Loncor Resources Inc. ("
Loncor" or the
“
Company”) (TSX: "LN"; OTCQB: "LONCF") announces
that it has entered into an agreement (the
“
Agreement”) with Resolute (Treasury) Pty Ltd
(“
Resolute”), Kilo Goldmines Ltd.
(“
KGL”) and Kilo Goldmines Inc. (“
Kilo
Inc.”, and together with KGL, “
Kilo”) to
consolidate ground in the Ngayu gold belt in northeastern
Democratic Republic of the Congo (the “
DRC”). The
Agreement provides as follows:
(a) Resolute will assign to Loncor for nominal
consideration all of Resolute’s rights under a secured cash advance
facility (the “Facility”) which Resolute had made
available to Kilo (including Resolute’s rights under the security
provided by Kilo in respect of the Facility (the
“Security”)). Resolute has advanced AUD$750,000 to
Kilo under the Facility, and this AUD$750,000 of principal plus
accrued interest was repayable by Kilo on March 14, 2019. None of
the said principal or interest has been repaid such that Kilo is in
default under the Facility, and Kilo does not have the funds to
repay this debt.
(b) Kilo has agreed to consent to the assignment
of the Facility (including the Security) from Resolute to Loncor.
Following implementation of the said assignment, Loncor will
exercise its rights under the Security (the “Security
Enforcement”) as a secured creditor to realize on all of
the outstanding shares of Kilo Inc., in full satisfaction of all
amounts owing under the Facility. Kilo Inc. is currently a
wholly-owned subsidiary of KGL. Upon Loncor completing the Security
Enforcement, Kilo Inc. will become a wholly-owned subsidiary of
Loncor, such that Loncor will hold, through Kilo Inc., Kilo Inc.’s
mineral projects in the DRC (which mineral projects are currently
in care and maintenance mode and are summarized below). Kilo has
agreed to cooperate with and assist Loncor in the Security
Enforcement. For such cooperation and assistance, Loncor will pay
Cdn$130,000 to KGL.
An affiliate of Resolute is Loncor’s second
largest shareholder, holding 27.22% of the outstanding shares of
Loncor. The assignment of the Facility (including the Security)
from Resolute to Loncor is subject to the approval of the Toronto
Stock Exchange.
Kilo Inc. owns a 71.25% interest in the Somituri
gold project (the “Somituri Project”) in
northeastern DRC. Licence fees totalling approximately US$250,000
relating to the exploitation permits comprising the Somituri
Project were due on March 31, 2019 and have not been paid. These
permits are therefor currently in default and at risk of forfeiture
(such that the Somituri Project is at risk of forfeiture). Kilo
does not have the funds to pay these fees. The DRC government may
also assess penalties for late payment of such fees. As well,
minority stakeholders in the Somituri Project have sought to place
the Somituri Project exploitation permits under force majeure,
citing insufficient progress towards delivery of a feasibility
study.
KGL reports in its filings on SEDAR that the
Somituri Project contains an inferred mineral resource of 1.675
million ounces of gold (20.78 million tonnes grading 2.5 g/t
Au).
Kilo Inc. also has a joint venture with an
affiliate of Barrick Gold Corporation (“Barrick”)
for gold and associated minerals in respect of the Isiro
exploration permits in northeastern DRC (the “Isiro
JV”). The Isiro JV is managed by Barrick, and Barrick is
required under the terms of the Isiro JV to fund all maintenance
costs for the project. To date, Barrick has elected to eliminate a
significant number of the project areas deemed to be of no interest
to Barrick, and has suspended payment of expenses relating to the
Isiro JV pending resolution of an ongoing legal dispute in the DRC
regarding title to the Isiro JV exploration permits.
The Somituri Project and the Isiro JV project
are both located in the Ngayu gold belt in northeastern DRC near
Loncor’s existing Ngayu project, and therefore consolidate ground
for Loncor in the belt. Additional information with respect to the
Somituri Project and the Isiro JV can be found on SEDAR at
www.sedar.com under the profile of KGL.
Loncor has also agreed to provide to KGL an
unsecured loan in the principal amount of Cdn$65,000 bearing
interest of 8% per annum and repayable 12 months from the date of
the loan. Subject to receipt of all necessary regulatory approvals,
KGL may on the maturity date of the loan convert all or any part of
such principal amount and all accrued and unpaid interest thereon
into common shares of KGL at a price per share equal to the volume
weighted average price of KGL’s shares on KGL’s principal trading
market for the 20 trading days immediately before the said maturity
date.
About Loncor Resources
Inc.Loncor is a Canadian gold exploration company focused
on two projects in the DRC - the Ngayu and North Kivu projects.
Both projects have historic gold production. Exploration at the
Ngayu project is currently being undertaken by Loncor’s joint
venture partner Barrick Gold (Congo) SARL
(“Barrick”). The Ngayu project is 200 kilometres
southwest of the Kibali gold mine, which is operated by Barrick and
in 2018 produced approximately 800,000 ounces of gold. As per the
joint venture agreement signed in January 2016, Barrick manages and
funds exploration at the Ngayu project until the completion of a
pre-feasibility study on any gold discovery meeting the investment
criteria of Barrick. Subject to the DRC’s free carried interest
requirements, Barrick would earn 65% of any discovery with Loncor
holding the balance of 35%. Loncor will be required, from that
point forward, to fund its pro-rata share in respect of the
discovery in order to maintain its 35% interest or be diluted.
Certain parcels of land within the Ngayu project
surrounding and including the Makapela and Yindi prospects have
been retained by Loncor and do not form part of the joint venture
with Barrick. Barrick has certain preemptive rights over these two
areas. Loncor’s Makapela prospect has an Indicated Mineral Resource
of 614,200 ounces of gold (2.20 million tonnes grading 8.66 g/t Au)
and an Inferred Mineral Resource of 549,600 ounces of gold (3.22
million tonnes grading 5.30 g/t Au).
Additional information with respect to Loncor
and its projects can be found on Loncor's website at
www.loncor.com.
Qualified PersonWilliam R. Wilson, a director of
Loncor and a "qualified person" as such term is defined in National
Instrument 43-101, has reviewed and approved the technical
information in this press release.
Technical ReportCertain additional information
with respect to the Company’s Ngayu project is contained in the
technical report of Venmyn Rand (Pty) Ltd dated May 29, 2012 and
entitled "Updated National Instrument 43-101 Independent Technical
Report on the Ngayu Gold Project, Orientale Province, Democratic
Republic of the Congo". A copy of the said report can be obtained
from SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Cautionary Note to U.S.
InvestorsThe United States Securities and Exchange
Commission (the "SEC") permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. Certain
terms are used by the Company, such as "Indicated" and "Inferred"
"Resources", that the SEC guidelines strictly prohibit U.S.
registered companies from including in their filings with the SEC.
U.S. Investors are urged to consider closely the disclosure in the
Company's Form 20-F annual report, File No. 001- 35124, which may
be secured from the Company, or from the SEC's website at
http://www.sec.gov/edgar.shtml.
Cautionary Note Concerning
Forward-Looking InformationThis press release contains
forward-looking information. All statements, other than statements
of historical fact, that address activities, events or developments
that the Company believes, expects or anticipates will or may occur
in the future (including, without limitation, statements relating
to the completion of the Security Enforcement by Loncor and Kilo
Inc. becoming a wholly-owned subsidiary of Loncor, mineral resource
estimates, future exploration, and potential gold discoveries) are
forward-looking information. This forward-looking information
reflects the current expectations or beliefs of the Company based
on information currently available to the Company. Forward-looking
information is subject to a number of risks and uncertainties that
may cause the actual results of the Company to differ materially
from those discussed in the forward-looking information, and even
if such actual results are realized or substantially realized,
there can be no assurance that they will have the expected
consequences to, or effects on the Company. Factors that could
cause actual results or events to differ materially from current
expectations include, among other things, failure to complete the
Security Enforcement, the need to satisfy regulatory and legal
requirements relating to the Security Enforcement, risks related to
the exploration stage of the Company's properties, the possibility
that future exploration or development results will not be
consistent with the Company's expectations, failure to establish
estimated mineral resources (the Company’s mineral resource figures
are estimates and no assurances can be given that the indicated
levels of gold will be produced), changes in world gold markets or
equity markets, political developments in the DRC, uncertainties
relating to the availability and costs of financing needed in the
future, gold recoveries being less than those indicated by the
metallurgical testwork carried out to date (there can be no
assurance that gold recoveries in small scale laboratory tests will
be duplicated in large tests under on-site conditions or during
production), fluctuations in currency exchange rates, inflation,
changes to regulations affecting the Company's activities, delays
in obtaining or failure to obtain required project approvals, the
uncertainties involved in interpreting drilling results and other
geological data and the other risks disclosed under the heading
"Risk Factors" and elsewhere in the Company's annual report on Form
20-F dated April 1, 2019 filed on SEDAR at www.sedar.com and EDGAR
at www.sec.gov. Forward-looking information speaks only as of the
date on which it is provided and, except as may be required by
applicable securities laws, the Company disclaims any intent or
obligation to update any forward-looking information, whether as a
result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainty therein.
For further information, please visit our
website at www.loncor.com, or contact: Arnold Kondrat, President
& CEO, Toronto, Ontario, Tel: + 1 (416) 361 2510.
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