Minnova gets OK to settle $123,975 debt with shares
2020-11-02 11:06 ET - News Release
Mr. Gorden Glenn reports
CORPORATE UPDATE ON PL MINE EXPLORATION STRATEGY AND PRE-DEVELOPMENT ACTIVITIES
Minnova Corp. has provided a corporate update on exploration and development strategy and corporate debt settlements originally announced on July 9, 2020.
Exploration results and strategy
Following the conclusion of its PL mine summer 2020 drill program where stepout drilling confirmed the project's on-lease exploration potential with discovery of a) new high-grade mineralized structures outside of the limits of the current PL resource and reserve estimate, b) new high-grade near-surface mineralization and c) new footwall tonalite mineralized structures; the company retasked its geological team to a property-wide mapping, prospecting and sampling program.
In summary, the summer field program was the most extensive off-lease exploration effort in over 35 years and significantly advanced its understanding of both structure and geology on the property. The mapped area covered over four square kilometres contiguous to the permitted mining lease extending mapping coverage a further two kilometres (km) west and northwest of the mining lease. The program confirmed the presence of several new structures in the footwall tonalite both in the immediate footwall to the current PL resource and reserve estimate (on lease) and along strike to the northwest of the historical PL deposit and PL North structural trends. These new structures will be targeted for follow-up geophysics and drilling.
In addition, mapping has extended strike length of the footwall tonalite intrusive body by over one kilometre (roughly a 30-per-cent increase in previous strike length) to the north and northwest. Importantly, the northern contact of the footwall tonalite appears to coincide with a northeast-trending VTEM conductor. This contact is also associated with the J showing originally identified in the summer of 2017 prospecting program, but no follow-up was completed at that time. The work completed this summer confirmed footwall tonalite is associated with this showing and the VTEM conductor making this a high-priority target for follow-up drilling.
Gorden Glenn, chief executive officer, commented: "The PL mine lease and surrounding property have exceptional exploration and resource expansion potential. Systematic prospecting and mapping have returned positive results to date and significantly enhanced our geologic model of the property. Future programs of drilling (resource expansion, in-fill and stepout/exploration) combined with ground geophysics will be designed to further derisk our restart plans and expand our global resources."
Development strategy
In addition to the continuing exploration programs, the company continues to review financing and development options for the restart of the PL mine as per its positive 2017 feasibility study. With current gold price well above that used in the base case 2017 FS of $1,250 (U.S.) per oz, the company believes the PL mine restart represents a very attractive investment opportunity and it is reviewing its development plans with interested financial sponsors. As part of its financing discussions, it is consulting with various contractors and service and equipment providers to review its 2017 FS development plans with a view to updating and optimizing its restart plans for new equipment and innovative mining technology. Recent stepout drilling results could positively impact resource size and potentially the mine development schedule. For example, the current mine development schedule calls for partial dewatering of the existing portal at the southeast end of the deposit, followed by development of a new decline to reach high-grade reserves targeted for initial stope development. Recent stepout drilling results may support development of a new portal and decline at the north western end of the PL deposit, closer to the PL mill and closer to the stopes targeted for initial development, thus reducing initial ramp and lateral development requirements. Its predevelopment work program contemplates future bulk sample and underground exploration/test mining decline and portal to be initiated as early as the spring of 2021. The program is being designed to access shallow high-grade mineral reserves to extract a bulk sample to i) update metallurgy to optimize its process flow sheet and enhance overall gold recoveries and ii) test various mechanized equipment options for safe and efficient stope development. It is anticipated that some free gold would be recovered from on-site gravity concentration, following crushing and grinding processes, and the process tails would be stock piled for future processing in the PL mill once it is refurbished.
In addition to the above predevelopment planning, the company is also reviewing recent developments in specialized mechanized equipment/mining systems, specifically designed for steep development (ramps and stopes at 30-degree inclines). This new innovative equipment is rapidly being developed and it hopes to report on its potential inclusion in an updated mine plan and its potential impact on capital expenditure and operating costs in early 2021.
Mr. Glenn, chief executive officer, commented: "It is worth reiterating to current shareholders and new investors that our 100-per-cent owned PL mine is one of a very few shovel-ready, low-capex, high-grade gold projects in an excellent jurisdiction. Furthermore, recent drilling results demonstrate the exceptional exploration and resource expansion potential and high leverage to gold price. See our July 30, 2020, press release where we highlight the projects leverage to higher gold price versus the base. In parallel with planning for additional exploration and resource expansion programs, we have initiated the process of assembling a project development team to oversee planning and initial development, as described above, as well as to prepare for the future full development and refurbishment plans as laid out in our 2017 FS."
Debt settlement update
The company has received final approval from the TSX Venture Exchange to settle an aggregate of $123,975 in debt with arm's-length and non-arm's-length parties and has issued 619,875 common shares at a deemed price of 20 cents per common share. In addition, the TSX Venture Exchange has conditionally approved the settlement of a further $476,025 in indebtedness related to the provision of management consulting services and fees for an aggregate of up to 2,380,125 common shares, also at a deemed price of 20 cents per common share, which will be issued to the company's CEO in full or partial settlement, as the case may be, of the outstanding indebtedness. All securities issued pursuant to the concurrent debt settlement will be subject to a four-month statutory hold period in accordance with applicable securities legislation.
The issue of the common shares in connection with the debt settlement of management consulting services and fees remains subject to subject to receiving disinterested shareholder approval, which the company will be seeking at the next annual and special meeting of the shareholders of the company (scheduled from Nov. 23, 2020) and the approval of the TSX Venture Exchange.
The debt settlement constitutes a related-party transaction within the meaning of TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 as various insiders of the company received 981,112 common shares in connection with the debt settlement. The company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the common shares being issued to insiders in connection with the debt settlement does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101. The company did not file a material change report in respect of the related-party transaction at least 21 days before the closing of the debt settlement because the company wanted to improve its financial position as expeditiously as possible. ......