Cerro Grande Mining Corporation Announces Letter of Intent to acquire the Assets relating to the Pimentón Copper Gold Mining Project

TORONTO, July 15, 2020 (GLOBE NEWSWIRE) -- Cerro Grande Mining Corporation (the “Company” or “CEG”) (CSE:CEG) announces that it has entered into a non-binding letter of intent (the “LOI”) with Minera Tamidak Limitada (“Tamidak”), a private Chilean company owned by David Thomson and his family, to acquire from Tamidak certain assets, rights and obligations of Tamidak relating to the Pimentón Copper Gold Mining Project.  The Pimentón Mining Project covers 3,121 hectares located approximately 120km northeast of Santiago in the Andes mountains in Chile, and hosts the Company’s former Pimentón gold mine which closed down in May 2017 and was subsequently forfeited to the liquidator when the Company’s subsidiary Compañía Minera Pimentón entered into voluntary bankruptcy proceedings in June 2017.  Tamidak acquired the Pimentón Mining Project in those bankruptcy proceedings on June 25, 2018.

Pursuant to an asset purchase agreement to be negotiated by the parties (the “APA”), CEG’s Chilean subsidiary Minera Til Til SpA would acquire from Tamidak the mining concessions and other assets covering the Pimentón Mining Project as well as Tamidak’s rights and obligations under the Exploration and Option to Joint Venture Agreement (the “FQM Agreement”) entered into on or about April 27, 2020 between Tamidak and FQM Exploration (Chile) S.A. (“FQM”), a Chilean subsidiary of First Quantum Minerals Ltd.

In summary, the FQM Agreement provides that:

(a)                during the 12-month period following execution of the FQM Agreement (extensible up to 18 months), subject to permitting, FQM will proceed with a 3D deep penetrating geophysical survey, upon the completion of which FQM will have the right to continue to earn a 49% equity interest in a joint venture company (the “JV Company”) to be incorporated by the parties;

(b)               after the completion of the 3D survey, FQM will, among other things and subject to certain conditions (including termination rights), (i) work towards completing a resource report concerning the Pimentón properties in accordance with reporting standards set out in National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators; and (ii) complete an in-house feasibility study sufficient to lead to a decision to mine, in each case at the expense of FQM. If such 43-101 report is timely completed and other conditions are met, FQM may elect to form the JV Company (49% FQM and 51% Tamidak) upon payment to Tamidak of US$5 million. If FQM timely completes such feasibility study, and upon payment to Tamidak of an additional US$5 million, FQM will increase its equity interest in the JV Company to up to 70% (70% FQM and 30% Tamidak).