SRHI inks $40 mln deal to buy 70 pct of Chilean copper miner

Sprott Resource Holdings Inc (TSX: SRHI) has agreed to acquire 70 percent of the outstanding equity of SC Minera Tres Valles, which owns the Minera Tres Valles copper mining and refining complex in Salamanca, Chile. SRHI agreed to buy the stake from Vecchiola SA, a Chilean mining services and supply company, for US$39.9 million in cash and shares. The deal is expected to close in the fourth quarter of fiscal 2017. SRHI, a Toronto-based resource holding company, was formed earlier in 2017 as a result of the merger of Canadian private equity firm Sprott Resource Corp with Adriana Resources Inc.

PRESS RELEASE

Sprott Resource Holdings Announces US$40 Million Investment in Chilean Copper Miner

TORONTO, Aug. 22, 2017 (GLOBE NEWSWIRE) — Sprott Resource Holdings Inc. (“SRHI” or the “Corporation”) (TSX:SRHI) today announced that it has entered into a definitive agreement to acquire 70% of the outstanding equity of S.C. Minera Tres Valles (“MTV”) from the Vecchiola Group for an aggregate purchase price of US$39.9 million, consisting of US$33.5 million in cash and US$6.4 million in SRHI common shares. The transaction is expected to close during the fourth quarter of fiscal 2017 and is subject to the satisfaction of certain customary closing conditions, including receipt of the approval of the Toronto Stock Exchange.

Transaction Highlights:

MTV owns 100% of the currently producing Minera Tres Valles copper mining and refining complex located in Salamanca, Chile.
Historical JORC-compliant Measured and Indicated Resources of 40.7 million metric tonnes of ore at 0.81% Cu using a cut-off grade of 0.2% Cu completed by Snowden Mining Industry Consultants (“Snowden”) in May 2013. A qualified person has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves and SRHI is not treating this historical estimate as current mineral resources. See “Historical Estimates” below.
Experienced partner in the Vecchiola Group, a premier Chilean mining services and construction company.
Experienced management team responsible for re-tooling operations, designing and implementing a strategic growth plan.
Chile has one of the world’s most stable mining regimes, is a premiere destination for mining investment and is the world’s top copper producing country.
Extensive land package with exploration potential.
Strong community support through charitable foundation and formalization of small-scale miners.

“We are excited to announce this investment in MTV,” said Steve Yuzpe, CEO of SRHI. “We are very bullish on copper and acquiring a majority stake in a producing asset located in a stable, investor-friendly mining jurisdiction like Chile is completely in line with our strategy.”

“The Vecchiola Group will be tremendous partners on this project and the MTV management team are experienced operators with the ability to effectively execute on our development plan,” added Mr. Yuzpe.

MTV has begun preparing a NI 43-101 compliant technical report that will provide a summary of its mineral resources and mineral reserves and describe the development plan designed to grow production to reach and exceed the nameplate capacity of the current solvent-extraction and electrowinning infrastructure.

“Vecchiola Group is pleased to partner with such an experienced mining investor as SRHI to bring MTV to its full operating potential,” said Guido Vecchiola, eldest of the Vecchiola brothers, who speaks in representation of his brothers.

“We look forward to working with the team at SRHI to continue the development of MTV and execute on our growth plan,” said MTV CEO, Luis Vega.

“After evaluating more than 70 investment opportunities, we concluded that MTV offered the greatest potential to create immediate value for our shareholders,” concluded Mr. Yuzpe. “After giving effect to this transaction, we still have approximately $35 million in cash available to deploy towards other accretive investments, while also continuing to monetize non-core investments.”

Bofill Mir & Álvarez Jana acted as legal counsel to SRHI. Next Meridian LLC and Three Keys Capital Advisors LLC acted as financial advisors to Vecchiola Group and Nassar, Delgado & Fainé Abogados acted as legal counsel.

About MTV

MTV is a fully permitted operating mining complex located nine kilometers from Salamanca in Region IV of Chile
– Consists of two main deposits: Papomono (underground) and Don Gabriel (open pit).
– Processing plant with nameplate capacity of 5,400 tonnes per day of ore, with expandable to 7,000 tpd with the incorporation of a quaternary crusher.
– Designed to produce up to 18,500 tonnes per annum of thin copper cathodes.
– Commenced production on 2010.
– Produced 6.5 million pounds of copper at cash cost of US$2.24 per pound in the first half of 2017.
Vecchiola Group purchased the mine from Vale in 2013
– Vale S.A. invested US$242 million to purchase, explore, develop and build MTV from 2005 to 2013.
Historical JORC-compliant Measured and Indicated Resources of 40.7 million metric tonnes of ore at 0.81% Cu (of which 9.85 Mt are Measured mineral reserves at 0.89% Cu and 30.85 Mt are Indicated mineral resources at 0.80% Cu) using a cut-off grade of 0.2% Cu completed by Snowden in May 2013. A qualified person has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves and SRHI is not treating this historical estimate as current mineral resources. See “Historical Estimates” below.
Significant land package with exploration upside
– 44,334 hectares of mineral rights owned by MTV
– More than 100 copper occurrences not yet explored

Conference Call Details

SRHI will hold a conference call to discuss the MTV investment on Tuesday, August 22, 2017 at 5:00pm Toronto time. To participate in the call, please dial (855) 458-4215 ten minutes prior to the scheduled start of the call and provide conference ID: 73039524. A taped replay of the conference call will be available until Tuesday, August 29, 2017 by calling (855) 859-2056, conference ID 73039524.

The conference call will be webcast live at www.sprottresource.com and http://edge.media-server.com/m/p/dxh7qugr

About Sprott Resource Holdings Inc.

SRHI is a publicly-listed corporation transitioning into a diversified holding company focused on holding businesses in the natural resource industry. Based in Toronto, SRHI is a member of the Sprott Group of Companies and is managed by a team of leading resource investment professionals. SRHI’s current holdings are concentrated in the mining, energy and agriculture sectors. SRHI takes an active role in the companies in which it invests and is committed to being a high-value partner to the management teams it backs and the co-investors who invest alongside SRHI. For more information about SRHI, please visit www.sprottresource.com.

For further information:

Glen Williams
Director of Communications
T: (416) 943-4394
E: gwilliams@sprott.com

Photo courtesy of Vecchiola SA