Equitas Resources Corp. Enters Agreement to Acquire Alta Floresta Gold Ltd.

VANCOUVER, Jan.15, 2016 /CNW/ - Equitas Resources Corp. (TSXv: EQT) (FSE: T6UN) (US: EQTRF) ("Equitas" or the "Company") is pleased to announce that it has entered into a binding letter agreement dated effective January 6, 2016 to acquire (the "Transaction") all of the issued and outstanding securities of Alta Floresta Gold Ltd. ("Alta Floresta Gold").

Alta Floresta Gold is a private British Columbia company which holds approximately 60% of Alta Floresta Gold Mineração Ltd. ("Alta Floresta Mineração").  Alta Floresta Mineração holds six gold properties, and four production licences, over 184,410 hectares of land in the Mato Grosso, and Para states of the Federative Republic of Brazil.  Licence areas are highly prospective, with previous artisanal mining activity.  Alta Floresta Mineração is focused on expanding the production activities and defining additional gold resources at its Cajueiro Project (the "Cajueiro Project").

"In Alta Floresta Gold, we have identified an excellent opportunity that will allow us to leverage its current small scale, low cost, gold production into a much larger operation in the near future." stated Kyler Hardy, President and Director of Equitas.  "By incorporating the highly skilled senior management team of Alta Floresta Gold into Equitas, we gain an experienced South American operating team that will advance the Cajueiro Project.  Following closing of the transaction, Equitas will be a stronger company with quality gold and nickel assets as well as cash flow.  This transaction is in line with our corporate strategy to acquire exceptional property holdings in highly prospective and proven districts.  Equitas will also continue an aggressive exploration program on its highly prospective Garland nickel property in the Voisey's Bay district in Labrador, Canada."

"We are very pleased to finalise this letter agreement with Equitas, commented Chris Harris, Executive Chairman & Director of Alta Floresta Gold. "This transaction underlines the core value of the Alta Floresta portfolio and especially of our fast-track gold development target at Cajueiro which is already in production.  With the depth of our combined management team, we stand poised to create strong value for shareholders as well as to bring employment and business to Brazil. We intend to build on our in-house portfolio development pipeline, by acquiring selected value accretive neighbouring gold resources in Brazil to build a strong, cash flow generating gold junior with attractive growth prospects."

The Cajueiro Project

The Cajueiro Project encompasses 44,768 hectares and is located 95 kilometers north of the city of Alta Floresta in the Federative Republic of Brazil.  The project straddles the border of the Para and Mato Grosso states in the prolific Juruena Belt of Brazil.

To date, 48 drill holes for a total of 11,292 metres have tested four zones:  Marines, Baldo, Matrincha, and Crente.  At the Crente zone, the work has outlined an indicated and an inferred resource, while inferred resources were calculated for the Marines, Baldo and Matrincha zones. All of these zones have near surface oxide potential expansion. Exploration over the last five years has identified five further anomalies within the property package that have similar surface expression to the Crente target.

A resource estimate was prepared by Gustavson Associates of Boulder, Colorado in accordance with the definitions in the National Instrument 43-101 ("NI 43-101") in a report titled "NI 43-101 Technical Report on Resources, Cajueiro Project States of Mato Grosso and Para, Brazil effective March 22, 2013.

An updated NI 43-101 Technical Report is being prepared for Equitas and will be filed on www.sedar.com within the time periods required under NI 43-101 and will be available on the Company's website.

The details of the NI 43-101 Technical Report are summarized below:

Table 1. Indicated and Inferred Resources at Crente zone.

Table 2. Inferred Resources at Baldo, Matrincha and Marines zones.

Oz Au = Gold-equivalent ounces.

All quantities are rounded to the appropriate number of significant figures; consequently sums may not add up due to rounding.  All resources reported above for the Baldo, Matrincha and Marines zones are inferred resources. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resource will be converted into mineral reserves.

Alta Floresta Gold started processing alluvial gold mineralization in the Baldo zone in June 2015 with modest gold production to date.

Equitas Resources intends to embark on a three phase development plan at the Cajueiro Property.  First, the Company plans to install a small gravity plant to process the saprolite mineralization at the Baldo zone.

Once permits and the necessary supply agreements are in hand, the second phase of the plan envisions the construction of a carbon-in-leach plant between the Baldo and Crente zones. These two zones are less than 1 km apart.  Initial metallurgical test work indicates that in excess of 85% gold recovery can be achieved through gravity separation and cyanide leaching.  

The third phase would be to increase production at the Cajueiro Project under a full production licence.  The Company expects that this could be funded through operating cash flow.

Everett F. Makela, P. Geo., VP Exploration for Equitas Resources Corp., a Qualified Person as defined by National Instrument 43-101, has approved disclosure of the technical information in this news release.

Transaction Summary

A summary of the transaction is as follows:

• Equitas will acquire 100% of the issued and outstanding shares of Alta Floresta Gold from its security holders in exchange for that number of Equitas shares that is equal to 100% of the issued and outstanding Equitas shares at closing.
• Upon closing, (i) Alta Floresta Gold will become a wholly-owned subsidiary of Equitas, and (ii) former shareholders of Alta Floresta Gold will hold approximately 50% of the outstanding shares of the Company (without giving effect to any issuances of Equitas shares prior to or concurrent with closing). No new insiders or control persons will be created as a result of the Transaction.
• Each unexercised stock option in Alta Floresta Gold will be exchanged for or replaced with approximately 1.5 options of Equitas at a price of $0.15 per share.
• Equitas Resources will segregate up to USD$1 million to be applied on closing exclusively to advance the Alta Floresta Gold projects. Subject to TSX Venture Exchange (the "Exchange") approval, US$300,000 of this will be advanced to Alta Floresta Gold following completion of Equitas' technical due diligence and licence review.
• Prior to closing, Alta Floresta Gold will use commercially reasonable efforts to become the legal and beneficial owner of 100% of the issued and outstanding equity interests of Alta Floresta Mineração. Alta Floresta Gold invested in Alta Floresta Mineração in June 2014, under an investment agreement (the "Underlying Investment Agreement") with ECI Exploration and Mining Inc. ("ECI"), and other ECI related parties, all of which are at arm's length to Alta Floresta Gold. Pursuant to the Underlying Investment Agreement, Alta Floresta Gold has the right to farm-in to Alta Floresta Mineração up to a 70% equity interest (currently approximately 60% held), and has taken operational control of the Alta Floresta Mineração business and board. Alta Floresta Gold has the right of first refusal on any sale of the remaining ECI interest, and has the ability through further un-matched investment, to dilute the ECI interest down to a level (10%) at which the ECI interest would convert to a 1.25% NSR.

Alta Floresta Gold will have net positive working capital at closing of the Transaction. Equitas will be assuming long term deferred license fees of approximately US$38,000 (as at September 30, 2015) payable by Alta Floresta Gold.

The proposed Transaction is subject to a number of terms and conditions, including but not limited to (i) the entering into by the parties of a definitive agreement with respect to the Transaction (such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature), (ii) the absence of any material adverse change in either party, (iii)  the completion of satisfactory due diligence investigations by both parties, (iv) the approval of the directors of each of the Company and Alta Floresta Gold, (v) the completion by Equitas of a private placement generating minimum proceeds of $2,500,000 and (vi) the approval of the Exchange.

The parties have agreed that during the period from signing the letter agreement through to execution of the definitive agreement, each of the parties will continue their respective operations in the ordinary course and will not solicit or accept alternative offers. Subject to satisfactory completion of due diligence, the parties expect to execute the definitive agreement by January 31, 2016 and have agreed to use their best efforts to complete the Transaction by February 19, 2016 or as soon as reasonably practicable thereafter.

The proposed Transaction will constitute a Reviewable Transaction pursuant to the policies of the Exchange.  The proposed Transaction is an arm's length transaction.  The Company will not be required to obtain shareholder approval of the Transaction.

No finder's fees are payable in connection with the Transaction.

Further details concerning the Transaction will be announced if and when a definitive agreement is reached.

Proposed Management of the Company

Subject to Exchange approval, on completion of the Transaction, it is proposed that the new management be constituted from the two entities, with the new board of directors and technical management team being as follows:

Kyler Hardy – Chairman and Director
Mr. Hardy is a seasoned and successful entrepreneur who has been involved in mineral exploration and the mining industry for over 15 years.  He is a founder and former CEO of a geosciences and logistics management business which specializes in the exploration and development of projects in remote areas. Mr. Hardy is experienced in project generation, exploration management, logistics, raising capital, corporate development and developing alliances and strategic partnerships.

Chris Harris – President, Chief Executive Officer and Director
Mr. Harris has over 29 years' experience in mining finance, energy, and commodities with multiple principal investments and director roles and is a Fellow Chartered Accountant (FCA). After qualifying at Ernst & Young in London, Mr. Harris moved to CIBC Wood Gundy in 1991, becoming Director Project Finance in the Energy & Utilities sector. After three years at Enron Europe where he co-ran the European Commodity Finance business, Mr. Harris moved to BHP Billiton to run a global mining merchant investment business for eight years. He then spent three years heading upstream investments for GMI Resources, a shipping hedge fund. Mr. Harris is co-founder of Alta Floresta Gold.

Alan Carter – Director
Dr. Carter has 30 years of experience in the minerals exploration industry. He spent seven years working for Rio Tinto Corp. in South America and the United Kingdom. Dr. Carter joined Billiton Plc in 1998, and in 2000 moved from Lima, Peru to Vancouver.  Following the merger of Billiton with BHP, he assumed the role of Manager, Business Development within the BHP Billiton Exploration Group.  He was the Chief Operating Officer of Peregrine Diamonds Ltd. from mid-2004 to late 2006. Dr. Carter is currently CEO and Director of Magellan Minerals Ltd., and a director of Peregrine Diamonds Ltd. He has a B.Sc. degree in Geology from the University of Nottingham, and a Ph.D. from the University of Southampton, U.K.

David Hodge – Director
Mr. Hodge, President and Director of Zimtu Capital Corp, has an extensive background in business that includes over 20 years of experience in the management and financing of publicly-traded companies. Mr. Hodge has been a director of mineral exploration companies since 1986, and some of his many strengths lie in leadership and imaginative direction. His success has been founded on a belief in team building, consultation and strong leadership, as well as a willingness to incorporate expert advice into a viable working enterprise.

Michael Bennett – Technical Advisor, Director and Officer of Alta Floresta Mineração
Mr. Bennett is a senior geologist with 30 years of experience in the minerals exploration industry (24 of these years in South America).  He is currently General Manager for the Brazil Manganese Corp in Rondonia Brazil, and was VP Exploration of ECI Exploration and Mining Inc. from 2009 to 2014. He has been responsible for 3 gold discoveries in South America: Bolivia - Puquio North (0.5Moz); Brazil - Coringa (1.1Moz), and Cajueiro.

Everett Makela – VP of Exploration
Mr. Makela brings over 30 years of exploration experience to the team. During a career with Inco and Vale, Everett held roles of increasing responsibility in settings ranging from grassroots evaluations to near-mine resource definition. He excels at target generation, design and implementation of exploration programs, and the creation of joint venture and alliance opportunities. Everett holds an Honours Bachelor of Science in Geology from Laurentian University, and is a member of APGO, PEGNL, PDAC and SEG. He retired from Vale as Principal Geologist, North America in 2012.

For further information please visit the Equitas Resources website at: www.equitasresources.com.

On Behalf of the Board of Directors,
EQUITAS RESOURCES CORP.

"Kyler Hardy"
Kyler Hardy
President
Tel: 604.681.1568
Email:  info@equitasresources.com

All information contained in this news release with respect to Equitas and Alta Floresta Gold was supplied by the parties respectively, for inclusion herein, and Equitas and its directors and officers have relied on Alta Floresta Gold for any information concerning Alta Floresta Gold.

Neither TSX Venture Exchange nor it 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 news release contains forward-looking statements relating to the timing and completion of the proposed Transaction, the future operations of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the proposed Transaction and the future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the failure to satisfy the conditions to completion of the Transaction set forth above and other risks detailed from time to time in the filings made by the Company with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. As a result, the Company cannot guarantee that the proposed Transaction will be completed on the terms and within the time disclosed herein or at all.  The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

SOURCE Equitas Resources Corp.