COMPANY ALSO ANNOUNCES COMMENCEMENT OF EXPLORATION DRILLING
May 2, 2019, Vancouver, B.C. -- Para Resources Inc. (the “Company” or “Para”) is pleased to announce that it has closed the Company’s previously announced non-brokered private placement (the “Offering”).
Pursuant to the Offering, the Company has issued 29,591,788 units of the Company (the “Units”) at a price of C$0.18 per Unit for gross proceeds to the Company of approximately C$5,326,522. Each Unit consists of one common share of Para and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share of the Company at a price of C$0.25 until November 2, 2020. The warrants are subject to an accelerated expiry if the closing trading price of the Company’s shares is greater than 35 cents per share for a period of 10 consecutive trading days. The Company will give notice to the holders of the acceleration event and the warrants will expire 30 days thereafter. All of the securities issued pursuant to the Offering are subject to a four month hold period in accordance with applicable Canadian securities law.
Glenn Walsh and Geoff Hampson, directors of the Company participated in the Offering by purchasing an aggregate of 28,961,788 Units. Accordingly, the Offering constitutes a related-party transaction under Multilateral Instrument 61-101. Because the Company’s shares trade only on the TSX Venture Exchange, the issuance of securities is exempt from the formal valuation requirements of Section 5.4 of MI 61-101 pursuant to Subsection 5.5(b) of MI 61-101 and exempt from the minority approval requirements of Section 5.6 of MI 61-101 pursuant to Subsection 5.7(a) of MI 61-101.
The Company also announces that it is developing a new mine plan for the Gold Road Mine. The first phase of the previous mine development plan included rehabilitation of the existing workings including the haulage road, the underground ventilation system, ground support, dewatering, secondary escapeways, power distribution and mine infrastructure, all of which have been substantially completed. The second phase of the plan, which had been accepted and approved by Mine Safety and Health Administration (“MSHA”), included gradually increasing the number of production faces by developing sub-levels simultaneously with mine development. This plan as well as the proposed secondary escapeway had been inspected and approved by MSHA. A new MSHA inspector has made a different interpretation of the regulation which requires a different approach and has resulted in a delay of mining operations. The Company is working together with MSHA to ensure that the updated escapeway plan will meet the requirements.
The Company is taking this opportunity to review the overall mine plan taking into consideration accelerated development work in the near term to increase the number of production faces. The Company foresees a six to eight-week delay in reaching production goals but does not believe this will cause a significant impact to long-term production guidance.
Ian Harris, Para’s President stated, “While this change to the mine plan delays production, development below the 800 Level will continue to be the highest priority. We are updating the mine plan while working with MSHA and anticipate that as a result, development will be accelerated in two footwall declines off the 800 Level. Ventilation and escape raises will be established prior to sublevel ore development. The ventilation and escape raises will allow waste development, sublevel ore development, and stoping below the 800 Level. The far west decline and raises will provide ventilation and escape for the development under the “historic” high grade Sharpe Stope (1,000’ strike length) and will establish access to multiple ore faces once completed. Our guidance for Q4 2019 production, when we anticipate declaring Commercial Production, is un-changed”
The Company also announces that the contract drilling company that will do the initial exploration drilling on the adjacent Tr-Ue vein will commence work during the first half of May with assays of core expected in the first half of July 2019.
A copy of this news release can also be found on our SEDAR profile.