Deep-South acquires 75% stake in Turkey’s Kapili Tepe project

8 May 2019 (Last Updated May 8th, 2019 11:53)

Canadian mining company Deep-South Resources has secured approval from the Ministry of Energy and Natural Resources of Turkey to close the acquisition of 75% of RCR Quantum, which holds the Kapili Tepe project comprising one mining licence and two exploration licenses in the Sivas Province.

Deep-South acquires 75% stake in Turkey’s Kapili Tepe project
Deep-South to close acquisition of 75% stake in Turkey’s Kapili Tepe project. Credit: Jonny Caspari on Unsplash.

Canadian mining company Deep-South Resources has secured approval from the Ministry of Energy and Natural Resources of Turkey to close the acquisition of 75% of RCR Quantum, which holds the Kapili Tepe project comprising one mining licence and two exploration licenses in the Sivas Province.

The Kapili Tepe copper, nickel, cobalt and gold project is located close to Imranli in north-east Central Turkey, within the Tethyan Orogenic Belt. Falconbridge had explored the project in the early 2000s.

Previously, Deep-South issued 3.5 million of its common shares to the seller and the shares were kept in trust until the approval of the ministry.

The shares issued to the seller have a lock-in period of three years and one-sixth of the shares (583,333 shares) will be released every six months, starting on 1 May 2019.

All the shares will be released for trading after completion of a first NI 43-101 resource estimation or a listing of Deep-South shares on the London stock market.

Deep-South will pay $110,000 to the seller upon closing of a first financing of $1m or more, or the cumulative closing of financing totalling $1m or more following the acquisition.

The company will issue additional common shares to the seller at a valuation of C$2m upon completion of resources estimation in accordance with CIM definitions and compliant with the National Instrument 43-101, estimating an inferred resource totalling a minimum of 20m tonnes at a minimum grade of 1% Cu equivalent.

Deep-South will also issue additional common shares to the seller at a valuation of C$2m if the first resources report estimates an inferred resource totalling a minimum of 100m tonnes at a minimum grade of 1% Cu equivalent.

Furthermore, the seller will be the beneficiary of a non-guaranteed, interest-free subordinated loan totalling TRY3,800,000 from RCR Quantum.

The Canadian company will buy back TRY2,400,000 of the loan, in cash or shares, at the election of the seller, after completion of a NI 43-101 resources report estimating an inferred resource totalling a minimum of 20m tonnes at a minimum grade of 1% Cu equivalent.

“The shares have a lock-in period of three years and one-sixth of the shares will be released every six months, starting on 1 May 2019.”

Deep-South will also buy back the balance of TRY1,400,000 of the loan, in cash or shares, on completion of any additional NI 43-101 resources report estimating an inferred resource totalling a minimum of 100m tonnes at a minimum grade of 1% Cu equivalent.

However, Deep-South does not have any obligation to buy back the loan until a NI 43-101 compliant resource estimates a minimum inferred resource of 20m tonnes at a minimum of 1% Cu equivalent.

The first NI 43-101 resource estimation report on Kapili Tepe is to be completed by 30 October 2019.

The seller will have the right to appoint one director to the board of Deep-South.

In September 2018, Deep-South announced that it has amended an agreement, announced on 19 June 2018, to acquire 75% of RCR Quantum.

Under the amended agreement, Deep-South will acquire all the common shares held by Jeanette Gyldstoff Borg in Quantum.