DRC Gold gets 65% option on Giro, Nizi

Executive Summary

• DRC Gold Corp. has entered into a binding term sheet granting it an option to acquire up to a 65% indirect interest in the Giro gold project and up to a 65% interest in the Nizi gold project in the Democratic Republic of the Congo (DRC).
• The transaction involves the issuance of 350 million common shares to Amani Consulting SARL and Mabanga Mining SARL, constituting a change of control and fundamental change under CSE policies, which will trigger a trading halt.
• The deal includes significant financial obligations, including the assumption of an $8 million loan to SOKIMO and potential future cash payments of up to $80 million for additional interests, alongside the suspension of the Okote gold project in Ethiopia due to security concerns.

Key Details

• Transaction Structure: DRC Gold holds an option to acquire:
  • Up to 65% indirect interest in Giro Goldfields SARL (via Amani Consulting).
  • Up to 65% interest in the Nizi gold project (via Mabanga Mining).
• Share Consideration:
  • Initial Issuance: 25 million common shares issued upon signing the formal option agreement.
  • Closing Issuance: 325 million common shares issued upon shareholder approval and closing.
  • Total Shares: 350 million shares issued in total upon full exercise of the option.
• Financial Obligations & Loans:
  • DRC Gold agrees to assume Mabanga’s obligations under an $8 million (USD) loan previously made to SOKIMO.
  • $5.5 million (USD) of this loan has already been advanced by Mabanga.
  • Upon raising a minimum of $40 million (USD), DRC Gold will pay $5.5 million (USD) to Mabanga to settle the advanced funds, contingent on the assignment of Mabanga’s rights to the SOKIMO loan.
• Additional Options for Further Acquisition:
  • Giro Project: Amani grants DRC Gold an option to acquire the remaining 10% interest in Giro Goldfields for either $30 million (USD) within 12 months of closing or $50 million (USD) within 24 months.
  • Nizi Project: Mabanga grants DRC Gold an option to acquire an additional 10% interest for $30 million (USD) plus the issuance of 50 million common shares.
• Corporate Governance Changes:
  • Upon initial share issuance, Amani/Mabanga can appoint 1-2 directors.
  • Upon closing, Amani/Mabanga can appoint candidates such that they constitute a maximum of 3 of DRC Gold’s 5 directors.
• Regulatory & Trading Status:
  • The transaction constitutes a change of control and fundamental change under CSE Policy 1.3(2) and Policy 8.
  • A trading halt will be initiated upon full exercise and will remain in effect until after the closing of the transaction.
  • Shares are subject to a CSE-required escrow agreement.
• Project Details:
  • Giro Gold Project: Located in the Kilo Moto greenstone belt, DRC. Covers ~497 sq km via Permis d'Exploitation (PE) 5046 and PE 5049. Contains Kebigada and Douze Match deposits. Located ~35 km west of the Kibali mine.
  • Nizi Gold Project: Located in the Ituri district, DRC. Covers 113 sq km via PE 5110. Includes the abandoned King Leopold underground mine (operated 1913-1931) with up to seven known major quartz gold veins.
  • Okote Gold Project: Located in Ethiopia. Announced as being put on hold for the foreseeable future due to the uncertain military situation.
• Counterparties: Amani Consulting SARL, Giro Goldfields SARL, and Mabanga Mining SARL are all arm's length to DRC Gold. Societe Miniere de Kilo Moto (SOKIMO) holds a 35% interest in both Giro Goldfields and the Nizi gold project.

Notable Quotes

• "We are very pleased that we now have been granted an option to acquire majority interests in both the Giro gold project and the Nizi gold project. Our team has a wealth of experience exploring mineral concessions in the DRC and we look forward to developing the potential of these two exciting projects." — Klaus Eckhof, Chief Executive Officer