News: AVB Jaguar signs earn-in agreement to sell Gurupi project to Avanco resources, page-3

TORONTO, Oct. 4, 2016 /PRNewswire/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX: JAG) is pleased to announce that it has entered into an earn-in agreement (the "Agreement") with Avanco Resources Limited (ASX: AVB) ("Avanco"), pursuant to which Avanco may earn up to a 100% interest in the Gurupi Project ("Gurupi" or the "Project"). Gurupi is located in the state of Maranhão, Brazil, and includes the Cipoeiro and Chega Tudo deposits which are found in a 72-kilometre trend that remains mainly unexplored. Jaguar, through a wholly-owned subsidiary, holds mineral concessions totaling 140,332 hectares. The last feasibility study on the Gurupi Project was prepared on January 31, 2011, by TechnoMine Services LLC, which is filed under the Company's profile on SEDAR (www.sedar.com).
Main Terms of the Agreement
Upon the satisfactory completion of certain closing conditions, the Agreement provides Avanco with the right to earn 20% of Jaguar's interest in the Project by paying to Jaguar an aggregate cash fee of US$1.7 million plus an additional fee ofUS$500,000 in cash or shares of Avanco, and by expending a minimum of US$300,000 on permitting and access in respect of the Project. Avanco will earn an additional 31% interest in Gurupi upon the publication of a JORC compliant reserve estimate in excess of 500,000 ounces, and will earn a further 29% interest in Gurupi upon demonstration of adequate funding coupled with the start of construction of a process plant with capacity in excess of 50,000 ounces per year. In the event that Avanco cannot demonstrate adequate funding for the Project, Jaguar will have a one-time right to buy-back a 31% interest in Gurupi and control of the Project by paying to Avanco the reasonable costs and expenses incurred in the preparation of the JORC compliant reserve estimate and technical studies. Avanco will have the option to acquire the remaining 20% interest in the Project at any time by paying a fee equal to the greater of US$6.25 million or the sum of US$12.50 per ounce of gold as per the JORC compliant reserve estimate.
Pursuant to the Agreement, Jaguar will retain a Net Smelter Return ("NSR") royalty ("Royalty") upon the commissioning of production at the Project. The Royalty will be 1% NSR on the first 500,000 ounces of gold or gold ounce equivalents produced; 2% NSR on production from 500,001 to 1,500,000 ounces of gold or gold ounce equivalents; and 1% NSR on production exceeding 1,500,000 ounces of gold or gold ounce equivalents.
Rodney Lamond, President and Chief Executive Officer of Jaguar commented, "We are pleased to announce that we are partnering with Avanco to develop the Gurupi Project while retaining exposure to the significant exploration upside this property possesses through an Earn-In Agreement and through an NSR Royalty on the Property. Jaguar originally acquired Gurupi as part of the 2009 acquisition of Mineração Chega Tudo from Kinross Gold, through which we gained 100% ownership of the entire mineral licenses for the Project located in northern Brazil. Since joining Jaguar as CEO, our primary focus has been on our core assets in the Iron Quadrangle to create shareholder value. We are pleased with this agreement and with our new partners who we believe will develop the Gurupi Project enabling the Company to remain focused on our operating mines and achieving our 2016 production guidance."
Mr. Lamond went on to say, "Avanco's strong track record in raising funds, building and commissioning mines in northern Brazil, and recognized Brazilian regulatory skills makes them a solid partner positioned for success. Avanco's board members include former Kinross Gold executives highly familiar with Gurupi, which further demonstrates that Avanco's team retains the necessary experience and knowledge to take on this high-profile asset and succeed. Lastly, the Royalty, while beneficial to Jaguar, will allow Avanco to develop the project cost effectively."