April 25, 2019 – Zug, Switzerland – Solway Investment Group GmbH (Solway) today announced that it has delivered a proposal to Euromax Resources Ltd. (TSX: EOX) (Euromax), which will address Euromax’s long-term financing and development requirements (the Solway Proposal) and provides feasible solution to the environmental and social issues the project has faced with.
Combining the Buchim Project and Ilovica-Shtuka Project under a single joint venture as contemplated by Solway Proposal is a unique value creation opportunity and may be the only viable near-term opportunity to get the Ilovica-Shtuka Project approved by the North Macedonian government and supported by the hosting communities and environmental groups. One of the main problems with the current Ilovica-Shtuka Project design is the close proximity to the Ilovica communities, resulting in concerns with the Ilovica-Shtuka Project’s potential environmental impact. By combining the Buchim and Ilovica-Shtuka Projects under the same joint venture, tailings from the Ilovica-Shtuka Project could be stored at Buchim Project’s tailings storage facilities and processing facilities could be built on the existing Buchim Project plant site, thereby reducing the environmental footprint of the Ilovica-Shtuka Project dramatically.
The Solway Proposal is a superior alternative to the private placement announced on March 22, 2019 (the Private Placement Transaction), which does not address the primary environmental concerns of local communities, offers no clear road map for getting the Ilovica-Shtuka Project permitted, and leaves its financial partners facing continued uncertainty regarding the prospects of their investments. The Private Placement Transaction is subject to the approval of the North Macedonian Commission for Competition, which Euromax’s news release indicates is expected no later than June 30, 2019. Solway believes it is highly unlikely that the approval will be obtained in this time frame. Solway has therefore decided to present Euromax with the Solway Proposal so that Euromax has a superior alternative to the Private Placement Transaction in the event that the approval of the North Macedonian Commission for Competition is not obtained within the time frame provided under the Private Placement Transaction.
Under the Solway Proposal Solway and Euromax would form a joint venture comprising Solway’s Buchim Project and Euromax’s Ilovica-Shtuka Project, with ownership of the joint venture being held 75% Solway and 25% Euromax. Solway would sole-fund a new definitive feasibility study for the Ilovica-Shtuka Project and other activities of the joint venture until the Ilovica-Shtuka Project receives an exploitation permit (subject to a 5 year outside date).
Solway believes that by optimizing some of the over-engineered solutions, reducing certain EPCM services, achieving significant savings by avoiding the need for a tailings storage facility (as elaborated on above), and sharing existing plant infrastructure with Solway’s Buchim Project (existing 4.5Mt pa processing plant, existing and construction ready infrastructure for another 10Mt pa concentrator, old open pits capable of being converted into tailing storage facilities with total capacity of over 200Mt and a seasoned management team of mining and engineering experts), the Ilovica-Shtuka mine can be built with US$300,000,000 to US$350,000,000 of investment instead of US$500,000,000.
Solway would also advance a US$2,000,000 convertible bridge loan to Euromax to enable Euromax to properly evaluate the Solway Proposal, convertible on closing of the Solway Proposal into 26,000,000 units of Euromax consisting of 1 common share and 1 common share purchase warrant (implies CAD$0.10 per unit versus CAD$0.0625 or approximately 60% premium to the unit pricing set out in the Private Placement Transaction) with each warrant being exercisable at CAD$0.20 (versus CAD$0.15 under the Private Placement Transaction) for a period of 2 years after closing of the Solway Proposal. Solway is ready to advance the bridge loan to Euromax without any additional conditions or due-diligence.
Solway looks forward to meeting with Euromax, its creditors and other stakeholders in the coming days to discuss how the Solway Proposal offers a better path forward for all interested parties.
Dan Bronstein, Chief Executive Officer of Solway, stated:
“The Solway Group has a track record of successfully and quickly launching mining projects in North Macedonia since 2005. We are convinced that by exploiting the unique synergies of the Buchim and Ilovica-Shtuka Projects will allow to launch a new mine swiftly, in strict accordance with international safety and sustainability standards and in full compliance with the expectations of the local communities and the Government of Macedonia. We look forward to partnering with the shareholders of Euromax in another Macedonian mining success story”.