(TheNewswire)
Toronto, ON – TheNewswire - September28 ,2021 –Otso Gold Corp. (“ Otso ” or the “ Company ”),(TSXV:OTSO) is pleased to release the followingshareholder update.
Dear Shareholders,
The Company is pleased to announce that the Companyrestarted the process plant and began ramping-up production at theOtso Gold Mine on September 20, 2021. Accordingly, it is expected thatthe first gold pour will occur in October 2021.
The move back towards production represents theculmination of the considerable work completed by management to dateto ensure that operations are long term, sustainable and profitable.It also marks the conclusion of the Company's preparatory works phaseand the beginning of the Company’s ramp-up to production phasebefore moving to full commercial production.
Overview
The Company’s focus since February 2021 has been toensure that all elements for the ramp-up and production phases are inplace and the completion of all necessary preparatory works,including:
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1. completing the initialfinancing, and subsequent warrant exercise, by Brunswick Gold Limited(" BGL ") which enabled the Company to complete all criticalpreparatory works leading to the Company’s ramp-up toproduction;
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2. expansion and upgrade oftailings and waste dump areas;
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3. upgrade of the waterreservoir;
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4. completing 10,000 metres ofan infill diamond drilling campaign, with drillingcontinuing;
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5. commissioning of an assaylaboratory on site complete with Atomic Absorption Spectroscopy andInductively Coupled Plasma capability. Such laboratory is beingmanaged on site by CRS Laboratories Oy, an accredited laboratory,which will train Otso staff and assist in the ramp-up of all testingon site;
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6. receiving the initial resultsfrom an updated technical report and mine plan forproduction;
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7. entering into a miningcontract for operations, as well as other agreements for the ramp-upto production;
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8. installing best practicehealth and safety practices;
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9. upgrading and expandingOtso’s environmental monitoring responsibilities to ensurecompliance with mining best practices and the requirements of theFinnish regulatory authorities;
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10. hiring approximately 130personnel representing the workforce for ramp-up andproduction;
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11. retaining Orica Finland Oyas the Company’s explosives supplier;
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12. completing all testing andmaintenance of equipment required for production; and
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13. upgrading equipment andsystems on site.
In-Depth Operations Update
To recap, the Company finalized an investment agreementdated December 13, 2020 with BGL which resulted in an aggregateinvestment of approximately US$22 million (including the fundsreceived from BGL’s recent warrant exercise – see the Company'spress release dated July 21, 2021). The funds were allocated tocompleting all preparatory work at the Otso Gold Mine site, ramping-upto production and ensuring that all elements were in place for fullcommercial production.
The drill program which commenced in 2019 is nowcomplete with a cumulative 10,000 metres of drilling completed,infilling the resources in and around (up to 40 metres from thecurrent pit footprints) the north and south pits. The drilling wasundertaken on the advice of John T Boyd Company (" Boyd ") andsupported by both internal reviews and the advice of variousconsultants in previously published reports, including the BoydPreliminary Economic Assessment (the " PEA ") publishedin 2018. The updated technical report released by Boyd (noting theTechnical Report did not include the final ~4,000 metres of drillingcompleted as part of the original drilling campaign) and announced onAugust 19, 2021, illustrated the following improvements in the finalmine plan for production (as compared to the PEA):
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- an increase in measured and indicated ounces of~290%; and
- an increase in measured and indicated “highgrade” of ~20%;
The drilling campaign has confirmed the mineralizationcontinues on strike both east and west and has identified additionalstructures to the north and south, in addition to mineralization belowthe existing pits. The Company continues to drill for both gradecontrol and expansion of the confidence and breadth of Otso’sresources.
The Company expects to continue exploration and infilldrilling for the foreseeable future with extensive geological targetsidentified by geophysics and previous drilling the focus oncecommercial production has stabilized. This drilling, it is expected,will ensure continued development and understanding of the mineralizedarea and will focus on continual replenishment, expansion andupgrading of the resources and reserves. Continued drilling will becarried out based on the detailed geophysical interpretation theCompany has been undertaking to complement the initial drillingcampaign. Furthermore, the Company plans to define new drillingtargets across the 1,500 hectare mining lease area and 4,000 hectareexploration lease area.
Additionally, grade control reverse circulationdrilling is being carried out as new areas are stripped to furtherinfill the current 25 metre diamond drill spacing and will deploy apattern of 6 x 8 metres for detailed mine planning.
Blasting operations begun on site in September 2021 totest patterns for production and move ore for the ramp-up. The initialmining will be focused on the South Pit and shallow targets identifiedaround the pit edges of both the North and South Pit.
The Company is working closely with Boyd to define thelong-term mine plan. The Company expects to publish the previouslyannounced Definitive Feasibility Study (“ DFS ”) prepared byBoyd in October 2021, inclusive of the additional ~4,000 metres ofdrilling completed. The mine plan will see the area of mining increaseby approximately 300% from the current foot print and the merging ofthe North and South pits. Boyd is also working closely with theCompany to assess options in order to double production on site through the installation of a parallel low-gradecircuit. Progress is encouraging and will continue with the resultsbeing expected after the publication of the previously announcedfeasibility study.
As announced on August 11, 2021, the Company hascontracted E. Hartikainen (" Hartikainen ") to provide mining servicesto the Company. The contract with Hartikainen sets the Company up witha highly competent mining contractor with significant experiencemining in the region and having a fleet of world-class equipment.
The Company has employed a highly skilled health andsafety team with experience in medical and emergency services. Theteam is also building an integrated health and safety framework andautomated training system applied across all areas of operations.
Supported by global recruitment agency, Brunel EnergyInc., the Company has welcomed 133 new employees since May 2021. TheCompany is confident that the diverse skill set and significantexpertise of its workforce will fully support its operations.
As highlighted above, all preparatory work onsite forthe ramp-up to production is now complete, including substantialupgrades to the water reservoir, residue storage and waste rockfacilities.
Orica will be working with the Company and Hartikainenonsite to supply and test explosives for mining.
All processing equipment has been tested and maintainedand, where necessary, upgraded for production. Metso OutotecCorporation has spent considerable time onsite testing the mills andcrushers.
The Company is expanding its high-grade sulphidecircuit capacity from 6 tonnes per hour to 12 tonnes initially at a~97% percent recovery. To optimize recovery and enhance monitoring,the Company has upgraded and modernized its process automation systemValmet DNA DCS.
The Company is further installing a portable jaw andcone crusher onsite to decrease the size fraction of the ore feed tothe milling circuit providing the Company with the flexibility tooptimize grind size - which we expect will ultimately improverecovery and throughput.
The Company expects to announce a results update fromthe drilling program shortly as well as the results of thefeasibility study by Boyd.
Further Financing to Full Commercial Production
The Board of Director’s has decided to secure up to $5 million through a stand by facility to ensure the Company has asufficient working capital buffer as we continue the ramp- up and moveto full commercial production.
The Company is investigating options in this regard;however, BGL has agreed to provide such funding (the" Working CapitalFinancing ”) by subscribing for units(" Units ") of the Company at a price to be determined at a laterdate at a discount of 25 %to the share price of the day per Unit. EachUnit will consist of one common share (each, a " Common Share ")and one common share purchase warrant (each, a " Warrant "). Each Warrant will entitle the holder thereof to purchase one CommonShare at a price equivalent to the share price of the day for a periodof five years from the date of issuance. The Working CapitalFinancing is subject to TSXV approval.
BGL currently holds an aggregate of 569,888,880 CommonShares representing approximately 63.05% of the issued and outstandingCommon Shares. The Working Capital Financing is considered a‘related party transaction’ within the meaning of MultilateralInstrument 61-101 Protectionof Minority Security Holders in Special Transactions (" MI61-101 "). The Company intends to rely onexemptions from the formal valuation and majority of minority approvalrequirements in sections 5.5(b) and 5.7(a) of MI 61-101 in respect tocompleting the Working Capital Financing, as the fair market value ofBGL's participation will not be more than 25% of the Company's marketcapitalization.
Refinancing update
The Company has engaged with a number of commercialbanks regarding refinancing of borrowings including the secured debtdue in December 2021.
Finally, the Company has recently updated its websiteand invites shareholders to follow its progress in this exciting timeas the Company ramps-up to commercial production.
Sincerely,
Brian Wesson
Chief Executive Officer
For furtherinformation, please contact:
Clyde Wesson
Vice President
1 917 287 0716
info@otsogold.com
www.otsogold.com
The technical disclosure in this news release has beenreviewed and approved by Gregory B. Sparks, P. Eng., of John T. BoydCompany, a Qualified Person as defined by National Instrument43-101.
Caution
The Company cautions that it has notdefined or delineated any proven or probable reserves for the OtsoMine Project and mineralization estimates may therefore requireadjustment or downward revision based upon further exploration ordevelopment work or actual production experience. Mineral resourcesthat are not mineral reserves do not have demonstrated economicviability.
The Company also cautions that thedecision by the Company to proceed to develop the Osto Mine Projectand extract mineralization proceeded without the Company firstestablishing reserves supported by a technical report and completing apre-feasibility or feasibility study. Accordingly, there is a higherrisk of technical and economic failure at Osto because developmentproceeded without first establishing reserves supported by a technicalreport and completing a feasibility study. This is particularlyrelevant as the Company has proceeded with development at Osto onindicated and inferred resources without first completing apreliminary economic report.
Forward-lookingStatements
This press release containsforward-looking statements regarding the Company based on currentexpectations and assumptions of management, which involve known andunknown risks and uncertainties associated with our business and theeconomic environment in which the business operates. All suchstatements are forward-looking statements under applicable Canadiansecurities legislation. Any statements contained herein that are notstatements of historical facts may be deemed to be forward-looking statements. By theirnature, forward-looking statements require us to make assumptions andare subject to inherent risks and uncertainties. We caution ourreaders of this press release not to place undue reliance on ourforward-looking statements as a number of factors could cause actualresults or conditions to differ materially from current expectations.Please refer to the risks set forth in the Company's continuousdisclosure documents that can be found on SEDAR ( www.sedar.com ) under the Company’s issuer profile. The Company does notintend, and disclaims any obligation, except as required by law, toupdate or revise any forward-looking statements whether as a result ofnew information, future events or otherwise.
About the Company
Otso Gold Corp. wholly owns the Otso Gold Mine near thetown of Raahe in Finland. The Otso Gold Mine is developed, fullypermitted, has all infrastructure in place, two open pits and isprogressing towards production in October 2021 to ramp up towardsprocessing ore at name plate capacity of 2 million tonnes perannum.
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 thisrelease.
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