sold the Con Mine to Nerco Minerals Company Limited who subsequently modernized the underground operation with mechanized machinery. In 1993, Nerco sold the mine to MNML who continued production and then closed the operation in 2003 at a time when the price of gold was at around US$370 per oz, which was too low to continue production. As such, historic, un-mined reserves remain in the mine property along with other unexplored high-potential areas. (Reference - Ryan Silke, 2009, The Operational History of Mines in the Northwest Territories.)
The Company will have added to its large land play a key piece of ground with excellent potential along the Campbell Shear to add high-grade resources. Currently, drilling is expanding the Yellorex zone and returning high-grade gold assays such as in hole GTCM21-014 with 5.22 g/t over 17.86metres including 11.21 g/t gold over 4.57metres (see September 7, 2021 press release). The Option Agreement provides access to multiple additional zones with historic high-grade assays such as hole Y88 (13.9 g/t gold over 5.27metres) which remain untested in all directions at approximately 900m below surface.
The Transaction includes the following hard assets which will provide future infrastructure cost savings and efficiencies: Multiple existing underground access openings including the original C -1 shaft opening, and the deep Robertson shaft (1950m) with a 2,000 tpd (ton per day) capacity for future underground exploration and mining, valued for time saving, and investment saving; surface infrastructure including a large 10,000 square foot warehouse and dry; surface vehicles; and a C$10 million water treatment plant recently built in 2015. The Con Mine Property reclamation is near completion.
Over the next 24 months, the Company's strategy is to increase its drilling program mainly south of the original Con Mine to depth of 1,000 metres, and more at a drill spacing of 100 metres and with 50 metres infill, with the objective of delineating a high-grade gold mineral resource to add to the Company's current 1.2 million ounces in the inferred mineral resource category (See the technical report, titled "Technical Report on the 2021 Updated Mineral Resource Estimates, North belt Property, Yellowknife City Gold Project, Yellowknife, Northwest Territories, Canada" with an effective date of March 14, 2021, which can be found on the Company's website at https://www.goldterracorp.com and on SEDAR at www.sedar.com) and ultimately bring the mineral resources toward economic assessment, and feasibility. The Transaction will be adding another +20 km2 to consolidate Gold Terra's land position in the Yellowknife Gold Belt to exceptional district size holdings now totalling 820 km2.
Adelaide Capital will host a Gold Terra Update webinar with senior management on Tuesday, November 23, 2021, 11:00 AM-12:15 PM (UTC-05:00) Eastern Time (US & Canada) to discuss the Transaction. Gerald Panneton, Executive Chairman, and David Suda, President and Chief Executive Officer will give an update on the project and answer any questions. Access to the webinar is as follows:
Adelaide Capital Hosts Gold Terra Update
Webinar Registration: Webinar Registration - Zoom
Topic: Update by Gerald Panneton and David Suda
Date and Time: Tuesday, November 23, 2021, 11:00 AM-12:15 PM EST