Amarillo Gold Corp. (the “Company”) has been advised by the NEX and the TSX Venture Exchange (the “Exchange”) that the acquisition of the Mara Rosa Property, in conjunction with its recent financing activities will constitute a Reverse Takeover as such term is defined by the policies of the TSX Venture Exchange. The shares of the Company have therefore been subject to a trading halt pending Exchange review.
The Company has entered into an agreement dated October 22, 2003 as amended on April 20, 2004, to purchase the Mara Rosa Gold project in Brazil from De Re Holdings Inc. a subsidiary of Metallica Resources Inc. of Toronto, Ontario (Metallica). Metallica is an arm’s length public company which has its shares trade on the TSX and AMEX. The agreement is for the purchase of its wholly owned Brazilian subsidiary (Metallica Brasil Ltda.), which primary asset is the Mara Rosa Gold project located in Goias State in central Brazil. The project encompasses 28,567 hectares within 3 mining leases, 19 exploration permits and 1 exploration application. Local infrastructure is excellent with paved road access to the national capital of Brasilia (350 km) and the state capital, Goiania (300km).
The Mara Rosa gold project has known mesothermal gold mineralization, at the Posse deposit, which in the past has seen mining activity. Also occurring within the property are several untested gold in soil anomalies with equivalent pathfinder element associations to the Posse deposit in similar structural settings. Drilling will be required to test these targets.
Terms of the transaction call for the Company to acquire the project for $450,000 (U.S.) in staged payments. The payments have been made and the closing of the transaction is subject to Exchange and shareholder acceptance. Underlying interests on the property include two separate 1% NSR royalties to Newmont Mining Corporation and to BHP/Billiton respectively. De Re Holdings Ltd. has the option the convert the last payment of US$100,000 into a private placement of the Company, the pricing of which will be determined in accordance with the policies of the Exchange at the time of the conversion.
Upon completion of the Reverse Takeover the Company will be a resource issuer with a focus on gold in Brazil. The Company has recently announced the acquisition of an option to acquire up to a 100% interest in the San Antonio property located in Goias, Brazil. The Company has been a resource issuer since November of 1998, and has in the past acquired mineral properties in Canada.
Since August of 2003, the Company has completed a non-brokered financing of 3,300,000 units at $0.10 per unit, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder thereof to purchase one additional common share of the Company for a one year period at a price of $0.20 per share.
The Company has also announced a private placement of 1,000,000 units at $0.20 per unit, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder thereof to purchase one additional common share of the Company for a one year period at a price of $0.40 per share. The Company expects to close this private placement upon completion of the Reverse Takeover.
The Company will be completing an additional private placement to meet the minimum listing requirements of the Exchange with respect to working capital and to repay loans taken out to make the final payment of the USD$100,000 to Metallica The amount and pricing of this private placement will be set in accordance with the policies of the Exchange with respect to pricing after the resumption of trading.
The Company has been on the NEX board since August of 2003 and has made application to the Exchange to be moved to Tier II of the NEX. As part of the application the Company will have to undergo a Reverse Takeover. Included as part of the Reverse Takeover will be an information circular which will be delivered to shareholders as part of the Annual and Special Meeting materials. The Annual and Special Meeting of shareholders has been set for June 29, 2004. At the Meeting, shareholders will be asked to approve the above transactions, including the completion of the acquisition of Metallica Brasil Ltda.
As part of the Reverse Takeover the Company has retained Canaccord Capital Corporation (“Canaccord”) to act as its Sponsor. The terms of the Sponsorship Agreement are that are that Canaccord will be paid the sum of $25,000 plus GST and costs and disbursements to act as the Company’s sponsor with respect to the Reverse Takeover as contemplated herein. The fee will increase to $40,000 in the event the sponsor is required to certify this Information Circular or other disclosure document. In addition the Company has agreed to issue to the sponsor a warrant to purchase 100,000 shares of the Company for a period of eighteen months from the date of issuance at a price of $0.30 per share.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the Reverse Takeover may not be accurate or complete and should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.
Canaccord Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor to the Company in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.