RCS - Camino Minerals Corp - Camino, Nittetsu, Denham Capital Sign Agreement

Nittetsu Mining CoAnnouncement

07/10/2024 16:00

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RNS Number : 2258H  Camino Minerals Corporation  07 October 2024

Camino, Nittetsu and Denham Capital Sign Definitive Agreement for Acquisition
of the Puquios Copper Project in Chile

VANCOUVER, BC / ACCESSWIRE / October 7, 2024 / Camino Minerals
Corporation (TSXV:COR)(OTC PINK:CAMZF) ("Camino" or the "Company") is pleased
to announce that, further to its news release on June 27, 2024, it has entered
into a definitive share purchase agreement dated October 4, 2024 ("Agreement")
with Nittetsu Mining Co., Ltd. ("Nittetsu") and Santiago Metals Investment
Holdings II SL and Santiago Metals Investment Holdings II-A LLC (together,
the "Vendors"), pursuant to which Camino and Nittetsu will jointly acquire
(through a Chilean entity co-owned 50/50 by Camino and Nittetsu) all of the
issued and outstanding shares of Cuprum Resources Chile SpA ("Cuprum"), a
Chilean incorporated company and the owner of the Puquios Project
("Puquios" or the "Project"), a construction-ready copper project located in
Chile (the "Transaction").

In connection with the Transaction, and subject to approval of the TSX Venture
Exchange (the "Exchange"), Camino intends to undertake a private placement of
common shares to close prior to, or concurrently with, closing of the
Transaction, for gross proceeds of up to $2 million for working capital
purposes. The terms, timing, and pricing of such financing have not been
finalized and will be detailed in a subsequent news release. The Vendors have
agreed to participate in the financing, directly or indirectly, in the amount
of $500,000.

The Vendors are companies owned by a fund advised by Denham Capital Management
LP("Denham") and are non-arm's length parties to Camino under the policies of
the Exchange. Separate Denham-advised funds hold a shareholder interest in
Camino of approximately 15% and Justin Machin, a Managing Director of Denham,
is also a member of the Camino board of directors.

The Transaction will constitute a non-arm's length "Reverse Takeover" for
Camino as that term is defined in Policy 5.2 of the Exchange. The Company will
be seeking an exemption from the Exchange with respect to any sponsorship
requirements in respect of the Transaction.

All dollar amounts in this news release are in Canadian Dollars unless
otherwise stated.

Highlights:

·      Production from conventional SXEW copper heap leach mine

·      Technology upside with the potential to economically process the
underlying sulphide resource

·      Production and resource upside with new exploration (>13,000
hectare land package), locally sourced oxide ore from third parties and
potential development of sulphide resources

·      Operational and development synergies to apply to "next in line"
Los Chapitos, Peru

·      More exploration at Los Chapitos IOCG copper and Maria Cecilia
copper porphyry in Peru

The Company views the Puquios Project as one of the premier construction-ready
copper assets currently available, and one that is well-suited for Camino's
financing and development capabilities. By adding copper production assets to
its portfolio, Camino aims to strengthen its exploration strategy, with a
broader vision to become a consolidator in the copper sector, driving value
through cashflow generation via the acquisition of the Puquios Project in
Chile, and new copper discoveries and potential development at its Los
Chapitos copper project and continued exploration drilling at its Maria
Cecilia project in Peru. Camino has been actively pursuing a corporate
acquisition strategy, carefully evaluating numerous projects over the past
several years to build a robust copper portfolio in anticipation of favorable
macro-economic conditions for higher copper prices.

"We are pleased to expand our collaboration with Camino through the
acquisition of the Puquios Project in Chile" said Shinichiro Mita, General
Manager of Nittetsu Mining Co., ltd. "This opportunity aligns with Nittetsu's
commitment to expanding our footprint in the copper sector by utilizing our
extensive operational experience and technical expertise. Our presence and
experience in Chile, including the producing Atacama Kozan mine and the
construction of the Arqueros copper mine in the La Serena district, where the
Puquios Project is located, will be complementary assets to this venture. We
believe Puquios holds significant potential for near-term copper production,
and alongside Camino, we are dedicated to unlocking value for all stakeholders
through efficient project development and long-term success. This opportunity
also extends to our investment in, and exploration at, the Los Chapitos copper
project in Peru."

"The Puquios Project acquisition marks a pivotal step in our strategy to
become a mid-tier copper producer, with production and cashflow at the core of
our business plan," said Jay Chmelauskas, Chief Executive Officer of Camino.
"The Puquios Project offers the potential for a long-life mine, in a
high-quality prospective jurisdiction, aligning with our goal of building a
long-term copper business. Together with our partners at Nittetsu, we believe
that our business and copper portfolio will not only drive significant value
for our shareholders but also position Camino as a key player in the copper
sector, alongside our ongoing exploration efforts at Los Chapitos and Maria
Cecilia in Peru."

"This is a good time in the copper cycle to bring Puquios, one of the few
shovel-ready copper projects in the Americas, to the public markets and
continue Denham's partnership with Camino that started in 2021" said Justin
Machin, Managing Director of Denham. "We look forward to working closely with
Camino and Nittetsu to progress Puquios through construction and into
production."

Description of Cuprum

Cuprum, headquartered in Santiago, Chile, has been engaged in the exploration
and development of mineral resources, the nature of which will not change upon
completion of the Transaction. Cuprum has advanced the Puquios Project to its
current Definitive Feasibility Stage, following the completion of a NI 43-101
technical report in January 2022, authored by Ausenco.

Pursuant to the audited financial statements of Cuprum as at December 31,
2023, Cuprum had US$47.95 million in total assets, including intangible assets
of US$43.46 million, representing the cumulative costs of exploring and
developing Puquios, and net cash of US$2.35 million. At that same time, Cuprum
held US$432,970 in liabilities, with no external debt outside of trade
payables, for a net asset balance of US$47.52 million. Cuprum, as an
exploration and development company, has not generated revenues.

Key Terms:

·      Initial Cash Payment: CAD $10 million cash payment funded by
Nittetsu (less the CAD $100,000 exclusivity payment already made and any
applicable Chilean withholding tax) on closing of the Transaction ("Closing").

·      Initial Equity Consideration: CAD $10.5 million in Camino shares
on Closing, with the number of shares issued calculated based on the lesser of
CAD $0.075 per share and the price per share or unit of any Camino shares or
Camino units issued pursuant to a private placement or public equity financing
of Camino that closes on or before Closing for gross proceeds of more than $2
million; provided that if the issue price of the consideration shares is
required, by the Exchange or otherwise, to be greater than $0.075 per Camino
share, the Vendors will receive such number of additional Camino shares,
issued at no cost, as would have been issuable if the consideration shares had
been issued at $0.075 per Camino share, as a means of price protection.
Furthermore, in the event that Camino completes an equity financing within 12
months after Closing at a price per share/unit that is less than CAD $0.075,
the Vendors will receive such number of additional Camino shares, issued at no
cost, as would have been issuable if the consideration shares had been issued
at the price of such subsequent equity financing. In the case of a unit
financing prior to or following Closing, the Vendors will also receive
warrants or securities underlying the units in such financing, in an amount
equal to the number of consideration shares issued to the Vendors.

·      First Contingent Payment: CAD $5 million cash payment (less any
applicable Chilean withholding tax) on the receipt of the earlier of: (i) (A)
the applicable environmental approval for the ~26ha expansion of the waste
dump and other project infrastructure for Puquios or (B) the environmental
permit or permits for alternative site layouts that achieve the same objective
for advancement of the Project as the receipt of the applicable environmental
approval referenced in subclause (A) above would have or (ii) the date the
obligation to make the Second Contingent Payment below is triggered.

·      Second Contingent Payment: CAD $5 million cash payment (less any
applicable Chilean withholding tax) on the earlier of: (i) 3 months after the
date the obligation to make the First Contingent Payment is triggered, (ii)
the date of a binding agreement evidencing any loan facility or other
financing arrangement provided for the purpose of financing all or a portion
of the cost of developing, expanding, constructing or operating the Project,
including any refinancing thereof ("Project Financing"), or (iii) the date the
obligation to make the Third Contingent Payment below is triggered.

·      Third Contingent Payment: CAD $5 million cash payment (less any
applicable Chilean withholding tax) on the earlier of: (i) one month after the
date the obligation to make the Second Contingent Payment is triggered; or
(ii) the commencement date of earthworks (other than preparatory earthworks
with a budgeted cost of less than $10 million) associated with the
construction of a mine, processing plant or related infrastructure of the
Project.

·      Fourth Contingent Payment: CAD $5 million cash payment (less any
applicable Chilean withholding tax) on the earlier of: (i) 20 months after the
obligation to make the Third Contingent Payment is triggered; or (ii) the date
the Project's processing plant has operated at greater than 80% of nameplate
capacity for a period of 60 consecutive days.

·      Fifth Contingent Payment: CAD $5 million cash payment (less any
applicable Chilean withholding tax) 12 months after the date the obligation to
make the Fourth Contingent Payment is triggered.

·      Contingent Payments Generally: At the election of either the
Vendors or Camino and Nittetsu (with the Vendors having the deciding vote), up
to 50% of all contingent payments described above may be satisfied in Camino
shares based on the 20-day VWAP prior to payment date. In addition, the
contingent payments will be secured by a share pledge of the acquired shares
of Cuprum.

·      NSR Royalty: NSR royalty payable to Santiago Metals II Upper
Holdco LLC quarterly on all sales of products derived from minerals extracted
from all concessions currently held by Cuprum, regardless of where the
minerals are processed. The NSR royalty: (i) will not be capped by time,
commodity, production amount or royalty paid; and (ii) will be freely
transferable / saleable by the Vendors. The NSR royalty will be 1.25% on all
sales less allowable deductions.

·      Investor Rights Agreement: To be entered into at Closing, and
provides Denham, via its interests in Stellar Investment Holdings LLC and
Santiago Metals Holdings II SLU, with (i) participation rights to maintain its
percentage ownership in Camino (so long as its percentage ownership in Camino
is then at least 9.9%), (ii) board representation rights - one nominee if its
percentage ownership in Camino is between 9.9%-19.9%, two nominees if its
percentage ownership in Camino is between 19.9%-24.9%, three nominees if
percentage ownership in Camino is between 24.9%-29.9%, and four nominees, and
the right to nominate the chair of the board, if percentage ownership in
Camino is at least 29.9%, and (iii) after the earlier of the first anniversary
date of Closing and the closing date of Project Financing, and for as long as
the Denham's percentage interest in Camino is at least 9.9%, qualification
rights to have its Camino shares included in any prospectus offering of
Camino, subject to certain limitations. Until all contingent payments are
made, the Camino board of directors cannot be larger than seven directors
without the Vendors' approval.

·      Conditions to Closing: In addition to the entering of the
Investor Rights Agreement and royalty agreement in respect of the NSR royalty
and the provision of the share pledge referenced above, Closing is conditional
upon obtaining (i) disinterested Camino shareholder approval in respect of the
Transaction (currently expected to be presented to the Camino shareholders at
a special meeting of shareholders to held by no later than December 15, 2024),
and (ii) Exchange approval of the Transaction.

·      Principals and Insiders of Camino after Closing: As of the date
hereof, there are 209,251,638 Camino shares issued and outstanding. Assuming
(i) no equity financing is completed prior to Closing, (ii) 140,000,000 Camino
shares are issued to the Vendors at Closing (which assumes a price per share
of CAD $0.075), and (ii) no Camino shares are issued to satisfy any contingent
payments, upon completion of the Transaction, Denham will indirectly (through
the Vendors) exercise control or direction over approximately 169,467,607
Camino shares (47.5%). Denham's director nominees and the composition of the
directors and officers of Camino generally post-Closing have not yet been
confirmed. Camino will provide further details regarding such individuals and
their biographies once available.

·      Shareholders Agreement between Camino and Nittetsu: Camino and
Nittetsu have agreed to enter into a shareholders agreement with respect to
their 50/50 investment in the Project. The shareholders agreement is in
settled form and, among other things, provides for the following:

§ Equal board representation of the Chilean purchaser entity, with the
initial board consisting of four directors. So long as the proportionate
interest of each shareholder is at least 40%, each shareholder will have the
right to appoint two directors. If the proportionate interest of one
shareholder falls below 40%, then such shareholder shall only have the right
to nominate one out of four directors and the other shareholder shall have the
right to nominate three out of four directors. If the proportionate interest
of a shareholder shall fall below 15% they lose the right to representation on
the board. For so long as any contingent payments remain outstanding, the
board shall allow one nominee of the Vendors to act as a non-voting observer.

§ The shareholder who is serving as the operator of the Project shall have
the right to appoint the chairman of the board, who shall have a casting vote
on certain specified matters that are to be considered by the shareholders.

§ Camino will act as the initial operator until there has been a project
financing commitment and a construction commencement date, whereupon Nittetsu
shall act as the operator.

§ The sale of products from the Project will be managed by the operator and
each shareholder will be entitled to purchase a percentage of available
product equal to its proportionate interest.

§ Shareholders will be required to contribute to programs and budgets as well
as emergency and unexpected expenditures pro rata or become subject to
straight line dilution. At such time as the ownership interests of a
shareholder dilute to less than 10%, the other shareholder has the right to
purchase the ownership interests for a purchase price equal to the fair market
value thereof.

§ If a shareholder shall seek to sell its ownership interest, the other
shareholder has tag along rights so long as it holds a proportionate interest
of between 40% and 50%.

About the Puquios Copper Project

The Project is located in the La Serena district, Region IV, Chile. The
Project demonstrates excellent infrastructure with paved highways to Punta
Colorada and well maintained 45-kilometer gravel road to the site. Foundation
earthworks have been started for the process plant and the Project is in a
ready state for construction, with major permits in place. Multiple water
wells, owned by Cuprum, are available to adequately supply the mine and a 23KV
power sub-station has been contracted at the nearby Barrick power facility.

About Nittetsu Mining Co., Ltd.

Nittetsu is a Japanese corporation listed on the Tokyo Stock Exchange with an
85-year history as a mining and trading company. Nittetsu is the operator of
the Atacama Kozan mine located in the prolific Candelaria-Punta del Cobre
copper district which is known to host iron-oxide-copper-gold type ore
deposits. In addition, Nittetsu has made a decision to start construction of
its 80% owned Arqueros copper mine in Chile. Nittetsu has expertise in
processing, distributing, importing, and exporting copper and other mineral
products. Other businesses include: purchasing and distributing coal and
petroleum products; developing and distributing equipment, machinery and
environment-related products; real estate; power generation using renewable
energy; the supply and sale of electricity; and mining and distributing
industrial minerals including limestone.

About Camino Minerals Corporation

Camino is a discovery and development stage copper exploration company with a
portfolio of projects located in Peru. The Company is focused on advancing its
high-grade Los Chapitos copper project through to resource delineation, new
discoveries and development. Camino has also permitted the Maria Cecilia
copper porphyry project for copper and gold exploration drilling. In addition,
the Company has increased its land position at its copper and silver Plata
Dorada project. The Company seeks to acquire a portfolio of advanced copper
assets that have the potential to deliver copper into an electrifying copper
intensive global economy. For more information, please refer to Camino's
website at www.caminocorp.com.

 ON BEHALF OF THE BOARD  For further information, please contact:
 /S/ "Jay Chmelauskas"   Camino Investor Relations
 President and CEO       info@caminocorp.com
                         Tel: (604) 493-2058

Completion of the Transaction is subject to a number of conditions, including
but not limited to, Exchange acceptance and if applicable, disinterested
shareholder approval. Where applicable, 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 or filing statement to be prepared in connection with the
Transaction, any information released or received with respect to the
Transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of Camino should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed Transaction
and has neither approved nor disapproved the contents of this news release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward Looking Statements: Certain disclosures in
this release constitute forward-looking information. In making the
forward-looking disclosures in this release, the Company has applied certain
factors and assumptions that are based on the Company's current beliefs as
well as assumptions made by and information currently available to the
Company. Forward-looking information in the release includes statements with
respect to the proposed acquisition of the Project; the closing of the
Transaction and satisfaction of the related conditions to close; the
anticipated synergies between Nittetsu and Camino in respect of the Project;
the equity financing; the nature of Cuprum's business following Closing; and
the Company's aims, goals and growth plans. Although the Company considers
these assumptions to be reasonable based on information currently available to
it, they may prove to be incorrect, and the forward-looking information in
this release is subject to numerous risks, uncertainties and other factors
that may cause future results to differ materially from those expressed or
implied in such forward-looking information. Such risk factors include, among
others, risk that the Transaction will not be completed as anticipated, or at
all; risk that the Company will not obtain from the Exchange a waiver of the
sponsorship requirement in respect of the Transaction; risk that the equity
financing will not be approved by the Exchange or otherwise completed on terms
acceptable to Camino; risk that the Company will not receive requisite
regulatory and shareholder approvals or satisfy the customary conditions in
respect of the Transaction as anticipated, or at all; risk that the
anticipated synergies between Nittetsu and Camino in respect of the Project
will not be realized as contemplated, or at all; risk that actual results of
the Company's exploration activities may be different than those expected by
management; risk that the Company may be unable to obtain or will experience
delays in obtaining any required authorizations and approvals; and risks
related to the state of equity and commodity markets. Readers are cautioned
not to place undue reliance on forward-looking statements. The Company does
not intend, and expressly disclaims any intention or obligation to, update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.

SOURCE: Camino Minerals Corp

 

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