Kaizen Discovery Inc. announced today that it has closed its definitive acquisition agreement with AM Gold Inc. that gives Kaizen 100% ownership of the Pinaya Copper-Gold Project (the Pinaya Project) in Peru's provinces of Caylloma and Lampa.
The Pinaya Project covers 192 square kilometres and includes more than 25 kilometres of strike length within the Andahuaylas-Yauri Porphyry Belt in southeastern Peru. This belt hosts numerous productive and world-class porphyry and skarn systems, including Las Bambas, Tintaya, Constancia and Haquira. Project infrastructure consists of an exploration camp with a Hydracore 2000 hydraulic diamond drill and office facilities (see photos below). The exploration camp facilities also include a dormitory, dining facilities, a first aid station, general storage bays, a diamond saw station and two permanent drill core storage facilities, one of which is used for core logging and sampling.
The Pinaya Project contains Mineral Resources within three zones that are essentially contiguous over a 1.7-kilometre strike in the central part of the property. The Western and Northwestern porphyry zones hold estimated Measured and Indicated Resources of 32.3 million tonnes at 0.39% copper and 0.44 grams per tonne (g/t) of gold, for contained metal of 280 million pounds of copper and 452,000 ounces of gold. These porphyry zones also have additional Inferred Resources of 35.4 million tonnes grading 0.40% copper and 0.27 g/t gold, containing 314 million pounds of copper and 307,000 ounces of gold.
The Gold Oxide Skarn Zone has additional Measured and Indicated Resources of 6.4 million tonnes at 0.80 g/t gold and 0.092% copper, containing 164,000 ounces of gold and 13.0 million pounds of copper. This zone also has an Inferred Resource of 2.38 million tonnes grading 0.60 g/t of gold and 0.081% copper, containing 46,000 ounces of gold and 4.3 million pounds of copper.
Previous drilling on the property was focused mainly on defining the current resources and much less on systematic regional exploration. Regional soil geochemical and geophysical surveys have identified multiple, untested targets along and across strike of the resource.
"The acquisition of the Pinaya Project is an important step forward in the transformation of Kaizen, positioning the company for future growth," said B. Matthew Hornor, Kaizen's President and CEO. "Pinaya fits well with our long-term strategy of acquiring exploration and development-stage projects of interest to our Japanese funding partners, and we look forward to continued growth in the years to come."
"We believe that there are excellent opportunities to discover significant additional copper and gold mineralization at Pinaya, and are planning a comprehensive exploration program to follow up on these targets", added Dr. David Broughton, Kaizen's Executive Vice President, Exploration.
Figure 1: Location of the Pinaya Copper-Gold Project in Peru is available at the following address: http://media3.marketwire.com/docs/Figure1_Pinaya.pdf
Under the acquisition agreement, Kaizen has acquired Canper Exploraciones S.A.C., a Peruvian subsidiary of AM Gold. The Pinaya Project is Canper's principal asset.
AM Gold received 15,384,615 common shares of Kaizen - representing approximately 8.8% of Kaizen's issued and outstanding common shares, on an undiluted basis, a cash payment of C$500,000 and a US$198,617 reimbursement for certain property-maintenance payments made by AM Gold.
Kaizen also closed a concurrent agreement with Rokmaster Resources Corp., which previously had entered into an option and joint-venture agreement with AM Gold to earn up to a 75% interest in the Pinaya Project by spending approximately C$26 million. Rokmaster and AM Gold have been engaged in arbitration proceedings, which were suspended pending closing of the transaction with Kaizen. Under the terms of the agreement with Rokmaster, (i) Rokmaster transferred to Kaizen certain of Rokmaster's drill equipment located in Peru and (ii) Rokmaster agreed to, among other things, terminate the arbitration proceedings with AM Gold and Canper. As consideration, Kaizen issued 2,000,000 common shares of Kaizen and paid C$300,000 to Rokmaster.
The Kaizen common shares issued to AM Gold are subject to escrow trickle-out provisions under which 10% of the Kaizen common shares will be released from escrow to AM Gold on the first anniversary date of the closing of the transaction. A cumulative and further 10% will be released on each three-month anniversary thereafter, ensuring that all Kaizen common shares issued to AM Gold will be released from escrow 39 months after the closing date.
The Kaizen common shares issued to Rokmaster also are subject to restrictions on disposition pursuant to a lock-up agreement between Rokmaster and Kaizen wherein, without having first obtained the prior written consent of Kaizen, Rokmaster may only dispose of 25% of the Kaizen common shares on the first trading day after the expiry of the four-month hold period under applicable securities laws. A cumulative and further 25% will be released on each subsequent three-month anniversary.
The Kaizen common shares issued to Rokmaster also are subject to a placement right during the 14 days prior to each release date, permitting Kaizen to arrange the sale of the escrowed Kaizen shares, provided the sale price is at least equal to the 30-day volume-weighted average trading price prior to such release date.
Kaizen will be participating at the upcoming Mining and Investment Latin America Summit at The Westin Lima Hotel on November 4 and 5 (www.mininglatam.com), and will be conducting investor tours with its Japanese partners around the same time period. Discussions have commenced with potential funding partners to jointly explore and develop the Pinaya Project.
Photo 1: Pinaya camp facilities is available at the following address: http://media3.marketwire.com/docs/Photo_1_Pinaya.jpg
Photo 2: Pinaya core shed is available at the following address: http://media3.marketwire.com/docs/Photo_2_Pinaya.jpg