ORINOCO GOLD LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 149 219 974 (ASX CODE: OGX) (COMPANY) COMPANY AND ITS SUBSIDIARIES (GROUP)
27 April 2020
Following the Deed Administrators’ previous updates to shareholders, please find below an update on the status of the Administration of the Company.
MAJOR TRANSACTION
On 8 January 2020, the Company executed a term sheet with Chancery Asset Management Pte Ltd and a confidential Canadian-based party, which set out the indicative terms by which OGX would sell its shares in its 100% owned subsidiary, Orinoco Brasil Mineracao Ltda (OBM), which holds the Company’s Brazilain assets, including the Cascaval, Sertao and Antena-Xupe projects (Brazilian Assets), to a newly incorporated Canadian private company (which was subsequently identified as 1232123 BC Ltd (BC Ltd)).
In consideration for the sale of the Company’s shares in OBM, the Company is to receive a release from the security held by CRH Purchasing Partner Inc. (CRH) and 2,500,000 shares in BC Ltd. It was contemplated that BC Ltd would then subsequently complete a reverse takeover of a TSXV listed entity, following the raise of further funds to update and further commercialise the Brazilian Assets.
It is now understood that Canadian explorer, Pacific Arc Resources Ltd (Pacific Arc)(NEX: PAV H) has entered into a letter of intent with BC Ltd for a proposed reverse takeover transaction to acquire OGX's Brazilian gold production and exploration assets (Transaction). We refer to the attached announcement issued on the Toronto Stock Exchange (TSX) market notices detailing the Transaction.
DELISTING OF OGX
Following successful completion of the Transaction, the Company will significantly reduce its indirect ownership of the Brazilian Assets, as it will be left with approximately 1.5% of the issued share capital in Pacific Arc.
The Deed Administrators had previously anticipated that the Company would then be able to be recapitalised following the release of the CRH security, at conclusion of the sale of the OBM shares to BC Ltd, via a subsequent transaction with a party to be determined following a brief marketing program which would be commenced at or about the time of completion of the Transaction. The subsequent transaction would only be attractive or commercially viable to prospective proponents if the Company were to be granted access to a waiver from ASX Listing Rule 2.1, condition 2 (the‘2 cent waiver’).
The Deed Administrators understand that in the past 6 months, the ASX has significantly reduced its discretion to provide the 2 cent waiver and as a consequence it is now understood that following completion of the Transaction, the Company will be left with insufficient assets to permit it to access the 2 cent waiver. As a consequence, the Deed Administrators have been unable to progress a recapitalisation of the Company and have not utilised the Company’s limited resources to continue to maintain the Company’s listing on the ASX.
The ASX has recently advised that the Company will now be delisted from the ASX on 1 May 2020 as a result of its failure to comply with its ongoing financial reporting requirements.
