Mithril Resources Limited (ASX: MTH) announced that it has entered into a binding terms sheet to acquire all the issued share capital of Sun Minerals Pty Ltd.
MTH reported that it has an exclusive Option to earn up to 100% of the high-grade Copalquin Gold Silver Project in Durango, Mexico.
The company said that the historic drilling highlights project’s exploration potential with multiple high-grade drill intercepts.
MTH reported that the completion of transaction is anticipated to be catalyst for change at Board and Senior Management level with Mithril’s current Managing Director to resign and Sun Minerals Nominees to be appointed to Mithril Board and a lead project management position.
Binding agreement with Sun Minerals
Mithril reported that it has entered into a binding agreement with Sun Minerals.
Sun Minerals holds an exclusive option to earn up to a 100% interest in the high-grade Copalquin Gold Silver Project located in the Sierra Madre Trend, Durango State, western Mexico. The mining concessions forming the Copalquin Project are held by Compania Minera Copalquin S.A de C.V., a Mexican domiciled entity (CMC).
The Copalquin project lies within the Sierra Madre gold-silver trend which hosts numerous world class gold silver mines including Coeur Mining’s Palmarejo and Agnico Eagles’ Pinos Altos mines.
Copalquin contains 32 known historic gold and silver underground mines including the La Soledad and El Refugio Mines.
The company said that the historic drilling highlights project’s exploration potential with multiple high-grade drill intercepts including 17.77m @ 45.16 g/t gold and 118.2 g/t silver from 30.98 metres in UC-03 (El Cometa Mine); 7.9m @ 6.54g/t gold and 140.g/t silver from 143.10 metres in UC-024 (El Refugio Mine); 4.53m @ 28.99g/t gold and 2,350.3g/t silver from 138.00 metres in MP-07-101 (La Soledad Mine).
Terms of takeover
The terms of agreement state that the consideration payable by Mithril for the purchase of all issued share capital of Sun Minerals comprises an aggregate total of 673,852,281 fully paid ordinary Mithril shares, which will account for 40% of the expanded share capital of Mithril following completion of the Transaction.
As a condition of the Transaction, Mithril also proposes conducting a capital raising by way of an entitlement issue to shareholders on a record date to be determined to raise approximately A$4.9 million (before costs) at an issue price of A$0.01 (1 cent) per share.
The funds raised from the capital raising will be used by Mithril primarily to complete a drill programme at Copalquin and to continue work on the Company’s existing projects.
Mithril will pay Sun a $150,000 cash exclusivity payment to be used solely for expenditure on Copalquin.
The terms further states that subject to and upon completion of the Transaction, Sun Minerals shall also have the right to nominate an individual to be appointed as a Director (Executive Chairman) of Mithril (subject to receipt of a valid consent to act and, if required, shareholder approval) and to nominate an individual to be appointed to a lead management role in Mithril in respect of the exploration of the Copalquin Project.
Sun Minerals indicated that it intends to nominate Mr Dudley Leitch as the Executive Chairman of the Company upon completion of the Transaction.
Mithril advises that Mr. David Hutton has served his notice of resignation as Managing Director, with termination of his employment as Managing Director of Mithril to occur at the earlier of 22 May 2020.
Next steps and 2020 drilling campaign
The company announced that previous drilling has identified three areas with underground mineable grades over potentially mineable widths, El Refugio, La Soledad, and El Cometa.
Sun Minerals’ 2020 drilling campaign will systematically test each of these high-priority areas and will also begin drill exploration at Los Reyes, Los Pinos, La Constancia, and San Manuel. The company said that there are now 29 holes totalling 4,490 meters planned.
The company reported that the drilling will start at El Refugio, move to Los Reyes, then to Cometa, then to La Soledad, then to Los Pinos, then Constancia, and, finally San Manuel.
Mithril said that the objective of this drill program is discovery, not resource definition. The best targets currently identified on the property will be tested and if any of the targets other than the top three produce favourable results Sun Minerals will have met its objective.