Atlantic Gold Announces Receipt of Fixed Price Proposal for EPC...

Atlantic Gold Announces Receipt of Fixed Price Proposal for EPC Contract With Ausenco


VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 23, 2016) -Atlantic Gold Corporation (TSX VENTURE:AGB) ("Atlantic" or the "Company") is pleased to announce that, pursuant to the terms of a memorandum of understanding ("MOU") executed on October 26, 2015 between Ausenco and the Company, Ausenco have provided the Company with a Lump Sum Turnkey Price ("LSTK Price") of CAD$87.4 million, to build a 2 million tonne per annum process plant, truck shop and office facilities, as well as other support infrastructure related to these facilities on an Engineering Procurement and Construction("EPC") basis, for the Company's Moose River Consolidated Project("MRC Project") in Nova Scotia, thereby fixing most of the initial construction and development capital costs of the MRC Project.
The LSTK Price was derived from further detailed due diligence and preliminary engineering on the initial capital expenditure estimates in the Company's Feasibility Study, published August 13, 2015. This proposal allows Atlantic to fix the construction costs of the process plant and related infrastructure, representing approximately 70% of the initial capital costs of approximately $127 million contained in the August 2015 feasibility study, excluding environmental bonding. The balance of initial capital costs represents construction costs for the tailings management facility, mine development earthworks, power supply, spares and contingencies which have now also been estimated and engineered in further detail, confirming feasibility study estimates.
The LSTK Price remains subject to exchange rate variation on those components of the LSTK Price quoted in foreign currencies, being US and Australian Dollars. This foreign exchange risk is based against a US/CDN exchange rate of 0.721 and a AUD/CDN exchange rate of 1.01, and any variation to that rate as at the date of execution of the final EPC contract as applied to an agreed amount of US$8.0 and AUD$4.8 million, respectively.
The LSTK Price is valid until May 4, 2016. Within this period, the parties aim to execute a definitive EPC agreement. Atlantic's execution of the EPC Agreement will be subject to various conditions, including the finalization of project financing to fund the development of the MRC Project. Ausenco have agreed to provide Bank Letters of Credit in support of its obligations in addition to standard Labour & Materials and Design Defect Bonds.
It is anticipated that subject to finalizing project financing, initial site work and construction will commence in early Q3 2016.
Steven Dean, Chairman and CEO commented, "Atlantic is very happy with the work undertaken by Ausenco to provide an LSTK price that results in the confirmation of the costs in our previously disclosed Feasibility Study with respect to plant and infrastructure capital expenditures, further de-risking the development of the MRC Project. At Atlantic, we see one of management's primary responsibilities is to reduce the uncertainties associated with the development of the MRC Project, including the risk of capex overruns. Capex overruns have become a common feature and challenge for mining development in recent years. The execution of a LSTK Price with Ausenco delivers an important piece of our risk management strategy and further underwrites the financeability of the development of the project.
The experience Ausenco brings in constructing quality gold facilities should provide additional surety regarding the timely and on-budget construction of the MRC Project. We look forward to working towards the finalization of a definitive EPC agreement in the coming weeks".
Banking Update
Further to our press release dated February 22, 2016, legal documentation for the project loan facility is well advanced and is expected to be finalized for execution in 4-6 weeks.
Further updates will be provided in due course.
Notes:
The LSTK Price includes a provisional sum of $527,000 for an HVAC system, to be confirmed in due course through future detailed building engineering.
John A. Thomas, P. Eng., VP Projects of Atlantic, and a Qualified Person as defined by National Instrument 43-101 ("NI 43-101"), has reviewed and approved the scientific and technical contents of this news release.
On behalf of the Board of Directors,
Steven Dean, Chairman and Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements:
This release contains certain "forward looking statements" and certain...

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