Mr. Mike Mutchler reports
AMARILLO GOLD ANNOUNCES THE SALE OF AN NSR ROYALTY TO ROYAL GOLD FOR USD $10.8 MILLION
Amarillo Gold Corp. has entered into an agreement for sale of a perpetual 1.75-per-cent net smelter return royalty on the Mara Rosa gold project to RG Royalties LLC, a wholly owned subsidiary of Royal Gold Inc., for $10.8-million (U.S.).
The proceeds of the sale are expected to be used toward recapitalizing the balance sheet of the company in the least dilutive manner to shareholders, and to further finance continuing exploration and development activities at Mara Rosa. The company expects to use a portion of the proceeds from the royalty to repay the gold-linked credit facility that it entered into on July 31, 2014. The company's obligations under the royalty will be secured by Mara Rosa project assets. However, the royalty agreement thoughtfully contemplates and permits a potential future first-ranking project financier.
Mike Mutchler, chief executive officer of Amarillo Gold, commented: "This highly accretive transaction marks a turning point for the company by providing a clean balance sheet and a well-funded treasury.In addition, the overall robust economics of the Mara Rosa gold project remain intact. I am very pleased to welcome Royal Gold as a significant stakeholder.Their rigorous due diligence process and well-respected reputation are a testament to the quality of the Mara Rosa assets, and a vote of confidence in the Amarillo team.I would like to thank Royal Gold and our existing shareholders for their support, as we transition the company to an emerging developer."
The closing of the sale of the royalty is subject to the approval of the TSX Venture Exchange.
Mr. Mutchler, president and chief executive officer of the company, is a qualified person as defined by National Instrument 43-101 guidelines. He has reviewed and approved the scientific and technical disclosure in this news release.
About Amarillo Gold Corp.
Amarillo is developing a highly economic, open-pit gold resource at its Mara Rosa project in the mining-friendly jurisdiction of Goias state in Brazil. The Posse deposit at Mara Rosa contains 551,100 ounces of gold measured from 8,568,000 tonnes at 2.00 grams per tonne gold, plus 659,000 ounces of gold indicated from 13,458,000 t at 1.52 g/t Au and 287,700 ounces of gold inferred from 7,119,000 t at 1.26 g/t Au (NI 43-101 technical resource report July, 2016). In addition, Amarillo has an advanced exploration project with excellent grades at Lavras do Sul, Brazil. The initial resource estimate at the Butia prospect reported 215,000 ounces of gold indicated from 6.4 million tonnes at 1.05 grams per tonne gold and 308,000 ounces of gold inferred from 12.9 Mt at 0.74 g/t Au using a 0.3 g/t cut-off grade.
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