Feb 17 2015
Sandspring Resources Ltd. (the "Company" or "Sandspring") is announcing a series of steps to enhance the ability of the Company to move forward while responding to the extended period of volatility and uncertainty in the gold market and the challenges in raising equity capital that continue to face junior developers.
The Company announces that it has completed all field and design engineering work required for the feasibility study for its Toroparu Gold Project located in the Upper Puruni River Region of western Guyana. However, the Company has elected to defer the additional expenditures required to complete the final stages of the Toroparu Gold Project feasibility study such as value engineering and optimization studies.
Under the terms of the Company's Early Deposit Gold Stream Agreement (the "Early Deposit Agreement") with Silver Wheaton Corp.'s wholly owned subsidiary Silver Wheaton (Caymans) Ltd. ("Silver Wheaton"), Sandspring has until December 31, 2015 to deliver a definitive feasibility study and other related documents to Silver Wheaton, at which time Silver Wheaton may elect to proceed with the Gold Stream under the Early Deposit Agreement.
CEO Rich Munson stated "I am pleased that we have completed this extensive amount of work within the projected timeframes. However, because the Early Deposit Agreement allows us until the end of 2015 to deliver the actual feasibility report, we have chosen to reduce our overall expenditures now and be better positioned to take advantage of future improvements in the gold and equity markets. We are prepared to take the necessary steps to ensure a timely delivery of the report."
The Company announces further that Mr. Yani Roditis is leaving his position as President and COO to pursue other opportunities.
"The completion of all the field and design engineering work is a major milestone for the Toroparu Project," commented Mr. Roditis. "I am pleased to have led the move in advancing the feasibility work to a higher level of accuracy, further de-risking the project. I have elected to relinquish my formal position in the Company and make myself available to assist Sandspring on a consulting basis as they take the next steps in the feasibility process and in their efforts to secure an operating partner for development of the project as market conditions improve."
Rich Munson, CEO, commented: "Yani has done a tremendous job in completing this phase of the feasibility work within budget and on schedule. We are greatly appreciative of Yani's contribution and we look forward to being able to utilize his significant skills on a consulting basis as we continue our efforts."
The Company also announces that it has elected to re-establish its small-scale mining division. CEO Rich Munson stated: "Our Guyana subsidiary, ETK Inc. conducted small-scale mining operations from 2004 to 2009 until the discovery of the hard rock deposit at Toroparu. The historical small-scale mining operation produced approximately 4,000 to 4,500 ounces of gold per year. The initial areas targeted for mining are permitted, the basic exploration has been completed and we expect to achieve at least historical production levels.
The small-scale mining operation will be operated via a newly formed joint venture (the "Joint Venture") between ETK and Guyana Ventures LLC ("Guyana Ventures") on terms set out in a term sheet under which Guyana Ventures will acquire, subject to certain conditions including the approval of the TSX Venture Exchange and Silver Wheaton, from ETK 50% of its interest in a property (the "Godette Property") adjoining the Toroparu Gold Project. There has been exploration work conducted on the Godette Property but the Company also considers the area to be prospective for the recovery of alluvial gold with a small-scale alluvial mining operation.
Guyana Ventures acquired its position in the joint venture in exchange for a US $500,000 non-refundable cash deposit. This amount is approximately equal to ETK's out-of pocket acquisition expenditures on the Godette Property to date. ETK will contribute equipment to the operations but is not obligated to provide any funding to the operation for the first two years. Thereafter, ETK and Guyana Ventures shall contribute funds necessary for operations in an amount equal to its then ownership percentage of the Joint Venture.
Profits from the Joint Venture operation will be distributed on a priority basis to Guyana Ventures until Guyana Ventures has received distributions equal to three times the cash deposit. Thereafter, the profits shall be utilized to fund further exploration activity on the Godette Property unless ETK and Guyana Ventures mutually agree to distribute some or all of the profits to each of them.
John Adams, the Chairman of the Company, owns 25% of the voting securities of Guyana Ventures, and Gerald Grandey, an independent director of the Company, owns 50% of the voting securities of Guyana Ventures. The transaction may therefore be considered a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is exempt from the valuation and minority approval requirements under MI 61-101 because, at the time the transaction was agreed to, neither the fair market value of the subject matter of, nor the value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% of the Company's market capitalization.
Sandspring Resources Ltd. is a Canadian junior mining company currently in advanced exploration and in the process of finalizing a feasibility study for the multi-million ounce Toroparu Gold Project in Guyana, South America. Visit Sandspring's website at www.sandspringresources.com.
Additional information on Sandspring can be viewed on SEDAR under the Company's profile at www.sedar.com or on Sandspring's website at www.sandspringresources.com.