Orea Sanctions and Corporate Update
Vancouver, BC, Canada, June 9, 2023, Orea Mining Corp. ("Orea") (OREA: TSX) (OREAF: OTCQB) (3CG: FSE) provides an update on the closing of the acquisition of the additional 55.01% interest (for a total of 100%) in the Montagne d'Or gold project holding company ("HoldingCo") (the "Acquisition") in French Guiana, France.
The closing of the Acquisition was scheduled for February 27, 2023, but was delayed due to sanctions imposed by the Canadian government on Nord Gold PLC's ("Nordgold") Russian controlling shareholders on February 23, 2023. Global Affairs Canada ("GAC") is the department within the Canadian government responsible for matters related to sanctions; GAC is ultimately the responsibility of the Minister of Foreign Affairs (the "Minister"). GAC received Orea's sanctions application on March 2nd, 2023.
Orea's application was rejected principally based on the interpretation of the Minister that Orea cannot guarantee that any potential future C$100 million payment to Nordgold, would be paid into a frozen account, if sanctions still apply at the time of the payment. Even though the agreement with Nordgold expressly prohibits such payment, the Minister is of the view that Orea could circumvent sanctions and pay Nordgold C$100 million into a non-frozen bank account. Orea has communicated with GAC several times post the rejection, that the agreement with Nordgold makes it contractually impossible to circumvent sanctions to make the C$100 million payment into a non-frozen account.
Orea has filed a formal reply to the rejection letter, proposing to amend the terms of the agreement with Nordgold whereby the C$100 million payment would only be made if and when all sanctions are lifted against Nordgold and its controlling shareholders, in the U.S., the UK, the EU and in Canada. For clarity, the current agreement with Nordgold requires the C$100 million payment to be made to a frozen account if sanctions are still in effect when and if the conditions to make the payment are triggered. The new proposal is that the payment will only be made if all sanctions are lifted, when and if the conditions to make the payment are triggered. Orea is awaiting a formal determination to the proposal from the Minister.
The Canadian government rejection was received only a few days prior to the expiry of Orea's French government sanctions authorization. No extension by France is possible under current European Union ("EU") legislation and there is no assurance that any new EU legislation will permit France to consider an extension to Orea's expired authorization or to consider a new authorization. The EU member states are currently negotiating new sanctions legislation. Orea and its legal advisors are following developments in the EU closely.
Orea's agreement with Nordgold allows either party to terminate the agreement after May 31, 2023, by providing written notice. Orea sees no incentive to compel either party to terminate the agreement prior to seeing through developments in Canada and the EU, however Orea cannot predict Nordgold's position.
Given the timing of the rejection by the Canadian government, there can be no assurance that the Acquisition will close. As a result of the extensive delays in obtain GAC approval of the transaction, Orea has a significant working capital deficit and concerns about its solvency. There can be no assurance that Orea is able to meet its obligations as they become due.
Orea also reports that Michel Jebrak has resigned as a director due to his recent involvement with a group that has been granted a significant mining consulting contract by the French government, and as a result is now conflicted by sitting on Orea's board.
*About Montagne d'Or
Orea is awaiting a decision by the Supreme Court of France regarding the renewal of the Montagne d'Or mining titles (see press release of May 10, 2022). Montagne d'Or is an open pit gold mine development project that hosts Measured Mineral Resources of 10.3 Mt at 1.804 g/t gold (600,000 oz), Indicated Mineral Resources of 74.8 Mt at 1.350 g/t gold (3.25 Moz) and additional Inferred Mineral Resources of 20.2 Mt at 1.48 g/t gold (960,000 oz), prepared in accordance with the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). The Mineral Resources are confined within a pit shell defined by a gold price of US$1,300/oz and a cut-off grade of 0.4 g/t gold. Mineral Reserves have also been defined with Proven Mineral Reserves of 8.25 Mt at 1.99 g/t gold (530,000 oz) and Probable Mineral Reserves of 45.87 Mt at 1.50 g/t gold (2.2 M oz). The Proven and Probable Mineral Reserves were estimated using a gold price of US$1,200 per ounce at varied cut-off grades from 0.552 to 0.665 g/t gold, dependent on lithological rock types, economics and estimated metallurgical recovery. Montagne d'Or ore can be readily processed to recover the contained gold and silver values using unit operations considered standard to the industry.
Qualified Person
Rock Lefrançois, a director of the Company, is a Qualified Person under National Instrument 43-101, has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.
For more about Orea visit the company's website at www.oreamining.com
Robert F. Giustra
Chairman
For more information contact:
+1 604 638-3944
ir@oreamining.com
