TORONTO, ONTARIO--(Marketwired - May 30, 2017) - Minera Alamos Inc. (TSX VENTURE:MAI) (the "Company" or "Minera Alamos") is pleased to announce that the Company has entered into and completed an agreement with Osisko Gold Royalties Ltd ("Osisko"), pursuant to which Osisko has purchased, on a private placement basis, 22,045,000 common shares of the Company (the "Common Shares") at a price of $0.15 per Common Share (the "Issue Price") for gross proceeds of $3,306,750 (the "Osisko Placement"). As a result of the Osisko Placement, Osisko owns approximately 19.9% of the common shares of Minera Alamos on a non-diluted basis.
Concurrent to the Osisko Placement, Minera Alamos is pleased to announce that it has entered into an agreement with Haywood Securities Inc. ("Haywood Securities"), as lead agent on behalf of a syndicate of agents (collectively, the "Agents"), pursuant to which the Agents have agreed to sell, on a best efforts private placement basis, up to 23,333,333 Common Shares at the Issue Price, for additional gross proceeds of up to $3,500,000 (the "Brokered Offering" and together with the Osisko Placement, the "Financings"). Minera Alamos has granted the Agents an option, exercisable in whole or in part by the Agents at any time up to 48 hours prior to the closing of the Brokered Offering, to sell up to an additional 20% of the Brokered Offering in Common Shares at the Issue Price.
Darren Koningen, President of Minera Alamos, commented: "this is a transformative announcement for Minera Alamos and marks the beginning of the next phase of our Mexican production and growth strategy. We are pleased to welcome Osisko as a significant shareholder of the Company and a strong partner to pursue near-term gold production at La Fortuna. We look forward to working with Osisko to fast-track La Fortuna toward production and expand our presence in Mexico organically and through additional acquisitions."
Sean Roosen, Chairman and CEO of Osisko, commented: "we are pleased to partner with Minera Alamos as a platform for growth in Mexico and add an option to acquire another near-term production royalty to our portfolio. We look forward to working with Darren and his team to advance La Fortuna as well as other future opportunities in Mexico and elsewhere in Central and South America as they become available."
Investment Agreement with Osisko and Financings
In connection with the Osisko Placement, the Company and Osisko have executed an investment agreement (the "Investment Agreement") which provides for the following:
- Participation Right: As long as Osisko holds common shares equal to at least 10% of the issued and outstanding common shares of Minera Alamos, on a non-diluted basis (as determined in accordance with the terms of the Investment Agreement), Osisko shall have the right to participate in any future issuances of equity or voting securities, or securities convertible into or exchangeable for equity or voting securities, of Minera Alamos, including the Brokered Offering, provided that in no event shall the exercise of such participation right results in Osisko owning, directly or indirectly, 20% or more of the issued and outstanding common shares of Minera Alamos on a non-diluted basis.
- Nomination Right: As long as Osisko holds common shares equal to at least 10% of the issued and outstanding common shares of Minera Alamos, on a non-diluted basis (as determined in accordance with the terms of the Investment Agreement) and under certain other circumstances, Osisko will be entitled to nominate up to two (2) directors to the board of Minera Alamos. Ruben Padilla, current chief geologist of Talisker Exploration Services Inc., will be appointed to the board of Minera Alamos immediately.
- Royalty Option: Osisko will be granted an option to purchase up to a 4.0% NSR royalty on the La Fortuna Property ("La Fortuna") for total consideration of $9 million.
- Royalty/Stream Right: As long as Osisko holds common shares equal to at least 10% of the issued and outstanding common shares of Minera Alamos, on a non-diluted basis (as determined in accordance with the terms of the Investment Agreement), Osisko will have a participation right on any and all royalties, streams, or similar interests granted on properties belonging to Minera Alamos.
- Additional Rights: Osisko has (i) the right to participate in half of any buybacks of existing La Fortuna royalties, and (ii) the right to acquire a 2.0% NSR on any property acquired within a 250 km radius of La Fortuna.
The aggregate gross proceeds from the Financings will be used for the development of La Fortuna and for working capital and general corporate purposes. The Brokered Offering is expected to close on or about June 29, 2017 and is subject to receipt of all necessary regulatory approvals, including approval of the TSX Venture Exchange.
Common Shares issued in the Financings will be subject to a four month hold in accordance with Canadian securities laws. Haywood Securities has acted as financial advisor to Minera Alamos in relation to the Osisko Placement and the Investment Agreement. The Company has agreed to pay the Agents a cash commission equal to 7.0% of the gross proceeds of the Financings and issue the Agents compensation options equal to 7.0% of the number of Common Shares issued in connection with the Financings.
Insiders of the Company intend to subscribe for Common Shares pursuant to the Brokered Offering. The issuance of those Common Shares to insiders (the "Insider Participation") will be considered a related party transaction within the meaning of TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 ("MI 61-101"). The Company intends to rely on the exemptions from the requirements of MI 61-101 in respect of any Insider Participation.
Corporate Update: Appointment of Darren Koningen as Chief Executive Officer
Minera Alamos announces that Chris Frostad is resigning as Director and Chief Executive Officer, effective May 31, 2017, to pursue other business interests. The Board of Directors of the Company has appointed current President, Darren Koningen, to the role of Incoming President and Chief Executive Officer effective May 31, 2017. Darren has a proven track record of building and operating mines in Mexico and is well-positioned to advance La Fortuna through the next phase of construction and beyond. The Board of Directors thanks Mr. Frostad for his support and direction of Minera Alamos and wishes Chris well in his future endeavours.
About Minera Alamos
Minera Alamos is a junior exploration and development company. Its growing portfolio of high-grade Mexican projects includes the La Fortuna open pit gold project in Durango and the Los Verdes open pit copper-molybdenum project in Sonora, both currently in development.
