The Aripuanã zinc project is a low-cost underground zinc polymetallic mine project, with excellent potential mine life, based on the significant current inferred mineral resources and Nexa’s good conversion track record.
Luxembourg, August 26, 2019 - Nexa Resources S.A. (“Nexa Resources” or “Nexa”) (NYSE and TSX: NEXA), through its subsidiary, Votorantim Metals Canada Inc., is pleased to announce that it has entered into a definitive arrangement agreement (the “Arrangement Agreement”) with, among others, Karmin Exploration Inc. (“Karmin”) (TSXV and the Lima Stock Exchange: KAR), pursuant to which Nexa has agreed to acquire Karmin for an aggregate acquisition price of US$70 million. Karmin currently indirectly holds a 30% interest in the Aripuanã zinc project located in Mato Grosso, Brazil (the “Aripuanã Project”). Upon the closing of the transaction, Nexa and its affiliates will own 100% of the Aripuanã Project.
Tito Martins, CEO of Nexa, commented: “The acquisition consolidates our ownership of the Aripuanã Project, providing us marketing and sales flexibility to improve our margins. We believe this is a strategic and accretive deal for Nexa, while it also benefits Karmin.”
The transaction provides Nexa with 100% ownership of a high-quality asset and provides additional flexibility to Nexa in continuing the development of the Aripuanã Project, taking into account the following value drivers:
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Declared mineral reserves and potential mine life extension given mineral resources. According to the Technical Report (as defined below), the Aripuanã Project has an estimated mine life of 13 years based on currently defined mineral reserves with a potential mine life extension of up to 6 years based on the significant current inferred mineral resources and Nexa’s proven track record of mineral resource conversion.
Potential mineral resource expansion at the Project’s mineralized zones (Arex, Link, and Ambrex). Nexa believes that the Aripuanã Project has significant untapped exploration potential to extend mine life beyond its mineral reserve and resource life.
District exploration potential in satellite regions around the Aripuanã project, which could expand resources with future drilling. Given the existing exploration drilling campaigns, there is a potential to discover new deposits in satellite bodies (i.e. Babaçu and Massaranduba targets), which can be integrated in the future with the Aripuanã Project. Considering the nature and genesis of the deposit, there are important indicators to support the existence of other mineralized structures that could be part of a larger mineral trend.
Operational structure. Nexa believes that the transaction will potentially unlock operating and tax synergies within Nexa’s operations. Specifically, Nexa would be able to integrate Aripuanã’s zinc concentrate within its smelters in Brazil.