Wealth Minerals has signed a binding letter of agreement to acquire an indirect 100% royalty-free interest in the Andacollo Oro gold project (AOG project) in Chile.
The AOG project is located in the province of Coquimbo and produced 1.12 million ounces(moz) of gold from 1995 to 2018 through an open-pit heap leach operation, before being suspended due to lower gold prices.
The location is 60km from the port of Coquimbo and 480km north of Santiago.
At its peak, annual production reached 135,000oz in 1999, with a throughput rate of 20,000 tonnes per day.
The project includes existing permits covering mining rights, land title and water, along with significant onsite infrastructure, and is adjacent to Teck Resource’s Carmen de Andacollo copper mine.
Historical estimates associated with the Andacollo Oro project include 2.02moz of gold in the measured and indicated categories and 5.06 million ounces in the inferred category.
Wealth CEO Henk van Alphen stated: “The chance to acquire the AOG project is an opportunity management believes is the right choice for shareholders. Gold, an asset class that has been around for millennia, is now 'new' to the capital markets as investors increasingly worry about governments’ monetary and fiscal policies globally. I see no reason to expect the drivers of this worry to change, and I expect gold’s favour amongst investors to continue.”
In accordance with the provisions of the letter of agreement and pending approval from the TSX Venture Exchange, it is proposed that the transaction will be executed through a share purchase and sale agreement. Under this arrangement, Wealth Minerals or one of its subsidiaries will acquire full ownership of an arm's-length private company based in Chile.
The completion of the transaction is contingent upon this private company finalising its acquisition of a 100% royalty-free interest in the AOG project (underlying transaction).
This underlying transaction will involve deferred purchase payments totalling an aggregate of $30m, which Wealth will assume. Of this amount, up to $7m may be paid in shares over a period of 48 months, with $250,000 already paid.
In connection with the transaction, Wealth has launched a non-brokered private placement of at least 41.7 million units at $0.12 per unit to raise a minimum of $5m.
The proceeds raised will be allocated toward acquisition costs, exploration and development work, including drilling and permitting, with $1m earmarked for general corporate purposes.
Meanwhile, Wealth also announced the appointment of Chad Williams, founder and chairman of Red Cloud Mining Capital, as strategic advisor to the company.
