Azarga Metals Corp. (“Azarga Metals” or the “Company”) (TSXV: AZR) is pleased to announce that it has entered into the agreement (the “Agreement”) with Baker Steel Resources Trust Limited (“BSRT”) announced in April December 19, 2022. Pursuant to the Agreement, Azarga Metals granted BSRT the option to acquire the Unkur Project from Azarga Metal (the “Unkur Option”) until December 31, 2023 (the “Option Period”). Unkur”), after which the Unkur option will automatically expire
Upon closing of the agreement, BSRT exercised its right to convert the $3.5 million loan (the “Ready“) made under the Secured Convertible Loan Facility (the “Loan agreement“) between Azarga Metals and BSRT. The loan was converted at a fixed Canadian dollar equivalent value of C$4.7 million, with a conversion price of C$0.10 per share for a total issue of 46,925 500 ordinary shares of the Company (the “Shares“).
The Unkur option is exercisable at a strike price of US$1.00 from the date of termination of the loan agreement, i.e. June 14, 2022 until December 31, 2023, after which, if not not previously exercised by BSRT, the Unkur option will automatically expire. .
The Company will use its best efforts (recognizing that sanctions and other force majeure circumstances may prevent such efforts) to maintain the social existence of its subsidiaries and licenses, including the Unkur project, located in the region from Zabaikalskiy in eastern Russia, on a care and maintenance basis during the option period.
If the Unkur Option is exercised by BSRT and Unkur is then sold to an arm’s length third party within 2 years of the date the Unkur Option is exercised by BSRT, the proceeds from the sale of the Unkur project will be shared between the Company and BSRT based on an agreed formula. The proceeds of a sale will be paid to the Company and BSRT as follows: (1) the Company will be reimbursed for upkeep and maintenance costs until the Unkur Option is exercised, (2) BSRT will be reimbursed upkeep and maintenance costs between the date of exercise of the Unkur option and the date of the sale to a third party, (3) BSRT will be paid US$3.5 million and (4) BSRT and the Company will share any residual consideration on an 80%/20% basis. basis respectively.
Pursuant to the Agreement, the Company granted BSRT a ROFR (right of first refusal) corresponding to any third party offers received by the Company for the Unkur project. The parties agree to use reasonable efforts to work together during the option period to find potential buyers for the Unkur project. Gordon Tainton, President and CEO of the company, commented “BSRT’s cooperation to convert the loan into common stock removes $3.5 million of debt and improves the company’s financial position. This debt reduction allows the Company to focus more on advancing exploration at its 100% owned, copper-rich VMS Marg project located near Keno City, Yukon. We look forward to commencing our planned exploration program at Marg this summer.“
The Company owns 100% of the high-grade copper VMS Marg project in the Keno Hill silver district of the Yukon Territory. As previously announced, the Company is reviewing and reinterpreting the historical VTEM database from the airborne geophysical program which will be used to refine drill targets for the Company’s planned 2022 exploration program. Geological preparatory work is expected to focus on extensions of the Marg deposit and the highly prospective Jane mineral occurrence, which has the potential for another Marg-type deposit. Mineralization at the Marg project remains open laterally, down dip and down dip and the geological program should help the drilling campaign to set a target of 14 to 15 million tonnes of mineralized material.
Planning for the 2022 exploration program has begun, with the aim of commencing a geological program in July. A geologist experienced in the VMS deposits and a full-service contractor have been engaged to execute and oversee this plan, all subject to funding.
James Pickell, P.Geo., a consultant to Azarga Metals and a Qualified Person as defined by NI 43-101, has verified the disclosed data and has reviewed and approved the disclosure contained in this press release.
BSRT Early Warning Disclosure
As a result of BSRT’s exercise of its conversion option under the loan agreement, BSRT holds a total of 58,527,286 shares, representing an increase of 24.1% from the holding of 8, 9% that BSRT held before the conversion. Following the conversion, BSRT holds 33% of the issued and outstanding common shares of the Company.
BSRT also holds 20,440,914 Company warrants, each exercisable at C$0.10 per warrant until December 31, 2022. Assuming the exercise of these warrants, BSRT would hold, in aggregate, 78 968,200 shares, representing an aggregate ownership of 39.9% of the issued and outstanding shares of Azarga (and a 6.9% increase in its ownership percentage following the conversion).
Depending on market conditions and other factors, BSRT may from time to time acquire and/or dispose of securities or Azarga Metals or continue to maintain its current position.
A copy of the alert report to be filed with the applicable Canadian securities commissions in connection with the Conversion will be available under the Company’s profile on SEDAR at www.sedar.com and may be obtained by contacting with Tino Isnardi on +44 (0) 20 7389 0009.
Baker Steel Resource Trust
Azarga Metals Corp.
Unit 1 – 15782 Marine Drive
White Rock, BC
Azarga Metals Corp.
President and CEO
For more information, please contact: Doris Meyer, at +1 604 536-2711 ext. 3 or visit www.azargametals.com. The registered office address of Azarga Metals is Unit 1 – 15782 Marine Drive, White Rock, BC V4B 1E6, British Columbia, Canada.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release contains forward-looking statements within the meaning of applicable securities laws. The use of any of the words “ambition”, “estimate”, “agreed”, “offer”, “objective”, “may”, “shall”, “should”, “potential” and other similar expressions are intended to identify statements to search. In particular, this press release contains forward-looking statements regarding the planned 2022 exploration program for the Marg Project and the objective of defining 14 to 15 million tonnes of mineralized material. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements as the Company cannot guarantee that they will prove to be correct. Because forward-looking statements address future events and conditions, they involve inherent assumptions, risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of assumptions, factors and risks. These assumptions and risks include, but are not limited to, assumptions and risks associated with the state of the equity financing markets and the Company’s ability to obtain financing to complete the 2022 exploration program and the results of the Company’s future exploration activities, including the forecast 2022 exploration program at the Marg project. Management has provided the above summary of the risks and assumptions associated with the forward-looking statements in this press release in order to provide readers with a more complete perspective on the Company’s future operations. The actual results, performance or achievements of the Company could differ materially from those expressed or implied by such forward-looking statements and, therefore, no assurance can be given that any of the events anticipated by the forward-looking statements will occur or will occur, or if any of them does, what benefits the Company will derive. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, the Company disclaims any intention or obligation to publicly update any forward-looking statement, whether as a result new information, future events or results or otherwise.
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