Amarillo Gold Corp CEO Mike Mutchler said the company “had a good year” as the mining-exploration company announced the financial results for the year ending December 31, 2021.
"We had a good year," said Mutchler in a statement. "We continued to develop the Posse Gold Project, which attracted the attention of Hochschild Mining, a leading precious metals company.”
He added: “As we said late last year when we announced Hochschild's proposed acquisition of Amarillo, we believe Hochschild is the right company to bring Posse into production, and we're looking forward to applying the same disciplined approach to our Lavras do Sul property, through Lavras Gold Corp."
READ: Amarillo Gold agrees to around C$164.5M takeover offer from UK's Hochschild Mining
Cash on hand at the end of the year was $26 million, the company noted.
Mara Rosa expenditures increased by $2.9 million in the fourth quarter due to $2.2 million continued spending on geotechnical and process plant engineering.
Lavras Project costs increased by $1.2 million mostly due to drilling and assay costs, which increased by $0.7 million as drilling continued at the Matilde and Cerrito prospects. Other major expenses in the quarter related to fees associated with the Hochschild transaction.
The advancements at Amarillo's flagship Posse Gold project in 2021 included receiving the License to Install for the Posse Gold Mine and the Posse power line, acquiring almost 100% of the land needed to build the mine, and completing more than 75% of the overall project detailed engineering, the company noted.
A second new primary gold deposit was also discovered at Mara Rosa, the property that hosts the Posse Gold Deposit.
Located 3.5 kilometers northeast of the Posse Gold Deposit, Pastinho is a near-surface tabular-shaped deposit striking 1,700 meters (m) in a northeast-southwest direction that dips approximately 60 degrees northwest. Assay results received in October confirmed the continuity and down-dip extensions of Pastinho, which is at least 200m deep.
The company said Pastinho confirmed that there is more to find at Mara Rosa.
It is expected to develop into another source of future ore feed for the Posse mill that could extend Posse's overall mine life and significantly increase the mine's average annual gold production, thus enhancing the project's overall economics.
This exploration and development success culminated in a proposed transformational transaction: the acquisition of Amarillo Gold Corporation (TSX-V:AGC, OTCQB:AGCBF) by Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF).
Each share of Amarillo will be exchanged for C$0.40 and one share of a new Brazil-focused exploration company, Lavras Gold Corp. Lavras SpinCo will be capitalized with C$10 million cash and will hold all assets and rights with respect to the Lavras do Sul gold project located in southern Brazil in the state of Rio Grande do Sul.
The cash consideration represents a premium of 66% over the 20-trading day volume-weighted average trading price of the Amarillo shares on the TSX Venture Exchange of C$0.24 at the time of the announcement, the company said. The total transaction value is approximately C$164.5 million, excluding Lavras SpinCo's asset value and C$10 million of cash.
It is anticipated that Lavras SpinCo will complete a share consolidation immediately following the completion of the arrangement.
The company's stock was trading at C$0.41 a share Friday.
Contact Ritika at ritika@proactiveinvestors.com