Mexoro Minerals Ltd. Signs Letter Of Intent For Project Financing With Minera Rio Tinto For $9 Million For Its Cieneguita Project.
Mexoro Minerals is pleased to announce that it has signed a letter of intent with Minera Rio Tinto to provide immediate funding to the Company to initiate production at its Cieneguita property, complete a feasibility study as well to continue the exploration of its properties. The letter of intent calls for funding of up to USD $9,000,000. The major points of the agreement are as follows:
1. Minera Rio Tinto (”MRT”) and/or its investors will subscribe for up to USD $1 million of units at $0.60 per unit. Each unit comprises 2 common shares and 1 warrant. Each warrant is exercisable at $0.50 per share for a period of 4 years. The placement will be used for continued exploration of the Company’s properties and general working capital.
2. MRT and Mexoro’s wholly owned subsidiary Sunburst Mining de Mexico will form a new Mexican joint venture company (MRT 75%/Sunburst 25%) for the purpose of putting the Cieneguita property into production. The terms of the agreement will call for Sunburst to contribute its existing mining and milling equipment and MRT is to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000. The agreement will limit the mining of the mineralized material for the new JV company to material that is available from surface to a depth of 15 meters.
3. MRT will spend up to USD $5 million to take the Cieneguita property through the feasibility stage. In doing so, MRT will earn a 55% interest in Mexoro’s rights to the property. After the expenditure of the $5 million all costs will be shared on a 55% to MRT and 45% to Mexoro Minerals. If Mexoro elects not to pay its portion of costs after the $5 million had been spent, then Mexoro’s position shall revert to a 30% carried interest on the property.
MRT is a private Mexican corporation with significant cash flow from its mining operations located in the state of Sinaloa and Chihuahua, Mexico. They state, “We are very excited about the prospects of the Cieneguita project and the capital we are committing should greatly enhance the value of Mexoro for all its shareholders. Obviously, we have lots of experience working with Mexoro and are looking forward to a long term relationship with them.”
Barry Quiroz, President, states, “The financing package that MRT is proposing is the best offer made over a number of other companies. The significant infusion of working capital should greatly enhance Mexoro’s position to be able to complete on its business plan. We expect to have the infill drilling completed on the Cieneguita project by the end of the year allowing us to calculate a drill indicated reserve. Taking the company through to feasibility will be the next logical step in the development of the property. Also, once the property is in production, it should provide Mexoro with the necessary cash flow to maintain its exploration programs and increase its pipeline of additional attractive projects which have become available as a result of the current market conditions.”
Some terms of the final joint venture agreement between Mexoro and MRT will require the consent of Paramount Gold and Silver Corporation.