Inca One closes acquisition of Koricancha plant

2018-08-21 07:39 ET - News Release

Mr. Edward Kelly reports
INCA ONE GOLD COMPLETES THE ACQUISITION OF KORICANCHA PROCESSING FACILITY IN PERU
Inca One Gold Corp. has finalized the purchase of Anthem United Inc., which owns 90.14-per-cent interest in the 350-tonne-per-day (tpd) Koricancha ore processing facility in Peru, from Equinox Gold Corp. and certain minority shareholders. Please refer to Inca One's press release dated July 17, 2018, for complete details on the terms of the acquisition.
Highlights of acquisition for Inca One shareholders include:

• Combined 450 tpd permitted capacity;
• Additional 200 to 250 tpd of available capacity for future growth;
• Economy-of-scale opportunities with two plants in nearby proximity;
• Combined working capital of approximately $5-million (U.S.);
• Equinox becomes a new significant shareholder.

The total purchase price for the Koricancha acquisition was approximately $16.3-million satisfied through the issuance of an aggregate of 110,050,225 shares at a deemed price of 5.5 cents per share, $7.5-million in cash or shares payable over three years at the company's option, $1.5-million payable in cash on the second anniversary of closing and the balance on the third anniversary, subject to certain working capital adjustments. The purchase price includes certain IGV tax credits which will be split between Inca One and Equinox as collected. In connection with the transaction, the 3.5-per-cent gold stream currently payable by Koricancha was terminated and, as a result, future production from Koricancha will not be subject to any precious metal streams or royalties thereby maximizing revenues for the company's shareholders. As a result of the Koricancha acquisition, both Equinox and SA Targeted Investing Corp. (SATIC) will both hold approximately 19.9 per cent of Inca One's issued and outstanding shares. No finders' fees were paid in relation to the acquisition.
"The closing of this acquisition of the producing Koricancha mill is a strategic and transformative acquisition for Inca One," repeated president and chief executive officer, Edward Kelly. "It instantly increases our footprint in Peru and allows us to grow our sales and earnings without significant and time-consuming capital spending and delays in permitting."
Koricancha is a custom-built, fully operational, industrial gold ore processing facility, featuring a carbon-in-leach gold circuit, strategically situated in the Arequipa region of Peru. It is located at sea level, fully serviced by excellent infrastructure just 10 minutes from the Pan American Highway, within the Nazca-Ocona gold belt in Southern Peru. It is built out and permitted for 350 tpd and has been operating at an average of approximately 135 tpd since January, 2018. It has been servicing the small-scale mining sector of Peru for three years and has a stockpile of material currently being processed.

Early warning
In connection with the transaction, Equinox has acquired 51,269,708 Inca One shares and SATIC has acquired 51,269,708 Inca One shares, each representing 19.99 per cent of the Inca One Shares that are issued and outstanding upon completion of the transaction, at a deemed price of 5.5 cents per share. Prior to completion of the transaction, neither Equinox nor SATIC owned any Inca One shares or other securities of Inca One. Equinox and SATIC are acquiring the Inca One shares for investment purposes only. Depending upon market and other conditions, or as future circumstances may dictate, either or both of Equinox and SATIC may, respectively, from time to time, increase or decrease their holdings of Inca One shares or other securities of Inca One.
In connection with the closing of the transaction, Equinox and Inca One have entered into a nomination rights agreement pursuant to which, among other things, so long as Equinox beneficially owns at least 10 per cent of the outstanding Inca One shares it will have the right to nominate one director to Inca One's board and to participate in certain offerings of securities by Inca One to maintain its pro rata ownership interest.

This portion of this news release is issued pursuant to National Instrument 62-103 -- The Early Warning System and Related Takeover Bid and Insider Reporting Issues of the Canadian Securities Administrators, which also requires an early warning report to be filed with the applicable securities regulators containing additional information with respect to the foregoing matters. A copy of the early warning reports of Equinox and SATIC will be available on Inca One's issuer profile on SEDAR. Equinox's head office is located at Suite 730, 800 West Pender St., Vancouver, B.C., V6C 2V6, and Equinox can be contacted at 604-558-0560, attention Pam Kinsman, to obtain a copy of its early warning report.

About Inca One Gold Corp.
Inca One is a Canada-based mineral processing company. The company's activities consist of the production of gold and silver from the processing of purchased minerals located in Peru. Peru is the sixth-largest producer of gold in the world and the Peruvian government estimates the small-scale mining sector accounts for a significant portion of all Peruvian gold production, estimated to be valued at approximately $3-billion (U.S.) annually. The company purchases its minerals from government registered small-scale mining producers from various regions and processes it at its Chala One milling facility located in Chala, southern Peru.
We seek Safe Harbor.