Amarillo to be acquired by Hochschild

TORONTO, Nov. 29, 2021 (GLOBE NEWSWIRE) -- Amarillo Gold Corporation (“Amarillo” or the “Company”) (TSXV: AGC, OTCQB: AGCBF) has entered into an agreement (the “Arrangement Agreement”) with Hochschild Mining PLC (“Hochschild”), whereby Hochschild will acquire all of the outstanding shares of Amarillo by way of a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia). Pursuant to the Arrangement, each share of Amarillo will be exchanged for cash consideration of C$0.40 and one share of a new Brazil-focused exploration company, Lavras Gold Corp. (“Lavras SpinCo”), based in Toronto, Ontario.

Lavras SpinCo will be capitalized with C$10 million cash and will hold all assets and rights with respect the Lavras do Sul gold project (the “Lavras Project”) located in southern Brazil in the state of Rio Grande do Sul.

The cash consideration (not including the value of the Lavras SpinCo shares) represents a premium of 66% over the 20-trading day volume weighted average trading price of the Amarillo shares on the TSX Venture Exchange of C$0.24. The total transaction value is approximately C$164.5 million, excluding Lavras SpinCo’s asset value and C$10 million of cash. It is anticipated that Lavras SpinCo will complete a share consolidation immediately following the completion of the Arrangement.

Highlights of the proposed transactions:

• Cash consideration of C$0.40 per Amarillo share;
• Amarillo shareholders also receive one share of Lavras SpinCo for every Amarillo share held;
• Lavras SpinCo will have C$10 million cash and will hold a stake of the Lavras Project assets; and
• Lavras SpinCo will have a 2% net smelter return royalty over certain of Amarillo’s exploration properties located outside of the current Posse resource and mine plan at Amarillo’s Mara Rosa property.

“This acquisition delivers an immediate and compelling opportunity for our shareholders to monetize their investment in Amarillo at an attractive valuation and significant premium to the current and historical trading price of Amarillo’s shares,” said Mike Mutchler, President and Chief Executive Officer. “The transaction also provides our shareholders with additional value through their continued participation in the future exploration and advancement of the prospective Lavras Project through Lavras SpinCo, where our leadership team will be focussed on unlocking the true value of this project.”