The Cascavel gold project is one of the best undeveloped high grade Projects in the
market " -
Chancery Asset Management
Trafford Resources Limited (ASX:TRF) notes that Orinoco Gold Limited (ASX:OGX)
yesterday informed the market that funding for start up at its planned gold mining
operations at the Cascavel Project in Brazil had passed the final hurdle. Chancery
Asset Management - a Singapore based, private mining investment company -
completed it's due diligence, and comprehensively endorsed the project.
Orinoco's planned timetable will see the mine development commencing at the end
of April with plant commissioning in November 2015.
Trafford is further encouraged by the confirmation of this funding and the imminent
move into gold production at Cascavel, since it currently holds an 8.08% direct equity
interest in Orinoco Gold Limited and is one of it's major shareholders.
Orinoco's full ASX announcement is appended.
Ian Finch
Managing Director
Trafford Resources Limited
ASX Release
25 March 2015
Successful Completion of Due Diligence
Clears the Way for US$8m of Funding for
Cascavel Development
"The Cascavel gold project is one of the best undeveloped high grade Projects in the market" -
Chancery Asset Management
Key Points:
· Singaporean mining investment group Chancery Asset Management completes
technical due diligence on Orinoco's 70%-owned Cascavel Gold Project in Brazil to its
satisfaction.
· This satisfies the key Condition Precedent to the innovative gold sharing
arrangement of US$8M to underpin the development of Cascavel.
· Funds will be available for drawdown under this facility by the end of April, enabling
Orinoco to commence mine development at Cascavel at that point.
· Ordering of equipment for the Plant to commence in May, for commissioning of the
Plant in November 2015.
· Orinoco will shortly release a Prospectus and timetable for its previously announced
1-for-4 non-renounceable Entitlement Issue at 7c plus a free attaching option, which
will complete its A$14M funding package for Cascavel.
Orinoco Gold Limited (ASX: OGX) is pleased to advise that Singapore-based private mining
investment company Chancery Asset Management, its funding partner for the 70%-owned Cascavel
Gold Project in Brazil, has completed extensive technical due diligence on the project to its
satisfaction.
The completion of the 45-day due diligence process represents a key milestone towards the
completion of the overall A$14 million project financing package announced on 16 February 2015.
This funding package will enable Orinoco to develop Cascavel, putting it on track to join the ranks
of Brazilian gold producers by the end of this year.
Thomas Puppendahl, Managing Director of Chancery, said "Our due diligence team has concluded
that Orinoco's Cascavel gold project is one of the best undeveloped high grade Projects in the
market - and when combined with Orinoco's strong management team, we have every confidence
that our production assumptions will be met in the near term. We are fortunate to have secured a
quality asset such as Cascavel for the first stream within Chancery Asset Management and we look
forward to growing our portfolio with this type of high quality project."
Completion of due diligence was one of two Conditions Precedent to the binding Term Sheet with
Chancery Asset Management signed in February for a gold sharing arrangement of US$8 million
which forms the cornerstone of Orinoco's project funding arrangements.
The other Condition Precedent was for Orinoco to obtain all Australian statutory approvals to enable
it to perform its obligations under the Term Sheet. Orinoco is well advanced in this process and
expects to finalise all of these approvals within the next month.
Under this innovative arrangement, Chancery will participate in a share of gold production from the
Cascavel Project for a period of three years from the start of commercial production or such longer
time until the Company has delivered a minimum of 16,000oz of gold.
Following completion of due diligence, the parties will now enter into a full-form agreement further
detailing the terms and conditions of the Gold Sharing Arrangement. The full commercial terms of
the Gold Sharing Arrangement were provided in the ASX Announcement of 16 February 2015;
however, for the sake of completeness, they are also attached as an Appendix to this
announcement.
Once the full-form agreement has been completed and executed, funds are anticipated to be
available for drawdown prior to the end of April.
Update on Equity Funding Arrangements
In addition to the Gold Sharing Arrangement with Chancery Asset Management, Orinoco completed
a A$1 million share placement last month and also intends to offer its existing eligible shareholders
the opportunity to participate in a non-renounceable entitlement offer of 1 fully-paid ordinary share
for every 4 shares held on the record date at an issue price of 7 cents per share to raise up to a
further A$2.7 million ("Entitlement Issue"). Azure Capital Ltd has been engaged as Lead Manager to
the Entitlement Issue.
Under the Entitlement Issue, the Company will offer approximately 38.25 million shares to eligible
shareholders. Shareholders will also be entitled to receive one (1) free option for every one (1) share
subscribed for under the Entitlement Issue. The timetable for the Entitlements Issue will be released
shortly.
Updated Development Timetable
As previously stated, Orinoco's development strategy is to bring a low-cost, standalone mining and
processing operation into production during 2015. The completion of the project financing package
will allow Orinoco to immediately commence the development of its planned underground mining
operation at Cascavel and to commence construction of a gravity circuit at the nearby Sertão Gold
Mine (100% owned by Orinoco) to process the material mined at Cascavel.
The initial underground mine plan will focus on the Cascavel and Mestre areas of the Cascavel
deposit. These areas have been delineated by a combination of surface drilling and underground
bulk sampling from an exploration decline developed by the Company last year. A development
timetable will be released during late April, with commissioning of the Plant targeted for Q4 2015.
Management Comments
Orinoco's Managing Director, Mr Mark Papendieck, said the completion of due diligence by
Chancery Asset Management marked a major milestone for the project.
"Chancery has conducted extensive and very detailed due diligence, including several visits to the
project," he said. "The completion of this process therefore represents a significant technical
validation of the project and of our development and mining plan.
"We are very pleased to have secured Chancery Asset Management as a long-term funding and
development partner at Cascavel. The US$8 million Gold Sharing Arrangement is an innovative and
flexible funding strategy for a deposit like Cascavel which, importantly, is non-dilutive to existing
shareholders.
"Funds will be available by the end of April, clearing the way for us to move forward with our
aggressive development plan. We will also soon move ahead with the final component of our equity
funding package, the previously announced rights issue which will give all shareholders the
opportunity to participate in this milestone capital raising at an attractive price
"As I've said before, this will provide the foundation for us to make the all-important transition to a
self-funding junior gold producer - a major turning point in the evolution of any resource company,"
Mr Papendieck added.
NOTE: No specific gold production targets for Cascavel can currently be quoted as Cascavel does
not have a JORC compliant resource.
-ENDSFor
further information, please contact:
Mark Papendieck Nicholas Read
Managing Director Managing Director
Orinoco Gold Limited Read Corporate
08 9463 3241 08 9388 1474
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