Form F-7 Coro Mining Corp

Registration No. 333-         

As filed with the Securities and Exchange Commission on August 20, 2018

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

 

Form F-7

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

_________________________________

 

Coro Mining Corp.

(Exact name of Registrant as specified in its charter)

 

British Columbia	1000	None
(Province or other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number, if any)

 

Suite 1280-625 Howe Street

Vancouver, BC

Canada V6C 2T6

(604) 682 5546

(Address and telephone number of Registrant’s principal executive offices)

 

CT Corporation System

111 Eighth Avenue

New York, New York 10011

(212) 894-8940

 

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

___________________________________

 

Copies to:

 

Mark D. Wood Farzad F. Damania Katten Muchin Rosenman LLP 525 W. Monroe Street Chicago, IL 60661 (312) 902-5200

Armando Veliz Chief Financial Officer Coro Mining Corp. Suite 1280-625 Howe Street Vancouver, BC Canada V6C 2T6 (604) 682 5546

James Clare Bennett Jones LLP 3400 One First Canadian Place P.O. Box 130 Toronto, Ontario M5X 1A4, Canada (416) 777-6245

__________________________________

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effectiveness of this registration statement.

 __________________________________

 

This registration statement and any amendment thereto shall become effective upon filing with the Commission in accordance with Rule 467(a).

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. [ ]

__________________________________

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per common share (1) (2)	Proposed Maximum Aggregate  Offering Price (1) (2)	Amount of Registration Fee (2)
Common Shares	671,591,957	US $0.04	US $26,863,678.28	US $3,344.53

 

(1)

Based on the Canadian offering price of Cdn$0.05 converted using the daily exchange rate as published by the Bank of Canada on August 14, 2018 of US $1.00 = CDN $1.30897

 

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to General Instruction II.F to Form F-7.

 

 

If, as a result of stock splits, stock dividends or similar transactions, the number of securities purported to be registered on this registration statement changes, the provisions of Rule 416 under the Securities Act of 1933, as amended, shall apply to this registration statement.

 

 

 

 

 

 

 

 

 

PART I—INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS

 

 

Item 1. Home Jurisdiction Document

 

Notice of Rights Offering and Rights Offering Circular, attached hereto.

 

All references to CDN $ or $ in the Notice of Rights Offering or Rights Offering Circular refer to Canadian Dollars.

 

 

Item 2. Informational Legends

 

See the Rights Offering Circular, attached hereto.

 

 

Item 3. Incorporation of Certain Information by Reference

 

N/A

 

 

Item 4. List of Documents Filed with the Commission

 

See the Notice of Rights Offering and Rights Offering Circular, attached hereto.

 

 

 

CORO MINING CORP.

 

Notice to security holders – August 13, 2018

 

The following notice (the “Notice”) to holders of common shares of Coro Mining Corp. sets out information concerning Coro’s rights offering in Q&A format.

 

Who can participate in the Offering?

 

Coro Mining Corp. ("Coro" or the "Corporation") is issuing to the holders (the "Shareholders") of its outstanding common shares (the "Common Shares") of record at 5:00 p.m. (Toronto time) on August 22, 2018 (the "Record Date") an aggregate of 783,546,337 rights (each, a "Right") on the terms set forth herein (the "Offering").

 

References in this notice to “we”, “our”, “us” and similar terms mean the Corporation. References in this notice to “you”, “your” and similar terms mean the Shareholders.

 

Who is eligible to receive Rights?

 

The Offering is being made to Shareholders (the “Eligible Shareholders”) resident in: (a) the provinces and territories of Canada; and (b) the United States, excluding the states of Arizona, Arkansas, California, Minnesota, Ohio and Wisconsin (collectively the “Eligible Jurisdictions”).

 

You will be presumed to be resident in the place shown in our records as your registered address, unless the contrary is shown to our satisfaction.

 

This Notice is not to be construed as an offering of the Rights, nor are the Common Shares issuable upon exercise of the Rights, offered for sale in any jurisdiction outside the Eligible Jurisdictions or to Shareholders who are residents of any jurisdiction other than the Eligible Jurisdictions (“Ineligible Shareholders”). Instead, Ineligible Shareholders will be sent a letter advising them that their Rights will be held by Computershare Investor Services Inc. (the “Rights Agent”), who will hold such Rights as agent for the benefit of all such Ineligible Shareholders.

 

The Corporation will accept subscriptions from Ineligible Shareholders or transferees if such Ineligible Shareholders or transferees satisfy the Corporation, through the delivery of an opinion of counsel in such Ineligible Shareholders’ jurisdiction of good standing not less than 7 days before the Expiry Date (and if the 7th day prior to the Expiry Date is a Saturday, Sunday or statutory holiday in the Toronto, Ontario, then such date shall be deemed to be the next business day following the 7th day prior to the Expiry Date), that the receipt by such Ineligible Shareholder or transferee of the Rights in the Offering and subscription by such Ineligible Shareholder or transferee and issuance to it of the Common Shares on exercise of the Rights is lawful and : (a) will not violate the laws of their jurisdiction of residence or other applicable jurisdiction, and (b) will not impose any requirement on the Corporation to comply with legal requirements in their jurisdiction of residence or other applicable jurisdiction other than those being complied with for the offering of Rights in the Eligible Jurisdictions.

 

 

If an Ineligible Shareholder does not satisfy the Corporation as to their eligibility to participate in the Offering on or before 7th day prior to the Expiry Date, the Rights Agent will, prior to the Expiry Time attempt to sell such Rights on the Toronto Stock Exchange, on a best efforts basis. The proceeds received by the Rights Agent, if any, from the sale of the Rights delivered to it, net of any applicable costs, expenses and taxes will be divided among the Ineligible Shareholders who do not satisfy the Corporation as to their eligibility to participate in the Offering on or before the 7^th day prior to the Expiry Date on a pro rata basis according to the total number of Common Shares held by them.

 

How many Rights is Coro offering?

 

Coro is offering a total of 783,546,337 Rights to purchase an aggregate of up to 671,591,957 Common Shares.

 

How many Rights will you receive?

 

A Shareholder on the Record Date will receive one Right for each Common Share owned by the Shareholder.

 

What do Rights entitle you to receive?

 

Each 1.1667 Rights entitles a Eligible Shareholder to subscribe for one Common Share at a subscription price of $0.05 per Common Share (the "Basic Subscription Privilege") until 5:00 p.m. (Toronto time) (the “Expiry Time”) on September 20, 2018 (the "Expiry Date"). No fractional Common Shares will be issued. Where the exercise of Rights would appear to entitle a holder of Rights to receive fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares.

 

Any Shareholder who exercises all of their Rights under the Basic Subscription Privilege will also have the additional privilege of subscribing, pro rata, for additional Common Shares at the subscription price (the "Additional Subscription Privilege"). The Common Shares available under the Additional Subscription Privilege will be those Common Shares issuable under the Rights Offering that have not been subscribed and paid for under the Basic Subscription Privilege by the Expiry Time.

 

Any Eligible Shareholder who exercises its Rights must enclose payment in Canadian funds by certified cheque, bank draft or money order payable to the order of Computershare Investor Services Inc.

 

How will you receive your Rights?

 

Registered Eligible Shareholders: If you are a registered Eligible Shareholder of Common Shares, a certificate (a "Rights Certificate") representing the total number of Rights that you are entitled to as of the Record Date is enclosed with this notice.

 

 

Beneficial Eligible Shareholders: You are a beneficial holder of Common Shares if you hold your Common Shares through a securities broker or dealer, bank or trust company or other participant (a "Participant") in the book-based system administered by CDS Clearing and Depository Services Inc. ("CDS"). The total number of Rights to which all beneficial Eligible Shareholders as of the Record Date are entitled will be issued to and deposited with CDS following the Record Date. If you are a beneficial Shareholder, we expect you will receive a confirmation of the number of Rights issued to you from the applicable Participant in accordance with the practices and procedures of that Participant. CDS will be responsible for establishing and maintaining book-entry accounts for Participants holding Rights.

 

When and how can you exercise your Rights?

 

The period to exercise the Rights expires at the Expiry Time on the Expiry Date.

 

For Common Shares held through a Participant in the book-based system administered by CDS, a subscriber may subscribe for Common Shares by instructing the Participant holding the subscriber’s Rights to exercise all or a specified number of such Rights and forwarding the subscription price for each Common Shares subscribed for to such Participant in accordance with the terms of the Offering. A subscriber wishing to subscribe for additional Common Shares, if available, must exercise the Basic Subscription Privilege and forward its request to the Participant that holds the subscriber's Rights prior to the Expiry Time, along with payment for the number of additional Common Shares requested. Any excess funds will be returned by mail or credited to the subscriber's account with its Participant without interest or deduction. Subscriptions for Common Shares made through a Participant will be irrevocable and subscribers will be unable to withdraw their subscriptions for Common Shares once submitted. Participants may have an earlier deadline for receipt of instructions and payment than the Expiry Time.

 

Only registered Eligible Shareholders will be provided with Rights Certificates. For all non-registered, beneficial Eligible Shareholders of the Corporation who hold their Common Shares through a Participant in the book-based systems administered by CDS, a global certificate representing the total number of Rights to which all such Eligible Shareholders as at the Record Date are entitled will be issued in registered form to, and deposited with, CDS. The Corporation expects that each beneficial Eligible Shareholder will receive a confirmation of the number of Rights issued to it from its Participant in accordance with the practices and procedures of that Participant. CDS will be responsible for establishing and maintaining book-entry accounts for Participants holding Rights.

 

Eligible Shareholders who hold their Common Shares through a Participant must arrange for exercises, purchases or transfers of Rights through their Participant and should contact the Participant to instruct them accordingly. It is anticipated by the Corporation that each purchaser of Common Shares will receive a customer confirmation of issuance or purchase, as applicable, from the CDS Participant through which such Common Shares are issued or such Rights or Common Shares are purchased in accordance with the practices and policies of such Participant.

 

The Rights are not transferable in the United States and may be transferred only in transactions outside of the United States in accordance with Regulation S under the United States Securities Act of 1933, as amended, which will permit the resale of the Rights by persons through the facilities of the TSX as described in the right offering circular.

 

What are the next steps?

 

This document contains key information you should know about Coro. You can find more details in the Corporation's rights offering circular. To obtain a copy, visit the Corporation's profile on the SEDAR website (www.sedar.com) or visit www.coromining.com. You should read the rights offering circular, along with the Corporation's continuous disclosure record, to make an informed decision.

 

 

Inquiries relating to this Offering should be directed to:

 

·

Coro Mining Corp.: Nicholas Bias, Vice President Corporate Development & Investor Relations, at: [email protected]; or

 

·

Computershare Investor Services Inc. (Rights Agent): 1-800-564-6253 (North America); 1-514-982-7555 (International); [email protected].

 

Shareholders in the United States should also review the Corporation’s Registration Statement on Form F-7, which will be filed with the United States Securities and Exchange Commission, which can be found at www.sec.gov.

 

Coro Mining Corporation

 

Per: Luis Albano Tondo

President & Chief Executive Officer

 

August 13, 2018

 

 

PLEASE READ THIS MATERIAL CAREFULLY AS YOU ARE REQUIRED TO MAKE A DECISION PRIOR TO 5:00 P.M. (TORONTO TIME) ON SEPTEMBER 20, 2018.

 

This rights offering circular ("Circular") is prepared by management. No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this Circular. Any representation to the contrary is an offence.

 

This is the Circular we referred to in the August 13, 2018 rights offering notice (the "Notice"), which you should have already received. Your rights certificate and relevant forms were enclosed with the Notice. This Circular should be read in conjunction with the Notice and Coro Mining Corp.'s continuous disclosure prior to making an investment decision.

 

The offer of these securities is being made in the provinces and territories of Canada, in each state of the United States, except Arizona, Arkansas, California, Minnesota, Ohio, and Wisconsin (collectively the "Eligible Jurisdictions").

 

Rights Offering Circular

August 13, 2018

 

 

 

 

CORO MINING CORP.

OFFERING OF RIGHTS TO SUBSCRIBE FOR COMMON SHARES

 

References in this Circular to we, our, us and similar terms mean to Coro Mining Corp. ("Coro” or the "Corporation"). References in this Circular to you, your and similar terms mean to holders of the common shares in the capital of the Corporation (the "Common Shares"). Unless otherwise indicated, references herein to "$" or "dollars" are to Canadian dollars.

 

This rights offering is made by a Canadian issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare this rights offering circular in accordance with the disclosure requirements of Canada. Prospective investors should be aware that those requirements are different from those of the United States.

 

Prospective investors should be aware that the acquisition of the securities described herein may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein. Financial statements included or incorporated herein, of the Company have been prepared in accordance with international financial reporting standards, and are subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

 

The enforcement by investors of civil liabilities under U.S. federal securities laws may be affected adversely by the fact that the issuer is organized under the laws of British Columbia, Canada, that a majority of its directors and officers named in this Circular are residents of Canada, and that a substantial portion of the assets of the issuer and of said persons are located outside the United States.

 

 

THE SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”) OR ANY STATE SECURITIES REGULATOR NOR HAS THE SEC OR ANY STATE SECURITIES REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

 

SUMMARY OF THE RIGHTS OFFERING

 

 

Why are you reading this Circular?

 

Coro is issuing to the holders (the "Shareholders") of its outstanding Common Shares of record at the close of business (5:00 p.m. Toronto time) on August 22, 2018 (the "Record Date") an aggregate of 783,546,337 transferable rights (each, a "Right").

 

Rights will entitle the holder thereof to acquire, at the election of the holder and on the basis described herein, Common Shares upon the exercise of the Rights.

 

This Circular describes details of the Offering (as defined below) and is referred to in the Notice that you have received regarding the Offering.

 

Inquiries relating to this Offering should be directed to:

 

·

Coro Mining Corp.: Nicholas Bias, Vice President Corporate Development & Investor Relations, at: [email protected]; or

 

·

Computershare Investor Services Inc. (Rights Agent): 1-800-564-6253 (North America); 1-514-982-7555 (International); [email protected].

 

What is being offered?

 

Each Shareholder on the Record Date, being August 22, 2018, who is resident in an Eligible Jurisdiction will receive one Right for every Common Share held on the Record Date. An aggregate of 783,546,337 Rights are being issued by the Corporation to purchase an aggregate of up to 671,591,957 Common Shares (the "Offering").

 

Rights issued to registered Shareholders will be evidenced by transferable rights certificates in registered form (each, a "Rights Certificate"). Rights issued to beneficial Shareholders will be evidenced by a confirmation from such Shareholders’ respective CDS Participant (as defined herein) in accordance with the practices and procedures of such CDS Participant in the book-based system administered by CDS Clearing and Depository Services Inc. (“CDS”).

 

Who is eligible to receive and exercise rights?

 

The Offering is only being made to Shareholders (the "Eligible Shareholders") resident in the Eligible Jurisdictions. The Rights and Common Shares issuable upon exercise of the Rights are not being offered to persons who are, or appear to be, or the Corporation has reason to believe are, resident in any jurisdictions (the "Non-Participating Jurisdictions") other than the Eligible Jurisdictions ("Ineligible Shareholders"). Rights may not be exercised by or on behalf of an Ineligible Shareholder. CDS Participants may not issue Rights to Ineligible Shareholders.

 

Shareholders will be presumed to be resident in the place of their registered address, unless the contrary is shown to the satisfaction of the Corporation. A registered Ineligible Shareholder whose address of record is outside the Eligible Jurisdictions but who holds Common Shares on behalf of a holder who is eligible to participate in the Offering must notify the Corporation, in writing, on or before the 7th day prior to the Expiry Date if such beneficial holder wishes to participate in the Offering.

 

 

This circular covers the offer and sale of the Common Shares issuable upon exercise of the Rights within the United States under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). Notwithstanding registration under the U.S. Securities Act, the securities or blue sky laws of certain states (including Arizona, Arkansas, California, Minnesota, Ohio, and Wisconsin) may not permit the Corporation to offer Rights and/or Common Shares in such states, or to certain persons in those states, or may otherwise limit the Corporation's ability to do so, and as a result the Corporation will treat those states as Non-Participating Jurisdictions under the Offering.

 

What do Rights entitle you to receive?

 

Each 1.1667 Rights will entitle the holder thereof to acquire, at the election of the holder and on the basis described below, one Common Share at the Subscription Price upon the exercise of the Right until 5:00 p.m. (Toronto time) on September 20, 2018 (the "Basic Subscription Privilege"). No fractional Common Shares will be issued. Where the exercise of Rights would appear to entitle a holder of Rights to receive fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares.

 

In the event that a Eligible Shareholder exercises the Basic Subscription Privilege in respect of all of the Rights issued to such Eligible Shareholder, the Eligible Shareholder may exercise an additional subscription privilege (the "Additional Subscription Privilege") to subscribe pro rata for additional Common Shares not otherwise purchased under the Basic Subscription Privilege ("Additional Shares") if available, at the Subscription Price. The Common Shares available under the Additional Subscription Privilege will be those securities issuable pursuant to the Offering that have not been subscribed and paid for under the Basic Subscription Privilege before the Expiry Time (as defined below). (See "What is the additional subscription privilege and how can you exercise this privilege?").

 

What is the subscription price?

 

The subscription price is $0.05 per Common Share (the "Subscription Price").

 

A holder of Rights must pay the Subscription Price to the Rights Agent (as defined herein) or to their CDS Participant, in accordance with the terms and conditions set forth herein, in order to exercise the Rights and purchase Common Shares.

 

On August 3, 2018, being the last trading day prior to the announcement of the Offering, the closing price of the Common Shares on the Toronto Stock Exchange ("TSX") was $0.095.

 

When does the Offering expire?

 

The Offering will expire at 5:00 p.m. (Toronto time) (the "Expiry Time") on September 20, 2018 (the "Expiry Date").

 

To subscribe for Common Shares, a properly completed Rights Certificate, election and payment for the Common Shares must be delivered to the offices of Computershare Investor Services Inc. (the "Rights Agent") at 100 University Ave., 8th floor, Toronto, ON M5J 2Y1 Attn.: Corporate Actions (the "Subscription Office"), before the Expiry Time on the Expiry Date.

 

The Rights Agent may be contacted at 1-800-564-6253 (North America); 1-514-982-7555 (International); or [email protected].

 

What are the significant attributes of the Rights issued under the Offering and the Common Shares to be issued upon the exercise of the Rights?

 

Each 1.1667 Rights will entitle the holder thereof to purchase one Common Share upon payment of the Subscription Price per Common Share acquired. Rights not exercised and paid for by the Expiry Time will be void and of no value.

 

 

A Right does not entitle the holder thereof to any rights whatsoever as a security holder of the Corporation other than the right to subscribe for and purchase Common Shares on the terms and conditions of the Rights described herein.

 

The Rights are transferable securities within Canada that entitle their holders to subscribe for Common Shares on the terms described in this circular.

 

The Rights may not be transferred to any person within the United States. Holders of Common Shares in the United States who receive Rights may transfer or resell them only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which generally will permit the resale of the Rights through the facilities of the Toronto Stock Exchange (the "TSX") provided that the offer is not made to a person in the United States, neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and no “directed selling efforts”, as that term is defined in Regulation S under the US Securities Act, are conducted in the United States in connection with the resale. Certain additional conditions are applicable to the Corporation’s “affiliates”, as that term is defined under the U.S. Securities Act. In order to enforce this resale restriction, sellers of Rights in the United States will be required to execute a declaration certifying that such sale is being made outside the United States in accordance with Regulation S under the U.S. Securities Act.

 

Common Shares

 

The Corporation is authorized to issue an unlimited number of Common Shares and, as of the date of this Circular, the Corporation has 783,546,337 Common Shares issued and outstanding.

 

Each Common Share entitles the holder thereof to one vote. All of the Common Shares rank equally as to dividends, voting powers and participation in assets. There are no pre-emptive or conversion rights and no provisions for redemption, purchase for cancellation, surrender or sinking or purchase funds applicable to the Common Shares.

 

What are the minimum and maximum numbers or amount of Common Shares that may be issued under the Offering?

 

The maximum amount of Common Shares which may be issued in connection with the Offering is 671,591,957 for gross proceeds of $33,579,597.85. Pursuant to the guarantee provided by Standby Commitment (as defined herein), the Corporation anticipates that it will issue the maximum number of Common Shares in connection with the Offering. See also “Standby Commitment”.

 

There is no minimum amount of Common Shares which may be issued in connection with the Offering.

 

Where will the Rights and Common Shares issuable upon exercise of the Rights be listed for trading?

 

The currently outstanding Common Shares are listed for trading on the TSX under the symbol "COP".

 

The Rights will trade on the TSX under the trading symbol "COP.RT" until 12:00 p.m. (Toronto Time) on the Expiry Date.

 

FORWARD LOOKING INFORMATION

 

This Circular contains "forward-looking information" and “forward-looking statements” (within the meaning of applicable Canadian securities legislation and otherwise).

 

In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" , or variations or the negative of such words and phrases, or statements that certain actions, events or results "may" " could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. Forward-looking statements in this Circular include, without limitation, statements with respect to: completion of the Offering; the estimated costs of the Offering; the net proceeds to be available upon completion of the Offering; our working capital requirements over the next twelve months; and the use of proceeds from the Offering.

 

 

Forward-looking statements in this Circular are subject to a number of risks and uncertainties that may cause the Corporation's actual results to differ materially from those discussed in the forward-looking statements and, even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Corporation. Risk factors that could cause actual results or events to differ materially from those expressed in the forward-looking statements include, among other things: risks related to the Offering and; uncertainties relating to the cost of completing the Offering; delays in obtaining or failure to obtain required approvals to complete the Offering and the Standby Commitment (as defined herein); the ability of the Tembo Capital (as defined herein) to complete the Standby Commitment; and risks that could cause the Corporation to allocate the proceeds of the Offering in a manner other than as disclosed in this Circular, including all of the risks related to the Corporation's business, financial condition, results of operations and cash flows.

 

Please refer to our most recently filed Annual Information Form and management's discussion and analysis for the year ended December 31, 2017 and the six months ended June 30, 2018 in respect of material assumptions and risks related to our business financial condition, results of operations and cash flows.

 

The material factors and assumptions used to develop the forward-looking statements in this Circular include: the assumption that the Offering will be completed; management’s expectations regarding the cost of completing the Offering; that no unforeseen events will affect the Corporation’s existing working capital; that the Corporation’s working capital requirements over the next twelve months will be substantially as projected; the Corporation will obtain all necessary approvals and satisfy all required conditions for the completion of the Offering and the Standby Commitment and that current plans and expected metal prices and exchange rates will proceed in accordance with or remain within range of management's expectations.

 

Any forward-looking statements in this Circular are stated as of the date of this document and the Corporation does not intend, and does not assume any obligation, to update such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events unless required to do so by

applicable laws.

 

Readers are cautioned that the foregoing list is not exhaustive.

 

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this Circular are made as of the date of this Circular and the Corporation does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

 

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESERVE AND RESOURCE ESTIMATES

 

This circular has been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the SEC applicable to registration statements and reports filed by United States companies pursuant to the U.S. Securities Act or the United States Securities Exchange Act of 1934, as amended. As such information contained or incorporated by reference in this circular concerning descriptions of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

 

 

USE OF AVAILABLE FUNDS

 

What will Coro's available funds be upon closing of the Offering?

 

The gross proceeds to be received under this Offering is $33,579,597.85, based on a maximum offering of 671,591,957 Common Shares and the guarantee provided by the Standby Commitment Agreement (as defined herein).

 

		Assuming 100% of Offering (through exercise of Rights or Standby Commitment)
A	Amount to be raised by the Offering	$33,579,597
B	Selling commissions and fees	$Nil
C	Estimated offering costs (e.g. legal, accounting audit)	$1,315,000
D	Available funds: D=A-(B+C)	$32,264,597
E	Additional sources of funding	$13,667,850(1)
F	Working capital deficiency	$Nil
G	Total: G = (D+E) – F	$45,932,447

 

⁽¹⁾ A portion of the additional available funding was deployed prior to the record date to complete the acquisition of the Sierra Miranda claims. See “How will Coro use the available funds?”.

 

How will Coro use the available funds?

 

The following table below provides a detailed breakdown of how the Corporation will use its available funds, including those received pursuant to the Offering:

 

Description of intended use of available funds listed in order or priority.	Assuming 100% of Offering (through exercise of Rights or Standby Commitment)
Repayment of loans from Greenstone (as defined herein)	$11,585,130(1)
Exploration work at Marimaca Project	$10,920,000
Development work at Marimaca Project	$1,450,000
Acquisition of Sierra Miranda claims	$7,680,030(2)
Potential land acquisitions	$1,300,000
Transaction costs and expenses	$1,300,000
Working capital, general and administrative expenses	$11,697,287
Total:	$45,932,447

 

⁽¹⁾ Canadian dollar equivalent of US$8.9 million loans payable to Greenstone, including accrued but unpaid interest and related fees, on the basis of the daily exchange rate published by the Bank of Canada on July 31, 2018 of US$1.00 = $1.3017. The Corporation has agreed with Greenstone to set-off the principal amount of such loans payable against a portion of the aggregate exercise price of Rights to be exercised by Greenstone under its Basic Subscription Privilege. See “Insider Participation”.

 

⁽²⁾ Canadian dollar equivalent of the US$5.9 million purchase price for Sierra Miranda claims, pursuant to a mineral concession purchase agreement «promesa de compraventa de concesiones mineras» dated January 19, 2018 between the Corporation’s wholly-owned subsidiary Compania Minera Ceilo Azul Lta. And Capax S.A., on the basis of the daily exchange rate published by the Bank of Canada on July 31, 208 of US$1.00 = $1.3017. The acquisition of the Sierra Miranda claims was completed prior to the record date.

 

The Corporation intends to use of a significant portion of the proceeds from the Offering on the Marimaca Project. These expenditures include exploration and development work, as well as potential land acquisitions.

 

 

The allocation of the net proceeds of the Offering may be adjusted within the stated categories of expenditures above depending on, among other things, timing of availability of equipment and services, and general political and market conditions. Further, while the Corporation intends to spend the available funds as set forth above, there may be circumstances where, for sound business reasons, a reallocation of the available funds may be necessary. In any event, the available funds will be used by the Corporation in furtherance of its business. See "Forward-Looking Information" above.

 

How long will the available funds last?

 

Based on current plans, work programs and budgeted expenditures, management of the Corporation anticipates that the Corporation will have sufficient funds to maintain operations for at least 18 months. See “Risk Factors” in the Corporation’s annual information form for the year ended December 31, 2017, "Risks and Critical Accounting Estimates & Policies" in the Corporation’s management's discussion and analysis for the audited consolidated annual financial statements for the year ended December 31, 2017 and "Risks and Critical Accounting Estimates & Policies" in the Corporation’s management's discussion and analysis for the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2018. See also "Forward-Looking Information" above.

 

INSIDER PARTICIPATION

 

Will insiders be participating?

 

Colin Kinley, Chairman of the Corporation, has indicated an intention to exercise all Rights issued to him. Mr. Kinley owns 100,000 Common Shares and therefore will receive 100,000 Rights entitling him to acquire 85,711 Common Shares under the Basic Subscription Privilege at the Subscription Price.

 

Gordon Fretwell, a director of the Corporation, has indicated an intention to exercise all Rights issued to him. Mr. Fretwell owns 730,488 Common Shares and therefore will receive 730,488 Rights entitling him to acquire 626,114 Common Shares under the Basic Subscription Privilege at the Subscription Price.

 

Sergio Rivera, Vice President of Exploration of the Corporation, has indicated an intention to exercise all Rights issued to him. Mr. Rivera owns 2,100,000 Common Shares and therefore will receive 2,100,000 Rights entitling him to acquire 1,799,948 Common Shares under the Basic Subscription Privilege at the Subscription Price.

 

Greenstone Resources L.P. (“Greenstone”), an insider of the Corporation by virtue of beneficial control, directly or indirectly, of in excess of 10% of the issued and outstanding Common Shares of the Corporation, has indicated an intention to exercise all Rights issued to it. Greenstone, together with entities affiliated with Greenstone (the “Greenstone Group”) own 435,969,014 Common Shares and therefore will receive 435,969,014 Rights entitling Greenstone to acquire 373,677,049 Common Shares under the Basic Subscription Privilege at the Subscription Price. Separately, the Corporation is indebted to Greenstone pursuant to a series of loans. As described under the heading “Use of Available Funds”, the Corporation intends to use approximately $11,585,130 (being the Canadian dollar equivalent of US$8,900,000 on the basis of the daily exchange rate published by the Bank of Canada on July 31, 2018 of US$1.00 = $1.3017) to repay certain of these loans in the principal amount (including accrued but unpaid interest and related fees) of approximately US$8,900,000. The Corporation and Greenstone have agreed to set off the Canadian dollar equivalent of the principal amount of the loans payable to Greenstone against a portion of the exercise price to be paid by the Greenstone Group to exercise their Rights under the Basic Subscription Privilege.

 

Ndovu Capital XIV BV (“Tembo Capital”), an insider of the Corporation by virtue of beneficial control, directly or indirectly, of in excess of 10% of the issued and outstanding Common Shares of the Corporation, has indicated an intention to exercise all Rights issued to it. Tembo Capital has indicated that it will participate in the Basic Subscription Privilege and the Additional Subscription Privilege. Tembo Capital owns 109,733,334 Common Shares and therefore will receive 109,733,334 Rights entitling Tembo Capital to acquire 94,054,456 Common Shares under the Basic Subscription Privilege at the Subscription Price. Additionally, as described under the heading “Standby Commitment”, Tembo Capital has agreed to provide the Standby Commitment. As a result of the Standby Commitment, the number of Common Shares that will ultimately be acquired by Tembo Capital is contingent on the level of participation of other Eligible Shareholders in the Offering and cannot be determined at this time.

 

 

Alan Stephens, a director of the Corporation, and Marcelo Cortes, Vice President of Project Development of the Corporation, have indicated an intention not to exercise the Rights issued to them.

 

Other than as described above, each of the directors, officers and other insiders of the Corporation either do not own any Common Shares of the Corporation (and will therefore receive no Rights) or else have not indicated an intention to the Corporation with respect to their exercise of the Basic Subscription Privilege or Additional Subscription Privilege.

 

The foregoing reflects the intentions of such insiders (as defined in applicable Canadian securities legislation) as of the date hereof to the extent such intentions are reasonably known to the Corporation; however such insiders may alter their intentions before the Expiry Time on the Expiry Date. No assurance can be given that the respective insiders will exercise or not exercise their Rights to acquire Common Shares.

 

Who are the holders of 10% or more of the Common Shares before and after the Offering?

 

To the knowledge of the directors and executive officers of Coro, as at the date hereof, no person or company beneficially owns, directly or indirectly, or controls or directs more than 10% of any class of voting securities of the Corporation, other than as set out below.

 

Shareholder	Holdings of Common Shares before the Offering	Percentage before the Offering	Holdings of Common Shares after the Offering(1)	Percentage after the Offering(1)
Greenstone Resources L.P. and its affiliate, Greenstone Co-Investment No. 1 (Coro) L.P.	435,969,014 Common Shares	55.64%	809,646,063 Common Shares	55.64%
Ndovu Capital XIV BV	109,733,334 Common Shares	14.00%	405,136,468 Common Shares	27.84%

 

⁽¹⁾ Assumes: (i) the maximum number of Common Shares are issued under the Offering, (ii) no person acquires Common Shares under the Offering other than Greenstone, Tembo Capital and the other insiders of the Corporation who have indicated an intention to exercise their Basic Subscription Privilege, and (iii) that Tembo Capital will, in such circumstance, fulfill its obligations under the Standby Commitment Agreement (as defined herein) by purchasing all Common Shares available under the Offering (other than those issued to Greenstone and the identified insiders pursuant to their respective Basic Subscription Privilege).

 

DILUTION

 

If you do not exercise your Rights, by how much will your security holdings be diluted?

 

If you fail to exercise your Rights and all other Eligible Shareholders fully exercise their Basic Subscription Privilege for Common Shares, subject to the various conditions described in this Circular, 671,591,957 Common Shares may be issued pursuant to this Offering and your percentage ownership of the Common Shares will thereby be diluted by approximately 85.71% (since 671,591,957 Common Shares is 85.71% of the current number of issued and outstanding Common Shares of 783,546,337).

 

If you wish to retain your current percentage ownership of the Common Shares, you should exercise your Rights and pay the Subscription Price for the Common Shares to which you are entitled under the Basic Subscription Privilege.

 

 

STANDBY COMMITMENT

 

Who is the stand-by guarantor and what are the fees?

 

Pursuant to the standby purchase agreement dated August 3, 2018 between the Corporation and Tembo Capital (the “Standby Commitment Agreement”), Tembo Capital has agreed, subject to certain terms and conditions, to exercise its Basic Subscription Privilege and Additional Subscription Privilege and, in addition thereto, acquire any additional Rights available as a result of any unexercised Rights under the Offering, such that the Corporation will, subject to the terms of the Standby Commitment Agreement be guaranteed to issue 671,591,957 Common Shares in connection with the Offering for aggregate gross proceeds of $33,579,597.85 (the “Standby Commitment”).

 

Tembo Capital may terminate the Standby Commitment Agreement in the following circumstances:

 

(a) any of the conditions in favour of Tembo Capital as set forth in the Standby Commitment Agreement are not satisfied or waived by Tembo Capital;

 

(b) the Corporation fails to complete the Offering; or

 

(c) any order cease trading the securities of Coro is made by a competent regulatory authority and that order is still in effect.

 

Tembo Capital currently owns approximately 14.00% of the outstanding Common Shares. Tembo Capital is a related party of the Corporation in accordance with generally accepted accounting principles applicable to Coro (being International Financial Reporting Standards). No fees are payable by the Corporation to Tembo Capital pursuant to the Standby Commitment Agreement.

 

A copy of the Standby Commitment Agreement is available for review under the Corporation's SEDAR profile at www.sedar.com.

 

See "Insider Participation – Will insiders be participating?" for further information on Tembo Capital.

 

Have we confirmed that the stand-by guarantor has the financial ability to carry out its stand-by commitment?

 

The Corporation has confirmed that Tembo Capital has the financial ability to carry out its obligations under the Standby Commitment Agreement.

 

What are the security holdings of the stand-by guarantor before and after the rights offering?

 

See "Insider Participation – Who are the holders of 10% or more of the Common Shares before and after the Offering?”.

 

MANAGING DEALER, SOLICITING DEALER AND UNDERWRITING CONFLICTS

 

Who is the soliciting dealer and what are its fees?

 

The Corporation has not retained any party to solicit subscriptions for Common Shares pursuant to the Offering.

 

HOW TO EXERCISE THE RIGHTS

 

How does a security holder that is a registered holder participate in the Offering?

 

The Notice for the Offering has been sent to Eligible Shareholders in the Eligible Jurisdictions. For Common Shares held in registered form, a Rights Certificate evidencing the number of Rights to which an Eligible Shareholder is entitled has been included with the Notice. In order to exercise the Rights represented by the Rights Certificate, a holder of Rights must complete and deliver the Rights Certificate in the manner and upon the terms set out in the Rights Certificate.

 

 

Each Rights Certificate indicates the number of Rights to which the Rights Certificate holder is entitled. By completing the appropriate form appearing on the front of the Rights Certificate in accordance with the instructions outlined on the Rights Certificate, a Rights Certificate holder may: (i) subscribe for Common Shares (Form 1); (ii) subscribe for Additional Shares (Form 2); (iii) sell or transfer Rights (Form 3); or (iv) divide or combine the Rights Certificate (Form 4).

 

Rights Certificates will expire and be of no value unless they are returned with a properly completed Form 1, 2, 3 or 4, as the case may be, and received with payment for the Common Shares subscribed for, at the office of the Rights Agent located at the Subscription Office, Attention: Corporate Actions, before the Expiry Time.

 

The Subscription Price may be paid by certified cheque, bank draft or money order made payable to "Computershare Investor Services Inc." All payments, together with Form 1 and Form 2 duly completed on the Rights Certificate, must be received by the Rights Agent at or before the Expiry time.

 

The Rights Agent may be contacted at 1-800-564-6253 (North America); 1-514-982-7555 (International); or [email protected].

 

All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any subscriptions will be determined by the Corporation in its sole discretion, and any determination by the Corporation will be final and binding. All subscriptions are irrevocable. The Corporation reserves the absolute right to reject any subscription if it is not in proper form or if the acceptance thereof or the issuance of Common Shares pursuant thereto could be deemed unlawful. The Corporation also reserves the right to waive any defect in respect of any particular subscription. The Corporation is not nor will it be under any duty to give any notice of any defect or irregularity in any subscription, nor will it be liable for the failure to give any such notice.

 

How does a security holder that is not a registered holder participate in the Offering?

 

For Common Shares held through a securities broker or dealer, bank or trust company or other participant (a "CDS Participant") in the book-based system administered by CDS, an Eligible Shareholder may subscribe for Common Shares by instructing the CDS Participant holding the Eligible Shareholder's Rights to elect in accordance with the Eligible Shareholder's instructions and exercise all or a specified number of such Rights and forwarding the Subscription Price for each Common Share subscribed for to such CDS Participant in accordance with the terms of the Offering. An Eligible Shareholder wishing to subscribe for Additional Shares pursuant to the Additional Subscription Privilege must forward its request to the CDS Participant that holds the subscriber's Rights prior to the Expiry Time, along with payment for the number of Additional Shares requested. Any excess funds will be returned by mail or credited to the Eligible Shareholder's account with its CDS Participant without interest or deduction. Subscriptions for Common Shares made through a CDS Participant will be irrevocable and Eligible Shareholders will be unable to withdraw their subscriptions for Common Shares once submitted. CDS Participants may have an earlier deadline for receipt of instructions and payment than the Expiry Time.

 

Only registered Eligible Shareholders will be provided with Rights Certificates. For all non-registered, beneficial Eligible Shareholders who hold their Common Shares through a CDS Participant in the book-based systems administered by CDS, a global certificate representing the total number of Rights to which all such Eligible Shareholders as at the Record Date are entitled will be issued in registered form to, and deposited with, CDS. The Corporation expects that each beneficial Eligible Shareholder will receive a confirmation of the number of Rights issued to it from its CDS Participant in accordance with the practices and procedures of that CDS Participant. CDS will be responsible for establishing and maintaining book-entry accounts for CDS Participants holding Rights.

 

 

Eligible Shareholders who hold their Common Shares through a CDS Participant must arrange for exercises, purchases or transfers of Rights through their CDS Participant and should contact the CDS Participant to instruct them accordingly. It is anticipated by the Corporation that each purchaser of Common Shares will receive a customer confirmation of issuance or purchase, as applicable, from the CDS Participant through which such Rights are issued or such Rights or Common Shares are purchased in accordance with the practices and policies of such CDS Participant.

 

Beneficial Eligible Shareholders in the Eligible Jurisdictions may also accept the Offering in the Eligible Jurisdictions by following the procedures for book-based transfer, provided that a confirmation of the book-based transfer of their Rights through CDS' on-line tendering system into the Corporation's account at CDS, is received by the Corporation prior to the Expiry Time. The Corporation has established an account at CDS for the purpose of the Offering. Any financial institution that is a participant in CDS may cause CDS to make a book-based transfer of a holder's Rights into the Corporation's account in accordance with CDS procedures for such transfer. Delivery of Rights using the CDS book-based transfer system will constitute a valid tender under the Offering.

 

Beneficial Eligible Shareholders in the Eligible Jurisdictions, through their respective CDS Participants, who utilize the CDS on-line system to accept the Offering through a book-based transfer of their Rights into the Corporation's account with CDS are deemed to have completed a Rights Certificate and therefore such instructions received by the Corporation are considered as a valid tender in accordance with the terms of the Offering.

 

The Corporation will not have any liability for: (i) the records maintained by CDS or CDS Participants relating to the Rights or the book-entry accounts maintained by them; (ii) maintaining, supervising or reviewing any records relating to such Rights; or (iii) any advice or representations made or given by CDS or CDS Participants with respect to the rules and regulations of CDS or any action to be taken by CDS or their CDS Participants.

 

Who is eligible to receive Rights?

 

The Offering is only being made to Shareholders resident in the Eligible Jurisdictions. The Rights and Common Shares issuable upon exercise of the Rights are not being offered to Ineligible Shareholder.. Rights may not be exercised by or on behalf of an Ineligible Shareholder. CDS Participants may not issue Rights to Ineligible Shareholders.

 

Shareholders will be presumed to be resident in the place of their registered address, unless the contrary is shown to the satisfaction of the Corporation. A registered Ineligible Shareholder whose address of record is outside the Eligible Jurisdictions but who holds Common Shares on behalf of a holder who is eligible to participate in the Offering must notify the Corporation, in writing, on or before the 7th day prior to the Expiry Date if such beneficial holder wishes to participate in the Offering.

 

Rights delivered to brokers, dealers or other intermediaries may not be delivered by those intermediaries to beneficial Eligible Shareholders who are resident in Non-Participating Jurisdictions. Intermediaries receiving Rights that would otherwise be deliverable to Ineligible Shareholders may attempt to sell those rights for the accounts of such Ineligible Shareholders and should deliver the proceeds of sale to such persons.

 

The Rights and the Common Shares issuable on the exercise of the Rights have not been qualified for distribution in any Non-Participating Jurisdiction and, accordingly, may only be offered, sold, acquired, exercised or transferred in transactions not prohibited by applicable laws in Non-Participating Jurisdictions.
The Corporation will accept subscriptions from Ineligible Shareholders or transferees if such Ineligible Shareholders or transferees satisfy the Corporation, through the delivery of an opinion of counsel in such Ineligible Shareholders’ jurisdiction of good standing not less than 7 days before the Expiry Date (and if the 7th day prior to the Expiry Date is a Saturday, Sunday or statutory holiday in the Toronto, Ontario, then such date shall be deemed to be the next business day following the 14th day prior to the Expiry Date), that the receipt by such Ineligible Shareholder or transferee of the Rights in the Offering and subscription by such Ineligible Shareholder or transferee and issuance to it of the Common Shares on exercise of the Rights is lawful and : (a) will not violate the laws of their jurisdiction of residence or other applicable jurisdiction, and (b) will not impose any requirement on the Corporation to comply with legal requirements in their jurisdiction of residence or other applicable jurisdiction other than those being complied with for the offering of Rights in the Qualified Jurisdictions.

 

 

If an Ineligible Shareholder does not satisfy the Corporation as to their eligibility to participate in the Offering on or before 7th day prior to the Expiry Date, the Rights Agent will, prior to the Expiry Time attempt to sell such Rights on the TSX, on a best efforts basis. The proceeds received by the Rights Agent, if any, from the sale of the Rights delivered to it, net of any applicable costs, expenses and taxes will be divided among the Ineligible Shareholders who do not satisfy the Corporation as to their eligibility to participate in the Offering on or before the 7^th day prior to the Expiry Date on a pro rata basis according to the total number of Common Shares held by them.

 

U.S. Shareholders

 

The Corporation will file with the SEC in the United States a Registration Statement on Form F-7 under the U.S. Securities Act (the “Registration Statement”) so that the Common Shares issuable upon the exercise of the Rights will not be subject to transfer restrictions. However, the Rights may be transferred only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which will permit the resale of the Rights by persons through the facilities of the TSX, provided that the offer is not made to a person in the United States, neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and no "directed selling efforts", as that term is defined in Regulation S under the U.S. Securities Act, are conducted in the United States in connection with the resale. Certain additional conditions are applicable to the Corporation's "affiliates", as that term is defined under the U.S. Securities Act. In order to enforce this resale restriction, holders thereof will be required to execute a declaration certifying that such sale is being made outside the United States in accordance with Regulation S under the U.S. Securities Act, which is included as part of Form 3.

 

What is the additional subscription privilege and how can you exercise this privilege?

 

A holder of a Rights Certificate who is not an Ineligible Shareholder and who has exercised all the Rights evidenced by such Rights Certificate (i.e. exercised their Basic Subscription Privilege in full) may subscribe for Additional Shares, if available, at the Subscription Price. Additional Shares will be allocated from those Rights, if any, available as a result of Rights that are unexercised by the Expiry Time. A holder who exercises the Additional Subscription Privilege will receive the lesser of (i) the number of Common Shares that holder subscribes for under the Additional Subscription Privilege, and (ii) the number of Common Shares that is equal to the aggregate number of Common Shares available through unexercised Rights multiplied by the quotient of the number of Rights previously exercised by such holder under the Offering divided by the aggregate number of Rights previously exercised under the Offering by holders of Rights that have subscribed for Common Shares under the Additional Subscription Privilege.

 

A Rights holder may subscribe for Common Shares by (i) completing Form 2 of the Rights Certificate, and (ii) delivering the Rights Certificate, together with payment for those Additional Shares, to the Rights Agent at or before the Expiry Time. If payment for all Additional Shares subscribed for pursuant to the Additional Subscription Privilege does not accompany the subscription, the over-subscription will be invalid. Subscriptions for Additional Shares immediately follow the Basic Subscription Privilege and shareholders that validly subscribe for Additional Shares will receive such Additional Shares concurrently with the Common Shares subscribed for under the Basic Subscription Privilege.

 

If the Offering is fully subscribed, then the funds included for any over-subscriptions will be returned by the Corporation to the relevant Shareholders. If the Offering is not fully subscribed, certificates representing Common Shares due to Shareholders as a result of over-subscriptions will be delivered by the Corporation together with the certificates representing Common Shares due to those Shareholders pursuant to their subscriptions in accordance with the Basic Subscription Privilege. In addition, the Corporation will return to any over-subscribing Shareholder within 30 calendar days of the Expiry Date any excess funds paid in respect of an over-subscription for Common Shares where the number of additional Common Shares available to that Shareholder is less than the number of Additional Shares subscribed for. No interest will be payable by the Corporation in respect of any excess funds returned to Shareholders.

 

 

How does a Rights holder sell or transfer Rights?

 

Registered Holders of Rights

 

The rights will trade on the TSX under the trading symbol "COP.RT" until 12:00 p.m. (Toronto Time) on the Expiry Date. Holders of Rights Certificates not wishing to exercise their rights may sell or transfer them directly or through their securities broker or dealer at the shareholder’s expense, subject to any applicable resale restrictions. Holders of Rights Certificates may elect to exercise only a part of their rights and dispose of the remainder, or dispose of all of their Rights. Any commission or other fee payable in connection with the exercise or any trade of rights is the responsibility of the holder of such rights. Depending on the number of Rights a holder may wish to sell, the commission payable in connection with a sale of Rights could exceed the proceeds received from such sale.

 

If you wish to transfer your Rights, complete Form 3 (the "Transfer Form") on the Rights Certificate, have the signature guaranteed by an "eligible institution" to the satisfaction of the Rights Agent and deliver the Rights Certificate to the transferee. For this purpose, eligible institution means a Canadian Schedule 1 chartered bank, a major trust company in Canada, a member of the Securities Transfer Agents Medallion Program, or a member of the Stock Exchange Medallion Program. Members of these programs are usually members of a recognized stock exchange in Canada or members of the Investment Industry Regulatory Organization of Canada.

 

It is not necessary for a transferee to obtain a new Rights Certificate to exercise the rights or the Additional Subscription Privilege, but the signature of the transferee on Forms 1 and 2 must correspond in every particular with the name of the transferee shown on the Transfer Form. If the Transfer Form is properly completed, the Corporation and the Rights Agent will treat the transferee as the absolute owner of the Rights Certificate for all purposes and will not be affected by notice to the contrary. A Rights Certificate so completed should be delivered to the appropriate person in ample time for the transferee to use it before the expiration of the rights.

 

Beneficial holders of Rights

 

If you hold Common Shares through a CDS Participant, you must arrange for the exercise, transfer or purchase of Rights through that CDS Participant.

 

U.S. Restriction

 

The Rights may be transferred only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which will permit the resale of the Rights by a Rights holder through the facilities of the TSX, provided that the offer is not made to a person in the United States, neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and no "directed selling efforts", as that term is defined in Regulation S under the U.S. Securities Act, are conducted in the United States in connection with the resale. Certain additional conditions are applicable to the Corporation's "affiliates", as that term is defined under the U.S. Securities Act. In order to enforce this resale restriction, a Rights holder thereof will be required to execute a declaration certifying that such sale is being made through the facilities of the TSX in accordance with Regulation S under the U.S. Securities Act.

 

 

When can you trade Common Shares issuable upon the exercise of your Rights

 

All Common Shares issuable upon the exercise of the Rights will be listed and posted for trading on the TSX under the symbol "COP" as soon as practicable after closing the Offering.

 

Are there restrictions on the resale of Rights and Common Shares?

 

Rights offered to holders in Canada and the Common Shares issuable on exercise of such Rights may be resold under applicable Canadian securities laws, including through the facilities of the TSX, by such holders provided that: (i) the sale is not by a “control person” of the Corporation; (ii) no unusual effort is made to prepare the market or create a demand for the securities being resold; (iii) no extraordinary commission or consideration is paid to a person or company in respect of the resale; and (iv) if the selling security holder is an insider or officer of the Corporation, the selling security holder has no reasonable grounds to believe that the Corporation is in default of securities legislation.

 

The Corporation will file with the SEC in the United States the Registration Statement so that the Common Shares issuable upon the exercise of the Rights will not be subject to transfer restrictions in the United States. However, the Rights may be transferred only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act. See "How does a rights holder sell or transfer rights? – U.S. Restriction" above.

 

The foregoing is a summary only and is not intended to be exhaustive. Holders of Rights should consult with their advisors concerning restrictions on resale, and should not resell their Securities until they have determined that any such resale is in compliance with the requirements of applicable legislation.

 

Each holder is urged to consult their professional advisor to determine the exact conditions and restrictions applicable to the right to trade in securities.

 

Will Coro issue fractional underlying Common Shares upon exercise of the Rights?

 

The Corporation will not issue fractional Common Shares upon the exercise of Rights. Where the issuance of Rights would otherwise entitle the holder of Rights to fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares with no additional compensation, as applicable.

 

ADDITIONAL INFORMATION

 

Where can you find more information about Coro?

 

Further information regarding the Corporation, its activities and its financial results, including copies of the financial statements and other continuous disclosure documents filed by the Corporation with applicable Canadian securities regulatory authorities, may be obtained under the Corporation's profile on SEDAR at www.sedar.com. You can also access information about us at our website at www.coromining.com.

 

The Corporation has filed a Registration Statement so that the Common Shares issuable upon the exercise of the Rights will not be subject to transfer restrictions in the United States. Shareholders in the United States should also review the Corporation’s Registration Statement on Form F-7 which will be filed with the SEC and can be found at www.sec.gov and may also be obtained by contacting Nicholas Bias, Vice President Corporate Development & Investor Relations, at: [email protected].

 

MATERIAL FACTS AND MATERIAL CHANGES

 

There is no material fact or material change about Coro that has not been generally disclosed.

 

 

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

 

The following documents are being filed with the SEC as part of the Registration Statement of which this Circular forms a part: (i) the Corporation’s Annual Information Form for the year ended December 31, 2017; (ii) the Corporation’s audited consolidated annual financial statements as at and for the years ended December 31, 2017 and 2016; (iii) management's discussion and analysis for the audited consolidated annual financial statements for the year ended December 31, 2017; (iv) the unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2018 and the corresponding management’s discussion and analysis; (v) the management information circular dated May 30, 2018 (vi) the consent of PricewaterhouseCoopers LLP; (vii) the consent of certain technical experts, and (viii) the powers of attorney. Shareholders in the U.S. are encouraged to read the Registration Statement, including exhibits, carefully and in their entirety.

 

 

 

 

PART II—INFORMATION NOT REQUIRED TO BE SENT TO SHAREHOLDERS

 

The exhibits to this registration statement are:

 

Exhibit		Description
99.1		Annual Information Form of the Registrant dated March 29, 2018 for the year ended December 31, 2017
99.2		Audited Consolidated Annual Financial Statements of the Registrant as at and for the years ended December 31, 2017 and 2016
99.3		Management’s Discussion and Analysis of the Registrant for the year ended December 31, 2017
99.4		Unaudited Consolidated Financial Statements of the Registrant for the period ended June 30, 2018
99.5		Management’s Discussion and Analysis of the Registrant for the period ended June 30, 2018
99.6		Management Information Circular of the Registrant dated May 30, 2018
99.7		Consent of PricewaterhouseCoopers LLP
99.8		Consent of Sergio Alvarado
99.9		Consent of Luis Oviedo
99.10		Press Release dated August 7, 2018
99.11		Power of Attorney (contained on the signature page)
99.12		Standby Commitment Agreement dated August 3, 2018

 

 

 

PART III—CONSENT TO SERVICE OF PROCESS

Not applicable.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-7 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Vancouver, British Columbia, Canada, on August 20, 2018.

 

	CORO MINING CORP.
	By:	/s/ Armando Veliz
	Name:	Armando Veliz
	Title:	Chief Financial Officer

 

 

 

 

Signatures and POWER OF ATTORNEY

 

The Registrant and each person whose signature appears below constitutes and appoints each of Luis Albano Tondo and Armando Veliz as his or her true and lawful attorney-in-fact and agent with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and registration statements filed pursuant to Rule 429 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Luis Albano Tondo
Luis Albano Tondo		President & CEO and Director (Principal Executive Officer)		August 20, 2018
/s/ Armando Veliz
Armando Veliz		Chief Financial Officer (Principal Financial and Accounting Officer)		August 20, 2018
/s/ Colin Kinley
Colin Kinley		Chairman, Director		August 20, 2018
/s/ Petra Decher
Petra Decher		Director		August 20, 2018
/s/ Gordon J. Fretwell
Gordon J. Fretwell		Director		August 20, 2018
/s/ Michael Haworth
Michael Haworth		Director		August 20, 2018
/s/ Alan Stephens
Alan Stephens		Director		August 20, 2018

 

 

 

AUTHORIZED REPRESENTATIVE

 

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this Registration Statement, solely in the capacity as the duly authorized representative of Coro Mining Corp. in the United States, on August 20, 2018.

 

	/s/ Colin Kinley
	Name:	Colin Kinley
	Title:	Chairman and Director

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

Annual Information Form

 

 

March 29, 2018

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

1.   PRELIMINARY NOTES	1
Incorporation by Reference and Date of Information	1
Currency	1
Forward Looking Statements	1
2.   CORPORATE STRUCTURE OF THE COMPANY	2
Name, Address and Incorporation	2
Intercorporate Relationships	3
3.   GENERAL DEVELOPMENT OF THE BUSINESS	3
Three Year History	4
Description of the Business	9
Strategy	10
Competitive Conditions	10
Environmental Considerations	10
Employees	10
Foreign Operations	10
Risk Factors	11
4.   Mineral Properties	16
Information Regarding the Berta Property	16
Information Regarding the Marimaca Project	16
5.   dividendS	34
6.   description of capital STRUCTURE	34
7.   MARKET FOR SECURITIES	34
Market	34
Trading Price and Volume	34
8.   Escrowed securities aND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	35
9.   Directors and Officers	35
Name, Occupation and Security Holdings	35
Cease Trade Orders, Bankruptcies, Penalties or Sanctions	36
Conflicts of Interest	37
10.   legal proceedings AND REGULATORY ACTIONS	37
Legal Proceedings	37
Regulatory Actions	37
11.   INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	37
12.   TRANSFER AGENTS AND REGISTRARS	38
13.   material contracts	38
14.   INTERESTS OF EXPERTS	38
Names and Interests of Experts	38
15.   INFORMATION ON AUDIT COMMITTEE	38
Audit Committee Charter	38
Composition of the Audit Committee and Independence	38
Relevant Education and Experience	39
Audit Committee Oversight	39
Reliance on Certain Exemptions	39

 

Pre-Approval Policies and Procedures	40
Audit Fees	40
16.   ADDITIONAL INFORMATION	40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TECHNICAL GLOSSARY

 

The abbreviations set forth below have the following meanings in this AIF, or in documents incorporated by reference in this AIF.

 

“Ag” means silver;

 

“Au” means gold;

 

“Cu” means copper;

 

“CuCN” means cyanide soluble copper;

 

“CuS”, and “CuSol” all mean acid soluble copper;

 

“CuT” means total copper content;

 

“diamond drilling” means rotary drilling using diamond bits, used to produce a solid core of rock;

 

“DCIP” means direct current induced polarization;

 

“deposit” means a mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable ore body or as containing mineral reserves, until final legal, technical and economic factors have been resolved;

 

“development” means the preparation of a deposit for mining;

 

“feasibility study” means a comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production;

 

“g/t” means grams per tonne;

 

“hectare” or “ha” means an area contained by a square of 100 metres;

 

“indicated mineral resource” means that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parametres, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed;

 

“inferred mineral resource” means that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes;

 

“IP” means induced polarization;

 

“klb” means pounds x 1000;

 

“km” means one kilometre;

 

“koz” means ounces x 1000;

 

“ktons” means ounces x 1000;

 

“lb” means one pound;

 

“lps” means litres per second

 

“LOM” means life of mine

 

“measured mineral resource” means that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parametres, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity;

 

“m” means one metre;

 

“mm” means one millimetre;

 

“mineral deposit” means an identified in-situ mineral occurrence from which valuable or useful minerals may be recovered. Mineral deposit estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence of mineralization and on the available sampling results;

 

“mineralization” means the concentration of metals and their chemical compounds within a body of rock;

 

“mineral reserve” means the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economics and other relevant factors that demonstrate, at the time of reporting that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral reserves are sub-divided in order of increasing confidence into probable mineral reserves and proven mineral reserves;

 

“mineral resource” means a concentration or occurrence of diamonds, natural solid inorganic material, or fossilized organic material including base and precious metals, coal, diamonds or industrial minerals in or on the earth’s crust in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge;

 

“Mo” means molybdenum;

 

“Mt” means millions of tonnes;

 

“National Instrument 43-101” means National Instrument 43-10- Standards of Disclosure for Mineral Projects

 

“ore” means a metal or mineral or a combination of these of sufficient value as to quality and quantity to enable it to be mined at a profit;

 

“ounces” or “oz” means one troy ounce;

 

“ppm” means parts per million;

 

“pre-feasibility study” means a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve;

 

“probable mineral reserve” means the economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified;

 

“proven mineral reserve” means that economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified;

 

“Qualified Person” has the meaning set forth in National Instrument 43-101;

 

“RC” means reverse circulation percussion drilling in which the drill hole is advanced by the hammer action of the drill bit and where the circulation of compressed air used to bring the samples to the surface is reversed to the normal to reduce sample contamination;

 

“strike” means the direction or trend of a geologic structure;

 

“TCu” means total copper content; and

 

“tonne” or “t” means 1,000 kilograms

 

 

 

1.

PRELIMINARY NOTES

 

Incorporation by Reference and Date of Information

 

The following documents of Coro Mining Corp. (“Coro” or the “Company”), which have been filed with the regulatory authorities in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland and Labrador (the “Jurisdictions”) are specifically incorporated by reference and form a part of this annual information form (the “AIF”):

 

(a)

the report entitled, “Technical Report for the Marimaca Copper Project, Antofagasta Provinces, Region II, Chile dated February 24, 2017 and prepared by NCL Construcciὁn SA (the “Marimaca Technical Report”).

 

(b)

the report entitled “Amended Updated Preliminary Economic Assessment for the Berta Project Inca De Oro, III Region, Chile” dated September 24, 2015 and prepared by Geoinvestment SpA (the “Updated Berta PEA”); and

 

All documentation incorporated by reference in and forming a part of this AIF can be found on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com under the Company’s profile.

 

All information in this AIF is as of December 31, 2017 unless otherwise indicated.

 

Currency

 

All sums of money which are referred to herein are expressed in lawful money of the United States of America, unless otherwise specified. References to Canadian dollars are referred to as “C$”.

 

Forward Looking Statements

 

Certain statements contained in this AIF of the Company or any document filed with the Canadian regulatory authorities, or in any other written or oral communication by or on behalf of the Company that do not directly and exclusively relate to historical facts, may constitute forward-looking statements which reflect management’s expectations regarding the Company’s future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements include, but are not limited to, statements with respect to commercial mining operations, anticipated mineral recoveries, projected quantities of future mineral production, interpretation of drill results, anticipated production rates and mine life, operating efficiencies, capital budgets, costs and expenditures and conversion of mineral resources to proven and probable mineral reserves, analyses, and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable mineral reserves and mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed, and in the case of mineral resources or proven and probable mineral reserves, such statements reflect the conclusion based on certain assumptions that the mineral deposit can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, and similar expressions) are not statements of historical fact and may be “forward-looking statements”.

 

Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, changes in market and competition, technological and competitive developments, cooperation and performance of strategic partners, and potential downturns in economic conditions generally. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements include in, or incorporated by reference into, this short form of prospectus should not be unduly relied upon.

 

Forward-looking statements are based on management’s estimates, beliefs and opinions on the date the statements are made. Except as required by law, the Company assumes no obligation to update forward-looking statements if circumstances of management’s estimates, beliefs or opinions should change. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors incorporated by reference herein. See “Risk Factors”.

 

Additional information on these and other potential factors that could affect the Company’s financial results are detailed in documents filed from time to time with the securities commissions of the Jurisdictions.

 

This AIF uses the terms “measured”, “indicated” and “inferred” mineral resources. Inferred mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. Readers are cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

 

All mineral resources have been estimated in accordance with the definition standards on mineral resources and mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in National Instrument 43-101. U.S. reporting requirements for disclosure of mineral properties are governed by the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7. Canadian and Guide 7 standards are substantially different. This AIF uses the terms “measured,” “indicated” and “inferred” resources. We advise investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that enable them to be categorized as mineral reserves.

 

2.

CORPORATE STRUCTURE OF THE COMPANY

 

Name, Address and Incorporation

 

The Company was incorporated under the Business Corporations Act (British Columbia) on September 22, 2004 under the name of “Coro Mining Corp.” The Company’s registered and records office is located at Suite 2600 - 1066 West Hastings Street, Vancouver, British Columbia, V6E 3X1 and its head office is located at Suite 1280 - 625 Howe Street, Vancouver, British Columbia, V6C 2T6.

 

By Notice of Articles dated effective April 6, 2005, the Company increased its authorized share capital to an unlimited number of common shares without par value. On October 25, 2016, the Company simplified its corporate structure by completing vertical short form amalgamations with Sea to Sky Holdings Ltd., 0904213 BC Ltd., Sky Dust Holdings Limited, and Machair Investments Ltd., its four direct and indirect wholly owned British Columbia subsidiaries.

 

As of December 31, 2017, 651,929,511 common shares were issued and outstanding. The Company’s common shares carry no rights of redemption, retraction, conversion or exchange.

 

The Company became a reporting issuer in the Jurisdictions on June 13, 2007. The Company’s common shares were listed for trading on the Toronto Stock Exchange (the “TSX”) on July 10, 2007.

 

Intercorporate Relationships

 

References in this AIF to the business of the Company include the business conducted by its wholly-owned subsidiaries. The Company has the following direct or indirect subsidiaries, all of which are 100% beneficially owned (except for SCMB) by the Company.

 

 

^{(1) Minera Cielo Azul Ltda. (“MCAL”) holds the Marimaca Project and Llancahue Prospect.}

 

^{(2) Minera San Jorge S.A. (“MSJ”) owns the San Jorge property (the “San Jorge Property”). The sale of MSJ is pending and it has been deconsolidated from the Company’s financial statements.}

 

^{(3) Sociedad Contractual Minera Berta (“SCMB”) holds the Berta Project and is 65% owned by the Company and 35% owned by ProPipe.}

 

^{(4) Owner of the Ivan SXEW Plant.}

 

3.

GENERAL DEVELOPMENT OF THE BUSINESS

 

The Company is an operating mining company engaged in the acquisition, exploration and exploitation of mineral properties located principally in Chile with the objective of identifying mineralized deposits. Following is a brief description of how the Company’s business has developed over the past three years which includes some historical information for context.

 

Three Year History

 

Marimaca Copper Project, Chile

 

In August 2014, signed a letter of intent (the “Marimaca LOI”) to acquire an interest in the Marimaca copper oxide prospect (the “Marimaca Project”), located close to the city of Antofagasta in the II Region of northern Chile. Upon execution of the Marimaca LOI, the Marimaca Project had never been drilled.

 

Under the terms of the Marimaca LOI, Coro has a right to earn a 75% interest in the Marimaca Project on the following terms. In exchange for $60,000 payment (paid), completion of a resource estimate and engineering study and a $125,000 payment, Coro will earn a 51% interest in Compañia Minera Newco Marimaca (“CMNM”), the joint venture company holding the project. The resource estimate and engineering study must demonstrate the technical and economic feasibility of producing a minimum of 1,500tpy (3,306,933 lbs) Cu as cathode by August 6, 2018 at Coro’s cost. An additional 24% interest can be earned by Coro upon obtaining financing for the project construction. The owner’s interest will comprise a 15% interest free carried to commencement of commercial production and a 10% participating interest subject to dilution. The owners, at their election, may request Coro to loan them the equity portion corresponding to their 10% interest, if any. This loan plus applicable interest would be recoverable by Coro from 100% of the project’s free cash flow after debt repayments.

 

Throughout 2016, the Company completed drilling on the Marimaca Project. On April 28, 2016, the Company announced that it had intersected substantial copper mineralization in the first eight holes of its 16 hole, 2680m reverse circulation (“RC”) drilling program (the “Initial RC Drilling Program”). On May 6, 2016, the Company announced the results of the remaining eight holes of the Initial Drilling Program and confirmed they had intersected further substantial copper mineralization. On September 6, 2016, the Company announced the results of the first eight RC holes from a 39 hole, 8530m hole program nearing completion at the time (the “Follow Up RC Drilling Program”). It also announced the results of the first two diamond drill (“DDH”) holes of a six hole, 2021m program, aimed at providing metallurgical samples and geotechnical information, corroborating the RC drilling and testing underlying sulphide mineralization (the “Diamond Drilling Program”). The Company confirmed that the Diamond Drilling Program was complete and that it expected to finish the Follow Up RC Drilling Program shortly. On October 4, 2016, the Company announced the results of a further seven RC holes from the Follow Up RC Drilling Program and the results of the remaining four DDH holes of the Diamond Drilling Program. On October 18, 2016, the Company announced the results from the final 23 RC holes from the Follow Up RC Drilling Program.

 

The exploration efforts in 2016 resulted in the release of a maiden resource estimate for the Marimaca Project on January 12, 2017. Full details of the resource estimate are contained under the heading, “Information Regarding the Marimaca Project”. In addition, on February 9, 2017, the Company announced that it had completed an environmental baseline study for the Marimaca Project. The consultant engaged by the Company to prepare the study reported that there were no material environmental issues that would impede the development of the project. The information gathered for the study will form part of a feasibility study and will form the base for the environmental permit applications for the Marimaca Project.

 

On August 4, 2016, the Company announced that it entered into a non-binding letter of intent (the “Rayrock LOI”) to acquire Minera Rayrock Ltda. (“Rayrock”), a Chilean subsidiary of a Peruvian mining company. Rayrock is the owner of the Ivan SXEW plant (the “Ivan Plant”) located approximately 18 km south of the Marimaca Project as well as 23,748 hectares of mining claims (the extending between Marimaca and the Ivan Plant and an additional 14,505 hectares of mining claims located approximately 42 km north east from the Ivan Plant and 30 km east from Marimaca). The Ivan Plant has an installed capacity of approximately 10ktpy (22,046,226 lbs) copper cathode and operated from 1995 until 2012, when it was placed on care and maintenance. It has associated water rights and environmental and operating permits, some of which require updating. Coro has completed an initial examination of the plant and believes that it is in good condition and can be expeditiously placed back into production for a reasonable cost.

 

The acquisition terms under the Rayrock LOI were as follows:

 

-

Payment of $250,000 (paid) on execution of the Rayrock LOI in return for exclusivity to conduct due diligence for a period of 60 days, extendable to 90 days under certain circumstances

 

-

Closing period of 30 days to negotiate and execute a definitive purchase agreement (the “Definitive Agreement”)

 

-

Payment of $6,250,000 on execution of the Definitive Agreement

 

-

The owner will retain a 2% NSR on all production from the Rayrock mineral properties. Coro may acquire half the NSR for $2,000,000 at any time and will have a right of first refusal over the NSR.

 

On June 9, 2017, the Company announced that it had signed the Definitive Agreement and had successfully completed the acquisition of Rayrock.

 

On August 21, 2017, the Company announced that it entered into a binding letter of intent to acquire 100% of the La Atomica claims directly adjacent to the Marimaca Project. The definitive option agreement was executed on November 2, 2017. Under the terms of the option agreement, the Company must pay a total of US$6,000,000 over 36 months. The vendor of the property will retain a 1.5% NSR payable on the La Atomica claims, of which Coro may acquire 0.5% of the royalty at any time for a $2,000,000 payment.

 

On August 22, 2017, the Company announced that it had initiated a definitive feasibility study (“DFS”) for the Marimaca Project as part of a staged development process for the project. Phase 1 will be the completion of the DFS for production of 10,000 tonnes (22,046,030 lbs) of copper cathode per year via the Ivan Plant. Phase 2 will be the continuing exploration and development of the Marimaca deposit and its potential extensions with the objective of increasing the resource base. Phase 3 anticipates a significant increase in the Marimaca resource base which will determine the optimum future production rate and/or staged production scenarios. Completion of the DFS will satisfy the requirement under the Marimaca LOI to demonstrate the technical and economic feasibility of the Marimaca Project and formalize Coro’s 51% ownership interest. Under the agreement, Coro can acquire a further 24% interest by obtaining project construction finance, or contributing the Ivan Plant.

 

On October 17, 2017, the Company announced that it had signed a binding letter of intent to acquire the Naguayan claims totalling 1,075 hectares located northeast and east of the Marimaca Project. The definitive agreement for the Naguayan claims was executed on January 9, 2018 and provides that Coro may acquire the claims for a total purchase price of $6,500,000 payable over 48 months. The vendor of the property will retain a 1.5% NSR payable on the Naguayan claims, of which Coro may acquire 0.5% of the royalty for a $2,000,000 payment at any time up to one year after the start of commercial production on the property.

 

Throughout 2017, the Company completed a 57-hole, 11,178 metre infill drilling program on the Marimaca Project. The results of the 2017 drill program were announced on November 9, 2017, December 5, 2017, December 22, 2017 and January 17, 2018. For detailed information on these drill results, reference should be made the aforementioned press releases.

 

On January 19, 2018, the Company announced that it had submitted its Environmental Impact Declaration for the Marimaca Project and had passed the five day admissibility period into the Environmental Impact Evaluation System. Both of these milestones are required for the Marimaca Project to be considered in good standing by the Chilean government. The Chilean government will continue to assess the Marimaca Project and Environmental Qualification Resolution by the Chilean government will be required prior to production.

 

On January 22, 2018, the Company announced the results of RC step drilling completed on the La Atomica claims. Details of these drill results are contained in the news release issued on that date.

 

On January 22, 2018 the Company also announced it had entered into a promise to purchase and sell agreement with a local Chilean company to acquire a 379 hectare package of claims (the “SM Claims”) adjoining the Marimaca Project to the north and south. To acquire the SM Claims, Coro is required to pay the vendor an aggregate of $6,000,000, $100,000 of which was paid on signing of the agreement. The balance of the consideration will be payable on the completion of due diligence and certain other transfers of title. The SM claims will be subject to a 2% NSR in favour of the vendor.

 

Berta Copper Property and Nora Plant, Chile

 

In June 2011, the Company entered into an agreement (the “Berta Option Agreement”) to acquire 506 hectares located 20 km west of the village of Inca de Oro in Chile (the “Berta Property”) from a Chilean land claim holder.

 

Berta Copper Property Ownership

 

Under the terms of the Berta Option Agreement, Coro was granted the right to acquire 100% of the Berta Property for aggregate option payments of $6,000,000 by making staged payments over three years. These terms were renegotiated in May 2013 by reducing the payment due on June 10, 2013 from $1,500,000 to $500,000 and the final payment due on June 10, 2014 from $3,500,000 million to $2,500,000 million. All of the required payments have been made. A 1.5% NSR was also granted to the land claim holder on all production from the property.

 

In June 2014, the Company renegotiated the final option payment under the Berta Option Agreement whereby the payment of $2,500,000 payable by on June 10, 2014 was deferred as to $250,000 payable on August 14, 2014 (paid); and $2,250,000 payable on August 14, 2015. The Company was granted the option to elect to pay the final amount of $2,250,000 in 8 equal quarterly payments of $281,250 which will bear interest at LIBOR. In addition, under the modified terms the Company was permitted to commence production at Berta at any time after the August 14, 2014 payment. The 1.5% NSR continues to apply to all production from the property. In 2015, the Company exercised its option to acquire the Berta Project and elected to defer the final $2,250,000 payment into eight quarterly payments of $281,250 plus interest accruing at LIBOR. All of the payments have now been made.

 

The Berta Option Agreement was subsequently transferred to Sociedad Contractual Minera Berta (“SCMB”).

 

SCMB Ownership

 

In May 2013, the Company signed a Letter of Intent (“LOI”) with ProPipe SA (“ProPipe”). ProPipe was granted the right to earn up to 50% of the shares of SCMB by completing a series of payments, work commitments and project financing, within a specified time frames follows;

 

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An initial 10% interest by making the $500,000 option payment due under the Berta Option Agreement on June 10, 2013 (earned);

 

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A further 3% by completing and filing an EID (earned in November 2013);

 

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A further 5% by completing a NI 43-101 compliant preliminary economic assessment (a “PEA”) (earned in June 2015); and

 

-

An additional 32% by obtaining and structuring project financing (subsequently amended refer below).

 

The terms of the agreement between Coro and ProPipe were revised to provide that, upon closing of the Greenstone Financing Package, which is discussed above under the heading, “Financings and Corporate Matters”, ProPipe would be entitled to a 35% interest in SCMB, which holds the Berta project.

 

Project Development including Purchase of Nora Plant

 

During 2014, SCMB agreed to acquire the Nora SXEW processing plant (the “Nora Plant”) from Sociedad Contractual Minera Trinidad (“Trinidad”), a local company in administration, for 2.5 billion Chilean pesos.

 

The Nora Plant was subject to a suspension order (the “Suspension Order”) issued by SERNAGEOMIN, the Chilean Mining Authority in 2014, and in order to be lifted required minor remediation work to be done as well as the filing of a closure plan and technical project report which had already been filed by SCMB on behalf of the previous owners.

 

In November 2013, the Company filed its Environmental Impact Declaration (“EID”) for Berta which contemplated the treatment of pregnant leach solution (“PLS”) from Berta at a third party's SXEW operation. In October 2014, the Evaluation Commission of the Atacama Region of Chile, part of the Chilean Environmental Evaluation Service (in Spanish, “SEA”), approved EID of Berta and has issued the corresponding Resolution of Environmental Qualification (in Spanish, “RCA”).

 

In June 2015, the Company announced conclusions of an updated preliminary economic assessment for the Berta project (the “Berta PEA”).

 

The Berta PEA was an update of an engineering study completed by Geoinvestment SpA (“Geoinvestment”) released on September 15, 2014. The Berta PEA included a revised open pit mine plan, new operating and capital costs and financial analysis for the Berta project which contemplated the production of an average of 4,700ktpy (10,361,730 lbs) of copper cathode for a period of 8 years. The Berta PEA was filed on July 31, 2015 but, following a continuous disclosure review by the British Columbia Securities Commission, the Company filed the Updated Berta PEA on October 24, 2015. Full details on the Updated Berta PEA are contained under the heading, “Material Properties - Information Concerning the Berta Property”.

 

On February 9, 2016, Coro announced that it had been notified by SERNAGEOMIN, the Chilean Mining Authority that all of the requirements needed to lift the Suspension Order had been met and the Suspension Order was subsequently lifted.

 

Starting in 2016, the Nora Plant began treating material from a variety of dumps from the surrounding district and commissioned the plant in February 2016. In August 2016, it began processing material from selectively mined shallow pits at the Berta mine itself. As such, the operation has not reached commercial production, with delays in receiving operating permits for the Berta mine site contributing to its inability to do so. The Company announced in December 2016 that it was proceeding to install crushing and leaching facilities at the Berta mine site in order to enable PLS to be trucked to the Nora Plant. In March 2017, the Company announced that the installation of the heap leaching and crushing facilities was nearing completion with leaching of copper anticipated by the end of March 2017 and trucking of the PLS to the Nora Plant thereafter.

 

On May 15, 2017, the Company provided an update on Berta and announced the Nora Plant had been from 3000t/yr (6.6m lb/yr) to 4,800t/yr (10.6m lb/yr) copper cathode capacity. On June 19, 2017, the Company announced that it begun trucking concentrated PLS from the leach pads at the Berta mine to the Nora Plant. On August 22, 2017, the Company announced that it commissioning of the crusher, agglometer and the majority of the heap leach pads had been completed and the operation had commenced ramping up to nominal production of 400 tonnes (880,000 lbs) per month of copper cathode.

 

On July 6, 2017, the Company announced that SCMB had extended its offtake agreement with Louis Dreyfus Company Metals for an additional 12 months. As part of the agreement, SCMB received a US$750,000 prepayment facility from Louis Dreyfus Company Metals repayable in equal instalments over 12 months, through which SCMB commits to the delivery of 3,300 tonnes of copper cathode to the metals trader over the next year.

 

In February 2018 as part of its Strategic Review undertook a review of the SCMB Operations. The Company elected to proceed with acquisition of the Nora SX-EW plant in September 2015 based on an initial Preliminary Economic Assessment dated September 2014. The original plan was to process ore (crushing and leaching) at the Berta mine and install a 60km pipeline to transport the PLS between the Berta mine and Nora SX-EW plant. The pipeline to transport the PLS between the Berta mine and Nora SX-EW plant was an important part of the original design given the 60km distance. Pipelines are a common and cost effective way to transport PLS in Chile, although requiring a considerable amount of time for obtaining the required environmental & technical permits for installation and operation. Unfortunately, following a 1 in 100 year rainfall event in the Atacama Desert in March 2015, there was a major flood which severely damaged the town of Diego De Almagro which lies between the Berta mine and the Nora SX-EW plant. The original pipeline route would have crossed a dry river bed (Salado River) close to Diego De Almagro through which these flood waters flowed. As a result of this exceptional flood, it has become apparent that permitting for a pipeline across this previously dry riverbed is presently not feasible.

 

The requirement to truck ore and PLS between the Berta mine and the Nora SX-EW plant has significantly increased the realised C1 cash costs production risks particularly around transportation.

 

Over the last 9 months the Company has undertaken a number of optimisation strategies aimed at reducing the transportation costs between the Berta mine and the Nora SX-EW plant which has not yielded the expected results with lower transport costs being offset by higher production costs and lower recoveries due to the attempt to concentrate PLS. As a consequence of the above, SCM Berta incurred cumulative ramp-up and operating losses

 

The SCMB management team has now stabilised the operations:

 

·

Anticipating over 300 tons of copper in March 2018, the highest monthly production to date;

 

·

the Berta mine is operating as designed, with both grade and tonnage mined consistent with the mine plan;

 

·

the metallurgy of the Berta ore is as anticipated with 75% recoveries when the ore is leached conventionally to 4gpl PLS concentration levels;

 

·

the PLS has now been successfully stabilized at a concentration level of 10gpl at Berta with recoveries of 70% even at this relatively higher PLS concentration; and

 

·

the production bottleneck moved to the trucking of the PLS, and trucking of greater than 750m3 per day is now being achieved on a consistent basis;

 

Notwithstanding the improvements referred to above, SCMB’s operations is currently configured, with ore and PLS transported by truck, will always be high cost and unnecessarily complex due to the logistical constraint of not being able to build and operate a pipeline. The Company is in the process of concluding its strategic review of SCMB and hopes to be able to release the results of its conclusions shortly.

 

El Jote Property

 

In May 2016, SCMB optioned the El Jote copper project (formerly known as the Salvador Property) located approximately 30 km from the Nora Plant. SCMB may acquire a 100% interest in the property by making payments totalling $3,005,000, as follows

 

-

$105,000 (paid)

 

-

$30,000 on or before November 2016 (paid);

 

-

$180,000 in May 2017; (paid)

 

-

$250,000 in May 2018;

 

-

$2,440,000 in May 2019 (may be paid in eight installments plus interest at LIBOR) with SCMB having the right to start production on payment of the first installment payment.

 

The vendor will retain a 1.5% NSR which can be purchased by SCMB for $1,500,000 at any time.

 

Prat Project, Chile

 

In August 2014, Coro announced that it had signed a letter of intent to acquire an interest in the Prat project located close to the city of Antofagasta in the II Region of northern Chile. During its most recent year end, Coro elected not to proceed with the acquisition and terminated the letter of intent.

 

Celeste Property, Chile

 

The 100% owned Celeste Sur iron ore project is located 55km NE of the port of Chañaral, in the III Region of Chile. The Celeste property is comprised of a number of concessions covering ~2,800 hectares and was acquired by Coro in 2010 for the issuance of 150,000 common shares and the assumption of a 2.5% copper royalty.

 

Celeste is contiguous with and along strike to the northeast from the ENAMI owned Cerro Negro iron oxide copper gold type deposit. Small scale artisanal copper mining activity has been carried out in the Celeste area since the early 1900s. In the period 1994 to 2002, Cominco, (later Teck Resources), Phelps Dodge and Atna conducted exploration at the Celeste Property, including the drilling of 18 RC holes for 4,161m and 16 RC holes for a total of 3,650m. No resource estimates have been completed on the property.

 

In September 2014, Coro announced it had received encouraging results from initial mapping, surface sampling, and test work of its 100% owned Celeste Sur iron ore project, located 55km NE of the port of Chañaral, in the III Region of Chile. Preliminary internal evaluation indicated that potential exists for 5-10mt at ~45% Fe at Celeste Sur, which should be capable of sustaining a ~600ktpy Fe concentrate operation based on a simple, low cost, dry crushing and magnetic separation process route, enhanced by its proximity to a port with existing concentrate handling facilities. The declining iron ore price in 2014 resulted in the Company deferring any further evaluation of the Celeste Property.

 

Llancahue Property, Chile

 

The Llancahue project is 100% owned by Coro and is located 38km south west of the City Of Talca in the VII Region of central Chile, at an elevation of less than 200m above sea level.

 

In November 2014, Minera Peñoles de Chile Ltda, a subsidiary of Mexican mining company, Industrias Peñoles SAB de CV entered in an option to acquire a 70% interest in the project. Coro announced the termination of this option agreement in October 2016.

 

San Jorge Property, Argentina

 

In March 2015, the Company announced that it had reached agreement with its partners, Alterra Investments Ltd. and Solway Industries Ltd. (together, “A&S”), whereby they would immediately advance Coro US$1.3 million for the right to acquire a 100% interest in the San Jorge Property pursuant to the acquisition of MSJ. The acquisition of the 100% interest in the project was subject to the approval Franco Nevada, the underlying owner of San Jorge, approval and also Argentinean regulatory approval, which has since been obtained. Coro will retain a 2% net smelter royalty on production from the property, other than gold, in the event that A&S develop the project. The $1.3 million was advanced to the Company in April 2015 but formal completion of the transaction remains subject to the approval of Franco Nevada and other required third party approvals. Effective May 1, 2015, the Company deconsolidated MSJ from its financial statements.

 

Financings and Corporate Matters

 

In June 2015, the Company announced that it had received a financing proposal from Greenstone Resources L.P. (“Greenstone”). The financing to be provided by Greenstone (the “Greenstone Financing Package”) was comprised of two elements; a $6.5 million convertible debenture and an approximately $2.5 million equity private placement. The convertible debenture financing (the “Convertible Debenture”) was comprised of two tranches, being $5.1 million (“Tranche 1”) and $1.4 million (“Tranche 2”). In the event that the amounts were not repaid in full in cash, any unpaid amounts would be converted into common shares of Coro at a conversion price of C$0.04 per share. The structuring of the tranches was designed to facilitate the acquisition of the Nora Plant and required work programs (Tranche 1) with Tranche 2 being advanced after the lifting of a suspension order on the Nora Plant (the “Suspension Order”), which is discussed in more detail below under the heading “Berta Property and Nora Plant, Chile”. Due to the potential issuance of common shares upon conversion of the Convertible Debenture, the Company sought shareholder approval, which was obtained on July 17, 2015.

 

Due to issues surrounding the Suspension Order (refer to the “Berta Copper Property” section above), the terms of the Greenstone Financing Package were subsequently amended such that Tranche 1 and Tranche 2 of the Convertible Debenture would be completed prior to the lifting of the Suspension Order but the $2.5 million equity financing portion would remain dependent on the lifting of the order.

 

Tranche 1 of the Convertible Debenture completed on August 10, 2015 and Tranche 2 of the Convertible Debenture completed on November 27, 2015. The proceeds of Tranche 1 of the Convertible Debenture were used to acquire the Nora Plant and perform work to have the Suspension Order lifted. The proceeds of Tranche 2 were used to complete the commissioning and start-up of the Nora Plant.

 

On February 9, 2016, Coro announced that the Suspension Order had been lifted. As a result, Greenstone completed the equity financing portion of the Greenstone Financing Package and purchased 79,800,000 Coro common shares at a price of C$0.04 per share. Following this acquisition, Greenstone, in accordance with the terms of an investors rights agreement entered into between the parties (the “Investors Rights Agreement”), was provided with the right to nominate two directors to the board of directors of Coro. Accordingly, on February 9, 2016, Mr. Michael Haworth and Mr. Colin Kinley were appointed to the board and Mr. Robert Watts and Mr. Alvin Jackson resigned. The Investors Rights Agreement also provided Greenstone with a pre-emptive right to maintain its shareholding in the Company

 

On May 24, 2016, the Company announced a private placement financing of up to 100,000,000 common shares at a price of C$0.10 per common share to raise gross proceeds of $10,000,000 and announced that it had entered into an agreement to amend the terms of the Convertible Debenture held by Greenstone. Under the amended terms, Greenstone agreed to amend the conversion price from C$0.04 to C$0.10 per common share, resulting in considerably less dilution to the Company’s shareholders. 106,730,000 common shares were subsequently issued to Greenstone in full satisfaction of the Convertible Debenture which brought its holdings up to approximately 53.9% of the Company’s outstanding common shares. On June 13, 2016, the Company closed the first tranche of the 100,000,000 common share financing and issued 34,000,000 common shares to Greenstone. In accordance with the policies of the Exchange, the Company sought shareholder approval of the second tranche of the financing and, in July 2016, issued 46,074,350 to third party shareholders and 19,925,650 common shares to Greenstone.

 

On September 16, 2016, the Company announced that its co-founder and director, Michael Philpot had resigned as the Executive Vice-President and director. Mr. Philpot agreed to continue to act as a consultant to the Company for a period of six months, which may be extended by mutual consent.

 

On December 23, 2016, the Company completed an additional private placement financing of 37,522,859 common shares at a price of C$0.14 per common share. Greenstone participated in this financing and acquired 29,825,874 common shares, bringing its share ownership interest in the Company to 55.9%.

 

In January 2017, 2,162,500 warrants were exercised (at C$0.15) and 2,940,000 warrants expired.

 

On March 22, 2017, the Company announced that it intended to complete a non-brokered private placement of up to 107,680,000 common shares at a price of C$0.15 per common share. The first tranche of the private placement, comprised of an aggregate of 75,527,131 common shares completed on April 3 and 4, 2017. The second tranche of the private placement, comprised of 32,152,869 common shares, completed on April 20, 2017. Greenstone participated in both tranches of the private placement and acquired an aggregate of 92,088,333 common shares, bringing its share ownership interest in the Company to 61%.

 

On June 12, 2017, the Company announced that Luis Tondo had been appointed as the President and CEO and a director of the Company. In connection with Mr. Tondo’s appointment, Alan Stephens, the Company’s former CEO, transitioned to the role of Executive Director responsible for exploration and opportunity seeking activities.

 

On August 8, 2017, the Company announced that Mr. Nelson Mendoza has been appointed to the newly-created role of General Manager of the Berta Project operation.

 

On September11, 2017 the Company announced a private placement of up to 56,067,692 common shares at price of C$0.13 per common share. The private placement was completed in two tranches pursuant to which the Company issued an aggregate of 56,561,973 common shares for gross proceeds of approximately C$7,350,000. The gross proceeds of the financing are intended to be used for the DFS on the Marimaca Project. Greenstone acquired an aggregate of 51,715,665 common shares issued pursuant to the private placement, increasing its share ownership interest in the Company to 63.7%.

 

On December 22, 2017, the Company announced that it had entered into a $3,000,000 credit facility with Greenstone. The funds advanced by Greenstone must be repaid within 11 months and bear interest at 12% per annum until March 31, 2018 and 15% thereafter. Greenstone advanced a further $5,000,000 to the Company pursuant to a second credit facility on February 27, 2018. The funds advanced by Greenstone pursuant to the second credit facility must also be repaid within 11 months and bear interest at 12% per annum until June 30, 2018 and 15% thereafter. Greenstone received a 3% arrangement fee on both credit facilities.

 

Description of the Business

 

The Company is an operating mining company engaged in the acquisition, exploration and exploitation of mineral properties and projects located in Chile with the objective of identifying and exploiting mineralized deposits. The Company was incorporated under the Business Corporations Act (British Columbia) on September 22, 2004 and is listed on the Exchange under the symbol “COP”. As of the date of this AIF, the Company had 651,929,511 shares issued and outstanding.

 

The Company has its registered corporate office in Vancouver, Canada. In Chile, the Company is currently exploring and developing the Marimaca Project, and is operating 65% owned SCM Berta. It also owns the Celeste Sur and Llancahue projects. The Marimaca Project is subject to an underlying option agreement.

 

Strategy

 

Coro Mining Corp. (the “Company” or “Coro”) is a growth oriented copper producer using its exploration, development and operational experience to develop low cost, low capital intensity, leachable operations in areas of good infrastructure in Chile.

 

Competitive Conditions

 

The Company’s business of the acquisition, exploration and development of mineral properties is intensely competitive. The Company may be at a competitive disadvantage in acquiring additional mining properties because it must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than the Company. The Company may also encounter increasing competition from other mining companies in efforts to hire experienced mining professionals. Competition for exploration resources at all levels is in the past has been very intense, particularly affecting the availability of manpower, drill rigs and helicopters. Increased competition could adversely affect the Company’s ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

 

Environmental Considerations

 

The Company’s operations are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions of spills, releases or emissions of various substances related to mining industry operations, which could result in environmental pollution. A breach of such legislation may result in imposition of fines and penalties. In addition, certain types of operations require submissions to and approval of environmental impact assessments. Environmental legislation is evolving, which means stricter standards and enforcement, fines and penalties for non-compliance are becoming more stringent. Environmental assessment of proposed projects carries a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

 

Employees

 

As at December 31, 2017, the Company had a total of 195 full and part-time employees or consultants and also utilized the services of several professionals on a part-time contract or consulting basis. The Company seeks to employ individuals and utilize the services of consultants who have international mining experience.

 

Foreign Operations

 

The Company’s properties are currently located in Chile and, as such, a substantial portion of the Company’s business is exposed to various degrees of political, economic and other risks and uncertainties. The Company’s operations and investments may be affected by local political and economic developments, including expropriation, nationalization, invalidation of government orders, permits or agreements pertaining to property rights, political unrest, labour disputes, limitations on repatriation of earnings, limitations on mineral exports, limitations on foreign ownership, inability to obtain or delays in obtaining necessary mining permits, opposition to mining from local, environmental or other non-governmental organizations, government participation, royalties, duties, rates of exchange, high rates of inflation, price controls, exchange controls, currency fluctuations, taxation and changes in laws, regulations or policies as well as by laws and policies of Canada affecting foreign trade, investment and taxation.

 

Risk Factors

 

The Company will face a number of challenges in the development of its properties. The following is a description of the principal risk factors affecting the Company:

 

Operational Risks

 

The Company’s operations are subject to all of the risks normally incident to the exploration for and the development and operation of mineral properties. The Company has implemented comprehensive safety and environmental measures designed to comply with or exceed government regulations and ensure safe, reliable and efficient operations in all phases of its operations. The Company maintains liability and property insurance, where reasonably available, in such amounts it considers prudent. The Company may become subject to liability for hazards against which it cannot insure or which it may elect not to insure against because of high premium costs or other reasons. Mineral exploration and exploitation involves a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to avoid. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, explosions, tailings impoundment failures, cave-ins, landslides and the inability to obtain adequate machinery, equipment or labour are some of the risks involved in mineral exploration and exploitation activities.

 

The Company has relied on and may continue to rely on consultants and others for mineral exploration and exploitation expertise. The Company believes that those consultants are competent and that they have carried out their work in accordance with internationally recognized industry standards. However, if the work conducted by those consultants is ultimately found to be incorrect or inadequate in any material respect, then the Company may experience delays or increased costs in developing its properties.

 

Substantial expenditures are required to establish mineral reserves and resources through drilling, to develop metallurgical processes to extract the metal from the material processed and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. There can be no assurance that commercial quantities of ore will be discovered. There is also no assurance that even if commercial quantities of ore are discovered, that the properties will be brought into commercial production or that the funds required to exploit mineral reserves and resources discovered by the Company will be obtained on a timely basis or at all. The commercial viability of a mineral deposit once discovered is also dependent on a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, as well as metal prices. Most of the above factors are beyond the control of the Company. There can be no assurance that the Company’s mineral exploration activities will be successful. In the event that such commercial viability is never attained, the Company may seek to transfer its property interests or otherwise realize value or may even be required to abandon its business and fail as a “going concern”.

 

Estimates of Mineral Resources

 

The mineral resource estimates contained in this AIF are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that an identified resource will ever qualify as a commercially mineable (or viable) deposit which can be legally or commercially exploited. In addition, the grade of mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. The estimates of mineral resources described in this AIF should not be interpreted as assurances of mine life or of the profitability of future operations.

 

Additional Funding and Dilution

 

If the Company’s exploration programs are successful, then additional funds will be required in order to complete the development of its properties. The only sources of future funds presently available to the Company are the sale of additional equity capital or the entering into of joint venture arrangements or other strategic alliances. In addition, the status of Chile, where the Company operates, as a developing country may make it more difficult for the Company to obtain any financing for its projects. Issuances of additional securities will result in a dilution of the equity interests of any person who may become a holder of the Company’s securities. There is no assurance that the Company will be successful in raising sufficient funds to meet its obligation or to complete all of the currently proposed exploration programs. If the Company does not raise the necessary capital to meet its obligations under current contractual obligations, then the Company may have to forfeit its interest in the properties or prospects earned or assumed under such contracts. In addition, if the Company does not raise the funds to complete the currently proposed exploration programs, then the viability of the Company could be jeopardized.

 

Foreign Political Risk

 

The Company’s material property is located in Chile and, as such, a substantial portion of the Company’s business is exposed to various degrees of political and economic risk and uncertainties. The Company’s operations and investments may be affected by local political and economic developments, including expropriation, nationalization, invalidation of government orders, permits or agreements pertaining to property rights, political unrest, labour disputes, limitations on repatriation of earnings, limitations on mineral exports, limitations on foreign ownership, inability to obtain or delays in obtaining necessary mining permits, opposition to mining from local, environmental or other non-governmental organizations, government participation, royalties, duties, rates of exchange, high rates of inflation, price controls, exchange controls, currency fluctuations, taxation and changes in laws, regulations or policies as well as by-laws and policies of Canada affecting foreign trade, investment and taxation.

 

Permits

 

The operations of the Company will require licenses and permits from various governmental authorities to carry out exploration and development at its projects. Obtaining permits can be a complex, and time-consuming process. There can be no assurance that the Company will be able to obtain the necessary licenses and permits on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict the Company from continuing or proceeding with existing or future operations or projects. Any failure to comply with permits and applicable laws and regulations, even if inadvertent, could result in the interruption or closure of operations or material fines, penalties or other liabilities. In addition, the requirements applicable to sustain existing permits and licenses may change or become more stringent over time and there is no assurance that the Company will have the resources or expertise to meet its obligations under such licenses and permits.

 

As of December 31, 2017, SCMB was still waiting for its final permits for the Berta mine and facilities.

 

Government Regulation

 

The mineral exploration activities of the Company are subject to various laws governing prospecting, development, production, taxes, labour standards, occupational health, mine safety, waste disposal, toxic substances and other matters. Mining and exploration activities are also subject to various laws and regulations relating to the protection of the environment, historical and archaeological sites and endangered and protected species of plants and animals. Although the exploration, development and operating activities of the Company are generally carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing the operations and activities of the Company or more stringent implementation thereof could have a substantial adverse impact on the Company.

 

Property Interests

 

The Company has the right to earn an interest in certain of its properties, including the Marimaca Property, each of which are subject to the terms of an option agreement. To earn its interest in the optioned properties, the Company is required to make certain cash option payments and complete earn in requirements. . If the Company fails to make the agreed cash option payments and earn in requirements, then the Company may lose its right to such properties and forfeit any funds expended to such time.

 

Acquisition of Additional Mineral Properties

 

If the Company loses or abandons its interest in one or more of its properties, then there is no assurance that it will be able to acquire other mineral properties of merit, whether by way of option or otherwise, should the Company wish to acquire any additional properties.

 

Environmental Regulations

 

The Company’s activities are subject to foreign environmental laws and regulations, which may materially adversely affect its future operations. These laws and regulations control the exploration and development of mineral properties and their effects on the environment, including air and water quality, mine reclamation, waste handling and disposal, the protection of different species of plant and animal life, and the preservation of lands. These laws and regulations will require the Company to acquire permits and other authorizations for certain activities. There can be no assurance that the Company will be able to acquire such necessary permits or authorizations on a timely basis, if at all.

 

Unknown Environmental Risks for Past Activities

 

Exploration and mining operations involve a potential risk of releases to soil, surface water and groundwater of metals, chemicals, fuels, liquids having acidic properties and other contaminants. In recent years, regulatory requirements and improved technology have significantly reduced those risks. However, those risks have not been eliminated, and the risk of environmental contamination from present and past exploration or mining activities exists for mining companies. The Company may be liable for environmental contamination and natural resource damages relating to the properties that it currently owns or operates or at which environmental contamination occurred while or before it owned or operated the properties. However, no assurance can be given that potential liabilities for such contamination or damages caused by past activities at these properties do not exist.

 

Key Management

 

The success of the Company will be largely dependent upon the performance of its key officers, consultants and employees. Locating mineral deposits depends on a number of factors, not the least of which is the technical skill of the exploration personnel involved. The success of the Company is largely dependent on the performance of its key individuals. Failure to retain key individuals or to attract or retain additional key individuals with necessary skills could have a materially adverse impact upon the Company’s success.

 

Conflicts of Interest

 

Certain directors and officers of the Company are or may become associated with other natural resource companies which may give rise to conflicts of interest. In accordance with the Business Corporations Act (British Columbia), directors who have a material interest in any person who is a party to a material contract or a proposed material contract with the Company are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the contract. In addition, the directors and the officers are required to act honestly and in good faith with a view to the best interests of the Company. Certain of the directors and officers of the Company have either other full-time employment or other business or time restrictions placed on them and, accordingly, the Company will not be the only business enterprise of these directors and officers.

 

Title to Properties

 

Acquisition of rights to the mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral properties may be disputed. Although the Company has investigated the title to all of the properties for which it holds concessions or other mineral leases or licenses or in respect of which it has a right to earn an interest, the Company cannot give an assurance that title to such properties will not be challenged or impugned. The Company can never be completely certain that it or its option partners will have valid title to its mineral properties. Mineral properties sometimes contain claims or transfer histories that examiners cannot verify, and transfers under foreign law are often complex. The Company does not carry title insurance on its properties. A successful claim that the Company or its option partner does not have title to a property could cause the Company to lose its rights to that property, perhaps without compensation for its prior expenditures relating to the property.

 

Repatriation of Earnings

 

There is no assurance that any countries other than Canada in which the Company carries on business or may carry on business in the future will not impose restrictions on the repatriation of earnings to foreign entities.

 

Infrastructure

 

Development and exploration activities depend on adequate infrastructure, including reliable roads and water and power sources. In particular, the Company’s activities in Regions II and III of Chile will depend on adequate water supply. The Company’s inability to secure adequate water and power resources, as well as other events outside of its control, such as unusual weather, sabotage, government or other interference in the maintenance or provision of such infrastructure, could adversely affect the Company’s operations and financial condition.

 

Influence of Third Party Stakeholders

 

The Company’s interest in its properties and the exploration equipment and roads or other means of access which the Company intends to utilize in carrying out its work programs or general business mandates, may be subject to interests or claims by third party individuals, groups or companies. In the event that such third parties assert any claims, the Company’s work programs may be delayed even if such claims are not meritorious. Such delays may result in significant financial loss and loss of opportunity for the Company.

 

Uninsurable Risks

 

In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions, including rock bursts, cave-ins, fires, flooding, earthquakes and other environmental occurrences may occur. It is not always possible to fully insure against such risks and the Company may decide not take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company.

 

Commodity Prices

 

The profitability of the Company’s operations will be dependent upon the market price of mineral commodities. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rate of inflation, world supply of mineral commodities, consumption patterns, forward sales by producers, production, industrial demand, speculative activities and stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The prices of mineral commodities have fluctuated widely in recent years. Current and future price declines could cause commercial production to be impracticable. The Company’s revenues and earnings also could be affected by the prices of other commodities such as fuel and other consumable items, although to a lesser extent than by the price of copper or gold. The prices of these commodities are affected by numerous factors beyond the Company’s control.

 

Competition

 

The mining industry is intensely competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical facilities than itself with respect to the discovery and acquisition of interests in mineral properties, the recruitment and retention of qualified employees and other persons to carry out its mineral exploration activities. Competition in the mining industry could adversely affect the Company’s prospects for mineral exploration in the future.

 

Expected Continued Operating Losses

 

Other than fiscal 2010, whereby the Company realized mark to market gains for trading securities held, the Company has no history of operating earnings. The likelihood of success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. The Company has experienced losses from operation for each of the previous three years of operation. The Company expects to incur losses, and will likely incur increased losses until commercial production is reached at SCM Berta.

 

No History of Dividends

 

The Company has never paid a dividend on its common shares and does not expect to do so in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Company’s board of directors and will depend upon the capital requirements of the Company, results of operations and such other factors as the Company’s board of directors considers relevant. Accordingly, it is likely that investors will not receive any return on their investment in the common shares other than possible capital gains.

 

Foreign Currency Risk

 

A substantial portion of the Company’s expenses are now, and are expected to continue to be incurred in foreign currencies. The Company’s business will be subject to risks typical of an international business including, but not limited to, differing tax structures, regulations and restrictions and general foreign exchange rate volatility. Fluctuations in the exchange rate between the Canadian dollar and such other currencies may have a material effect on the Company’s business, financial condition and results of operations and could result in downward price pressure for our products in or losses from currency exchange rate fluctuations. The Company does not actively hedge against foreign currency fluctuations.

 

4.

Mineral Properties

 

In Chile, the Company owns a 65% interest in SCM Berta and has an option to acquire a 75% interest in the Marimaca Project. The Company also currently holds options to acquire certain claims adjacent to the Marimaca Project and owns the Celeste Sur and Llancahue projects.

 

For the purposes of this AIF, the Company has two material mineral properties, the Marimaca Project, and the SCM Berta Property.

 

Information Regarding the Marimaca Project

 

To satisfy the reporting requirements of Form 51-102F2 with respect to the Marimaca Project, the Company has incorporated the Marimaca Technical Report by reference and reproduced the summary from the Marimaca Technical Report below. The following information in this section is summarized or extracted from the Marimaca Technical Report, which was prepared by Luis Oviedo H., P. Geo in accordance with the requirements of National Instrument 43-101. Portions of the following information are based on assumptions, qualifications and procedures which are set out only in the full Marimaca Technical Report, which is incorporated by reference into this AIF. For a complete description of the assumptions, qualifications and procedures associated with the following information, reference should be made to the full text of the Marimaca Technical Report which is available for review on the SEDAR website at www.sedar.com.

 

Introduction

 

The Marimaca Project is an open pit-mineable copper oxide deposit located 45 Km to the north of Antofagasta, Region II of Chile. In anticipation of the report, Coro mandated NCL Construcciὁn SA (“NCL”) to visit the properties, estimate the mineral resources and compile an independent technical report pursuant to National Instrument 43-101.

 

In December 2016, a team of independent qualified persons (as those terms are defined by National Instrument 43-101), visited operations at Marimaca. The Marimaca Technical Report summarizes the technical information that is relevant to support the estimation of mineral resources pursuant to National Instrument 43-101.

 

Property Description and Ownership

 

The Marimaca Project and surrounding tenements are located in Chile’s Antofagasta Province, Region II, approximately 45 kilometres north of the city of Antofagasta, 25 Km to the east of the port of Mejillones and approximately 1,250 kilometres north of Santiago. The Cerro Moreno International Airport is located about 44 km south of the Project. Its WGS 85 UTM coordinates (used in the Google EarthTM public base, www.googleearth.com) correspond to 374,800 E and 7,434,900-N. Also is located 14km from the Antofagasta to Tocopilla paved highway. The properties are easily accessed using the public road system. Antofagasta and Mejillones are modern cities with all regular services and a combined population of approximately 560,000. Personnel employed by Coro come primarily from the Antofagasta Region.

 

Antofagasta has a coastal arid climate with mild temperatures year round. Winters are mild with warm temperatures. Annual precipitation averages approximately 2-4 millimetres, the majority of which falls in the winter season. The climate allows for year round mining and exploration activities.

 

Coro is an exploration, development and mining company and its 100% owned Chilean subsidiary Minera Cielo Azul Ltda. (“MCAL”), has the right to acquire a 75% interest in the project by completing a resource estimate, engineering studies and arranging financing. As of the date of the Marimaca Technical Report, Coro had completed a 54 holes reverse circulation (RC) drilling program for 11.620 m and 6 DDH for 2800.05 m to test outcropping mineralization exposed and in several artisanal miner’s open cuts.

 

The Marimaca Project is located in an area of approximately 1,300 m (meters), north-south; by 700 m, east-west direction. This land comprises one mining concession containing 23 properties (approximately 115 hectares). The tenements are free of mortgages, encumbrances, prohibitions, injunctions, and litigation. The tenements containing the active and future mining activities are not affected by royalties.

 

History

 

The project site and district exploration programs have been active since the Marimaca deposit discovery in 2016. There is no verifiable history of mining. The area was known since the end of the 19th century as “Mineral de Naguayán”. In 1962, the first report on the project concluded that a granodiorite hosted mineralization cut by "dark dykes" oriented north-south, and inclined to the east, with copper mineralization occurring within a system of centimetric parallel fractures. Reportedly, 5 tonnes per week grading between 17% and 50% Cu were being mined. Several of the deeper underground adits reached sulphides described as chalcopyrite, bornite and chalcocite.

 

Between the 1970s and 1990s there are only reports by geologists of the government institutions such as the Institute of Geological Investigations and ENAMI (Empresa Nacional de Minería).The descriptions mention copper oxide mineralization in north-south oriented fractures and a potential of 200,000 tonnes an average grade of 1.2% of total cooper was estimated.

 

In 2003 the owners commissioned a geological study that described and sampled a 10° striking narrow veined system and estimated a potential resource of 566,000t of average grade 2.8% Cu. This study recognized an intense fracturing and the key directions for faults and veins. At least a couple of companies reviewed the property in the early 2000's, mostly juniors, but none of them reported the possibility of a substantial mining potential. In May 2008, geologists from Minera Rayrock described the control of the mineralization by a "pseudo-stratification" or a "pseudo-stratified intrusive". The potential for copper oxide mineralization was estimated at 21 Mt of average grade 0.8% Cu. After this, there are no other reports regarding mining activities in the area. Meanwhile, artisanal miners exploited the properties by developing small open pits and underground workings often with some degree of mechanization. Most of these ores were sold to Michilla, ENAMI and Rayrock.

 

The small open pits had dimensions that do not exceed 20 by 15 m and depths of up to 20 m. Underground workings reached extensions of no more than 100 m. MCAL, a 100% Coro owned subsidiary was the first company to access the property with the idea of exploring for an open pit, leachable, deposit in the Naguayán area.

 

Geology, Mineralization and Deposit Types

 

The Marimaca deposit is located in the Coastal Cordillera in the Antofagasta Region, within a belt of Mesozoic age copper deposits, known as the Coastal Copper Belt, which range in (pre-mining) size from Mantos Blancos, ~500 million tonnes to Ivan with ~50 million tonnes. These types of deposits occur in a variety of host rocks and have different morphologies. However, they have a common Cu-Ag primary mineralogy zoned from bornite outwards to chalcopyrite and pyrite, deep oxidation and frequently, secondary enrichment.

 

The deposits in the district are located NW of the main branches of the Antofagasta Fault Zone, a subduction-related strike-slip fault system stretching over 1,000 kilometres along the Chilean coast and active at least since the Jurassic.

 

The copper mineralization at Marimaca is generally referred to as Coastal Copper Belt type of mineralization. The mineralization occurs in intensely parallel fractured monzodiorite, and in detail mineralization occurs in breccias, stockworks, veinlets and disseminations along a “shear zone” (parallel centimeter spaced faulting). Marimaca has become a new exploration model for Coastal Copper Belt deposits displaying close relationships to the plutonic complexes and broadly coeval fault systems.

 

The Marimaca deposit is a 150-250m thick; gently ESE dipping, portion of strongly fractured Jurassic monzodiorite, formed at the intersection of major N striking Marimaca structure and NE striking feeder zones. The intersection of these structures has produced wide NW-SE oriented zones of eastward dipping mineralization, that have been exploited from a series of open cuts and small underground workings by artisanal miners. Surface mapping and drilling has shown that the mineralization is comprised of multiple, thick, higher grade structures bordered by lower grade halos.

 

The better grades represent the oxidation of a former sulphide enrichment blanket consisting mostly of brochantite and chrysocolla. A large pyrite halo developed in the hanging wall, now oxidised to form limonitic leached cap, containing some low grade copper wad rich irregular zones. Mineralization and concentration of copper are controlled by fracture density. The deposit is cross cut by late, post mineral dykes and sills.

 

Exploration Status

 

Before the drilling that led to the discovery of Marimaca in the first half of 2016, the work carried out was only a few indicative samples of rock and geological reconnaissance. These works were performed as part of the due diligence prior to the option agreement, in late 2014 and part of 2015. In the last year geochemical sampling of rocks on a regular grid of 100 x 100 m, covering the surface of the property and the topographic survey and aerial images taken with UAV and drones were added.

 

The exploration was conducted by Coro with the primary purpose of exploring for mineral resources. Work will now be focused on the known mineralization, by improving the quality of the resources and expanding them.

 

From the first semester of 2016, Coro invested more than US$1.5 million in exploration to delineate mineral resources, primarily surrounding the Marimaca small open pit, then to the north and south. The information from that program was used to define the current base of measured, indicated and inferred copper oxide resources.

 

Building on this exploration success, an exploration program is planned for the 2017 period, targeting an infill and the lateral extensions of the investigated areas. The planned exploration program includes around 15,000 metres of core and RC drilling at an estimated total cost of US$2 million. The mineral potential targeted by the proposed exploration program is estimated to improve 50% of Indicated resources to measured resources and 70 % tonnes of inferred to indicated resources. The range of tonnage and grades expected from the results of the proposed exploration program are estimated from the recent exploration results. The reader is cautioned that the potential quantity and grade estimates expected from the proposed exploration program are conceptual in nature. The exploration potential of the Coro properties is good. NCL is of the opinion that aggressive exploration programs must continue to expand and improve the resources.

 

Drilling, Sample Preparation, Analyses and Security

 

Mineral Resources are derived from the 2016 drill program where Coro drilled 6 core and 54 RC holes in and around the Marimaca old workings. The drilling and sampling procedures are consistent with generally recognized industry best practices. NCL concludes that the samples are representative of the source materials and there is no evidence that the sampling process introduced a bias.

 

Analytical samples for the Marimaca mineral resources were prepared and assayed in Geolaquim Laboratory in Copiapo, certified for copper analyses. Conventional preparation and assaying procedures are used. Copper is analyzed by multi acid digestion and atomic absorption spectroscopy (AAS). Specific gravity was systematically measured on 184 core samples of the DDH campaign.

 

Coro implemented analytical quality control measures, consistent with generally accepted industry best practices. The analytical quality control program includes the use of control samples inserted with all samples submitted. The analytical quality control data was routinely monitored.

 

In the opinion of NCL, the analytical results are free of apparent bias. The sampling preparation, security, and analytical procedures used are consistent with generally accepted industry best practices and are therefore adequate to support the mineral resource estimation.

 

Mineral Processing and Metallurgical Testing

 

Coro is carrying out preliminary metallurgical analysis testing to predict its processing performance in terms of metal recovery to SXEW. Four types of leachable copper oxide mineralization were identified in logging and were modelled separately in the resource estimation:

 

·

Brochantite/Atacamite

 

·

Chrysocolla

 

·

Copper wad and black oxides

 

·

Mixed oxides and Enriched

 

At the time of preparing this report, the column tests are in progress. Nevertheless, prior column tests, from open pit samples, returned 75-85% Cu recovery and 20-40 kg/t net acid consumption.

 

Mineral Resource Estimates

 

The mineral resources discussed herein are based on information from 60 core and RC drill holes, stored in a secured central database, and were evaluated using a geostatistical block modelling approach. Separate models were prepared for the Marimaca geological estimation units. Only leachable oxides and mixed material are included in the estimation.

  

NCL reviewed and audited the different sets of sections and produced 3D solids of each estimation geological unit and in the opinion of NCL the resource evaluation reported herein is a reasonable representation of the mineral resources found at Marimaca at the current level of sampling. The mineral resources have been estimated in conformity with generally accepted CIM Estimation of Mineral Resource and Mineral Reserves Best Practices Guidelines and are reported in accordance with National Instrument 43-101. The consolidated mineral resource statement for the Marimaca deposit is presented in the table below. All figures in the table are rounded to reflect the relative accuracy of the estimates.

 

 

Pit-Contained Resource Estimate

 

This work is a resource estimate only. According to the standard of the 43-101 instruments, in the case of open pit projects it is necessary to consider an optimized open pit with actual and local parameters. The estimate is included in a Whittle optimized pit, for which technical and economic parameters are shown in the table below:

 

 

Project Infrastructure

 

At the time of preparing the Marimaca Technical Report, there is no specific infrastructure developed for Marimaca. The project has a good location and vicinity, and initially is expected to be developed within constraints of existing infrastructure in the surroundings, in particular power and water.

 

Conclusion and Recommendations

 

A team of independent consultants, under the leadership of NCL, was retained by Coro to visit Marimaca the second week of December 2016, inspect the project, review and audit the data and estimate the mineral resource. NCL examined the different sources of input information: raw data (QA/QC), exploration, geology and mineral modelling estimation units. The purpose of the investigation was to estimate the Mineral Resource, in compliance with generally recognized industry best practices and report them according to Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves (May 2014).

 

NCL carried out a resource estimation of the Marimaca Project, resulting in the estimation of measured, indicated and inferred resources, plus some potential mineralized rock. For a Cutoff grade of 0.2% CuT, the resources inside an optimized pit envelope are 21.5 Mt @ 0.68 CuT of measured + indicated and 18.8 Mt @ 0.53% CuT inferred resources. Based on the 2016 mineral resources estimation, the project is expected to continue under exploration during 2017.

 

Since 2016, aggressive exploration in Marimaca has defined oxides mineralization zones amenable to open pit mining and presents very good opportunities to expand the mineral resources and extend the life of the project. In this context, NCL recommends to continue the implementation of the exploration program proposed for 2017 (US$2 million). The regional exploration potential of the exploration properties remains good. Regional exploration targeting should be reviewed, including the use of high resolution geophysical data to enhance exploration targeting.

 

The technical information on Marimaca attests the high overall quality of the exploration and design work completed by site personnel. NCL examined the data, the exploration, and the geology modelling and produced the mineral resource estimates of Marimaca. On the basis of this work, NCL concluded that the models, mineral resources and statements for Marimaca in January 2017 are appropriately categorized and free of material errors. Other than disclosed in this Marimaca Technical Report, NCL is not aware of any other significant risks and uncertainties that could reasonably be expected to affect the reliability or confidence in the Marimaca Project.

 

Information Regarding the SCM Berta Property

 

To satisfy the reporting requirements of Form 51-102F2 with respect to the SCM Berta Property, the Company has incorporated the Updated Berta PEA by reference and reproduced the summary from the Updated Berta PEA below. The following information in this section is summarized or extracted from the Updated Berta PEA, which was prepared by Sergio Alvarado in accordance with the requirements of National Instrument 43-101. Portions of the following information are based on assumptions, qualifications and procedures which are set out only in the full Updated Berta PEA, which is incorporated by reference into this AIF. For a complete description of the assumptions, qualifications and procedures associated with the following information, reference should be made to the full text of the Updated Berta PEA which is available for review on the SEDAR website at www.sedar.com.

 

Introduction

 

Coro, through its subsidiary SCM Berta (“SCMB”) retained the services of Geoinvestment SpA (“Geoinvestment”) to prepare a mineral resource estimate, PEA and Technical Report, covering its Berta copper property, located in the III Region, Chile. Geoinvestment is aware that this report is intended for disclosure to the Toronto Stock Exchange, where Coro is listed, giving support to the News Release published on June 16th 2015. The mineral code followed in this report is the Canada Institute of Mining (“CIM”) code, 2014 Edition, and this report follows the recommendations of National Instrument 43-101.

 

Sergio Alvarado, BSc (Hons.) Geology, member of CIM, The Chilean Mining Commission (“CMC”) and The Chilean Mining Engineers Institute (“IIMCh") was responsible for the overall preparation of the Technical Report as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects and in compliance with Form 43-102F1.

 

In preparing this report, Geoinvestment relied on reports, studies, maps, databases and miscellaneous technical papers listed in the References section of this report. Additional information and data for Geoinvestment’s review and studies were obtained from SCMB on site or at Coro´s Santiago office.

 

Ownership

 

Coro owns all of the shares of Minera Coro Ltda. (“MCC”). MCC beneficially owns 65% of Sociedad Contractual Minera Berta (“SCMB”) (a company incorporated under the laws of Chile on June 4, 2013).

 

On June 13, 2011 Coro announced that its subsidiary MCC had reached an agreement with a local owner for 506 ha of pending measured and measurable concessions, all registered and in good standing, that protect the main part of the project. The terms of the option were renegotiated in May 2013 reducing the total payments from $6.0 million to $4.0 million for the introduction of a 1.5% NSR on any copper oxides; and further again in 2014 by deferring the $2.5 million and providing a financing option for the final payment due in August 2015. The 2014 amendment also allowed for the deposit to be mined after the payment on August 2014. The financing option allowed for the August 2015 payment to be divided into eight quarterly payments of $281,250 plus interest accruing at LIBOR. In 2015, the Company exercised the option and elected to pursue the financing option. As at December 31, 2017, all of the eight quarterly payments have been made.

 

Concession Terms

 

	Current Terms	Status
On June 10th, 2011	US$ 200,000	Paid
On June 10th, 2012:	US$ 800,000	Paid
On June 10th, 2013:	US$ 500,000	Paid
On August 14, 2014	US$250,000	Paid
On August 14, 2015	US$ 2.25 million(1)	Paid
TOTAL	US$ 4.0 million
	An NSR of 1.5% on all copper oxides and sulfide production and its by-products

 

⁽¹⁾ The Company elected to finance the $2.25 million payment and agreed to pay eight quarterly installments of $281,250 plus interest accruing at LIBOR. As at December 31, 2017, all of the payments have been made.

 

Additionally to adequately protect the area of interest, Coro has registered approximately 2,400 ha exploration concessions, named Berta 1 to Berta 8. All concessions are valid according to the Chilean Mining Code. Apart from the option payments and the NSR derived from its execution, no other payment obligations exist on the properties that protect the project. SCMB have already negotiated 15 lps water rights from the CODELCO Pampa Austral tailings dam which can be used any time from June 2015.

 

On May 7, 2013, MCC signed a Letter of Intent with ProPipe SA (“ProPipe”) whereby ProPipe may earn up to 50% of the shares in a new company called SCMB, formed on June 4, 2013, by completing a series of payments, work commitments and project financing, thereby earning percentages of that company as follows:

 

·

Making the US$500,000 option payment due on 10th June 2013: (10% earned).

 

·

Completing and filing an Environmental Impact Declaration by 30th July 2013: (3% earned).

 

·

Completing a NI43-101 compliant PEA by September 30th 2013: (5% earned).

 

·

Obtaining and structuring project financing on non-recourse basis, at market conditions, with funds available within 6 months of completion of the PEA, for a minimum of 70% of the project cost, including a cost overrun facility, as determined in the PEA. In the event that this financing is for 100% of the project cost, ProPipe will earn 32% of SCMB, for a total shareholding of 50%. If the financing is between 70% and 100% of the required funding, ProPipe will earn a pro-rata shareholding in SCMB. At the minimum 70% level, they would earn 22.4% of SCMB, for a total shareholding of 40.4%. In the event that less than 100% funding is received, ProPipe have the right to earn the corresponding shareholding for the percentage difference in funding, or to assign their right to do so to a third party on the same terms. In the event that they do neither, they must complete such additional work and reports as required by Coro by March 31st 2014, for Coro to obtain the financing required and thus earn the corresponding shareholding.

 

·

In the event that ProPipe does not arrange a minimum of 70% project financing, they must complete a NI 43-101 compliant DFS for the project by 31st March 2014, and by so doing, will earn an additional 7% shareholding, for a total shareholding of 25% in SCMB. Coro and ProPipe will then seek project financing on a pro-rata basis

 

·

ProPipe will be Operator during the development and construction of the project, thereafter the Operatorship will alternate every 2 years.

 

·

The dates shown above for completion of the various project earn in stages were subsequently extended by mutual agreement of the parties.

 

ProPipe paid the $500,000 option payment due on 10th June 2013 and earned a 10% interest in SCMB. It also earned a further 3% for completion and submission of the Environmental Impact Declaration on November 7th 2013, and approved in October 2014. In conjunction with the ProPipe agreement, in June 2013, the underlying option agreement with the local owner was transferred from MCC to SCMB, together with the Berta 1-14 exploration claims. The shareholder’s agreement between ProPipe and MCC has been executed, and ProPipe’s interest in SCMB is currently 35%.

 

History and Exploration

 

There is abundant evidence of superficial copper mineralization in the area; however the oldest mining was directed to the exploitation of superficial narrow Au veins, with copper mining limited to minor exploitation. There is no history of these mining properties prior to Mr. Oscar Rojas Garin’s acquisition during the late 1980's. The exploitation at a small-scale mining level was extended to mechanized extraction during the 1980's and 90's, through the development of small open pits and declines. According to the existing information (Guiñez and Zamora, 1998) in 1995 a mining company, developed the Gemela and Carmen oxide bodies producing more than 100,000 t of ore at an average grade of 1.68% CuT. If the exploitation of three other small bodies (Salvadora, Berta, San Carlos) is included, the total ore extracted at Berta approximates 200,000 t at 1.5% CuT.

 

Outokumpu (Outokumpu Explorations, 1994) carried out geological, geochemical and geophysical exploration between March and September 1994, completing 48 short air track (DTH) holes and 7 reverse circulation (RC) holes for a total of 2,216 m. These results did not meet Outokumpu minimum target size and therefore the area was returned to the owner.

 

In 1997 the area was optioned by Mantos Blancos S. A. a subsidiary of Anglo American PLC (Guinez and Zamora, 1998). During September - December 1997, the area was geologically mapped and, geochemical and geophysical (IP) surveys completed; 42 RC drill holes were completed totaling 4,942 m, and some bulldozer trenches were also dug. The project was deemed not to meet Mantos Blancos’ criteria and it was returned to its owner.

 

In 2005 the properties were optioned by Texas T Minerals through its Chilean subsidiary Faro S.A., then later transferred to Grandcru Resources, which initiated exploration works in October 2006 (Adkins, 2008). All previous work was verified and additional exploration carried out, including; geochemistry with new measurements of Cu and Mo content taken from trenches and pits, using a Niton portable XRF equipment; geophysics, consisting of ground magnetometry and radiometry; additional trenching; and finally 9 DDH holes were drilled for 3,311.40 m, with depths between 87 to 932 m. The objective of Grancru’s program was to demonstrate the presence of a porphyry system beneath the breccia and/or other non-outcropping breccia bodies. Results were not considered sufficiently attractive to justify the option payments, and the property was returned to its owner.

 

In June 2011 the properties were optioned by Coro through its Chilean subsidiary MCC. Since then, the potential for Cu (Mo) porphyry style mineralization in the area has been explored via the generation of a topographic base through restitution and ortho-rectification of images with topographical control; geological mapping of outcrops and trenches at 1:2000 scale; systematic rock and soil geochemistry; geophysical studies (IP); and the three successive campaigns of RC drilling totaling 92 drill holes for 18,908 meters. The first two phases of drilling (24 holes: 4,360 m and 32 holes: 10,520 m) were aimed at the exploration of the porphyry system and the third (36 holes: 4,028 m) to provide sufficient information for a resource estimate. Collection of samples from drill core, pit walls and trenches for metallurgical test work was also undertaken.

 

Geology and Mineralization

 

At Berta the evidence for an alteration-mineralization system with Cu and Mo extends over an area of approximately 2.3 km by 1 km, oriented NNE. The elongation of the area is clearly controlled by the Chivato Fault Zone (ZFCH), limiting the mineralization to the W. Notable differences in the geology and alteration-mineralization styles permit the separation of the area into three sectors: Berta Norte, Berta Central and Berta Sur.

 

Wall rocks comprise tonalite (TON) of medium-coarse equigranular texture, intruded by at least two varieties of porphyry with similar composition: namely, a “Crowded” porphyry (PTC) and a “Fine” porphyry (TFP). The first is volumetrically more abundant, cuts the tonalite showing porphyritic to equigranular textural variations, while the Fine type is younger. Igneous breccia (BXI), with various types of intrusive fragments, semi-rounded in a porphyritic matrix, and hydrothermal breccia (BXH), with angular monomictic clasts, open spaces and sulfide cements, cut the tonalite and Crowded Porphyry, but seem to pre-date the Fine Porphyry.

 

A NNE elongated belt of tonalite about 1 to 1.5 km wide, is bounded by foliated volcanic rocks, Cretaceous in age to the W and Jurassic to the E. However, these volcanic rocks do not host significant mineralization, except occasional narrow Au veins. Previous geological maps (Outokumpu, 1994, Guiñez and Zamora, 1997) did not recognize rocks with porphyritic textures and in general, only two belts were distinguished; "Fine textured Granodiorite" to the E and "Coarse textured Granodiorite” to the W. Coro mapping has distinguished both at surface and in drilling the porphyry varieties described above and the contact relationship between them, and with the tonalite wall rock.

 

The most relevant structure corresponds to ZFCH, which can be traced NNE along the western boundary of the area, where it displaces foliated intrusive and volcanic rocks in a belt approx. 50 m wide. A zone of foliated volcanic rocks, 20 to 60 m wide is also mappable along the E contact of the tonalite body with the Jurassic volcanic rocks. NW oriented faults displace the ZFCH as well as the belt of foliated rocks to the E.

 

A D type vein system, with sulfide filling and a sericitic halo and a predominant NW strike is recognized in Berta Norte. This can be observed at surface in several trenches, with dominant red limonite leached filling, and showing some fault planes parallel to the veins. In the northern part of Berta Central, some of these veins have been determined to have an E-W strike. The breccia bodies also exhibit control by faults varying from E-W in a large part of the Berta Central area to ENE in Berta Sur. As with the D type veins, these structures are pre-mineral.

 

The development of K-feldspar – biotite ± magnetite ± sericite is the most common alteration at Berta. For descriptive purposes this is named "background potassic alteration". Its intensity increases with further development of K-feldspar as igneous breccia cement and as a strong replacement of the crowded porphyry and tonalite surrounding the breccias. The sericite is preferentially developed in D type veins environment and shows greater development in the Berta Central and Norte areas. Muscovite development is found in some breccia bodies, especially at depth and in general in breccias located towards the western boundaries. Chlorite and variable sericite are best developed in porphyries and breccias, and in the best mineralized areas, the alteration contains "green grey sericite" and is characterized by the absence of magnetite, explaining why magnetic lows coincide with the mineralization. Propylitic halos with abundant chlorite and pyrite are better developed in the northern area. Within the marginal foliated rocks, especially in the west side along the ZFCH, the rocks are strongly replaced by biotite-magnetite, with some albite and actinolite. These minerals also occur as variations of background potassic alteration around the breccias in Berta Sur.

 

The primary mineralization consists of chalcopyrite with minor variable content of bornite. There is abundant molybdenite in some sectors but with no obvious relationship to Cu sulfides. Mineralization preferentially occurs as breccia filling and cement, to a lesser extent in veins and occasionally in veinlets. Pyrite is very poorly developed in areas of best mineralization, with greater occurrence in the northern part of Berta Central and especially in Berta Norte, where it constitutes the main filling of D type veins. Along the ZFCH, chalcopyrite occurs associated with magnetite mineralization. There is an ore-alteration zonation from N to S, with a propylitic border and development of veins and breccias containing pyrite ≥ chalcopyrite (molybdenite) and halos of pervasive replacement of sericite in the north, to a domain of background potassic alteration and mineralization in breccias surrounded by a crackled zone, with chalcopyrite (molybdenite, less bornite) pyrite alteration grading outwards to albite-actinolite in the south. The western boundary is dominated by breccias with muscovite containing only rare Cu mineralization and biotite-magnetite zones with some chalcopyrite that can be traced along the ZFCH. This zoning is also related to a greater abundance of porphyritic rocks toward the central and southern areas and to changes in style and orientation of structures from NW to E-W and, finally, ENE in Berta Sur. The distribution of limonite at surface shows a direct relationship with alteration as well as with relative abundance of sulfide: yellow to yellow-reddish color predominates in the northern part related to the greater development of D type veins and sericitic alteration, while goethite and scarce jarosite make up the leach cap in the central and southern areas. In situ leaching and oxidation of the sulfides has produced a zone of copper oxides of variable thickness ranging from 30 to 120 m, generated in an environment of scarce pyrite and in poorly reactive rock. It is composed of simple green Cu oxides ores, with predominant chrysocolla, and black oxide (mixtures of wad type), very low clay content, and limonite and predominant goethite. Only in some breccia bodies, mainly those located along the eastern boundary, is there limited development of supergene enrichment with chalcocite thicknesses of 2 to 10 m, invariably oxidized to a combination of hematite, “almagre” and cuprite.

 

The geology, mineralization and alteration of Berta Sur, corresponding to the sector of the project subject to the initial resource estimate completed in December 2012, comprises an area of 600 x 450 m evaluated according to a grid aligned 340°, perpendicular to the trend of mapped structures and after determining the orientation of mineralized bodies to be 060°. The Cu oxide mineralization is exposed on a 15 m high hill with gentle slopes, being flanked to the N and S by E-W and SW oriented creeks. This mineralization has not been previously mined and its exposure has been aided by trenches dug by Outokumpu, Mantos Blancos and Grandcru.

 

Berta Central occupies an area of 450 x 500 m. Most of the mineralization outcrops and a part of it have been mined out by artisanal miners. Greater than 1% Cu copper oxide mineralization occurs related to igneous-hydrothermal breccias hosted by tonalite and crowded tonalitic porphyry and cross cut by dykes of barren Fine Tonalite Porphyry. At least eight mineralized breccias bodies were modeled from NW-SE trending, 50 m spaced vertical sections using previous (Outokumpu, Mantos Blancos and Grandcru) and Coro drill hole data. Mapping and sampling from some open cuts and underground workings as well as from some surface trenches was also digitized and incorporated into the data base.

 

Metallurgy

 

A mineralogical and chemical characterization and metallurgical leaching test work was undertaken by Geomet, an independent laboratory in Santiago, Chile for samples from Berta Sur. A second column test work program was completed at the Hydrometallurgical Lab of the Universidad de Santiago of Chile Metallurgical Mining Engineering Department (USACH) for samples from Berta Central.

 

The first campaign at Geomet was performed with the objective of defining the main process variables, such as copper recovery and acid consumption. For the metallurgical tests, Coro selected three composite samples from Berta Sur, denominated as A, B and C with approximate CuT grades of 0.80%, 0.60% and 0.40%, respectively.

 

Based on these composites, Geomet performed the metallurgical program designed to obtain mineralogical and physical characterization, preliminary metallurgical test and column leaching test for the three composite samples at two granulometry levels of 100% - 1” (P80 = 19 mm), and 100% - ½” (P80 = 9 mm), as follows:

 

1.

Physical Characterization: This characterization stage comprised: granulometry and humidity analysis at sample reception, specific gravity, and bulk density.

 

2.

Mineralogical characterization: Each sample was characterized from a mineralogical point of view, by means of optical microscopy, determining the constituents of ore and gangue.

 

3.

Preliminary metallurgical test: Preliminary tests were performed, with the objective of obtaining leaching metallurgical parameters, in order to establish the most appropriate experimental conditions for larger scale testing (pilot leaching columns) such as: contaminants determination test, Iso-pH test and Sulfation test.

 

4.

Column leaching test: In order to obtain the first metallurgical conceptual engineering level parameters, leaching tests in 4” diameter (100 mm) and 2 meter high columns, for each of the grain sizes, were performed. The irrigation rate was 10 l/hrm2. Each test was performed in duplicate; therefore, it was required to set up twelve columns in total. Tests were irrigated until completion of the leaching rate of 2 m3/t, equivalent to 25 leaching days; including daily analysis for Cu, FeT and H+, during the first eight days, then on an every other day basis, until the completion of irrigation. Thus, for each leaching test 18 samples were taken for kinetic evaluation, including the final drain solution. In order to validate the contaminant elements kinetics, weekly composites were taken and assayed by Inductively Coupled Plasma (ICP) (three in each test).

 

The most relevant conclusions from the completed study are as follows:

 

·

Material from Berta Sur deposit presented a CuT grade of 0.83% for composite sample A, 0.63% for sample B and 0.39% for sample C.

 

·

The average solubility of the three samples by the sulfuric acid method was 70.1% for composite A, 50.8% for composite B and 37.6% for composite C.

 

·

The average solubility of the three composites by the citric acid method was 55.4% for A, 14.5% for B and 24.8% for C.

 

·

The solubility rates with ferric and sodium bisulfite agent were only performed on composite B, given that it approximates the average grade of the Berta Sur resource. The average solubility rate in ferric environment was 54.5%, while in bisulfite it was 59.5%.

 

·

The fact that the solubility maximizes while using sodium bisulfite (reduction agent), is an indicator of the presence of copper oxides species corresponding to copper wad (CuOMnO2).

 

·

The head sample mineralogical characterization confirmed that copper wad was a major component of the oxide copper species present.

 

·

Results from Iso-pH tests, in terms of total copper extraction were 73% for composite A, 69% for B and 55% for C.

 

·

Net acid consumption from Iso-pH tests were 15.0, 13.8, and 13.0 kg/t, in composites A, B and C respectively, equivalent to rough gross acid consumptions of 22.3, 19.7, and 15.4 kg/t, respectively.

 

·

In terms of chemical kinetics, composite A has the fastest dissolution velocity, followed by B and finally C. Furthermore, composites B and C have kinetic similarities, but they differ greatly from A.

 

·

Sulfation tests showed doses of 17 and 23 for composite A; 12 and 8 kg/t for composites B and C, respectively. Only composite A should use different doses for P80 of ¾” and ⅜”.

 

·

In the column leaching tests, the highest copper extraction levels (78-73%) were from composite A P80 ¾” as well as ⅜”, and B P80 ⅜”. A lower extraction level (61-65%), was for B P80 ¾” and C ⅜”. Finally, the lowest extraction level (55%) was from sample C, P80 ¾”.

 

·

Extraction kinetics were identical for each grain size of composite A.

 

·

Composite B shows a distinct difference between each grain size tested (P80 ¾” and ⅜”), reaching a difference of 11 points, in terms of copper extraction percentage, at the end of the leaching period.

 

·

Composite C also shows a difference between both sizes, reaching 5.2% difference at the end of the leaching period.

 

·

Net acid consumption varied between 19.0 kg/t (Composite A) and 22.3 kg/t (Composite B).

 

In order to compare the results obtained by Geomet, representative samples from the Berta Central deposit were extracted and leaching test work was performed at the Hydrometallurgical Lab of the Universidad de Santiago of Chile Metallurgical Mining Engineering Department.

 

According to field studies, Berta Central’s mineralogy is similar to that of Berta Sur, tested by Geomet.

 

Three tests in two meters columns were performed, with the same dimensions as the utilized by Geomet, but with columns’ feeding granulometry of 100% -1/2”. The sulfuric acid curing dose was 10 kg/t for 24 h at a specific flow of 10 l/hm².

 

Given that the sample extracted from Berta Central has a head grade of 1.4% CuT and 1.1% CuS that consumes more sulfuric acid for its higher copper content, it was decided to perform tests at 10, 15 and 20 g/l of sulfuric acid concentration in the leaching solution. Results showed a kinetic behavior very similar to that observed by Geomet, for which the Berta Central minerals are technically feasible to leach, with metallurgical results similar to the achieved by Geomet for Berta Sur, apart from the head grade differences on the samples used for the test work.

 

The table below shows a comparison between the metallurgical results obtained by Geomet using the material from Berta Sur and those obtained by USACH treating material from Berta Central. These results corroborates that Berta Sur and Berta Central have a similar metallurgical behavior. For Berta Central’s higher grade material, a higher sulfuric acid dose can be added in curing that will result in better metallurgical results.

 

Table 1: Metallurgical Column Test Work for Berta Sur & Berta Central

 

Column	Sample Location	Head assays		Theoretical % Sol	Actual		Days	NAC kg/t
		% CuT	% CuS		Rec CuT	Rec CuS
P80 3/8" Comp A Geomet	BDH07-07 Drill Core (Berta Sur)	0.84	0.59	70	91.0	130	26	21
P80 3/8" Comp B Geomet	Surface trench, partially leached (Berta Sur)	0.66	0.36	55	68.0	126	28	24
P80 3/8" Comp C Geomet	Surface trench, partially leached (Berta Sur)	0.38	0.14	37	56.0	150	28	22
P80 1/2" (10 g/L H2SO4) USACH	Berta Central	1.40	1.10	79	51.5	66	28	22
P80 1/2" (15 g/L H2SO4) USACH	Berta Central	1.40	1.10	79	80.0	113	28	20
P80 1/2" (20 g/L H2SO4) USACH	Berta Central	1.40	1.10	79	87.0	120	28	28

 

Table 1 shows that the recovery of soluble copper exceeds 100% in all but one of the columns. This is due to the presence of black oxides in (copper wad?) minerals that did not report to the soluble copper assay during analysis, but is recoverable over the period of the column tests. The columns were stopped at 28 days before the recovery curves went asymptotic. Based on the results of this column test work and the soluble copper component of the deposit from drill hole assays, SCMB estimates that a recovery of 78% of the total copper in the heap leachable material should be achievable in the 60 day leach cycle contemplated for the operation. The ROM material averages 0.20%CuT and 0.12%CuS, and recoveries are estimated to be 75% of the soluble copper which is equivalent to 45% of total copper. This estimate takes into account the proposed blasting pattern of a 5x5m grid on 5m high benches which should result in a grain size slightly better than that from a first stage crusher. Leaching will take place on 7m high pads without liners between lifts, which should also result in additional recovery over time. Benchmarking against other dump leach operations in Chile indicates that they achieve recoveries of between 40 and 50% of total copper.

 

Mineral Resources Estimation

 

The mineral resources described are located in mining claims originally optioned to MCC and transferred to SCMB, which has rights to acquire 100% of the property. The acquisition of the property is contingent upon making the underlying option payments.

 

The geology of the Berta Sur and Berta Central deposits are reasonably well understood, in terms of genesis, mineralization controls and structure. Copper oxide mineralization extends to depths of 30 to 100 m with mineralization outcropping at surface and with effectively no overburden. It also has a simple mineralization and gangue mineralogy, excellent response to leaching and fairly continuous Cu grades and sharp contacts with low-grade margin mineralization.

 

To separate the zones with different statistical behavior, solids were constructed to represent two mineralization types: Oxide Body and Low Grade Oxide Body. Metallurgical test considered copper grades for both types of mineralization.

 

This Berta report model is based on 22,213 m of drilling, mainly reverse circulation (RC) and mostly drilled by MCC in three stages completed during 2011 and 2012. Other drill holes included in the resource estimate were completed during the 1990’s by Mantos Blancos and Outokumpu and diamond drilling completed by Grandcru in 2006 and 2007. Drilling and sampling procedures, sample preparation and assay protocols for all the drilling campaigns were generally acceptable and that available information was used in the resource evaluation without limitation.

 

The resource estimate was completed at a variety of total copper (%CuT) grades, as shown on Table 2

 

Table 2: Resource Estimate

 

Berta Project Resource Estimate
Zone	Cutoff	Measured			Indicated			Measured & Indicated			Inferred
		Kt	%CuT	%CuS	Kt	%CuT	%CuS	Kt	%CuT	%CuS	Kt	%CuT	%CuS
Berta Sur & Central	0.10	16,498	0.34	0.34	8,653	0.23	0.14	25,150	0.30	0.20	4,845	0.24	0.15
	0.15	13,275	0.39	0.39	5,780	0.27	0.18	19,055	0.36	0.24	3,249	0.30	0.20
	0.20	10,487	0.45	0.45	3,336	0.35	0.23	13,822	0.43	0.29	2,039	0.38	0.25
	0.25	8,355	0.51	0.51	1,961	0.44	0.30	10,316	0.50	0.35	1,402	0.45	0.31
	0.30	6,791	0.56	0.56	1,289	0.52	0.36	8,080	0.56	0.39	932	0.53	0.37
Berta Sur	0.10	10,972	0.32	0.32	4,423	0.18	0.11	15,394	0.28	0.18	2,105	0.18	0.11
	0.15	8,853	0.37	0.37	2,800	0.21	0.13	11,653	0.33	0.22	1,296	0.22	0.13
	0.20	6,892	0.42	0.42	1,332	0.26	0.16	8,225	0.39	0.27	720	0.26	0.16
	0.25	5,385	0.47	0.47	561	0.31	0.20	5,946	0.46	0.32	343	0.29	0.18
	0.30	4,288	0.53	0.53	261	0.36	0.24	4,549	0.52	0.36	127	0.33	0.21
Berta Central	0.10	5,526	0.38	0.38	4,230	0.27	0.17	9,756	0.33	0.22	2,740	0.29	0.19
	0.15	4,422	0.45	0.45	2,980	0.33	0.22	7,402	0.40	0.27	1,953	0.35	0.24
	0.20	3,594	0.51	0.51	2,003	0.41	0.27	5,598	0.47	0.33	1,318	0.44	0.30
	0.25	2,969	0.57	0.57	1,401	0.49	0.34	4,370	0.55	0.38	1,059	0.50	0.34
	0.30	2,503	0.63	0.63	1,028	0.56	0.39	3,531	0.61	0.43	805	0.57	0.40

 

Geoinvestment considered the basis for determining the reasonable prospects for eventual economic extraction of the Berta Sur and Central resources by completing a series of pit optimizations using the Lersch & Grossmann algorithm based on the following technical and economic parameters; mining cost of $2.09/t, processing Cost of $4.74/t, SXEW cost of $0.102/lb, G&A cost of $0.045/lb, sales & marketing cost of $0.041/lb, metallurgical recovery of 80% (based on results obtained from the metallurgical test work), inter ramp pit slope of 50°, and a variety of copper prices. For a base case using a $3.00/lb copper price, and a 0.1%CuT cut off grade, the optimum pits were determined to contain Measured and Indicated Resources of 17.6 million tons at a grade of 0.37%CuT and an overall stripping ratio of 0.49:1, as detailed in Table 3 below.

 

The results are depicted in Table 3 below.

 

Table 3: In Pit Resources based on $3/lb Cu, 0.1% CuT cutoff

 

Berta Project in Pit Resource
Zone	Pit	Measured			Indicated			Measured & Indicated			Waste	Strip
		kt	%CuT	%CuS	kt	%CuT	%CuS	kt	%CuT	%CuS	kt	Ratio
Berta Sur	Berta Sur	8,929	0.35	0.23	1,427	0.19	0.11	10,356	0.33	0.21	2,609	0.25
Berta Central	Trinchera-Salvadora	2,242	0.48	0.30	527	0.47	0.29	2,769	0.48	0.30	2,499	0.90
	Carmen-Gemela	982	0.51	0.36	562	0.38	0.26	1,544	0.47	0.32	1,852	1.20
	Nueva	219	0.43	0.29	295	0.34	0.22	514	0.38	0.25	375	0.73
	Berta II	853	0.37	0.24	150	0.36	0.23	1,003	0.37	0.24	572	0.57
	Chico	900	0.30	0.18	518	0.25	0.14	1,418	0.29	0.17	762	0.54
Berta Sur & Central	Total	14,125	0.38	0.25	3,479	0.29	0.18	17,604	0.37	0.23	8,669	0.49

 

 

This Updated Berta PEA is further optimizing the project using the new operating parameters shown in Table 4. Mine plan also assumes a first phase using a variable cut-off grade in year 1 of between 0.60% and 0.70%CuT, in order to maintain a constant feed to the existing Nora crusher for a period of 11 months, thus postponing part of the capital investment until year 2 of operations. A total of 0.4mt at 0.83%Cu will be mined and trucked to the Nora plant while 1.2mt of lower grade heap leach material and 0.6mt of ROM will be stockpiled for processing in year 2. In addition, the Nora plant will reprocess some spent minerals stockpiles (“Ripios”) from the previous 2009-12 operation at a rate of ~30 tpm of copper cathode during Phase 1 as described in section 17.1.4 of the Updated Berta PEA.

 

In Phase 2, after eleven months, considers all the copper oxide material from the open pits will be treated through a heap leach process with capacity of 1 million tonnes of mineral per year (including crushing, agglomeration and permanent pads), and the processing of 1.2 million tonnes per year of Run of Mine (ROM) material directly onto dump leach pads.

 

Table 4: Design Criteria and Mine Planning

 

Variable	BERTA	NORA	ROM
Mining Cost (USD/ton)	2.32	2.32	2.32
Hauling (USD/ton)	0.00	0.00	0.00
Processing Cost (USD/ton)	7.91	12.29	1.82
SX-EW Cost (USD/lb)	0.250	0.250	0.250
G&A (USD/lb)	0.090	0.090	0.090
Selling cost (USD/lb)	0.050	0.050	0.050
Recovery	78.0%	78.0%	45.0%
Selling Price	$3.00	$3.00	$3.00

 

The final optimized pit contains 7.2 million tonnes @ 0.574%CuT of heap leachable material, 6.63 million tonnes @ 0.20%CuT of ROM and 7.1 million tonnes of waste, as shown below in Table 5 by sector. This represents a mining recovery of 89.4% of the heap leach resources and 38.8% of the ROM resources contained in the Berta resource estimate.

 

Readers are advised that more detailed engineering studies have not been completed for the Berta project and so the normal progression from PEA to Preliminary Feasibility Study to Feasibility Study has not been followed in respect of making a production decision. Therefore, investors are cautioned that no mineral reserves have been declared and the level of confidence in the resources, metallurgy, engineering and cost estimation is not at a level normally associated with a project reaching a production decision.

 

Table 5: Pit Optimization by Sector

 

Sector	HL Material	CuT%	CuS%	ROM	CuT%	CuS%	Waste	Total
Berta Sur	4.178.240	0,529	0,375	4.175.360	0,203	0,122	1.448.139	9.801.739
Trinchera-S	1.130.880	0,786	0,560	1.096.000	0,186	0,111	2.663.429	4.890.309
Carmen-G	786.240	0,588	0,422	314.880	0,196	0,117	1.931.798	3.032.918
Nueva	223.360	0,567	0,401	205.440	0,209	0,126	271.977	700.777
Berta II	509.760	0,522	0,367	308.160	0,204	0,123	434.526	1.252.446
Chico	395.200	0,492	0,343	533.440	0,196	0,117	434.770	1.363.410
Total	7.223.680	0,574	0,407	6.633.280	0,200	0,120	7.184.640	21.041.600

 

Mining and Processing

 

The Project contemplates an open pit mine to extract oxide material from the Berta Sur and Central deposits using mining contractors, followed by crushing, agglomeration and heap leaching of higher grade (>0.3%CuT) material and dump leaching of lower grade (0.1-0.3%CuT) material. The resulting PLS would then be transported by 6"-54kmpipeline to the Nora SXEW plant for recovery of copper cathode. Water and raffinate would be returned by 10"-54km pipeline from Nora to Berta. Overall material contained in the mine plan developed by Geoinvestment has 7.22 mt of heap leach material, with an average grade of 0.57% CuT and 6.63 mt of dump leach material with an average grade of 0.20%CuT. Annual average material movements represent a strip ratio of approximately 0.52:1 waste: mineral.

 

This Updated Berta PEA also considers a project Phase 1 using a variable cut-off grade in year 1 of between 0.60% and 0.70%CuT, in order to maintain a constant feed to the existing Nora crusher for a period of 11 months.

 

The Berta mine plan & cathode production schedule is shown on Table 6, below;

 

Table 6: Berta Mine Plan

 

Production Profile		Yr1	Yr2	Yr3	Yr4	Yr5	Yr6	Yr7	Yr8	Tot
Nora Crushed	Ton	399.258	-	-	-	-	-	-	-	399,258
	CuT%	0,83	-	-	-	-	-	-	-	0,83
	CuS%	0,61	-	-	-	-	-	-	-	0,61
	Rec%	80,97	-	-	-	-	-	-	-	31,0
	Cu Cathode, t	2.673	-	-	-	-	-	-	-	2,673
Ripios Line	Cu Cathode, t	315								315
Berta Crushed	Ton	84.932	1.002.740	1.000.000	1.000.000	1.000.000	846.925	1.000.000	828.737	6.763.334
	CuT%	0,55	0,51	0,55	0,50	0,51	0,79	0,61	0,48	0,56
	CuS%	0,39	0,36	0,39	0,35	0,36	0,56	0,43	0,34	0,40
	Rec%	0,79	0,78	0,78	0,77	0,77	0,78	0,79	0,77	0,78
	Cu Cathode, t	366	4.025	4.271	3.838	3.945	5.241	4.783	3.074	29.544
Berta ROM	Ton	109.353	1.537.653	1.163.006	975.679	598.340	490.499	470.580	603.613	5.948.725
	CuT%	0,18	0,20	0,21	0,19	0,19	0,19	0,21	0,20	0,20
	CuS%	0,11	0,12	0,13	0,11	0,11	0,11	0,13	0,12	0,12
	Rec%	45	45	45	45	45	45	45	45	45
	Cu Cathode, t	90	1.387	1.101	812	501	408	440	541	5.280
Total Cu	Cu Cathode, t	3.444	5.412	5.372	4.650	4.446	5.650	5.223	3,615	37.812
Stockpiled Material
Berta ROM	Ton	499.882	499.882	499.882	499.882	499.882	499.882	499.882	499.882	499.882
	Cu Cathode, t	490	490	490	490	490	490	490	490	490
Berta Leach	Ton	1.090.174	732.799	957.612	650.361	264.530	(0)	115.396	0	0
	Cu Cathode, t	4.036	2.281	2.922	1.896	742	0	330	0	0

 

Infrastructure

 

At the Nora Plant, power supply will be obtained from the existing electrical grid through a local distributor EMELAT that has confirmed connection feasibility point to the existing power line. At the Berta mine site power will be supplied by 1.75Mw diesel generators.

 

Water will be sourced from the CODELCO owned Pampa Austral tailing dams, located 10km north of Nora Plant. The Berta mine site water requirement will be supplied by 10"-54km pipeline.

 

Sulphuric acid may be sourced from CODELCO´s Potrerillo smelter located 85km to the northwest of Berta mine site or from ENAMI´s Paipote Smelter located 110 km to the south.

 

Environmental and Social Issues

 

The Evaluation Commission of the Atacama Region of Chile, part of the Chilean Environmental Evaluation Service (in Spanish, “SEA”), has approved the EID of the Berta copper project and has emitted the corresponding Resolution of Environmental Qualification (in Spanish, “RCA”) on 14 October 2014. The RCA notification is in Annex 1 of Chapter 28 of the Updated Berta PEA. The corresponding RCA for the Nora SXEW plant was granted in July 31, 2008.

 

Economic and Financial Analysis

 

Operating Costs

 

Operating cost estimates reflect the current market environment in northern Chile for contract mining, crushing, sulphuric acid, power supply, cathode production by SXEW, and transportation of PLS and water, and are shown on Table 7 below. Principal operating cost components are sulphuric acid at $94/t and power at $222/MW for Berta (generators) and $117/MW for Nora (connected to grid).

 

Table 7: Life of Mine Operating Costs

 

	$’000			$/lb
Operating Costs	Phase 1	Phase 2	LOM $m	Phase 1	Phase 2	LOM $m
Mining	2,653	38,700	41,353	0.40	0.50	0.50
Processing	5,478	71,334	76,811	0.83	0.93	0.92
Transport	2,276	2,942	5,218	0.35	0.04	0.06
G&A	1,143	7,762	8,906	0.17	0.10	0.11
Cash Costs C1	11,549	120,739	132,288	1.75	1.57	1.59

 

SCMB intends to complete the following capital expenditures in Phase 1:

 

Area No	Area Title	Total $’000	Phase 1 $’000	Phase 1 $’000	Rest of LOM $’000
10	Nora Plant Purchase and Start-up	5,761	6,467	219	-925
20	Berta Construction	6,375	-	6,375	-
30	Nora Expansion	1,324	-	1,324	-
40	Pipeline PLS & RAFF/WATER	3,773	107	3,666	-
50	Other Owner Cost	5,807	574	1,319	3,914
GRAND TOTAL		23,040	7,148	12,903	2,989

 

Pre-Financing Financial Analysis

 

The Project has been evaluated on both a pre-tax basis and after all Chilean taxes and a 1.5% royalty due to the Berta claim owner at a base case copper price of $2.80/lb and for sensitivity, at prices of $2.60/lb and $3.00/lb as shown on Table 1.9. The project economics contemplated by this Updated Berta PEA are summarized on Table 9- Summary Economics.

 

Table 8: Berta Economic Evaluation Summary

 

Cu Price	$2.60/ lb		$2.80/ lb		$3.00/ lb
NPV ($ millions)	Pre tax	After tax	Pre tax	After tax	Pre tax	After tax
5%	42.3	32.3	55.2	41.8	68.1	52.1
8%	35.1	26.8	46.4	35.2	47.7	44.3
10%	31.1	23.7	41.5	31.5	51.8	39.9
IRR	62%	56%	83%	75%	106%	98%

 

Table 9: Summary Economics

 

	Revised Mine Plan
	Phase 1	Phase 2	LOM
Copper Price	US$2.80/lb
Copper Production	2,988	34,833	37,821
Duration	11 months	7 years	8 years
Cash Costs	1.75/lb	$1.57/lb	$1.59/lb
CAPEX ($million)	$7.15	$12.6	$23.0(1)
Pre-tax:
NPV (8%)	$46.4 million
IRR	83%
After-tax:
NPV (8%)	$35.2 million
IRR	75%

 

Readers are advised that more detailed engineering studies have not been completed for the Berta project and so the normal progression from PEA to Preliminary Feasibility Study to Feasibility Study has not been followed in respect of making a production decision. Therefore, investors are cautioned that no mineral reserves have been declared and the level of confidence in the resources, metallurgy, engineering and cost estimation is not at a level normally associated with a project reaching a production decision.

 

Recommendations

 

Sufficient metallurgical test work has been completed for a PEA. However, a detailed assessment of the mine plan and testing of specific samples based on the early years of production is recommended in Phase 1.

 

For Berta Central, which will be exploited towards the end of the mine life in this plan, further drilling is necessary to investigate if more HG material is available for continuing the strategy differing initial capital. Also test work is necessary to confirm the anticipated metallurgical performance.

 

There is some potentially available dump material within trucking distance of the Nora plant which should be evaluated as feed for the plant in early stage Phase 1 and when Berta is being developed.

 

An alternative to the diesel generators proposed for mine site power supply could include solar power generation, similar to those currently being built in the area, and this should be evaluated.

 

Despite the execution of initials agreements, it is recommended that SCMB should conclude a sulphuric acid contract with either of the smelters located in the region.

 

5.

dividendS

 

The Company has no fixed dividend policy and the Company has not declared any dividends on its common shares since its incorporation. The Company anticipates that all available funds will be used to undertake exploration and development programs on its mineral properties as well as for the acquisition of additional mineral properties. The payment of dividends in the future will depend, among other things, upon the Company’s earnings, capital requirements and operating and financial condition. Generally, dividends can only be paid if a company has retained earnings. There can be no assurance that the Company will generate sufficient earnings to allow it to pay dividends.

 

6.

description of capital STRUCTURE

 

The Company is authorized to issue an unlimited number of common shares without par value of which, as of December 31, 2017, 651,929,511 common shares were issued and outstanding. The common shares do not carry any pre-emptive, subscription, redemption, retraction, conversion or exchange rights, nor do they contain any sinking or purchase fund provisions.

 

The holders of the common shares are entitled to: (i) notice of and to attend any meetings of shareholders and shall have one vote per share at any meeting of shareholders of the Company; (ii) dividends, if as and when declared by the Company’s board of the directors; and (iii) upon liquidation, dissolution or winding up of the Company, on a pro rata basis, the net assets of the Company after payment of debts and other liabilities.

 

7.

MARKET FOR SECURITIES

 

Market

 

The common shares of the Company are listed and posted for trading on the TSX under the symbol “COP”. The shares commenced trading on the TSX on July 10, 2007.

 

Trading Price and Volume

 

The Company’s common shares traded on the Exchange during the year ended December 31, 2017. The table shown below presents the high and low sale prices for the common shares and trading volume, on a monthly basis, on the Exchange for 2017.

 

Month	High $	Low $	Volume
January	0.18	0.145	3,130,503
February	0.20	0.16	5,258,547
March	0.165	0.14	2,743,778
April	0.155	0.13	1,815,129
May	0.14	0.12	1,756,429
June	0.125	0.10	1,461,514
July	0.125	0.10	834,646
August	0.14	0.11	1,603,537
September	0.135	0.115	1,334,656
October	0.13	0.10	3,134,438
November	0.115	0.085	4,258,870
December	0.125	0.095	2,886,687

 

8.

Escrowed securities aND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

 

As at December 31, 2017, the Company had no escrowed securities and securities subject to contractual restriction on transfer.

 

9.

Directors and Officers

 

Name, Occupation and Security Holdings

 

The name, province or state and country of residence, position and offices with the Company and principal occupation within the five preceding years for each of the directors and executive officers of the Company (as at the date of this AIF) are set out in the following table:

 

Name, Municipality of Residence and Position with the Company	Principal Occupation or Employment for the Last Five Years	Director Since
Luis Tondo Santiago, Chile President, Chief Executive Officer and Director	President and Chief Executive Officer of the Company from June 2017 to present; Chief Operating Officer of Grupo Minero Las Cenizas from September 2015 to June 2017; Business Development and Projects Manager, Grupo Minero Las Cenizas from January 2014 to August 2014; Consultant, from July 2013 to December 2013.	June 12, 2017
Colin Kinley(1)(2)(3) Kansas, United States Director and Chairman	Director and Senior Advisor, President and Chief Executive Officer of Kinley Exploration LLC from 2007 to present; President and Chief Executive Officer of Jet Mining Pty LLC from 2010 to present; Director of Excelsior Mining from 2010 to present; Director and Chief Operating Officer of Eco Atlantic Oil and Gas Ltd. from 2011 to present.	February 5, 2016
Alan J. Stephens West Sussex, United Kingdom Executive Director	President and Chief Executive Officer of the Company from January 2005 to June 2017; Executive Director of the Company from June 2017 to present.	January 5, 2005
Gordon Fretwell(1)(3) British Columbia, Canada Director	Self-employed Solicitor of Gordon Fretwell Law Corporation from 1991 to present.	June 10, 2009
Michael Haworth(1) (2) London, United Kingdom Director	Managing Partner with Greenstone Capital LLP since August, 2013.	February 5, 2016
Roderick J. Webster(2)(3) Western Australia, Australia Director	Chief Executive Officer of Weatherly International PLC (an integrated base metals producer) from July 2005 to June 2015; Director of Weatherly International PLC from July 2005 to present.	October 18, 2006
Damian J. Towns British Columbia, Canada Chief Financial Officer and Corporate Secretary	Chief Financial Officer of the Company since October 2006.	N/A
Marcelo Cortes Providencia, Chile Vice President, Project Development	VP Project Development since February 2010.	N/A
Sergio Rivera Santiago, Chile Vice President, Exploration	VP Exploration since November 2, 2011.	N/A
Naomi Nemeth Ontario, Canada Vice President, Communications	VP Communications since January 2017;previously provided investor relations and communications services to Dynasty Metals and Mining Inc. (April 2015 to June 2016), Sandspring Resources Ltd. (March 2014 to September 2015) and Banro Corporation (April 2011 to March 2015).	N/A

 

(1)

Member of the Company’s audit committee.

 

(2)

Member of the Company’s compensation committee.

 

(3)

Member of the Company’s corporate governance and nominating committee.

 

Each of the Company’s directors is elected by the Company’s shareholders at an annual general meeting to serve until the next annual general meeting of shareholders or until a successor is elected or appointed.

 

Based on information provided by such persons, as of the date of this AIF, the directors and executive officers of the Company and its subsidiaries as a group beneficially owned, or controlled or directed, directly or indirectly, or exercised control or direction over 7,343,695 common shares of the Company, representing 1.1 % of the issued and outstanding common shares. Greenstone owns 414,085,522 common shares and is represented on the Board, by Michael Haworth, a Principal of Greenstone. If this shares are included the directors and executive officers of the Company and its subsidiaries as a group beneficially owned, or controlled or directed, directly or indirectly, or exercised control or direction over 421,429,217 common shares of the Company, representing 64.6 % of the issued and outstanding common shares.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

Except as described below, no director or executive officer of the Company is, as at the date of this AIF, or was, within ten years before the date of this AIF, a director, chief executive officer or chief financial officer of any company (including the Company), that: (a) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under the securities legislation, for a period of more than 30 consecutive days; or (b) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

 

Except as described below, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company: (a) is, as at the date of the AIF, or has been within the 10 years before the date of this AIF, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement; or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or (b) has, within the 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

 

Gordon J. Fretwell was a director of TSX-V listed Lignol Energy Corporation (“Lignol”) from January 2007 to May, 2015. Lignol went into receivership on August 22, 2014.

 

No director, or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

 

Conflicts of Interest

 

To the best of the Company’s knowledge, except as otherwise noted in this AIF, there are no existing or potential conflicts of interest among the Company or a subsidiary of the Company, its directors, officers, or other members of management of the Company or of a subsidiary of the Company except that certain of the directors, officers and other members of management serve as directors, officers and members of management of other public companies and therefore it is possible that a conflict may arise between their duties as a director, officer or member of management of such other companies and their duties as a director, officer or member of management of the Company or a subsidiary of the Company.

 

The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosure by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors’ or officers’ conflicts of interest or in respect of any breaches of duty to any of its directors and officers. All such conflicts must be disclosed by such directors or officers in accordance with the Business Corporations Act (British Columbia).

 

10.

legal proceedings AND REGULATORY ACTIONS

 

Legal Proceedings

 

The Company or its subsidiaries is not a party, nor are any of the Company’s properties subject to any pending legal proceedings the outcome of which would have a material adverse effect on the Company. Other than the above, management has no knowledge of any material legal proceedings in which the Company may be a party which are contemplated by governmental authorities or otherwise.

 

Regulatory Actions

 

There are no: (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during the Company’s most recently completed financial year and up to the date of this AIF; (b) other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements the Company entered into with a court relating to securities legislation or with a securities regulatory authority during the Company's most recently completed financial year and up to the date of this AIF.

 

11.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

Except as noted below, none of the directors, executive officers or shareholders that beneficially own, control or direct, directly or indirectly, more than 10% of the Company’s shares, nor any associate or affiliate of the foregoing, has had no material interest, direct or indirect, in any transactions in which the Company has participated within the three most recently completed financial years or in the current financial year prior to the date of this AIF, which has materially affected or is reasonably expected to materially affect the Company.

 

As described in detail under the heading, “Financings and Corporate Matters”, Greenstone, the Company’s major shareholder, participated in private placements of common shares and convertible debentures during the previous three years.

 

12.

TRANSFER AGENTS AND REGISTRARS

 

The Company’s registrar and transfer agent for its common shares is Computershare Investor Services Inc. located at its principal offices in Vancouver, British Columbia, Canada and Toronto, Ontario, Canada.

 

13.

material contracts

 

Other than contracts entered into in the ordinary course of business, the Company is not a party to any material contracts.

 

14.

INTERESTS OF EXPERTS

 

Names and Interests of Experts

 

The Company’s auditors are PricewaterhouseCoopers LLP, Chartered Professional Accountants, who have prepared an independent auditor’s report dated March <@>, 2018 in respect of the Company’s consolidated financial statements as at December 31, 2017 and December 31, 2016 and for years then ended. PricewaterhouseCoopers LLP has advised that they are independent with respect to the Company within the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct.

 

Geoinvestment SpA prepared the Updated Berta PEA. The Qualified Person responsible for the Updated Berta PEA was Sergio Alvarado. To the knowledge of management, none of Geoinvestments SpA, any designated professional of Geoinvestments SpA, or the aforementioned Qualified Person has any registered or beneficial interests, direct or indirect, in any securities or other property of the Company (or of any of its associates or affiliates).

 

NCL Construcciὁn SA prepared the Marimaca Technical Report. The Qualified Person responsible for the Marimaca Technical Report was Luis Oviedo. To the knowledge of management, none of NCL Construcciὁn SA, any designated professional of NCL Construcciὁn SA, nor the aforementioned Qualified Person has any registered or beneficial interests, direct or indirect, in any securities or other property of the Company (or of any of its associates or affiliates).

 

15.

INFORMATION ON AUDIT COMMITTEE

 

The Company is required to have an audit committee comprised of not less than three directors. The Company’s current audit committee consists of Gordon Fretwell, Michael Haworth and Colin Kinley.

 

Audit Committee Charter

 

The text of the audit committee’s charter is attached as Schedule “A” to this AIF.

 

Composition of the Audit Committee and Independence

 

National Instrument 52-110 Audit Committees (“NI 52-110”) provides that a member of an audit committee is “independent” if the member has no direct or indirect material relationship with the Company, which could, in the view of the Company’s board of directors, reasonably interfere with the exercise of the member’s independent judgment.

 

All of the members of the audit committee of the Company are independent, as that term is defined in NI 52-110.

 

Relevant Education and Experience

 

NI 52-110 provides that an individual is “financially literate” if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.

 

All of the members of the Company’s audit committee are financially literate as that term is defined in NI 52-110.

 

Based on their business and educational experiences, each audit committee member has a reasonable understanding of the accounting principles used by the Company; an ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more individuals engaged in such activities; an understanding of internal controls and procedures for financial reporting.

 

Gordon Fretwell, Chairman of the Audit Committee

 

Gordon Fretwell holds a Bachelor of Commerce degree and graduated from the University of British Columbia in 1979 with his Bachelor of Law degree. Formerly a partner in a large Vancouver law firm, Mr. Fretwell has, since 1991, been a self-employed solicitor (Gordon J. Fretwell Law Corporation) in Vancouver practicing primarily in the areas of corporate and securities law.

 

Michael Haworth, Member of the Audit Committee

 

Michael Haworth qualified as a Chartered Accountant (South Africa). Following a 16 year career in the mining sector including Managing Director at JP Morgan and Head of Mining and Metals Corporate Finance in London, Mr. Haworth co-founded Greenstone Resources in 2013.

 

Colin Kinley, Member of the Audit Committee

 

Mr. Kinley is the Chief Executive Officer of Kinley Exploration LLC and leads a team of industry experts providing professional, technical and oversight expertise to international resource companies within the upstream sector. Mr. Kinley has over 30 years of international expertise in integrated energy project management and new energy companies’ development. Mr. Kinley served as a senior executive to several exploration and production companies and oilfield service companies and is specialized in frontier resource development.

 

Audit Committee Oversight

 

Since the commencement of the Company’s most recently completed financial year, the audit committee of the Company has not made any recommendations to nominate or compensate an external auditor which were not adopted by the board of directors of the Company.

 

Reliance on Certain Exemptions

 

Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemptions in section 2.4 (De Minimis Non-audit Services), section 3.2 (Initial Public Offerings), section 3.4 (Events Outside Control of Member) or section 3.5 (Death, Disability or Resignation of Audit Committee Member) of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 (Exemptions).

 

Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemption in subsection 3.3(2) (Controlled Companies) or section 3.6 (Temporary Exemption for Limited and Exceptional Circumstances) or the exemption in section 3.8 (Acquisition of Financial Literacy) of NI 52-110.

 

Pre-Approval Policies and Procedures

 

The audit committee has adopted specific policies and procedures for the engagement of non-audit services. As part of these policies and procedures the chair of the audit committee is required to be notified, or pre-approval is required to be sought, for any non-audit service that exceeds a pre-determined amount per assignment. The Company’s auditors are required to prepare quarterly statements for the audit committee outlining the details of any non-audit assignments undertaken during the quarter and the fees charged for such assignments.

 

Audit Fees

 

The following table sets forth the fees paid by the Company and its subsidiaries to PricewaterhouseCoopers, the current auditors, for services rendered during the financial years ended December 31, 2016 and 2017:

 

			2016				2017
Audit fees(1)			CA$70,000				CA$105,000
Audit-related fees(2)			-				-
Tax fees(3)			CA$40,750				CA$1,375
All other fees			-				-
Total			CA$110,750				CA$106,375

 

Notes:

 

(1)

The aggregate audit fees billed by the Company’s auditor (or accrued).

 

(2)

The aggregate fees billed (or accrued) for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements which are not included under the heading “Audit Fees”, including for quarterly reviews, and services in connection with a public offering of securities.

 

(3)

The aggregate fees billed (or accrued) for professional services rendered for tax compliance, tax advice and tax planning.

 

16.

ADDITIONAL INFORMATION

 

Additional information concerning the Company may be found on SEDAR at www.sedar.com. Additional financial information is provided in the Company’s financial statements and management’s discussion and analysis for its most recently completed financial year ended December 31, 2017, which are available for review on SEDAR at www.sedar.com. Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans is contained in the Company’s Information Circular for the Company’s Special and Annual General Meeting held June 15, 2017.

 

Schedule “a”

 

AUDIT COMMITTEE AND MANDATE

 

A.       PURPOSE

 

The overall purpose of the Audit Committee (the “Committee”) is to:

 

1.

provide independent review and oversight of the Company’s financial reporting process, the system of internal controls and management of financial risks and the audit process, including the selection, oversight and compensation of the Company’s external auditors, subject to the Board of directors (the “Board”) as a whole filling a vacancy in the office of auditor;

 

2.

assist the Board in fulfilling its responsibilities in reviewing the Company's process for monitoring compliance with laws and regulations and its own code of business conduct;

 

3.

maintain effective working relationships with the Board, management, and the external auditors and monitor the independence of those auditors; and

 

4.

review the Company’s financial strategies, its financing plans and its use of the equity and debt markets.

 

B.       COMPOSITION, PROCEDURES AND ORGANIZATION

 

1.

The Committee shall consist of at least three members of the Board, all of whom shall be “independent” and “financially literate” as those terms are defined in National Instrument 52-110 “Audit Committees”. In this regard, no member shall:

 

(a)

other than in his or her capacity as a member of the Committee, Board or any other committee of the Board, accept directly or indirectly any consulting, advisory or other compensatory fee from the Company. The indirect acceptance of a consulting, advisory or other compensatory fee shall include acceptance of the fee by a spouse, minor child or stepchild, or child or stepchild sharing a home with the committee member, or by an entity in which such member is a partner, member or principal or occupies a similar position and which provides accounting, consulting, legal, investment banking, financial or other advisory services or any similar services to the Company;

 

(b)

have been employed by the Company or any of its affiliates in the current or past two years; or

 

(c)

be an affiliate of the Company or any of its subsidiaries.

 

2.

To perform his or her role effectively, each Committee member will obtain an understanding of the responsibilities of Committee membership as well as the Company’s business, operations and risks.

 

3.

The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.

 

4.

Unless the Board shall have appointed a Chair of the Committee, the members of the Committee shall elect a Chairman from among their number.

 

5.

The secretary of the Committee shall be designated from time to time from one of the members of the Committee or, failing that, shall be the Company’s corporate secretary, unless otherwise determined by the Committee.

 

6.

The Committee shall have access to such officers and employees of the Company, its external auditors and legal counsel and to such information respecting the Company and may engage separate independent counsel and advisors at the expense of the Company, all as it considers to be necessary or advisable in order to perform its duties and responsibilities.

 

C.       MEETINGS

 

1.

At the request of the Chief Executive Officer (“CEO”) or any member of the Committee, the Chairman will convene a meeting of the Committee and provide an agenda for such meeting.

 

2.

Any two directors may request the Chairman to call a meeting of the Committee and may attend at such meeting or inform the Committee of a specific matter of concern to such directors, and may participate in such meeting to the extent permitted by the Chairman of the Committee.

 

3.

The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and hear each other.

 

4.

Meetings shall be held not less than four times a year and to coincide with the reporting of quarterly financial statements. Special meetings shall be convened as required. External auditors may convene a meeting if they consider that it is necessary.

 

5.

The Committee may invite such other persons (e.g. the CEO and/or the Chief Financial Officer (“CFO”) to its meetings, as it deems appropriate.

 

6.

The external auditors may be present at each Committee meeting at the request of the Chairman, and be expected to comment on the financial statements in accordance with best practices. The external auditor is entitled to be present and participate at audit committee meetings whose subject is the year-end financial statements and management’s discussion & analysis.

 

7.

The proceedings of all meetings will be recorded in minutes.

 

D.       DUTIES AND RESPONSIBILITIES

 

The duties and responsibilities of the Committee shall be as follows:

 

1.

Recommend to the Board:

 

(a)

the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the issuer; and

 

(b)

the compensation of the external auditor.

 

2.

Determine whether internal control recommendations made by external auditors have been implemented by management.

 

3.

Identify areas of greatest financial risk and determine whether management is managing these effectively.

 

4.

Review the Company’s strategic and financing plans to assist the Board’s understanding of the underlying financial risks and the financing alternatives.

 

5.

Review management’s plans to access the equity and debt markets and to provide the Board with advice and commentary.

 

6.

Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the financial statements.

 

7.

Review any legal matters which could significantly impact the financial statements as reported on by the Company’s outside counsel and meet with outside counsel whenever deemed appropriate.

 

8.

Review the annual and quarterly financial statements, including management's discussion and analysis and annual and interim earnings press releases before the Company publicly discloses this information, and determine whether they are complete and consistent with the information known to committee members; determine that the auditors are satisfied that the financial statements have been prepared in accordance with generally accepted accounting principles, and, if appropriate, recommend to the Board that the annual and quarterly financial statements and management’s discussion and analysis be included in the Company’s securities filings.

 

9.

Review and approve the financial sections of the annual report to shareholders, the annual information form, prospectuses and all other regulatory filings and public reports requiring approval by the Board, and report to the Board with respect to its review.

 

10.

Pay particular attention to complex and/or unusual transactions such as those involving derivative instruments and consider the adequacy of disclosure thereof.

 

11.

Focus on judgmental areas, for example those involving valuation of assets and liabilities and other commitments and contingencies.

 

12.

Review audit issues related to the Company's material associated and affiliated companies that may have a significant impact on the Company's equity investment.

 

13.

Meet with management and the external auditors to review the annual financial statements and the results of the audit.

 

14.

Assess the fairness of the interim financial statements and disclosures, and obtain explanations from management on whether:

 

(a)

actual financial results for the interim period varied significantly from budgeted or projected results;

 

(b)

generally accepted accounting principles have been consistently applied;

 

(c)

there are any actual or proposed changes in accounting or financial reporting practices; and

 

(d)

there are any significant or unusual events or transactions which require disclosure and, if so, consider the adequacy of that disclosure.

 

15.

Review the external auditors' proposed audit scope and approach and ensure no unjustifiable restriction or limitations have been placed on the scope.

 

16.

Review the performance of the external auditors and approve in advance provision of services other than auditing.

 

17.

Consider the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services bought by the Company. The Committee will obtain from the external auditors, on an annual basis, a formal written statement delineating all relationships between the external auditors and the Company,

 

18.

Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company.

 

19.

Meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately, including the results of the external auditors’ review of the adequacy and effectiveness of the Company’s accounting and financial controls.

 

20.

Endeavour to cause the receipt and discussion on a timely basis of any significant findings and recommendations made by the external auditors.

 

21.

Obtain regular updates from management and the Company's legal counsel regarding compliance matters, as well as certificates from the CFO as to required statutory payments and bank covenant compliance and from senior operating personnel as to permit compliance.

 

22.

Ensure that the Board is aware of matters which may significantly impact the financial condition or affairs of the business.

 

23.

If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist.

 

24.

Create specific procedures for the receipt, retention and treatment of complaints regarding the Company’s accounting, internal accounting controls and auditing matters. These procedures will include, among other things, provisions for the confidential treatment of complaints and anonymity for employees desiring to make submissions. Refer to the Company’s Whistle Blower Policy attached to this Mandate as Appendix A.

 

25.

Perform other functions as requested by the Board.

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.2

 

 

 

 

 

 

 

Coro Mining Corp.

Consolidated Financial Statements

December 31, 2017

(Expressed in U.S. dollars, except where indicated)

 

 

 

 

March 29, 2018

 

Independent Auditor’s Report

 

To the Shareholders of Coro Mining Corp.

 

 

We have audited the accompanying consolidated financial statements of Coro Mining Corp., which comprise the consolidated statements of financial position as at December 31, 2017 and December 31, 2016 and the consolidated statements of loss and comprehensive loss, shareholders’ equity, and cash flows for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

 

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

 

PricewaterhouseCoopers LLP

PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7 T: +1 604 806 7000, F: +1 604 806 7806

 

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

 

 

 

 

 

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Coro Mining Corp. as at December 31, 2017 and December 31, 2016 and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the IASB.

 

Emphasis of matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about Coro Mining Corp.'s ability to continue as a going concern.

 

(Signed) “PricewaterhouseCoopers LLP”

 

Chartered Professional Accountants

 

 

		2017				2016
		$000's				$000's
Assets
Current assets
Cash and cash equivalents			2,811				4,257
Accounts receivable and prepaid expenses (note 4)			3,299				1,296
Inventories (note 5)			1,956				1,578
			8,066				7,131
Property, plant and equipment (note 6)			28,790				20,861
Exploration and evaluation assets (note 7)			5,930				938
Total assets			42,786				28,930
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 8)			10,818				4,073
Current portion of other debt (note 9)			3,412				871
			14,231				4,944
Non-current portion of other debt (note 9)			250				431
Restoration provision (note 10)			6,583				1,281
Total liabilities			21,064				6,656
Shareholders' equity
Common shares (note 11)			92,635				74,477
Contributed surplus			7,789				7,155
Accumulated other comprehensive income ("AOCI")			439				571
Deficit			(74,331	)			(60,708	)
			26,532				21,495
Non-controlling interest ("NCI") (note 13)			(4,810	)			779
Total equity			21,722				22,274
Total liabilities and equity			42,786				28,930
Nature of operations and going concern (note 1)
Commitments (note 19)
Subsequent events (note 7 and 20)
Approved by the Board of Directors

 

 

“Colin Kinley”		“Michael Haworth”
Director		Director

 

 

 

 

		2017				2016
		$000's				$000's
Expenses
Exploration expenditures (note 14)			150				2,241
Care and maintenance costs (note 6)			573				-
Writedown and impairments (note 6 and 7)			15,903				-
Depreciation and amortization			25				12
Legal and filing fees			63				70
Other corporate costs			583				363
Salaries and management fees			974				536
Share-based payments expense			711				785
Operating loss			18,982				4,007
Finance income			(10	)			(170	)
Foreign exchange loss (gain)			248				(215	)
Other			(8	)			(36	)
Loss for the year			19,212				3,586
Attibutable to:
Owners of the parent			13,623				3,560
Non-controling interests			5,589				26
			19,212				3,586
Other comprehensive income
Items that may be reclassified subsequently to net income:
Foreign currency translation adjustment			132				194
Loss and comprehensive loss for the year			19,344				3,780
Attibutable to:
Owners of the parent			13,755				3,754
Non-controling interests			5,589				26
Loss and comprehensive loss for the year			19,344				3,780
Basic and diluted loss per share ($ per share)		$	0.02			$	0.01
Weighted average shares outstanding (000's)			576,563				348,346

 

 

 

		Attributable to owners of the parent
		Shares
		Number								Contributed																				Total
		of shares				Amount				surplus				AOCI				Deficit				Total				NCI				equity
		#000's				$000's				$000's				$000's				$000's				$000's				$000's				$000's
Balance at January 01, 2016			159,372				53,172				6,326				765				(57,148	)			3,115				805				3,920
Shares issued (note 11)			324,053				21,305				-				-				-				21,305				-				21,305
Share-based payments (note 12)			-				-				829				-				-				829				-				829
Comprehensive income (loss)			-				-				-				(194	)			(3,560	)			(3,754	)			(26	)			(3,780	)
Balance at December 31, 2016			483,425				74,477				7,155				571				(60,708	)			21,495				779				22,274
Balance at January 01, 2017			483,425				74,477				7,155				571				(60,708	)			21,495				779				22,274
Shares issued (note 11)			164,242				17,710								-				-				17,710				-				17,710
Warrants exercised (note 12)			2,163				305				(62	)			-				-				243				-				243
Options exercised (note 12)			2,100				143				(49	)			-				-				94				-				94
Share-based payments (note 12)			-				-				745				-				-				745				-				745
Comprehensive income (loss)			-				-				-				(132	)			(13,623	)			(13,754	)			(5,589	)			(19,344	)
Balance at December 31, 2017			651,930				92,635				7,789				439				(74,331	)			26,533				(4,810	)			21,722

 

 

 

 

 

		2017				2016
		$000's				$000's
Cash flows from operating activities
Loss for the year			(19,212	)			(3,586	)
Items not affecting cash
Depreciation and amortization			25				12
Writedown and impairments (note 6 and 7)			15,903				-
Share-based payment expense			711				785
Unrealized foreign exchange loss (gain)			-				(360	)
Accretion expense			56				-
Others			(8	)			(36	)
			(2,525	)			(3,185	)
Change in non-cash operating working capital
Increase in receivables and prepaid			(209	)			(29	)
Increase in inventory			(378	)			(730	)
Increase in accounts payable and accruals			(37	)			(19	)
			(3,149	)			(3,963	)
Cash flows from financing activities
Deferred consideration (note 9)			(563	)			(563	)
Finance lease payments (note 9)			(199	)			(443	)
Issuance of common shares net (note 11)			18,158				13,181
Repayment of loans (note 9)			(438	)			(600	)
Other debt (note 9)			3,750				-
			20,708				11,575
Cash flows from investing activities
Property, plant and equipment (note 6)			(21,932	)			(11,742	)
Proceeds from pre-commercial production sales			14,144				8,474
Rayrock acquisition (note 3)			(5,870	)			-
Deferred exploration and evaluation assets (note 7)			(5,215	)			(1,348	)
			(18,873	)			(4,616	)
Effect of exchange rate changes on cash			(132	)			191
Increase (decrease) in cash and cash equivalents			(1,446	)			3,187
Cash and cash equivalents: beginning of the year			4,257				1,070
Cash and cash equivalents: end of the year			2,811				4,257

 

 

1

Nature of operations and going concern

 

Coro Mining Corp. (the “Company” or “Coro”) and its subsidiaries are engaged in the exploration and development of base and precious metal projects in Chile. The Company was incorporated on September 22, 2004 and commenced activities in 2005. The Company’s registered office is Suite 2610, Oceanic Plaza, 1066 West Hastings Street, Vancouver, British Columbia, Canada.

 

Going concern

These consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”) applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. For the year ended December 31, 2017, the Company reported a $19.2 million loss and cash outflows from operating activities of $3.1 million. As at December 31, 2017, the Company had a working capital deficit of $6.2 million, principally arising from Sociedad Contractual Minera Berta (“SCMB”). These conditions cast significant doubt on the validity of the going concern assumption.

 

In December 2017, Coro entered into a credit agreement with its major shareholder, Greenstone Resources L.P. (“Greenstone”) pursuant to which Greenstone advanced $3 million to Coro on December 20, 2017. Under the terms of the credit agreement, the loan has an eleven-month term and bears interest at 12% per annum until March 31, 2018, after which the interest will be increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement. The proceeds of the loan will be used for working capital and general operating costs (note 9).

 

In February 2018, Coro entered into a further credit agreement with Greenstone for $5 million (note 20) and announced a strategic review of its Sociedad Contractual Minera Berta operations. At the conclusion of this review, the Company hopes to be able to provide a clear way forward with SCMB and reinitiate an equity financing to ensure the continuing developments and operations of the Company.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate cash flow from operations and, to the extent that this is not sufficient, to obtain additional funding from loans, equity financings or through other arrangements. While the Company has been successful in arranging financing in the past, the success of such initiatives cannot be assured.

 

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.

 

2

Significant accounting policies

 

Basis of presentation

These consolidated financial statements have been prepared in accordance with IFRS issued by the International Financial Reporting Standard (“IFRS”) and include all adjustments, of a normal recurring nature, considered necessary by management to fairly present the financial position, results of operations and cash flows of the Company. These financial statements were authorized for issue by the Board of Directors on March 29, 2018

 

Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Minera Cielo Azul Ltda., Minera Rayrock Ltda., Inversiones Cielo Azul Ltda., Minera Coro Chile Ltda., and its 65% interest in SCMB. All intercompany transactions, balances, income and expenses have been eliminated on consolidation.

 

Estimates and use of judgement

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The following discusses the most significant accounting judgments and estimates that the Company has made in the preparation of the financial statements that could result in a material effect in the next financial year on the carrying amounts of assets and liabilities:

2

Significant accounting policies (continued)

 

a)

Impairment of exploration and evaluation assets

The application of the Company’s accounting policy for impairment of exploration and evaluation assets requires judgement to determine whether indicators of impairment exist, including factors such as: the period for which the Company has the right to explore has expired or will expire in the future, and is not expected to be renewed; substantive expenditures on further exploration for and evaluation of mineral resources in the specific area is neither budgeted or planned; exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources; and sufficient data exists to indicate that the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Management has assessed impairment indicators on the Company’s exploration and evaluation assets and has concluded that no impairment indicators exist as of December 31, 2017.

 

b)

Impairment of property, plant and equipment

Each reporting period, cash generating units are evaluated to determine whether there are any indications of impairment. If any such indication exists, an impairment test is performed and if indicated, an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating unit is measured at the higher of the fair value less costs to sell or the value in use. The recoverable amount of the Company’s assets is calculated based on cash flow projections using assumptions and estimates that represent management's best estimate of the range of economic conditions that will exist over the remaining useful lives of the assets, and through a review of sales of comparative assets. These calculations include key estimates such as future copper prices, recoverable resources and reserves, operating and capital costs, inflation rate, discount rate and exchange rates. Although management has made its best estimate of these factors, it is possible that changes could occur in the near term that could adversely affect management’s estimate of the net cash flows to be generated from its projects.

 

c)

Achievement of commercial production

Once a mine is ready for its intended use, depletion of capitalized mineral property costs begins. Significant judgement is required to determine when a project is ready to be operated in the manner intended by management. In assessing whether the Berta project has reached commercial production, management has considered several factors including:

 

-		Whether all major capital expenditures necessary to bring the mine to the condition where it is capable of operating in the manner intended by management have been completed;
-		Whether a reasonable period of testing and commissioning has taken place;
-		The ability to produce saleable product (e.g., the ability to produce copper cathode within specifications);
-		Whether the mine or plant has reached a pre-determined percentage of design capacity;
-		Whether mineral recoveries are at or near the expected production level; and
-		Whether the mine has the ability to sustain ongoing production of ore.

 

Because of operating difficulties encountered in the ramp up of the Berta mine and Nora Plant relating to trucking costs, recoveries, plant efficiency and the inability to construct a pipeline between the two sites, management does not consider that commercial production has been met as at December 31, 2017.

 

Foreign currency translation

The functional currency of the parent company, Coro Mining Corp., is the Canadian dollar (CA$). The functional currency of the Company’s Chilean subsidiaries is the U.S. dollar ($). The presentation currency of the Company is the U.S. dollar.

 

The financial statements of the parent company are translated into U.S. dollars for presentation purposes as follows: monetary assets and liabilities are translated at the closing rate at the date of the consolidated statement of financial position. Non-monetary items are translated at historic exchange rates at each transaction date. Pre-commercial production sales and expenses are translated at the average exchange rate of the period (as this is considered a reasonable approximation to the actual rates). Gains and losses on translation are recognized in the statement of loss and comprehensive loss as cumulative translation adjustments.

 

2

Significant accounting policies (continued)

 

Transactions in currencies other than the functional currency of an entity are recorded at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies are translated at the rate prevailing at each reporting date. Foreign currency translation differences arising on translation into the functional currency of an entity are recognized in the statement of loss.

 

a)

Cash and cash equivalents

Cash and cash equivalents comprise cash at banks, cash on hand and other short-term investments with initial maturities of less than three months. Cash and cash equivalents are classified as loans and receivables.

 

b)

Investments

Investments in public company shares are held for trading and measured at fair value on the statement of financial position. Changes in fair value are recorded in a separate line in the statement of loss.

 

c)

Accounts receivable

Accounts receivable are classified as loans and receivables and are recorded at amortized cost using the effective interest rate method, which upon their initial measurement is approximately equal to their fair value. Subsequent measurement of receivables is at amortized cost.

 

d)

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are classified as other financial liabilities and are measured at amortized cost using the effective interest rate method.

 

e)

Debt

The Company recognizes all financial liabilities initially at fair value and classifies them as either fair value through profit or loss or other financial liabilities, as appropriate. Debt classified as other financial liabilities is subsequently measured at amortized cost, calculated using the effective interest rate method. Debt classified as fair value through profit or loss is measured at fair value on each financial period-end date with gains and losses flowing through the statement of operations.

 

f)

Derivative instruments

Derivative instruments, including embedded derivatives, are recorded at fair value through profit or loss and accordingly recorded on the statement of financial position date at fair value. Fair values for derivative instruments are determined using valuation techniques, using assumptions based on market conditions existing at the statement of financial position date.

 

g)

Inventories

Finished goods (copper cathodes), in-process and stockpile inventories are recorded at the lower of average cost and net realizable value. Ore stockpiles include materials extracted from the mine and stockpiled before and after the crushing process. Finished goods, in-process and ore stockpiles costs include all direct costs incurred in production including direct labour and materials, freight, depreciation and amortization, and directly attributable overhead costs.

 

When inventories have been written down to net realizable value, a new assessment of net realizable value is made in each subsequent period. When the circumstances that caused the write down no longer exist, the amount of the write down is reversed.

 

Consumable parts and supplies are valued at the lower of average cost and net realizable value. Cost includes acquisition, freight and other directly attributable costs.

 

h)

Property, plant and equipment

Property, plant and equipment include mineral properties and mine development costs, plant and equipment, and capital work in progress.

 

 

2

Significant accounting policies (continued)

 

Plant and equipment

Plant and equipment are carried at cost, less accumulated amortization and accumulated impairment losses. Cost comprises the fair value of consideration given to acquire an asset and includes the direct charges associated with bringing the asset to the location and condition necessary for putting it into use along with the future cost of dismantling and removing the asset. When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment.

 

Plant and equipment are amortized over the life of the mine using the units-of-production (“UOP”) method based on the recoverable tonnes from the estimated proven and probable reserves. Mobile equipment is depreciated on a straight-line basis for up to five years.

 

During the commissioning phase of a new plant, pre-production expenditures, net of incidental pre-commercial production sale, are capitalized to property, plant and equipment.

 

Mineral property and mine development costs

Mineral property costs are carried at cost, less accumulated depletion. Costs of project development, including gaining initial access to the ore body, are capitalized to mineral properties. Once the mineral property is in production, it will be depleted using the UOP method, based on recoverable tonnes from the estimated proven and probable reserves.

 

Capitalization of costs incurred in the pre-commercial production phase ceases when the mining property is capable of commencing mining operations in the manner intended by management. Costs incurred prior to this point, including depreciation of related plant and equipment, are capitalized and proceeds from sales during this period are offset against capitalized costs.

 

Deferred stripping

Stripping costs incurred during the production phase of a mine are considered production costs and are included in the cost of inventory produced during the period in which stripping costs are incurred, unless the stripping activity can be shown to be a betterment of the mineral property. Betterment occurs when stripping activity increases future output of the mine by providing access to additional reserves. Stripping costs incurred to prepare the ore body for extraction are capitalized as mine development costs and are amortized on a UOP basis over the reserves to which they relate.

 

Construction in progress

Costs recorded for assets under construction are capitalized as construction in progress. On completion, the cost of construction is transferred to the appropriate category of property, plant and equipment. No amortization is recorded until the assets are substantially complete and available for their intended use.

 

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial period of time to prepare for its intended use are capitalized as part of the cost of the asset. Capitalization of borrowing costs begins when there are borrowings and activities commence to prepare an asset for its intended use. Capitalization of borrowing costs ends when substantially all activity necessary to prepare a qualifying asset for its intended use is complete. When proceeds of project specific borrowings are invested on a temporary basis, borrowing costs are capitalized net of any investment income.

 

i)

Exploration and evaluation expenditures

Exploration and evaluation expenditures include the costs of acquiring licenses and costs associated with exploration and evaluation activity. Mineral property acquisition costs are capitalized. Exploration and evaluation costs relating to non-specific projects or properties or costs incurred before the Company has obtained legal rights to explore an area are expensed in the period incurred.

 

2

Significant accounting policies (continued)

 

Exploration and evaluation costs are recognized as mineral property interests when management has establish that a resource exists and that the costs can be economically recovered. Once the technical feasibility and commercial viability of the extraction of mineral reserves or resources from a particular mineral property have been determined, expenditures are reclassified to mineral property development costs within mineral properties, plant and equipment and are carried at cost until the properties to which the expenditures relate are sold, abandoned or determined by management to be impaired in value.

 

The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors, such as but not limited to:

·

The extent to which mineral reserves or resources have been identified through an economic study;

·

The status of environmental permits; and

·

The status of mining leases or permits.

 

Exploration and evaluation assets are tested for impairment immediately prior to reclassification to mineral property development costs within property, plant and equipment. Proceeds from the sale of properties or cash proceeds received from option payments are recorded as a reduction of the related mineral property interest.

 

j)

Impairment of non-financial assets

The carrying amounts of assets included in mineral properties, plant and equipment are reviewed for impairment whenever facts and circumstances suggest that the carrying amounts may not be recoverable. If there are indicators of impairment, the recoverable amount of the asset is estimated in order to determine the extent of any impairment. Where the asset does not generate cash flows that are independent from other assets, the recoverable amount of the cash generating unit to which the asset belongs is determined. The recoverable amount of an asset or cash generating unit is determined as the higher of its fair value less costs of disposal and its value in use. An impairment loss exists if the asset’s carrying amount exceeds the recoverable amount, and the excess is recorded as an expense immediately.

 

Value in use is determined as the present value of the future cash flows expected to be derived from continuing use of an asset or cash generating unit in its present form. These estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit for which estimates of future cash flows have not been adjusted.

 

Fair value is the price that would be received from selling an asset in an orderly transaction between market participants at the measurement date. Costs of disposal are incremental costs directly attributable to the disposal of an asset. Estimated future cash flows are calculated using estimated future prices, mineral reserves and resources and operating and capital costs. All inputs used are those that an independent market participant would consider appropriate.

 

Tangible assets that have been impaired in prior periods are tested for possible reversal of impairment whenever events or changes in circumstances indicate that the impairment has reversed. If the impairment has reversed, the carrying amount of the asset is increased to its recoverable amount, but not beyond the carrying amount that would have been determined had no impairment loss been recognized for the asset in the prior periods. A reversal of an impairment loss is recognized into profit or loss immediately.

 

k)

Decommissioning and restoration provision

An obligation to incur decommissioning and environmental costs arises when environmental disturbance is caused by the exploration or development of a mineral property. Such costs are estimated and discounted to their net present value and capitalized to the carrying amount of the related asset along with the recording of a corresponding liability, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflect risks specific to the liability are used to calculate the net present value. The liability is adjusted each year for the unwinding of the discount rate, changes to the current market-based discount rate, and for the amount or timing of the underlying cash flows needed to settle the obligation.

 

 

2

Significant accounting policies (continued)

 

l)

Leases

Assets financed by leasing agreements that give rights approximating ownership (finance leases) are capitalized at fair value. The capital elements of future obligations under finance leases are included as liabilities in the statement of financial position and the interest element is charged to the statement of loss. Annual payments under other lease arrangements, known as operating leases, are charged to the statement of loss on a straight-line basis.

 

m)

Loss per share

Loss per share is calculated using the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated using the treasury stock method whereby all in the money options and warrants are assumed to have been exercised at the beginning of the year and the proceeds from the exercise are assumed to have been used to purchase common shares at the average market price during the period. In periods of loss, basic and diluted loss per share are the same, as the effect of the exercise of outstanding options and warrants is anti-dilutive.

 

n)

Income taxes

Deferred income tax is recognized using the liability method on temporary differences arising between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years.  Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either accounting nor taxable profit or loss. Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the statement of financial position date.

 

Deferred income tax assets are recognized only to the extent that it is probable that future profit will be available against which such assets can be utilized.

 

o)

Share-based payments

The Company applies the fair value method of accounting for stock options granted to employees and others providing similar services. The fair value of options is determined using a Black-Scholes option pricing model that takes into account, as of the grant date, the exercise price, the expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock, and the risk-free interest rate over the expected life of the option. The Company expenses the fair value of stock options granted over the vesting period with the corresponding credit to contributed surplus.

 

Cash consideration received from employees on exercise of options is credited to common shares along with the original grant date fair value of the options exercised.

 

p)

Pre-commercial production sales

Pre-commercial production sales are recognized when it is probable that the economic benefits will flow to the Company, delivery has occurred, the sale price is reasonably determinable, and collectability is reasonably assured. These criteria are generally met at the time the product is shipped and delivered to the customer and, depending on the delivery conditions, title and risk have passed to the customer and acceptance of the product, when contractually required, has been obtained.

 

Pre-commercial production sales are recognized on a provisional pricing basis when title transfers and the rights and obligations of ownership pass to the customer, which occurs at mine gate. Final pricing is not determined at that time as it is contractually linked to market prices at a subsequent date. These arrangements have the characteristics of a derivative instrument as the value of the accounts receivable will vary as prices for the underlying commodities vary in the metal markets.

 

q)

New accounting pronouncements

The following revised standards and amendments are effective in future accounting periods with earlier application permitted, except where indicated.

 

 

2

Significant accounting policies (continued)

 

(i) IFRS 9, Financial Instruments, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in IAS 39, Financial Instruments: Recognition and Measurement, that relate to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements.

 

The main change for liabilities is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income (loss) rather than in net earnings. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect the adoption of IFRS 9 to have a significant measurement or disclosure impact on its financial statements.

 

(ii) IFRS 15, Revenue from Contracts with Customers, establishes principles to address the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS 15 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect the adoption of IFRS 15 to have a significant measurement or disclosure impact on its financial statements.

 

(iii) IFRS 16, Leases, addresses accounting for leases and lease obligations. It replaces the existing leasing guidance in IAS 17, Leases. The objective of the new standard is to report all leases on the statement of financial position and to define how leases and lease liabilities are measured. IFRS 16 is effective January 1, 2019 with early adoption permitted for companies that also apply IFRS 15. The Company is currently assessing the impact of IFRS 16.

 

There are no other IFRS’s or IFRIC interpretations that are not yet effective that are expected to have a material impact on the Company.

 

3

Rayrock acquisition

 

On June 8 2017, Coro acquired 100% of Minera Rayrock Ltda (“Rayrock”) from Compañia Minera Milpo S.A.A (“Milpo”). Rayrock owns 100% of the Ivan SXEW (solvent extraction and electrowinning) plant located about 18 km south of the Company’s Marimaca project. Milpo also retains a 2% of the net smelter return (“NSR”) on all production from the Rayrock mineral properties. Coro has the right to acquire 50% of the NSR for $2 million at any time and will have a right of first refusal over the NSR.

 

The Rayrock acquisition was considered to be an asset acquisition and also included 23,748 hectares of mining claims (the “Ivan Claims”) and a further 14,505 hectares of mining claims (the “Sierra Medina Claims”) (note 14). Subsequent to December 31, 2017, the Company acquired additional 379 hectares of Sierra Medina Claims (note 7).

 

Rayrock purchase consideration:

 

$000’s
Cash			6,219
Transaction costs			389
Total purchase consideration			6,608

 

 

3

Rayrock acquisition (continued)

 

The purchase price was allocated as follows:

 

$000’s
Current assets			23
Ivan plant (note 6)			10,786
Total assets:			10,809
Current liabilities			216
Restoration provision (note 10)			3,985
Total liabilities:			4,201
Net identifiable assets acquired			6,608

 

4

Accounts receivable and prepaid expenses

 

$000's		December 31, 2017				December 31, 2016
Trade receivable			143				147
Value added taxes			2,442				757
Prepaid expenses and other receivables			714				392
			3,299				1,296

 

Until October 1, 2015, the Company had been fully providing for Chilean value added taxes (“IVA”). With the acquisition of the Nora Plant and the ability to recover IVA via sales starting in early 2016, the Company no longer provides for the IVA receivable of SCMB.

 

5

Inventories

 

$000's		December 31, 2017				December 31, 2016
Consumable parts and supplies			160				118
Ore stockpiles			258				204
Copper in circuit			1,083				1,000
Finished goods			455				256
			1,956				1,578

 

6

Property, plant and equipment

 

$000’s		Mineral property & mine development				Berta facilities				Nora plant				Ivan plant				Other				Construction in progress				Total
Cost
January 1, 2016			6,833				-				8,091				-				127				28				15,079
Disposals			-				-				-				-				(86	)			-				(86	)
Additions			1,067				-				4,506				-				24				308				5,905
December 31, 2016			7,900				-				12,597				-				65				336				20,898
Disposals			-				-				(270	)			-				-								(270	)
Acquisition (note 7)			-				-				-				10,786				-				-				10,786
Equipment transfers			-				37				132				(169	)			-				-				-
Impairments			-				-				(15,683	)			-				-				-				(15,683	)
Additions			86				5,681				7,224				76				126				(72	)			13,121
December 31, 2017			7,986				5,718				4,000				10,693				191				264				28,853
Accumulated depreciation
January 1, 2016			-				-				-				-				(111	)			-				(111	)
Disposals			-				-				-				-				86				-				86
Depreciation			-				-				-				-				(12	)			-				(12	)
December 31, 2016			-				-				-				-				(37	)			-				(37	)
Disposals			-				-				-				-				-				-				-
Depreciation			-				-				-				-				(25	)			-				(25	)
December 31, 2017			-				-				-				-				(62	)			-				(62	)
Net book value
January 1, 2016			6,833				-				8,091				-				16				28				14,968
December 31, 2016			7,900				-				12,597				-				28				336				20,861
December 31, 2017			7,986				5,718				4,000				10,693				129				264				28,790

 

SCM Berta operational assets comprise the Berta mineral property & mine development (“Berta Mine”), Berta Facilities and the Nora Plant. None of the SCM Berta operational assets have been depreciated as the Company is yet to declare commercial production as of December 31, 2017.

 

Impairment assessments for the Berta Facilities and for the Nora Plant

 

As of December 31, 2017, the Company concluded that an impairment indicator existed in respect of the Berta Facilities and the Nora Plant. Collectively these assets have not yet been able to operate in the manner intended by management and they have not been capable of generating positive returns. Accordingly, as part of its impairment assessment, the Company concluded that the Berta Mine and the Berta Facilities would be treated as one cash-generating unit (“CGU”) and that the Nora Plant would be treated as a separate CGU.

 

 

6

Property, plant and equipment (continued)

 

The key assumption for the Nora Plant is that it will be used to process ore from deposits in a closer proximity to the plant, such as the Company’s El Jote project. This is because without the pipeline to link the Berta Facilities and the Nora Plant, the performance of the combined assets has not proven economic to date.

 

In respect of the Nora Plant, the Company recognized an impairment of $15.7 million reducing the carrying value of the Nora Plant to $4 million. In determining the fair value, the Company considered the future uses of the plant, the original acquisition cost and the current operating condition of the Nora Plant.

 

The Company assessed the impairment of the Berta Facilities CGU on the basis that an SXEW plant would be constructed at the Berta mine.

 

The key assumptions for the assessment of the fair value less costs to dispose of the Berta plant are as follows:

 

-

Average copper price for over the expected seven year mine life of $3.10 per pound.

-

Income tax rate of 35%

-

Discount rate of 10%.

 

The impairment assessment for the Berta Facilities did not result in an impairment charge to that CGU. A reduction in the average copper price estimate of 1% would result in the carrying value of the Berta Facilities being equal to its fair value less costs to dispose.

 

Mineral property & mine development

In the fourth quarter of 2015, the costs associated with the Berta deposit were reclassified from Exploration and evaluation to Mineral property and mine development costs.

 

Berta Facilities

In December 2016, the Company commenced building the Berta Facilities (completed in June 2017) which included a crushing and agglomeration circuit and leach pads to produce Pregnant Leach Solution (“PLS”). In 2017, Berta Facilities costs were $5.7 million (2016: $Nil).

 

Nora Plant

In 2017, additions at Nora included the capitalization of pre-commercial production expenditures of $6.3 million (2016: $2.6 million), net of revenues of $14.1 million (2016: $8.4 million); the expansion of the Nora SXEW plant of $0.5 million (2016: $0.5 million); and capitalization of administration, financing and interest costs of $0.3 million (2016: $1.4 million).

 

Ivan Plant

The Ivan Plant was purchased in June 2017, with the intention that it be used to process ore from the Marimaca property (note 3). The Ivan Plant is not currently operative and will be kept in care and maintenance until it is necessary to start commissioning and testing. In 2017, the Company expensed a total of $0.6 million for care maintenance cost associated to Ivan Plant.

 

7

Exploration and evaluation assets

 

$000’s		Marimaca				La Atomica				Prat				Ivan				El Jote				Total
Balance- January 1, 2016			-				-				152				-				-				152
Exploration and evaluation costs			-				-				68				-				-				68
Property acquisition costs (1)			-				-				-				583				135				718
Balance at December 31, 2016			-				-				220				583				135				938
Exploration and evaluation costs			5,100				415				-				56				180				5,751
Property acquisition costs			-				100				-				-				-				100
Write-down of exploration and evaluation assets			-				-				(220	)			-				-				(220	)
Reclassified to property, plant, equipment (note 3)			-				-				-				(639	)			-				(639	)
Balance at December 31, 2017			5,100				515				-				-				315				5,930

 

⁽¹⁾ Property acquisition costs for Rayrock/Ivan Plant include due diligence and evaluation costs.

 

a)

Marimaca property, Chile

 

Marimaca claims

In August 2014, subsequently amended in April 2017, the Company entered into an agreement to acquire up to a 75% interest in the Marimaca copper oxide prospect. By paying $185,000 ($60,000 paid); and $125,000 on completion of an NI 43-101 compliant resource estimate and engineering study that demonstrates the technical and economic feasibility of producing a minimum of 1,500tpy of copper cathode by August 2018 the Company can earn a 51% interest. Under the agreement, Coro can acquire a further 24% interest by obtaining project construction finance, or contributing the Ivan Plant (note 3). The owner of the property will maintain a 25% interest with a 15% interest free carried to commercial production and a 10% participating interest that is subject to dilution.

 

Commencing January 1, 2017, the costs associated with the Marimaca property were capitalized.

 

La Atomica claims

Under the terms of the August 2017 La Atomic Letter of Intent (“LOI”) (Option Agreement signed October 2017), the Company may acquire 100% of the La Atomica property by paying a total of $6.0 million as follows: $100,000 (paid); $0.5 million on the 12-month anniversary date; $1.0 million on the 24-month anniversary date; and $4.0 million on the 36-month anniversary date. A 1.5% NRS is payable on the claims, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million at any time.

 

Sierra Miranda claims

Under the terms of the January 2018 Sierra Miranda LOI, the Company may acquire 100% of Sierra Miranda mining claims (the “SM Claims”) immediately adjoining its Marimaca property for a total cash consideration of $6.0 million, $0.10 million (paid) and the balance of S$5.9 million payable on completion of due diligence and certain other transfers of title. In addition, the claims will be subject to a 2% NSR.

 

7

Exploration and evaluation assets (continued)

 

b)

Other properties, Chile

 

El Joté

In May 2016, SCMB optioned the El Joté (formerly called “Salvadora”) a copper project, located ~ 30km NW of the Nora Plant and 58km NE of the port of Chañaral in the III Region of Chile. Under the terms of the agreement, SCMB may acquire a 100% interest in the property by completing the following option payment schedule totalling $3.0 million; $0.32 million (paid) on or before: May 2018; $0.25 million, and May 2019; $2.43 million. The final payment may be made in eight equal instalments of $0.3 million plus interest at LIBOR, and SCMB may start production with the first instalment payment. A 1.5% NSR is payable, which can be purchased for $1.5 million at any time.

 

Planta Prat

In September 2017, the Company elected not to proceed with the acquisition of the Planta Prat. The agreement was terminated and the Company wrote off the deferred exploration and evaluation costs associated with the project. During the period ended December 31, 2017, the Company recorded $0.2 million in write-downs of exploration and evaluation assets related to this property.

 

8

Accounts payable and accrued liabilities

 

$000's		December 31, 2017				December 31, 2016
Accounts payable			6,450				3,292
Accrued liabilities			4,368				781
			10,818				4,073

 

Over 85% of the accounts payable and accrued liabilities balances are related to SCMB as at December 31, 2017.

 

9

Other debt

 

$000’s		December 31, 2017				December 31, 2016
Greenstone shareholder loan (a)			2,940				-
Finance leases (b)			160				489
Berta deferred consideration (c)			-				563
ProPipe shareholder loan			250				250
Deferred revenue (d)			313				-
Total other debt			3,662				1,302
Current portion			(3,412	)			(871	)
Non-current portion			250				431

 

a)

Greenstone shareholder loan

In December 2017, Coro entered into a credit agreement with its major shareholder Greenstone, pursuant to which Greenstone has advanced $3 million to Coro on December 20, 2017. Under the terms of the credit agreement, the loan has an eleven month term and bears interest at 12% per annum until March 31, 2018, after which the interest will be increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement.

 

b)

Finance leases

In March 2017, SCMB cancelled a twenty-four month lease on a semi-mobile crusher. The Company wrote off the total amount of $0.3 million under property, plant and equipment (note 6).

 

9

Other debt (continued)

 

Included in property, plant and equipment are generators acquired pursuant to lease agreements. The generators are the security for the indebtedness. During 2017, SCMB deferred the June to September payments to November 2017 for $0.14 million. Subsequently in November 2017, SCMB renegotiated the lease agreement to pay the remaining balance in six equal payments starting December 2017. As of December 31, 2017 SCMB has 6 payments left in the lease and one payment due is included in accounts payable and accrued liabilities.

 

The cost of the generators held under the finance lease is equal to the lower of the net present value of the minimum lease payments or the fair value of the leased property at the inception of the lease and is amortized over the term of the lease, except when there is a reasonable certainty that the leased assets will be purchased at the end of the lease, in which case they are amortized over the expected continued useful life of the assets.

 

$000’s		December 31, 2017				December 31, 2016
Remaining lease payments (within twelve months)			169				364
Remaining lease payments (thereafter)			-				184
Total lease payments			169				548
Less: interest portion			9				59
Present value of capital lease obligations			160				489
Current portion of the lease			160				489

 

c)

Berta deferred consideration

Under the amended Berta option agreement signed in April 2013, SCMB agreed to pay $2.25 million in deferred consideration in eight quarterly instalments. In addition to the deferred consideration, a 1.5% NSR is payable on all copper production and by product metal production from the Berta property. During 2017, SCMB paid $0.55 million towards the debt representing the final two installments.

 

d)

Deferred revenue

In June 2017, SCMB entered into a copper off-take contract for 100% of the copper production from the Nora Plant for a period of twelve months. The agreement provided for an immediate advance of $0.75 million repayable in twelve months from the borrowing date, bearing interest at a rate of one-month US Libor plus 6% per annum. During 2017, SCMB repaid $0.4 million from its copper off-take contract. As of December 31, 2017, SCMB owes $0.3 million, which represents 5 months left in the contract.

 

10

Restoration provision

 

$000’s		December 31, 2017																December 31, 2016
		Nora				Ivan				Berta				Total				Nora & Total
Balance, beginning of year			1,281				-				-				1,281				1,291
Initial provision			-				3,985				819				4,804				-
Reclamation revaluation			13				76				304				393				(25	)
Accretion expense			31				56				18				105				15
Balance, end of year			1,325				4,117				1,141				6,583				1,281

 

In calculating the present value of the restoration provisions as at December 31, 2017, management used a risk-free rate between 1.38% and 2.75% and inflation rate between 2.10% and 2.30%. The undiscounted cash flows, before inflation adjustments, estimated to settle the restoration provisions are approximately equal to the discounted cash flows. Due to the nature of closure plans, cash expenditures are expected to occur over a significant period of time with the majority of the expenditures expected to as follows: Nora and Berta in 7 to 8 years and Ivan Plant in 2 to 24 years.

 

 

10

Restoration provision (continued)

 

Nora Plant

Nora’s restoration provision of $1.3 million consists primarily of costs associated with reclamation and closure activities for the Nora Plant. These activities include costs for disposition of chemical materials, earthworks, and the dismantling and demolition of structures.

 

Berta Facilities

During the year ended December 31, 2017 SCMB recorded $1.1 million for restoration provision for the Berta Facilities which consists primarily of the costs associated with the auxiliary installations of the mine plant and the crushing and agglomeration facilities.

 

Ivan Plant

During the year ended December 31, 2017, Ivan’s restoration provision totalled $4.1 million which consists of costs associated with reclamation and closure activities for the Ivan Plant and mine site. These activities include costs for disposition of chemical materials, earthworks, and the dismantling and demolition of structures.

 

11

Common shares

 

Authorized

The Company has an unlimited number of authorized common shares without par value.

 

Issued

As of December 31, 2017, the Company had 651,929,511 common shares issued and outstanding (2016: 483,425,039)

 

a)

Year ended 2017

In January 2017, a total of 2,162,500 warrants at CA$0.15 were exercised for gross proceed of $0.24 million.

 

In April 2017 the Company completed a non-brokered private placement of 107,680,000 common shares at CA$0.15 per share for a total gross proceeds of $12.0 million in multiple tranches. Issuance costs associated with the private placement were $0.3 million.  

 

In October 2017, the Company completed a non-brokered private placement of 56,561,973 common shares at CA$0.13 per share for a total gross proceeds of $6.0 million in tranches. Issuance costs associated with the private placement were $0.04 million.

 

In November 2017, a total of 1,500,000 options were exercised at a price of CA$0.04 for total proceeds of $47,000 and in December 2017, a total of 600,000 options were exercised at a price of CA$0.10 for total proceeds of $47,026.

 

b)

Year ended 2016

In February 2016, the Company announced the closing of an equity private placement financing with Greenstone, whereby Greenstone purchased 79,800,000 common shares at a price of CA$0.04 for gross proceeds of CA$3.192 million.

 

In May 2016, the Company issued 106,730,000 common shares to extinguish a convertible debenture.

 

In June 2016, the Company also raised CA$3.4 million through the issuance of 34,000,000 common shares to Greenstone as part of an underwritten 100,000,000 common share issuance (CA$10.0 million) financing by Greenstone. In July 2016, the Company closed the remainder of the financing by issuing 46,074,350 common shares to third parties (to raise CA$4.6 million) and a final tranche with Greenstone of 19,925,650 common shares (to raise CA$1.9m). Associated with the aforementioned underwritten financing the Company paid $70,000 in underwriting fees to Greenstone and finder’s fees of CA$368,000 on certain shares issued to third parties.

 

 

11

Common shares (continued)

 

In December 2016, the Company raised gross proceeds of $4.0 million (CA$5.3 million at CA$0.14 per share) through the issuance of 37,522,859 common shares to Greenstone (29,825,874 shares) and third parties (7,696,985 shares). Finder’s fees of CA$78,000 were paid on certain shares issued to third parties.

 

Capital risk management

The Company considers its components of shareholders’ equity as capital. As the Company is in the development stage, its principal source of funds is from the issuance of common shares. It is the Company’s objective to safeguard its ability to continue as a going concern, so that it can continue to explore and develop its projects for the benefit of its stakeholders (note 1).

 

12

Share stock options and warrants

 

a)

Options

The Company has a stock option plan that permits the granting of stock options to directors, officers, key employees and consultants. Terms and pricing of options are determined in accordance with the plan. A total of 10% of the issued and outstanding common shares of the Company may be allotted and reserved for issuance under the stock option plan.

 

		December 31, 2017								December 31, 2016
Number of shares		Number of shares				Weighted average exercise price CA$				Number of shares				Weighted average exercise price CA$
Outstanding - January 1			34,290,000				0.16				8,590,000				0.25
Exercised			(600,000	)			0.10				-				-
Exercised			(1,500,000	)			0.04				-				-
Expired			(3,740,000	)			0.41				(1,050,000	)			0.22
Expired			(500,000	)			0.20				-				-
Expired			(500,000	)			0.14				-				-
Granted			1,000,000				0.16				26,750,000				0.13
Granted			5,000,000				0.11				-				-
Outstanding at December 31, 2017			33,450,000				0.13				34,290,000				0.16

 

At December 31, 2017, the following stock options were outstanding:

 

Number of options outstanding				Number of options vested and exercisable				Exercise price CA$				Expiry date
	3,200,000				3,200,000				0.10				2019
	10,250,000				10,250,000				0.04				2021
	14,000,000				-				0.20				2021
	1,000,000				333,333				0.16				2022
	5,000,000				1,666,667				0.11				2022
	33,450,000				15,450,000

 

During the year ended December 31, 2017, the Company granted 5,000,000 options at CA$0.11 and 1,000,000 options at CA$0.16.

 

 

12

Share stock options and warrants (continued)

 

Options were priced based on the Black-Scholes option pricing model using the following weighted average assumptions to estimate the fair value of options granted:

 

		December 31, 2017				December 31, 2016
Risk-free interest rate			0.76% to 1.05%				0.45% to 0.60%
Expected life			2.5 to 3.5 years				2 to 3.5 years
Expected volatility			122	%			90% to 122%
Expected dividend			0	%			0	%

 

During the year ended December 31, 2017, total share-based compensation expense was $744,451 (2016: $828,960) of which $28,157 was capitalized (2016: $46,823).

 

b)

Warrants

 

		December 31, 2017								December 31, 2016
Warrants		Number of shares				Weighted average exercise price CA$				Number of shares				Weighted average exercise price CA$
Outstanding - January 1			5,102,500				0.15				10,539,123				0.15
Exercised			(2,162,500	)			0.15				-				-
Expired			(2,940,000	)			0.15				(5,436,623	)			-
Outstanding at December 31, 2017			-				-				5,102,500				0.15

 

During the year ended December 31, 2017, 2,162,500 warrants were exercised and 2,940,000 warrants expired unexercised.

 

13

Non-controlling interest

 

Under the SCMB Amended Shareholders Agreement, ProPipe S.A. (“ProPipe”) have a 35% interest (2016: 35%) in SCMB. ProPipe earned its interest by completing various milestones in the development of the Berta Project.

 

The following table summarizes select SCMB financial information for the years ended December 31, 2017 and 2016

 

$000's		December 31, 2017				December 31, 2016
Current Assets			5,056				2,814
Non-current assets			22,546				24,128
Current Liabilities			29,116				10,252
External			10,123				4,614
Intercompany			18,993				5,638
Non-current liabilities			7,420				9,656
External			2,716				1,738
Intercompany			4,704				7,918
Loss and comprehensive loss			(15,969	)			(74	)

 

14

Exploration expenditures

 

		2017
$000's		Marimaca District				General				Total
Drilling & trenching costs			80				-				80
General & administration costs			1				43				44
Property investigations			-				26				26
Total			81				69				150

 

		2016
$000's		Marimaca				General				Total
Consulting, labour & professional fees			252				-				252
Drilling & trenching costs			1,445				-				1,445
General & administration costs			189				103				292
Property investigations			156				38				194
Property acquisition			58				-				58
Total			2,100				141				2,241

 

 

14

Exploration expenditures (continued)

 

a)

Marimaca District, Chile

The Marimaca District is a new exploration area for the Company located northeast of the Marimaca project, which is located 22 kms east of the Port of Mejillones in the II Region of Chile. Exploration activity in Marimaca District, Chile includes other property exploration expenditures and costs associated with the wholly owned Naguayan property.

 

Naguayan claims

Under the terms of the October 2017 Naguayan LOI (Option Agreement signed January 2018), the Company may acquire 100% of the Naguayan property for a total of $6.5 million; $0.2 million (paid); $0.3 million on the 12-month anniversary date; $0.7 million on the 24-month anniversary date; $1.75 million on the 36 month anniversary date; and $3.55 million on the 48-month anniversary date. A 1.5% NSR is payable, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million within the first 12 months following the start of commercial production on the property.

 

b)

Marimaca, Chile

Marimaca is a copper oxide development project located in northern Chile some 60 km north of the city of Antofagasta in the II Region of northern Chile. Prior to January 1, 2017 the Company expensed its exploration costs associated with the Marimaca Claims for a total of $2.1 million (note 7).

 

15

Income taxes

 

		2017								2016
		$(000's)				%				$(000's)				%
Loss before tax			(19,212	)			100				(3,585	)			100
Income tax (recovery) expense at statutory rates			(4,995	)			(26	)			(932	)			(26	)
Difference in foreign tax rates			(1,549	)			(8	)			(190	)			(5	)
Non-deductible expenses			185				1				205				6
Mineral property write down			4,030				21
Unrecognized (recognized) tax losses			2,329				12				917				25
Deferred income tax (recovery) expense			-				-				-				-

 

The significant components of the Company’s deferred income tax asset (liability) are as follows:

 

$(000's)			2017				2016
Operating losses carried forward			9,662				8,860
Mineral property interests			1,832				1,570
Share issuance costs			180				125
Restoration provision			2,304				448
Financing transactions			1,194				368
Unrecognized deferred tax assets			15,173				11,371

 

The Company has incurred non-capital losses that may be carried forward and used to reduce taxable income of future years in the countries indicated. The Company has tax losses of $5.7 million and $23.4 million, in Canada and Chile respectively that expire after 2027.

 

16

Related party transactions

 

The Company considers the Executive Directors and Officers of the Company to be key management personnel.

 

$000’s		December 31, 2017				December 31, 2016
Paid to related parties
Short-term employee benefits			1,356				839
Share-base payments			672				683
Total			2,028				1,522

 

As at December 31, 2017, amounts payable to a shareholder were $3.1 million. This amount was included under current portion of other debt (note 9).

 

17

Geographic information

 

The Company operates in a single operating segment, mineral exploration and development. The following table provides geographic information about the Company’s assets and operations:

 

$000's		Canada				Chile				Total
December 31, 2017
Non-current assets			565				34,155				34,720
Total assets			2,074				40,712				42,786
Total liabilities			3,290				17,773				21,064
December 31, 2016
Non-current assets			233				21,567				21,800
Total assets			3,353				25,577				28,930
Total liabilities			121				6,535				6,656

 

18

Financial instruments

 

Financial instruments include cash and any contracts that give rise to a financial asset to one party and a financial liability or equity instrument to another party. As at December 31, 2017, the Company's carrying values of cash and cash equivalents, accounts receivable, and convertible debenture approximate their fair values due to their short term to maturity.

 

The fair value of the Company’s accounts payable and accrued liabilities may be significantly lower than the carrying value given the Company’s going concern uncertainty and the fair value is not readily determinable.

 

The three levels of the fair value hierarchy are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

 

Level 3 – Inputs that are not based on observable market data.

 

At December 31, 2017, the Company’s financial instruments measured at fair value on a recurring basis were the held-for-trading investment in Bearing Resources Ltd. shares (classified as “Level 1”).

 

 

18

Financial instruments (continued)

 

Credit risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company deposits cash and cash equivalents with high credit quality financial institutions as determined by rating agencies.

 

Currency risk

The Company is subject to currency risk on financial instruments which are denominated in currencies that are not the same as the functional currency of the entity that holds them. Exchange gains and losses would impact profit or loss.

 

The Company’s significant subsidiaries are located in Chile and the parent company is in Canada. As a result a portion of the Company’s accounts receivable, accounts payable and accruals are denominated in the Chilean Peso and Canadian Dollars and are therefore subject to fluctuation in exchange rates.

 

As the Company’s parent company functional currency is the Canadian dollar, a 100 basis point (one per cent) increase-strengthening (decrease-weakening) in the U.S. dollar at period end would have resulted in the net loss being $64,411 higher (a greater loss) or $64,411 lower

 

Interest rate risk

The Company was exposed to interest rate risk on cash and cash equivalents held as at December 31, 2017. A 100 basis point (1%) increase or decrease in the interest rate would resulted in approximately $35,338 change in the Company’s reported loss for the period ended December 31, 2017 based on average cash holdings during the period.

 

The Company is also subject to interest rate risk with respect to the off-take advance on Berta copper production. A 100 basis point (1%) increase or decrease in the interest rate would not result in a significant change to the Company’s reported loss for the period ended December 31, 2017.

 

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities.   The Company is reliant upon equity issuances as its sole source of cash.  The Company manages liquidity risk by maintaining an adequate level of cash and cash equivalents to meet its ongoing obligations. The Company continuously reviews its actual expenditures and forecast cash flows and matches the maturity dates of its cash equivalents to capital and operating needs. For further information related to liquidity and going concern (note 1).

 

19

Commitments and option payments

 

The following table sets out the commitments and option payments of the Company as of December 31, 2017.

 

$000's		2018				2019				Thereafter				Total
Property option payments (1)
El Jote			250				2,440				-				2,690
La Atomica			500				1,000				4,400				5,900
Marimaca			125				-				-				125
Naguayan			-				300				6,000				6,300
Total property payments			875				3,740				10,400				15,015
Operating leases			152				104				83				339
Total			1,027				3,844				10,483				15,354

 

⁽¹⁾ Excludes the Sierra Miranda option agreement signed (January 2018).

 

20

Subsequent events

 

On February 2018, the Company entered into a credit agreement with its major shareholder, Greenstone, pursuant to which Greenstone has agreed to advance $5 million to Coro as a loan. Under the terms of the credit agreement, the loan has an eleven-month term and bears interest at 12% per annum until June 30, 2018, after which the interest will be increased to 15%. Greenstone will receive a 3% arrangement fee under the credit agreement, which will be payable on maturity. The proceeds of the loan will be used for both general working capital at Coro and SCMB Berta.

 

 

 

 

 

 

 

21

---

Exhibit 99.3

 

 

MANAGEMENT DISCUSSION AND ANALYSIS (“MD&A”) FOR THE YEAR ENDED DECEMBER 31, 2017

(Expressed in U.S. Dollars)

 

An EXPANDING CHILE FOCUSED COPPER COMPANY

 

Dated: March 29, 2018

 

 

 

 

For further information on the Company reference should be made to the Company’s public filings which are available on SEDAR at www.sedar.com. Information is also available at the Company’s website www.coromining.com. In addition, reference should be made to the risk factors section of the most recently filed Annual Information Form (“AIF”) and to the Company’s audited consolidated financial statements for the year ended December 31, 2017.

 

Financial information included in this MD&A has primarily been derived from the consolidated financial statements of the Company, which are prepared in accordance with International Financial Reporting Standards (IFRS). All amounts are presented in United States dollars, unless otherwise noted. This MD&A should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017.

 

This MD&A may contain forward looking statements based on assumptions and judgments of management regarding events or results that may prove to be inaccurate as a result of exploration or other risk factors beyond its control. Actual results may differ materially from the expected results.

 

Table of Contents:

 

1	OVERVIEW & OUTLOOK	2
2	MARIMACA DEVELOPMENT PROJECT	4
3	SCMB OPERATION	9
4	FINANCIAL POSITION REVIEW	11
5	EXPENDITURES REVIEW	17
6	RISKS AND CRITICAL ACCOUNTING ESTIMATES & POLICIES	19
7	SUMMARY OF FINANCIAL POSITION & SELECTED ANNUAL INFORMATION	23

 

 

 

 

 

1 OVERVIEW & OUTLOOK

 

Profile and Strategy

Coro Mining Corp. (the “Company” or “Coro”) is a growth oriented copper producer using its exploration, development and operational experience to develop low cost, low capital intensity, leachable operations in areas of good infrastructure in Chile.

 

The Company’s assets include:

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The Marimaca Concessions (earning 75% interest) (section 2), and the 100% owned and recently acquired Ivan Solvent Extraction & Electrowinning (“SXEW”) plant, which will enable the Company to accelerate the production timeline from Marimaca.

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The La Atomica and Sierra Miranda claims (earning 100%) located adjacent to the Marimaca Concessions

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The recent acquisition of Minera Rayrock (“Rayrock”), which included the Ivan SXEW plant, has also significantly increased the Company’s land position in Chile by adding 38,253 hectares of mineral claims (section 2).

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The 65% owned Sociedad Contractual Minera Berta (“SCMB”) operation (section 3) which includes the Berta Mine & Facilities, the Nora SXEW plant and El Jote option agreement.

 

In June 2017, the Company announced the appointment of Luis Albano Tondo as President and CEO, with former CEO, Alan Stephens, remaining on as an Executive Director responsible for exploration and opportunity-seeking activities. Mr. Tondo is a highly experienced mining engineer with 30 years of mining experience in Latin America. Prior to joining Coro, he spent seven years as Chief Operating Officer at mid-tier copper and gold producers in Chile, Uruguay and Brazil, where he was responsible for operations, projects and business development activities. Prior to this, he spent five years developing capital projects for Kinross Gold Corporation in Brazil and Chile, and 16 years in operations roles with Rio Tinto in Brazil.

 

Recent Updates & Developments

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$5 million debt financing (February 27, 2018) – section 4

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Acquisition of the Sierra Miranda claims adjacent to Marimaca property (January 2018) – section 2

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$3 million debt financing (December 2017) – section 4

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Marimaca Infill Drilling results from Marimaca Project (November 2017 thru January 2018) – section 2

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Acquired Naguayan claims (October 2017) – section 4

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$6 million equity financing (September/October 2017) – section 4

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Acquired La Atomica claims (August 2017)– section 2

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Initiated Marimaca Definitive Feasibility Study (“DFS”) (August 2017) – section 2

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Appointed new General Manager at SCM Berta (August 2017)

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Acquired Rayrock (which includes the Ivan SXEW Plan) (June 2017) – section 2.3

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Commenced Pregnant Leach Solution (“PLS”) trucking from Berta to Nora Plant (June 2017) – section 3

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Appointed new President and CEO (June 2017)

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Extended off-take agreement at SCMB including an advance of $0.75 million (June 2017) – section 4

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Marimaca $12 million equity financing (April 2017) – section 4

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Completed Marimaca Environmental Baseline Study (February 2017)

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Released a maiden pit-constrained mineral resource estimate at Marimaca: Measured & Indicated Resource of 145,500 tonnes (320 million pounds) of copper & Inferred Resources of 99,300 tonnes (218 million pounds) of copper (January 2017).

 

Nature of Operations and Going Concern

The consolidated financial statements have been prepared using IFRS applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. For the year ended December 31, 2017, the Company reported a loss of $19.2 million, and as at that date, had an accumulated deficit of $74.3 million and a working capital deficit of $6.2 million which principally arises from SCMB.

 

 

In December 2017, Coro entered into a $3 million credit agreement with its major shareholder, Greenstone Resources L.P. (“Greenstone”). Under the terms of the credit agreement, the loan has an eleven-month term and bears interest at 12% per annum until March 31, 2018, after which the interest will be increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement. The proceeds of the loan will be used for working capital and general operating costs.

 

In February 2018, Coro entered into $5 million credit agreement with Greenstone and announced a strategic review of SCMB operations. At the conclusion of this review, the Company hopes to be able to provide a clear way forward with SCMB and reinitiate an equity financing to ensure the continuing developments and operations of the Company.

 

As of February 28, 2018 the Company had cash and cash equivalents of $4.9 million.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate cash flow from operations and, to the extent that this is not sufficient, to obtain additional funding from loans, equity financings or through other arrangements. While the Company has been successful in arranging financing in the past, the success of such initiatives cannot be assured. These conditions cast significant doubt on the validity of the going concern assumption.

 

Outlook

 

Strategic Review:

In February 2018 as part of its Strategic Review undertook a review of the SCMB Operations. The Company elected to proceed with acquisition of the Nora SX-EW plant in September 2015 based on an initial Preliminary Economic Assessment (“PEA”) dated September 2014. The original plan was to process ore (crushing and leaching) at the Berta mine and install a 60km pipeline to transport the PLS between the Berta mine and Nora SX-EW plant. The pipeline to transport the PLS between the Berta mine and Nora SX-EW plant was an important part of the original design given the 60km distance. Pipelines are a common and cost effective way to transport PLS in Chile, although requiring a considerable amount of time for obtaining the required environmental & technical permits for installation and operation. Unfortunately, following a 1 in 100 year rainfall event in the Atacama Desert in March 2015, there was a major flood which severely damaged the town of Diego De Almagro which lies between the Berta mine and the Nora SX-EW plant. The original pipeline route would have crossed a dry river bed (Salado River) close to Diego De Almagro through which these flood waters flowed. As a result of this exceptional flood, it has become apparent that permitting for a pipeline across this previously dry riverbed is presently not feasible.

 

The requirement to truck ore and PLS between the Berta mine and the Nora SX-EW plant has significantly increased the cash costs and production risks particularly around transportation.

 

Over the last 9 months the Company has undertaken a number of optimisation strategies aimed at reducing the transportation costs between the Berta mine and the Nora SX-EW plant which has not yielded the expected results with lower transport costs being offset by higher production costs and lower recoveries due to the attempt to concentrate PLS. As a consequence of the above, SCMB incurred cumulative ramp-up and operating losses

 

The SCMB management team has now stabilised the operations:

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Anticipating over 300 tons of copper in March 2018, the highest monthly production to date;

•

the Berta mine is operating as designed, with both grade and tonnage mined consistent with the mine plan;

•

the metallurgy of the Berta ore is as anticipated with 75% recoveries when the ore is leached conventionally to 4 grams per litre (“gpl”) PLS concentration levels;

•

the PLS has now been successfully stabilized at a concentration level of 10gpl at Berta with recoveries of 70% even at this relatively higher PLS concentration; and

•

the production bottleneck moved to the trucking of the PLS, and trucking of greater than 750m3 per day is now being achieved on a consistent basis;

 

Notwithstanding the improvements referred to above, SCMB’s operations as currently configured, with ore and PLS transported by truck will always be high cost and unnecessarily complex due to the logistical constraint of not being able to build and operate a pipeline. The Company is in the process of concluding its strategic review of SCMB and hopes to be able to release the results of its conclusions shortly.

 

 

Marimaca Update:

The Company is continuing to finalise the feasibility study work relating to its 75% earn in interest in Marimaca. Both the feasibility study and the updated resource statement are at an advanced stage and expected to be released in early Q2 2018. The Company also expects to complete its acquisition of the SM Claims announced on January 22, 2018 during Q2 2018. Following completion of these two work streams, the Company will determine its future exploration and development strategy at Marimaca

 

 

2 MARIMACA: A POTENTIALLY LARGE SCALE DEVELOPMENT PROJECT

 

Marimaca has quickly become the Company’s Cornerstone asset with the near term production growth opportunity coupled with significant resource expansion potential on the newly enlarged property position.    The Marimaca project started with an option agreement on the Marimaca concessions in August 2014 whereby the Company was earning into a 75% interest in Marimaca concessions. In January 2017, the Company announced a maiden resource estimate incorporating the first drill results which were reported in April 2016 confirming a new discovery and the potential for a sizeable leachable copper deposit in an area of established infrastructure (section 2.1). This maiden resource also gave the Company the confidence to purchase the existing 10,000 tpy (22,204,000 lbs) Ivan SXEW Plant located 18km south of the Marimaca deposit, (section 2.4 – Rayrock Acquisition) in June 2017 – thus providing the opportunity for near term production growth.

 

Our exploration and aggressive acquisition programs have subsequently resulted in us significantly expanding our property position in the area including the following acquisitions (100% ownership) in addition to our own staking in the area: •   Sierra Miranda claims (379 hectares) •   Naguayan claims (1,075 hectares) •   La Atomica claims (50 hectares)

 

 

2.1

Marimaca Project Location

 

Marimaca is a copper oxide development project located in northern Chile some 60km north of the city of Antofagasta in the II Region of northern Chile. Being 14km from the highway and powerline, 22km from the port of Mejillones and a one hour drive from Antofagasta makes it an ideal location from a development perspective.

 

Coro’s approach to Marimaca project is two-fold. In 2017, it completed an infill drill program on the Marimaca concessions to convert its resources to reserves in order to advance the project to a production decision through completion of a Definitive Feasibility Study (“DFS”). While at the same time it completed an exploration program that extended the known mineralization 300m NW onto the La Atomica concessions and 300m NE on the original Marimaca concessions. The Company’s’ exploration objective in 2018 is to significantly expand the resources on the combined property.

 

From a development perspective, Coro’s intention is to feed the Ivan Plant with material from Marimaca. The acquisition of the existing Ivan Plant will significantly reduce the capital costs of developing Marimaca and reduce the permitting time frames which should significantly increase the ability to fast-track Marimaca to production. In January 2018, the Company successfully had its application accepted into the environmental approach process an important first step towards obtaining a mine permit.

 

 

2.2           Marimaca Project Concessions

 

a)       Adjacent to Marimaca Concessions

 

La Atómica Claims (50 hectares)

This property, held under an October 2017 option agreement (section 4.6), directly adjoins the Marimaca project to the northwest and both properties are located 22 km east of the port of Mejillones in the II Region of Chile.

 

Sierra Miranda Claims (379 hectares)

In January 2018, the Company entered into an agreement to acquire a 379 hectares package of mining claims (the “SM Claims”) immediately adjoining its Marimaca property to the north and south (section 4.6).

 

b)       Marimaca District Concessions

 

Naguayan Claims (1,075 hectares)

Prospective for Marimaca type mineralization, the property, held under a binding LOI signed October 2017 and a subsequent option agreement signed on January 2018 (section 4.6), comprises a large block of exploitation claims located northeast of the Marimaca Concessions.

 

c)       Other Exploration Properties, Chile

 

In June 2017, through the Rayrock acquisition, Coro acquired an additional 38,253 hectares of mining claims (the Ivan claims and Sierra Medina claims).

 

Ivan Claims (23,748 hectares),

The mining claims extend between Marimaca and the Ivan Plant.

 

Sierra Medina Claims (14,505 hectares)

Located in one of the most attractive emerging regions in Chile, Coro now controls an important package of land in this district comprising 14,505 hectares of mining claims (35,842 acres), which are strategically located 40 km from Antofagasta Minerals’ Antucoya mine and Rencoret project, 50km from Mantos Blancos mine; and 60 km from Ivan/ Marimaca.

 

In 2015 the prior owner of the claims, indicated that the Sierra Medina claims, in December 2013, hosted undefined resources of 12.2 million tonnes at 1.18%CuT & 0.86%CuS at a 0.7%CuT cutoff. Coro has not conducted any due diligence on these resources and cannot give any assurance regarding their economic viability, if any. Both the Ivan claim block and Sierra Medina claim block resources are believed to have been estimated to industry standards, but are not compliant with NI43-101 and therefore should not be relied on.

 

 

2.3           Project Spend Life to Date (“LTD”)

 

The following table shows the life to date expenditure on the Marimaca project including the acquisition of the Ivan Plant. Prior to completion of the maiden resource in January 2017, the Company was expensing costs on the Marimaca concessions (refer “MM Expensed”). As the La Atomica and Sierra Miranda claims are adjacent to the known mineralization the Company has capitalized these costs along with costs incurred on the Marimaca concession from January 1^st, 2017 (refer “MM Deferred”). Other Marimaca district exploration costs have been expensed (refer “MMD Expensed”).

 

The costs of evaluating the Ivan Plant purchase of the Ivan Plant were initially deferred (refer “Ivan Evaluation”) and then transferred to property, plant and equipment as part of the purchase consideration (refer “Ivan Purchase”). The ongoing care and maintenance costs are expensed in the income statement as a cost of maintaining the asset (refer “Ivan – care & maintenance”).

 

 

Table 1: ($000's)		Quarterly																																Annual
Expenditures		Q116				Q216				Q316				Q416				Q117				Q217				Q317				Q417				2016				2017				LTD
Expensed Costs:			26				449				1,231				394				-				-				324				330				2,100				654				3,039
MM exploration			26				449				1,231				394				-				-				-				-				2,100				-				2,385
Ivan care & maintenance			-				-				-				-				-				-				324				249				-				573				573
MMD exploration			-				-				-				-				-				-				-				81				-				81				81
Capitalized Costs:			-				-				-				583				813				10,831				977				2,682				583				4,517				15,886
Marimaca deferred			-				-				-				-				796				645				977				2,682				-				5,100				5,100
Ivan evaluation costs			-				-				-				583				17				(600	)			-				-				583				(583	)			-
Ivan purchase costs			-				-				-				-				-				10,786				-				-				-				-				10,786
Total			26				449				1,231				977				813				10,831				1,301				3,012				2,683				5,171				18,925

 

a)         Marimaca (“MM”) Exploration

In Q2 2016, the Company completed a 16-hole, 2,680m drilling program at Marimaca, (section 2.2) which resulted in increased labour and drill costs in Q2 2016, and a second drill program at Marimaca of 44 holes (11,060m drilling program), in Q3 2016.

 

b)         Ivan Care & Maintenance

The Ivan Plant was purchased to process ore from Marimaca and therefore represents a key piece of the Marimaca development plan. Because the plant is not currently operating, the related care and maintenance costs are required to be expensed and therefore the holding costs at the Ivan Plant have been expensed to the statement of loss.

 

c)         Marimaca District (“MMD”) Exploration

The Marimaca District includes properties that are not adjacent to the Marimaca Concessions (where the known mineralization exists today). Exploration activities within the Marimaca District, includes costs associated with the wholly owned Naguayan property.

 

d)         MM Deferred

An Independent Environmental Baseline Study (February 2017) indicated no material environmental issues that would impede the development of the Marimaca project; the information gathered will form part of the feasibility study for the project that is in progress. This information will also form the basis for the environmental permit applications for Marimaca, which will be submitted in due course.

 

Q1 and Q2 2017 expenditures of Marimaca included metallurgical test work, surface evaluation, and general exploration in the area. Q3 2017 includes engineering and geological expenses related to the DFS, including commencement of an infill drilling program (10,700 metres planned) of which 4,178m had been completed by quarter end. In January 2018, the Company reported the results from the final 26 RC holes associated with the infill drilling program. For full results of the infill drill program reference should be made to the following news releases on January 17, 2018; December 22, 2017; December 5, 2017; and November 9, 2017.

 

During the Q3 and Q4 2017, Coro drilled 59 RC Holes (11,928m) for infill purposes and a further 10 Diamond holes (2,050m) for Geometallurgical and Geotechnical purposes. It also extended the known mineralization to the NE of the Marimaca concession by completed 11 RC holes (2,950m) this program was completed in January 2018. The Company also completed a 24 RC holes (3,200m) program on the La Atomica concerns which extended the mineralization to the NW.

 

e)         Ivan Evaluation Costs

Q4 2016 includes the initial $0.25m payment related to the Minera Rayrock Ltda (“Rayrock”) purchase and due diligence costs associated with evaluating the Rayrock acquisition. Q2 2017 expenditures for Ivan include the acquisition costs of Rayrock (section 2.3).

 

 

f)          Ivan Purchase Costs

In June 2017, the Company acquired Rayrock. The seller retains a 2% NSR on all production from the Rayrock mineral properties (section 4). Coro may acquire half the NSR for $2 million at any time and has a right of first refusal over the NSR.

 

The Ivan Plant has an installed capacity of 10,000 tonnes per year of copper cathode and operated from 1995 until 2012, when it was placed on care and maintenance. It has associated water rights and environmental and operating permits, some of which require updating.

 

2.4           Rayrock Acquisition

 

In addition, the acquisition of Rayrock included a large block of claims between Marimaca and the Ivan Plant, which significantly extends the Company’s land package in the region. The following table sets out the details of the Rayrock purchase:

 

Table 4: Rayrock Purchase Consideration ($000’s)
Cash			6,219
Transaction costs			389
Total purchase consideration			6,608
The purchase price was allocated as follows:
Current assets			23
Ivan plant			10,786
Total assets			10,809
Current liabilities			216
Restoration provision			3,985
Total liabilities			4,201
Net identifiable assets acquired			6,608

 

2.5           Marimaca from Drill Hole (April 2016) to Resource (January 2017)

 

Resource

Prior to Coro’s ownership, the Marimaca property had never been drilled. In May 2016, final results from Coro’s 16-hole, 2,680m reverse circulation (“RC”) drilling program were announced, which intersected substantial copper mineralization in all holes. The first eight holes included MAR-04 which intersected 200m of 0.71% CuT. The second eight holes included MAR-10 which intersected 150m of 1.13% CuT.

 

In October 2016, the results from a 44-hole (38 RC and 6 diamond drill (“DD”)), 11,060m drill program confirmed the extent and continuity of the deposit. The results were released in three batches with the following highlighted intercepts:

- 190m @ 0.80% CuT & 256m @ 0.62% CuT;

- 330m @ 0.80% CuT, 236m @ 0.81% CuT & 188m @1.06% CuT; and

- 192m @ 0.83 % CuT, 102m @ 0.79% CuT & 82m @ 0.83% CuT

 

The Marimaca maiden resource estimate was released in January 2017, which defined sufficient resources to confirm the merits of completing the Rayrock acquisition. The resource estimate details are presented in the following table, where CuT means total copper and CuS means acid soluble copper:

 

 

Table 2: Marimaca Resource Estimate

 

Measured				Indicated			Meas + Ind			Inferred
Cut Off	kt	%CuT	%CuS	kt	%CuT	%CuS	kt	%CuT	%CuS	kt	%CuT	%CuS
>1.0	1,177	1.36	1.06	2,355	1.24	0.90	3,532	1.28	0.95	1,320	1.19	0.75
0.9	1,482	1.28	1.00	3,284	1.16	0.84	4,766	1.20	0.89	2,027	1.11	0.72
0.8	1,878	1.19	0.93	4,508	1.08	0.79	6,385	1.11	0.83	3,085	1.02	0.69
0.7	2,359	1.10	0.86	6,137	0.99	0.73	8,496	1.02	0.76	4,615	0.93	0.64
0.6	2,950	1.01	0.79	7,928	0.91	0.67	10,878	0.94	0.70	6,920	0.83	0.59
0.5	3,661	0.92	0.72	10,190	0.83	0.62	13,851	0.85	0.65	10,728	0.73	0.53
0.4	4,365	0.84	0.66	12,738	0.75	0.56	17,103	0.78	0.59	15,251	0.65	0.47
0.3	4,986	0.78	0.61	15,192	0.69	0.52	20,178	0.71	0.54	20,753	0.57	0.41
0.2	5,453	0.74	0.58	16,833	0.65	0.48	22,286	0.67	0.51	26,979	0.49	0.35
0.1	5,689	0.71	0.56	17,551	0.63	0.47	23,241	0.65	0.49	31,844	0.44	0.31
>0	5,761	0.70	0.56	18,052	0.61	0.46	23,814	0.63	0.48	39,456	0.36	0.33

An additional ~20mt of potential mineralization was identified during the modelling, which could not be classified as a resource based on the currently available drill hole information. For full details of the resource reference should be made to the Company’s news release dated January 12, 2017.

 

At a $3.20/lb long term copper price, the following in-pit resource, all of which is heap leach material, was estimated.

 

Table 3: In Pit Resource

Category		t x 1000				%Cut				%CuS				t Cut				tCuS
Measured			5,301				0.74				0.59				39,400				31,000
Indicated			16,198				0.66				0.49				106,100				79,400
Measured & Indicated			21,499				0.68				0.51				145,500				110,400
Inferred			18,769				0.53				0.39				99,300				72,800
Waste			54,436								Strip				1.31:1

 

Marimaca Development Plan

In August 2017, the Company initiated a DFS with the mine plan being undertaken by NCL Ingenieria y Construccion S.A. (“NCL”) with INGEROCK is conducting the geotechnical work. Environmental & permitting work was undertaken by Bordoli Consultores Asociados and was successfully submitted to the Chilean authorities. As part of the DFS, the Company has also conducted additional metallurgical test work and infill drilling, whose results are being used to update the geological resource (and subsequently the in pit resource). The Company anticipates that the DFS will be completed during Q2 2018.

 

The initial DFS, to earn into the Marimaca concession, will include 10,000 tonnes (22,046,030 lbs) of copper cathode per year via the Ivan Plant. The DFS is evaluating the alternative of trucking ore to the Ivan Plant. The DFS work also included completing infill and geotechnical drilling. The Company intends to expedite the permitting process with the objective of making a decision about implementing the project as soon as the permits are obtained.

 

In January 2018, the Company announced the results from the extension drilling on the La Atomic property and the results from drilling on the NE of the Marimaca concessions.  The drilling at La Atomica intersected leachable copper mineralization in ten out of twelve holes, with the remaining two holes confirming the location of the SW faulted boundary of the deposit.  The mineralized holes contained multiple intersections of oxides similar in grade and thickness to Marimaca, highlighted by 140m @ 0.46%CuT from surface, with some mixed and remnant enriched mineralization at depth, highlighted by 72m @ 1.34%CuT.

 

Thick mineralization averaging 180m @ 0.58%CuT was intersected from surface in one of the scout holes drilled some 300m NE of the Marimaca resource, indicating that the deposit continues in this direction. A second hole intersected 42m @ 1.82%CuT at depth as mixed and primary mineralization in the area immediately NE of the resource. Of the remaining five holes, three hit partially leached mineralization, possibly associated with faulting, while the other two appear to have defined the southern boundary of the leachable deposit in this part of the claim.

 

 

3 SCMB OPERATION

 

Coro holds a 65% interest in SCMB, which owns the Nora Plant and the Berta deposit (“Berta”). The primary feed for Nora to date has been Berta, which is located ~20km west of the village of Inca de Oro and 62 kilometres by road south of Nora, in the III region of Chile. The Berta property was optioned in 2011 and subsequently purchased. In August 2015, the existing Nora Plant located 62km north of Berta, was purchased out of administration.

 

In February 2016, Nora was successfully re-commissioned and in 2016 trucking high grade material to Nora for processing commenced. In December 2016, construction of the Berta crushing, agglomeration, and leaching facilities commenced and trucking of PLS to the Nora Plant started in June 2017.

 

In September 2017, Mr. Nelson Mendoza was appointed General Manager of SCMB. Mr. Mendoza has over 35 years’ experience in the operation of mineral processing plants, 17 years of which was focused on SXEW plants like Nora. In February 2018 as part of its Strategic Review undertook a review of the SCMB Operations and anticipates the results of this review to be released in the near term.

 

The following table shows the copper production and sales from SCMB since inception.

 

Table 5: SCMB KPIs		Q116				Q216				Q316				Q416				Q117				Q217				Q317				Q417				2016				2017				LTD
Cathode produced			343				434				490				508				421				496				644				765				1,775				2,326				4,183
Cathode sold			393				425				458				528				459				477				627				753				1,804				2,317				4,120

 

No unit cost (cost per pound) information has been provided as SCMB has not yet reached commercial production levels but it is expected to be able achieve this once production ramps up toward the intended capacity.

 

In June 2017, SCMB was granted the Berta Plant Operating technical permit from Sernageomin, the Chilean Mining Authority. SCMB continues to work towards obtaining the final operating technical permits for the Berta Mine. Work at the Berta facility has been focused on optimizing the current installations required to reach the project’s design capacity. Q3 and Q4 2017 saw the completion of the build of ore on the leach pads and consolidation of the operation from mine to PLS haulage to subsequent processing of PLS through the Nora SXEW plant.

 

In Q2 2017, SCMB expanded the Nora EW circuit from the existing 3,000 tonnes per year (6,613,870 lbs) to 4,800 tonnes per year (10,579,200 pounds) of copper cathode. This expansion coincided with PLS production from Berta and the completion of the Berta Facilities.

 

Development and Capitalized Operational Expenditure Analysis

The costs of developing SCMB are recognized under Mine Development in Property, Plant and equipment. With the acquisition of Nora (in August 2015), the development costs (presented below) include the acquisition, refurbishment, remediation and start-up (commissioning costs) of Nora. It also includes the capitalization of losses in the pre-commercial production stage.

 

 

Table 6: SCMB Expenditure Summary ($000's)		2013 to 2015				2016				2017				LTD
Nora plant (net) (table 7)			8,091				4,506				7,086				19,683
Mine development			6,833				1,067				86				7,986
Berta facilities			-				-				5,718				5,718
Capitalized development costs			14,924				5,573				12,889				33,386
Construction in progress (other)			-				336				(72	)			264
Expensed evaluation costs			-				-				-				4,428
Total expenditure			14,924				5,909				12,817				38,078

 

a)       Nora Plant

In Q4 2017, the Company produced 765 tonnes (1,686,060 lbs) of copper. The current capacity of the plant is 400 tonnes per month (881,848 lbs). In Q4 2017 the plant operated at approximately 64% capacity as Berta builds up to a steady state of production.

 

Table 7: Nora Plant Expenditure Summary ($000's)		2015				2016				2017				LTD
Acquisition costs			4,583				-				-				4,583
Remediation, refurbishment and start up costs			1,850				-				-				1,850
Capitalized interest and finance costs			651				1,444				315				2,410
Other additions (net of disposals)			1,007				499				511				2,017
Sales Proceeds			-				(8,382	)			(14,144	)			(22,526	)
Capitalized production costs			-				10,945				20,404				31,349
Total Nora Plant expenditure			8,091				4,506				7,086				19,683

 

Impairment Review

Under accounting rules the Company is required to review the carrying value of its assets on a continuing basis to ensure that the carrying value does not exceed the fair market value of the underlying asset. For accounting purposes the Company views the Nora Plant as a standalone cash generating unit (“CGU”) from the Berta Mine and Berta Facilities.

 

As of December 31, 2017, the Company concluded that an impairment indicator existed. In conjunction with its accounting policy on impairment of non-financial assets the Company recognized an impairment charge of $15.7m reducing the carry value of the Nora Plant to $4.0 million. In determining the fair value, the Company considered the future uses of the plant and the current operational performance. It also considered that over the course of the ramp up period the Company incurred operating losses that were capitalized to the Nora Plant which resulted in the Nora asset being carried at value above its fair market value.

 

The Company also undertook an impairment review of the Berta Mine and Berta Facilities (which it considers one CGU) and determined that the carrying value did not exceed its fair market value as of December 31, 2017. In this determination, the Company considered the implementation of SXEW plant at Berta in order to reduce its high current operating costs.

 

All of these impairment related assumptions are highly subjective and subject to change over time; changes in these assumptions could have a significant impact on the underlying assets carrying values.

 

Asset Impairment vs. Valuation of SCMB

The impairment review performed for the Nora Plant and the Berta site considered the estimated fair values of the underlying assets and not the fair value of SCMB, the entity. In determining the fair value of SCMB, one would have to consider not only the fair value of all of the underlying assets (which include the Nora Plant and the Berta site) but also the liabilities associated with the SCMB entity, that are included within the consolidated financial statements. Included within the consolidated accounts payable and accrued liabilities for Coro are approximately $9.6 million that relate specifically to SCMB and asset retirement obligations of $2.5 million, that would need to be considered in any valuation of SCMB the entity.

 

 

b)       Mine Development

The following table shows the mine development costs for Berta from January 1, 2016 by quarter:

 

Table 8: ($000’s)		Quarterly																Annual
Mine development		Q116		Q216		Q316		Q416		Q117		Q217		Q317		Q417				2016		2017		LTD
Total		378		232		315		142		56		17		4		9		3,827		1,067		86		7,986

 

In 2017 include minor administration expenditures for ongoing permitting work. Q4 2016 includes geological services, metallurgical assays and environmental permitting expenditures. Q3 2016 costs include preparation and evaluation work for building out the Berta Facilities. Q1 2016 includes the cost associated with completing 38 shallow grade control drill holes (1,084m).

 

c)       Berta Facilities

The completed Berta Facilities include crushing, agglomeration circuit, and leach pads to produce PLS at the mine site. The operation began trucking PLS in June 2017 from the Berta Facilities to Nora. As of December 31, 2017, the total costs for the Berta Facilities and the Nora expansion are as follow:

 

Table 9: Berta facilities ($000’s)		Q416		Q117		Q217		Q317		Q417		2016		2017		LTD
Berta facilities		236		1,849		1,049		459		984		236		4,340		4,577
Restoration provision		-		819		-		-		322		-		1,141		1,141
Total Berta facilities		236		2,668		1,049		459		1,305		236		5,482		5,718
Nora SXEW plant expansion		100		188		318		29		-		100		536		635
Other		-		-		128		149		(12)		-		264		264
Total Berta and Nora Expansion		336		2,856		1,495		637		1,293		336		6,282		6,617

 

El Joté Copper Project– A potential additional source of future feed for Nora

In May 2016, SCMB optioned the El Joté (formerly “Salvadora”) copper project, located ~ 30km NW of the Nora Plant and 58km NE of the port of Chañaral in the III Region of Chile (section 4.6).

 

4 Financial Position Review

 

4.1       Cash and Working Capital

 

		December 31,		December 31,
Table 10: Cash and Working Capital ($000’s)		2016		2017
Cash and cash equivalents		4,257		2,811
Accounts receivable and prepaid		1,296		3,299
Inventories (table 11)		1,578		1,956
Accounts payable and accruals		(4,073)		(10,818)
Current debt (table 13)		(871)		(3,412)
Net working capital (including current portion of debt)		2,187		(6,164)
Net working capital (excluding current portion of debt)		3,058		(2,752)

 

During the year ended December 31, 2017, the Company financed its activities by raising $18.2 million in equity (net of issuance costs) and securing $3.7 million in loans. Cash outflows included $5.9 million for Rayrock acquisition, $7.7 million between Nora, Berta and the Berta Facilities, $5.2 million to advance its development and exploration programs at Marimaca, and for working capital purposes.

 

 

At the end of December 31, 2017, accounts receivable balance increased from $1.3 million to $3.3 million compared to as of December 31, 2016 mainly due to an increase of $1.7 million in Chilean net value added taxes (“IVA”) from SCMB, which is refundable from copper cathode sales and is expected to be recovered when IVA on sales exceeds IVA on expenses.

 

Also, at the end of December 31, 2017, accounts payable balance increased to $10.8 million from $4.1 million compared with the same period of time last year, mainly due an increase of $5.9 million in Berta’s accounts payable related to its operations.

 

Current debt also increased from $0.9 million to $3.4 million mainly due to a loan of $3 million from the Company’s major shareholder at the end of December 2017.

 

As of February 28, 2018, the Company had cash and cash equivalents of $4.9 million.

 

		December 31,		December 31,
Table 11: Inventories ($000’s)		2016		2017
Consumable parts and supplies		118		160
Ore stockpiles		204		258
Copper in circuit		1,000		1,083
Finished goods		256		455
Total inventory		1,579		1,956

 

As of December 31, 2017 the copper in circuit and finished goods inventory was recorded at net realizable value (December 2016: recorded at cost).

 

4.2       Other Assets

 

		December 31,		December 31,
Table 12: Other Assets ($000’s)		2016		2017
Property, plant and equipment		20,861		28,790
Berta mine development (section 3)		7,900		7,986
Nora plant (section 3)		12,597		4,000
Ivan plant (section 3)		-		10,693
Berta facilities (section 3)		-		5,718
Construction in progress (other)		336		264
Other		28		129
Exploration & evaluation assets		938		5,930
Marimaca (section 2.1)		-		5,100
La Atomica		-		515
Planta Prat		220		-
El Jote (section 3)		135		315
Ivan (section 2.4)		583		-
Other assets		-		-
Total other assets		21,799		34,720

 

Berta Facilities

In December 2016, the Company commenced building the Berta Facilities (completed in June 2017) which included a crushing and agglomeration circuit and leach pads to produce PLS. In 2017, the carrying value of Berta Facilities costs was $5.7 million (2016: $Nil).

 

 

Nora Plant

In 2017, additions at Nora included the capitalization of pre-commercial production expenditures of $6.3 million (2016: $2.6 million), after offsetting pre-commercial production sales of $14.1 million (2016: $8.4 million); the expansion of the Nora SXEW plant of $0.5 million (2016: $0.5 million); and capitalization of financing and interest costs of $0.3 million (2016: $1.4 million). In December 2017, the Company recorded a $15.7 million impairment charge reducing its carrying value to $4.0 million.

 

Ivan Plant

The Ivan Plant was purchased in June 2017, with the intention that it be used to process ore from the Marimaca property. The Ivan Plant is not currently operative and will be kept in care and maintenance until it is necessary to start commissioning and testing. The Company expensed a total of $0.6 million for care maintenance cost associated to Ivan Plant in the year ended December 31, 2017.

 

Total assets of Coro as at December 31, 2017 were $43 million (Dec 2016: $29 million).

 

In June 2017, the Company terminated the Prat plant agreement and wrote off $0.2 million of its deferred exploration costs associated with the project.

 

4.3       Other Liabilities

 

		December 31,		December 31,
Table 13: - Other Liabilities ($000’s)		2016		2017
Current		871		3,412
Finance lease		308		160
Shareholder loan (section 4.3.1)		-		2,940
Current portion of other debt		563		-
Deferred revenue (section 4.3.2)		-		313
Non-current		1,712		6,833
Finance lease		181		-
Other debt		250		250
Restoration provision (section 4.3.3)		1,281		6,583
Total other liabilities		2,583		10,245

 

Total liabilities of Coro as at December 31, 2017 were $21.1 million (Dec 2016: $6.7 million).

 

4.3.1       Shareholder loan

In December 2017, Coro entered into a credit agreement with its major shareholder Greenstone, pursuant to which Greenstone advanced $3 million to Coro on December 20, 2017. Under the terms of the credit agreement, the loan has an eleven month term and bears interest at 12% per annum until March 31, 2018, after which the interest will be increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement

 

4.3.2       Deferred Revenue

In June 2017, SCMB entered into a copper off-take contract for 100% of the copper production from the Nora Plant for a period of twelve months. The agreement provided for an immediate advance of $0.75 million repayable in twelve months from the borrowing date, bearing interest at a rate of one-month US Libor plus 6% per annum. During 2017, SCMB repaid $0.4 million from its copper off-take contract. As of December 31, 2017, SCMB owes $0.3 million which represents 5 months left in the contract.

 

4.3.3       Restoration provision

Details of the restoration provision are as follows:

 

 

Table 14: Restoration Provision ($000’s)		December 31, 2016								December 31, 2017
		Nora & Total		Nora		Ivan		Berta		Total
Balance, beginning of year		1,291		1,281		-		-		1,281
Initial provision		-		-		3,985		819		4,804
Reclamation revaluation		(25)		13		76		304		393
Accretion expense		15		31		56		18		105
Balance, end of year		1,281		1,325		4,117		1,141		6,583

 

In calculating the present value of the restoration provisions as at December 31, 2017, management used a risk-free rate between 1.38% and 2.75% and inflation rate between 2.10% and 2.30%. The undiscounted cash flows, before inflation adjustments, estimated to settle the restoration provisions are approximately equal to the discounted cash flows. Due to the nature of closure plans, cash expenditures are expected to occur over a significant period of time with the majority of the expenditures expected to as follows: Nora and Berta from in 7 to 8 years and Ivan Plant in 2 to 24 years.

 

a)       Nora Plant

Nora’s restoration provision of $1.3 million consists primarily of costs associated with reclamation and closure activities for the Nora Plant. These activities include costs for disposition of chemical materials, earthworks, and the dismantling and demolition of structures.

 

b)       Berta Facilities

During the year ended December 31, 2017, SCMB recorded $1.1 million for restoration provision for the Berta Facilities which consists primarily of the costs associated with the auxiliary installations of the mine plant and the crushing and agglomeration facilities.

 

c)       Ivan Plant

As at December 31, 20127, Ivan’s restoration provision totalled $4.1 million which consists primarily of costs associated with reclamation and closure activities for the Ivan Plant and mine site. These activities include costs for disposition of chemical materials, earthworks, and the dismantling and demolition of structures.

 

4.4 Equity and Financings

 

		December 31,		December 31,
Table 15: Shareholders’ Equity ($000’s)		2016		2017
Common shares (Table 16)		74,477		92,635
Contributed surplus		7,155		7,789
Accumulated other comprehensive income		571		439
Deficit		(60,708)		(74,331)
Non-controlling interest (“NCI”)		779		(4,810)
Total shareholders’ equity		22,274		21,722

 

 

 

 

Equity instruments

 

		December 31,		December 31,
Table 16: Equity Instruments		2016		2017
Common shares outstanding		483,425,039		651,929,511
Options outstanding		34,290,000		33,450,000
Weighted average exercise price		CA$0.16		CA$0.13
Warrants outstanding		5,102,500		-
Weighted average exercise price		CA$0.15		-
Market capitalization ($000’s)		CA$72,514		CA$78,231
Closing share price		CA$0.15		CA$0.12

 

Coro was incorporated in 2004 and is listed on the Toronto Stock Exchange, under the symbol “COP”. As of December 31, 2017 the Company had 651,929,512 (December 31, 2016: 483,425,039) shares outstanding and a market capitalization of CA$78.2 million. The Company has its registered corporate office in Vancouver BC, Canada.

 

In January 2017, 2,162,500 warrants at CA$0.15 were exercised for gross proceeds of CA$0.3 million. In April 2017, the Company completed a non-brokered private placement for gross proceeds of $12.0 million issuing 107,680,000 common shares at CA$0.15 per common share.

 

In October 2017, the Company completed a non-brokered private placement for gross proceeds of $6 million and issued 56,561,973 common shares at a price of CA$0.13 per common share. Following completion of these financings, Greenstone Resources Ltd (“Greenstone”) holds approximately 63.7% of the Company’s issued and outstanding shares.

 

In November 2017, a total of 1,500,000 options were exercised at a price of CA$0.04 for total proceeds of $47,000 and in December 2017, a total of 600,000 options were exercised at a price of CA$0.10 for total proceeds of $47,026.

 

Table 17: - Use of Proceeds Table
Description	Shares (000’s)	Price CA$	Gross  Proceeds ($000’s)	Intended Use	Actual Use
Feb 16 – Share Issuance	79,800	$0.04	CA$3,192	Marimaca, Berta & working capital	As intended
May 16 – Conversion	106,730	$0.10	Conversion of Convertible Debenture (no proceeds received)
July 16 – Share Issuance	100,000	$0.10	CA$10,000	Marimaca, Berta & working capital	As intended
Dec 16 – Share Issuance	37,523	$0.14	CA$4,000	Marimaca, Berta & working capital	As intended
Mar 17 – Share Issuance	15,592	$0.15	CA$2,300	Marimaca, Berta & working capital	As intended
Apr 17 – Share Issuance	92,088	$0.15	CA$13,800	Marimaca, Rayrock & working capital	As intended
Sep 17 – Share Issuance	35,900	$0.13	CA$4,667	Marimaca DFS & working capital	As intended
Oct 17 – Share Issuance	20,662	$0.13	CA$2,686	Marimaca DFS & working capital	As intended

 

4.5       Non-controlling Interest

ProPipe S.A. (“ProPipe”) has a 35% interest (2016: 35%) in SCMB earned by completing various milestones in the development of the Berta deposit. As of December 31, 2017 the amount owed from SCMB to Coro was $23.7 million.

 

4.6       Contractual Obligations and Option Payments

The following table shows the contractual obligations of the Company including property options payments as at December 31, 2017:

 

 

Table 18:- Contractual Obligations and Option Payments ($000’s)		2018		2019		Thereafter		Total
Property option payments
Marimaca		125		-		-		125
La Atomica		500		1,000		4,400		5,900
El Joté (section 2)		250		2,440		-		2,690
Naguayan				300		6,000		6,300
Total property option payments		875		3,740		10,400		15,015
Operating leases		152		104		83		339
Total		1,027		3,844		10,483		15,354

 

^{(1) Excludes the Sierra Miranda option agreement (January 2018)}

 

a)       Marimaca property, Chile

 

Marimaca Claims

In August 2014, the Company entered into an agreement to acquire up to a 75% interest in the Marimaca copper oxide prospect for $185,000 ($60,000 paid); $125,000 payment is due on completion of an NI 43-101 compliant resource estimate and engineering study that demonstrates the technical and economic feasibility of producing a minimum of 1,500tpy of copper cathode by August 2018 to earn an initial 51% interest. Under the agreement, Coro can acquire a further 24% interest by obtaining project construction finance, or contributing the Ivan Plant. The owner of the property will maintain a 25% interest with a 15% interest free carried to commercial production and a 10% participating interest that is subject to dilution.

 

La Atomica Claims

In August 2017, a binding letter of intent (“LOI”) was signed to acquire 100% of the La Atomica property (option agreement signed October 2017) by making $6.0 million in option payments as follows: $100,000 (paid); $0.5 million on 12-month anniversary date; $1.0 million on 24-month anniversary date; and $4.0 million on 36-month anniversary date. A 1.5% net smelter return (“NSR”) is payable on the claims, with the Company’s option to purchase 0.5% out of the 1.5% for $2.0 million at any time.

 

Sierra Miranda Claims

Under the terms of the January 2018 Sierra Miranda LOI, the Company may acquire 100% of Sierra Miranda mining claims (the “SM Claims”) immediately adjoining its Marimaca property for a total cash consideration of $6.0 million, $0.10 million (paid) and the balance of $5.9 million payable on completion of due diligence and certain other transfers of title. In addition, the claims will be subject to a 2% NSR.

 

b)       Marimaca District, Chile

Naguayan Claims

In October 2017, a binding LOI was signed to acquire 100% of the Naguayan property, by making $6.5 million in option payments as follows; $0.2 million (paid), $0.3 million on 12-month anniversary date; $0.7 million on 24-month anniversary date; $1.75 million on 36 month anniversary date; and $3.55 million on 48-month anniversary date. A 1.5% NSR is payable, with the Company option to purchase 0.5% out of the 1.5% for $2.0 million at any time up to one year (12 months) following the start of commercial production on the property.

 

c)       Other Properties, Chile

El Joté Claims

In May 2016, SCMB optioned the El Joté (formerly called “Salvadora”) copper project, located ~ 30km NW of the Nora Plant and 58km NE of the port of Chañaral in the III Region of Chile. SCMB may acquire a 100% interest in the property by completing the following option payment schedule totalling $3.0 million; with $0.32 million (paid) and other payments on or before: May 2018; $0.25 million, and May 2019; $2.44 million. The final payment may be made in eight equal instalments of $0.3 million plus interest at LIBOR, and SCMB may start production with the first instalment payment. A 1.5% NSR is retained by the vendor, which can be purchased for $1.5 million at any time.

 

 

5 Expenditures Review

 

The following table details the Company’s quarterly expenditures, certain quarters have been adjusted to confirm to current presentation and treatment.

 

Table 19: ($000’s)
Expenditures Summary		Q116		Q216		Q316		Q416		Q117		Q217		Q317		Q417
Expenses
Exploration expenditures (table 20)		113		549		1,157		423		18		38		6		89
Writedown exploration and evaluation asset		-		-				-		-		220		-		15,683
Ivan plant care and maintenance		-		-		-		-		-		-		324		249
Depreciation and amortization		2		2		4		5		5		6		7		6
Legal and filing fees		18		28		12		13		25		28		4		7
Other corporate costs		55		116		61		131		156		106		139		181
Salaries & management fees		106		109		183		139		229		177		258		309
Share-based payments		39		15		304		426		201		294		115		101
Operating loss		332		819		1,720		1,136		634		870		854		16,627
Finance income		-		(23)		(60)		(88)		-		-		-		(10)
Interes expense (income)		-		-		-		-		-		-		-		-
Foreign exchange loss (gain)		(280)		183		16		(134)		68		96		21		63
Unrealized loss (gain) on held-for-trading		-		(24)		(3)		(9)		(12)		1		4		(1)
Loss per quarter		52		955		1,674		905		690		966		878		16,678
Attributable to:
Owners of Parent		52		947		1,653		907		588		832		717		11,485
Non-controlling interest		(1)		9		20		(2)		7		11		20		5,551
Other comprehensive loss (income)		273		(151)		(42)		114		(50)		(36)		68		150
Comprehensive loss		325		804		1,632		1,019		546		807		805		17,185
Attributable to:
Owners of Parent		325		796		1,612		1,021		538		796		785		11,634
Non-controlling interest		(1)		9		20		(2)		7		11		20		5,551
Basic loss (earnings) per share ($)		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.02
Fully diluted loss per share ($)		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.02

 

As of December 31, 2017, the Berta / Nora complex had not reached a state of commercial production and therefore has not recorded any sales or revenues.

 

In Q417, the Company recorded an impairment charge against the Nora asset of $15.7 million (section 3a). Q217 includes the write off of the deferred exploration costs associated with the Planta Prat project.

 

Legal and filing fees are higher in the first half of each year as a result of annual listing fees, and legal & regulatory costs associated with the annual general meeting.

 

The Ivan Plant was purchased to process ore from Marimaca and therefore represents a key piece of the Marimaca development plan. Because the plant is not currently operating, the related care and maintenance costs are required to be expensed and therefore the holding costs at the Ivan Plant have been expensed and reflected in the statement of loss.

 

Other corporate costs mainly include corporate travel costs, audit and accounting fees, insurance, rent and investor communications costs. Included within Q216, Q416, and Q117, are costs associated with an increasing marketing effort surrounding the $12.0 million financing (section 4.4). In Q217 and Q317, expenses include accounting fees for taxation matters related the 2016 amalgamation and other tax related filings, travel expenses for a board meeting in Chile and costs in connection with the marketing efforts towards the $6 million private placement closed in October (section 4.4). In Q417, costs are related to corporate travel for a second board meeting in Chile for the evaluation of Nora Plant and also investor relations travel and conferences costs.

 

 

Salaries and management fees are limited to corporate salaries and do not include the time of any Chilean-based exploration and development team members. The increase in Q317 is due to the incorporation of the new President and CEO in June 2017. The increase in Q316 is associated with a one-off payment made in respect of the retirement of a founder and executive director of the Company. In addition, effective September 1, 2016, the Company began paying fees to Directors who had previously not been compensated for services provided. Q1 and Q217 costs are higher due to the appointment of our VP Communications and investor relations, and the President and CEO in June 2017.

 

The variation in the share-based compensation is consistent with the various options granted.

 

5.1                Other Exploration Costs

 

The Company’s other exploration properties include, but are not limited to, Celeste, Llancahue, Naguayan, and the newly acquired ground as part of the Rayrock acquisition (section 2.4)

 

Table 20: ($000’s)		Quarterly																YTD
Exploration Chile		Q116		Q216		Q316		Q416		Q117		Q217		Q317		Q417		2016		2017
Consult, lab & prof.		8		56		87		104		-		-		-		-		253		-
Drilling & trenching		18		328		929		171		-		-		-		80		1,445		80
General & admin costs		86		119		47		96		15		14		6		9		349		44
Property investigations		1		46		94		52		3		24		-		-		194		26
Total exploration costs		113		549		1,157		423		18		38		6		89		2,241		150
By Project:
Marimaca		25		450		1,231		396		-		-		-		-		2,101		-
Marimaca District		-		-		-		-		-		-		-		80		-		80
Celeste		1		18		-		-		-		20		-		-		19		20
El Jote		-		-		-		-		-		-		-		-		-		-
Other (incl. Llancahue)		86		82		(74)		27		18		18		6		9		121		51
Total exploration costs		113		549		1,157		423		18		38		6		89		2,241		150

 

Exploration expenses dropped significantly in Q117 as a result of starting to capitalize exploration expenditures on Marimaca following the release of the NI 43-101 resource and management’s belief that these costs can now be recovered. General and Administration costs include a portion of all administrative costs of running the Company’s Santiago office and a provision for IVA. In Chile, IVA is not refundable in cash and is applied against other IVA credits. Property investigations costs in Q216 principally relate to the payment of annual Patentes (mining taxes) on the Celeste and Llancachue’s exploration properties; and from Q316 and Q416 mainly relate to Marimaca District’s exploration property assays and mining claims payments.

 

5.2       Related Party Disclosure

 

The Company considers the Executive Directors and Officers of the Company to be key management personnel.

 

Table 21 Key Management Personnel Compensation ($000’s)		Quarterly																YTD
		Q116		Q216		Q316		Q416		Q117		Q217		Q317		Q417		2016		2017
Short-term employee benefits		190		200		264		185		505		235		308		308		839		1,356
Share-based payments		44		14		261		364		188		279		110		95		683		672
Total		234		213		525		549		694		515		419		402		1,522		2,028

 

As at December 31, 2017, amounts payable to a shareholder were $3.1 million, the terms of which are described elsewhere in this MD&A. This amount was included under current portion of other debt (section 4.3).

 

Fluctuations in short term employee benefits are due to the underlying agreements being denominated in Chilean Pesos and the Canadian dollar. The Chilean salaries are also subject to indexing.

 

 

6 RISKS and CRITICAL ACCOUNTING ESTIMATES & POLICIES

 

For a full version of the critical accounting estimates and policies reference should be made to the Company’s audited financial statements for the year ended December 31, 2017, which are available on the Company’s website at www.coromining.com. In addition, reference should be made to the most recently filed Annual Information Form available on SEDAR at www.sedar.com.

 

6.1       Disclosure Controls and Internal Control Financial Reporting

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is communicated to senior management, to allow timely decisions regarding required disclosure.

 

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements in compliance with IFRS. The Company’s internal control over financial reporting includes policies and procedures that:

•

pertain to the maintenance of records that accurately and fairly reflect the transactions of the Company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS;

•

ensure the Company’s receipts and expenditures are made only in accordance with authorization of management and the Company’s directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized transactions that could have a material effect on the annual or interim financial statements.

 

Management has concluded that, as at December 31, 2017, the Company‘s internal control over financial reporting was not effective due to the existence of a material weakness. A material weakness existed in the design of internal control over financial reporting caused by a lack of adequate segregation of duties in the financial close process. The Chief Financial Officer is responsible for preparing, authorizing, and reviewing information that is key to the preparation of financial reports. He is also responsible for preparing and reviewing the resulting financial reports. This weakness has the potential to result in material misstatements in the Company’s financial statements.

 

Management has concluded, and the audit committee has agreed that taking into account the present stage of the Company's development, the Company does not have sufficient size and scale to warrant the hiring of additional staff to remediate the weakness at this time. There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

 

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

 

6.2       Forward Looking Statements

Certain statements included in this “MD&A” constitute forward-looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “may”, “should” and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect current expectations regarding future results or events. This MD&A contains forward-looking statements. These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors.

 

 

Information concerning the interpretation of drill results also may be considered forward-looking statements; as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. The estimates, risks and uncertainties described in this MD&A are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in the Company’s forward-looking statements. In addition, any forward-looking statements represent the Company’s estimates only as of the date of this MD&A and should not be relied upon as representing the Company’s estimates as of any subsequent date. The material factors and assumptions that were applied in making the forward-looking statements in this MD&A include: (a) execution of the Company’s existing plans or exploration programs for each of its properties, either of which may change due to changes in the views of the Company, or if new information arises which makes it prudent to change such plans or programs; and (b) the accuracy of current interpretation of drill and other exploration results, since new information or new interpretation of existing information may result in changes in the Company’s expectations. Readers should not place undue reliance on the Company’s forward-looking statements, as the Company’s actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company’s business, or if the Company’s estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize.

 

6.3       Nature of Operations and Going Concern - Refer to section 1

 

6.4       NI 43-101 Compliance Requirements

Under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), if an issuer disclosures in writing scientific or technical information about a mineral project on a property material to the issuer, the issuer must include in the written disclosure the name and the relationship to the issuer of the qualified person who: (a) prepared or supervised the preparation of the information that forms the basis for the written disclosure or (b) approved the written disclosure. For the purposes of this MD&A, Luis Albano Tonto, President and CEO of the Company, a mining engineer with more than 30 years of experience is the Qualified Person for the purposes of NI 43-101 has approved the written disclosure in this MD&A. This MD&A references a number of previous news releases in respect of disclosure of technical matters relating to mineral properties and reference should be made to these news releases to fully understand these references.

 

6.5 Government Laws, Regulation & Permitting

Mining and exploration activities of the Company are subject to both domestic and foreign laws and regulations governing prospecting, development, production, taxes, labour standards, occupational health, mine safety, waste disposal, toxic substances, the environment and other matters. Although the Company believes that all exploration activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing the operations and activities of the Company or more stringent implementation thereof could have a substantial adverse impact on the Company.

 

The operations of the Company will require licenses and permits from various governmental authorities to carry out exploration and development at its projects. There can be no assurance that the Company will be able to obtain the necessary licences and permits on acceptable terms, in a timely manner or at all. Any failure to comply with permits and applicable laws and regulations, even if inadvertent, could result in the interruption or closure of operations or material fines, penalties or other liabilities. As of December 31, 2017, SCMB was still waiting for its final permits for the Berta mine.

 

6.6 Key Management and Competition

The success of the Company will be largely dependent upon the performance of its key officers, consultants and employees. Locating mineral deposits depends on a number of factors, not the least of which is the technical skill of the exploration personnel involved. The success of the Company is largely dependent on the performance of its key individuals. Failure to retain key individuals or to attract or retain additional key individuals with necessary skills could have a materially adverse impact upon the Company’s success.

 

The mining industry is intensely competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical facilities than itself with respect to the discovery and acquisition of interests in mineral properties, the recruitment and retention of qualified employees and other persons to carry out its mineral exploration activities. Competition in the mining industry could adversely affect the Company’s prospects for mineral exploration in the future.

 

 

6.7 Title to Properties

Acquisition of rights to the mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral properties may be disputed. Although the Company has investigated the title to all of the properties for which it holds concessions or other mineral leases or licenses or in respect of which it has a right to earn an interest, the Company cannot give an assurance that title to such properties will not be challenged or impugned.

 

The Company is earning into the Marimaca property and various other properties as described elsewhere in this MD&A and if it fails to make these payments and meet its performance obligations may also lose its right to this property.

 

6.8 Commodity Prices

The profitability of the Company’s operations will be dependent upon the market price of mineral commodities. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The prices of mineral commodities have fluctuated widely in recent years. Current and future price declines could cause commercial production to be impracticable. The Company’s revenues and earnings also could be affected by the prices of other commodities such as fuel and other consumable items, although to a lesser extent than by the price of copper.     

 

6.9 Foreign Currency Risk

A substantial portion of the Company’s expenses are now, and are expected to continue to be incurred in foreign currencies. The Company’s business will be subject to risks typical of an international business including, but not limited to, differing tax structures, regulations and restrictions and general foreign exchange rate volatility. Fluctuations in the exchange rate between the Canadian dollar and such other currencies may have a material effect on the Company’s business, financial condition and results of operations and could result in downward price pressure for our products in or losses from currency exchange rate fluctuations. The Company does not actively hedge against foreign currency fluctuations.

 

6.10       Critical Accounting Policies

 

a)

Estimates and use of judgement

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The following discusses the most significant accounting judgments and estimates that the Company has made in the preparation of the financial statements that could result in a material effect in the next financial year on the carrying amounts of assets and liabilities:

 

Impairment of exploration and evaluation assets

The application of the Company’s accounting policy for impairment of exploration and evaluation assets requires judgement to determine whether indicators of impairment exist, including factors such as: the period for which the Company has the right to explore has expired or will expire in the future, and is not expected to be renewed; substantive expenditures on further exploration for and evaluation of mineral resources in the specific area is neither budgeted or planned; exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources; and sufficient data exists to indicate that the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Management has assessed impairment indicators on the Company’s exploration and evaluation assets and has concluded that no impairment indicators exist as of December 31, 2017.

 

Impairment of property, plant and equipment

Each reporting period, cash generating units are evaluated to determine whether there are any indications of impairment. If any such indication exists, an impairment test is performed and if indicated, an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating unit is measured at the higher of the fair value less costs to sell or the value in use. The recoverable amount of the Company’s assets is calculated based on cash flow projections using assumptions and estimates that represent management's best estimate of the range of economic conditions that will exist over the remaining useful lives of the assets, and through a review of sales of comparative assets. These calculations include key estimates such as future copper prices, recoverable resources and reserves, operating and capital costs, inflation rate, discount rate and exchange rates. Although management has made its best estimate of these factors, it is possible that changes could occur in the near term that could adversely affect management’s estimate of the net cash flows to be generated from its projects.

 

 

Achievement of commercial production

Once a mine is ready for its intended use, depletion of capitalized mineral property costs begins. Significant judgement is required to determine when a project is ready to be operated in the manner intended by management. In assessing whether the Berta project has reached commercial production, management has considered several factors including:

 

•

Whether all major capital expenditures necessary to bring the mine to the condition where it is capable of operating in the manner intended by management have been completed;

•

Whether a reasonable period of testing and commissioning has taken place;

•

The ability to produce saleable product (e.g., the ability to produce copper cathode within specifications);

•

Whether the mine or plant has reached a pre-determined percentage of design capacity;

•

Whether mineral recoveries are at or near the expected production level; and

•

Whether the mine has the ability to sustain ongoing production of ore.

 

Because of operating difficulties encountered in the ramp up of the Berta mine and Nora Plant relating to trucking costs, recoveries, plant efficiency and other matters, management does not consider that commercial production has been met as at December 31, 2017.

 

6.11        New accounting pronouncements

The following revised standards and amendments are effective in future accounting periods with earlier application permitted, except where indicated.

 

(i) IFRS 9, Financial Instruments, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in IAS 39, Financial Instruments: Recognition and Measurement, that relate to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements.

 

The main change for liabilities is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income (loss) rather than in net earnings. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect the adoption of IFRS 9 to have a significant measurement or disclosure impact on its financial statements.

 

(ii) IFRS 15, Revenue from Contracts with Customers, establishes principles to address the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. IFRS 15 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect the adoption of IFRS 15 to have a significant measurement or disclosure impact on its financial statements.

 

(iii) IFRS 16, Leases, addresses accounting for leases and lease obligations. It replaces the existing leasing guidance in IAS 17, Leases. The objective of the new standard is to report all leases on the statement of financial position and to define how leases and lease liabilities are measured. IFRS 16 is effective January 1, 2019 with early adoption permitted for companies that also apply IFRS 15. The Company is currently assessing the impact of IFRS 16.

 

There are no other IFRS’s or IFRIC interpretations that are not yet effective that are expected to have a material impact on the Company.

 

 

7 SELECTED ANNUAL INFORMATION & SUMMARY OF FINANCIAL POSITION

 

Certain balance sheet items have been reclassified to conform to current presentation

 

Table 22: ($000’s)
Selected Annual Information		2015		2016		2017
Net sales or revenues
Earnings (loss) before discontinued operations		(1,121)		(3,586)		(19,212)
Earnings (loss) before discontinued operations per-share		(0.01)		(0.01)		(0.02)
Earnings (loss) before discontinued operations diluted per-share		(0.01)		(0.01)		(0.02)
Net earnings (loss)		(1,121)		(3,586)		(19,212)
Net earnings (loss) per-share		(0.01)		(0.01)		(0.02)
Net earnings (loss) diluted per-share		(0.01)		(0.01)		(0.02)
Total assets		17,460		28,930		42,786
Total long-term financial liabilities		2,104		1,712		6,833
Cash dividends declared		-		-		-

 

 

 

 

 

 

Table 23: ($000’s)		Summary of Financial Position
Financial Position		Q116		Q216		Q316		Q416		Q117		Q217		Q317		Q417
Financial Position
Assets
Cash and cash equivalents		1,137		1,773		3,353		4,257		2,469		2,780		3,991		2,811
Accounts receivable and prepaids		730		916		1,177		1,296		1,597		2,399		2,477		3,299
Inventory		791		1,257		1,666		1,578		1,132		1,653		1,787		1,956
Total Current Assets		2,658		3,946		6,196		7,131		5,198		6,832		8,255		8,066
Property, plant and equipment		16,389		18,346		19,816		20,862		24,443		38,285		40,758		28,790
Exploration and evaluation assets		160		177		880		938		1,751		1,799		2,733		5,930
Other assets		-		-		-		-		-		-		-		-
Total Assets		19,207		22,470		26,891		28,931		31,392		46,916		51,746		42,786
Liabilities
Accounts payable and accrued liabilities		1,892		2,835		4,526		4,073		4,612		5,694		8,127		10,818
Other debt (current)		1,571		1,581		1,094		563		281		-		-		-
Finance leases & other debt (current)		611		462		515		308		286		989		691		3,412
Total current liabilities		4,074		4,878		6,135		4,944		5,179		6,683		8,818		14,231
Non-current liabilities
Convertible debenture		7,462		-		-		-		-		-		-		-
Non-current portion of financing lease		281		313		180		181		-		-		-		-
Restoration provision		1,295		1,299		1,303		1,281		2,108		6,606		6,140		6,583
Other debt (non current)		250		250		250		250		250		250		250		250
Shareholders’ Equity
Common shares		55,367		66,037		70,645		74,477		76,389		86,420		90,255		92,635
Contributed surplus		6,381		6,401		6,719		7,155		7,369		7,667		7,799		7,789
AOCI		491		642		684		571		621		657		589		439
Deficit		(57,200)		(58,147)		(59,801)		(60,708)		(61,296)		(62,128)		(62,846)		(74,331)
		5,039		14,933		18,247		21,495		23,083		32,616		35,797		26,532
Non-controlling interest		806		797		777		779		772		761		741		(4,810)
Total Shareholders’ Equity		5,845		15,730		19,024		22,274		23,855		33,377		36,538		21,722
Total Liabilities and Equity		19,207		22,470		26,892		28,930		31,392		46,916		51,746		42,786
Weighted average # of shares (000’s)		239,172		277,845		314,494		348,346		485,304		529,917		561,763		576,563
Working Capital		(1,416)		(932)		61		2,188		19		149		(563)		(6,164)

 

 

 

 

 

2017 MD&A (expressed in U.S. Dollars)

TSX Symbol: COP

Page| 24

 

Exhibit 99.4

 

 

 

 

 

 

 

Coro Mining Corp.

Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

(Unaudited, expressed in U.S. dollars, except where indicated)

 

 

 

 

 

 

 

 

 

Coro Mining Corp.

Condensed Interim Consolidated Statements of Financial Position

As at June 30, 2018 and December 31, 2017

(Unaudited, expressed in U.S. dollars, except where indicated)

 

		June 30,  2018				December 31, 2017
		$000's				$000's
Assets
Current assets
Cash and cash equivalents			2,891				2,811
Accounts receivable and prepaid expenses (note 4)			4,411				3,299
Inventories (note 5)			3,115				1,956
			10,417				8,066
Property, plant and equipment (note 6)			28,871				28,790
Exploration and evaluation assets (note 7)			9,049				5,930
Total assets			48,337				42,786
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 8)			8,108				10,819
Current portion of other debt (note 9)			20,135				3,412
			28,243				14,231
Non-current portion of other debt (note 9)			853				250
Restoration provision			6,662				6,583
Total liabilities			35,758				21,064
Shareholders' equity
Common shares (note 10)			92,635				92,635
Contributed surplus			8,002				7,789
Accumulated other comprehensive income ("AOCI")			778				439
Deficit			(88,836	)			(74,331	)
			12,579				26,532
Non-controlling interest ("NCI")			-				(4,810	)
Total equity			12,579				21,722
Total liabilities and equity			48,337				42,786
Nature of operations and going concern (note 1)
Commitments (note 16)
Subsequent events (note 17)

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 

Coro Mining Corp.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

For the three and six months ended June 30, 2018 and 2017

(Unaudited, expressed in U.S. dollars, except where indicated)

 

 

		Three months ended								Six months ended
		June 30				June 30				June 30				June 30
		2018				2017				2018				2017
		$000's				$000's				$000's				$000's
Expenses
Exploration expenditures (note 12)			379				38				798				56
Care and maintenance costs (note 6)			306				-				712				-
Writedown and impairments (note 6)			2,641				220				4,262				220
Depreciation and amortization			23				6				43				11
Legal and filing fees			92				28				122				53
Other corporate costs			142				106				310				261
Salaries and management fees			344				177				788				407
Share-based payments expense			122				294				214				495
Operating loss			4,049				869				7,249				1,503
Finance expense (income)			85				(123	)			113				(217	)
Foreign exchange loss			462				96				487				164
Other expense (income)			5				1				8				(12	)
Loss for the period			4,601				843				7,857				1,438
Attibutable to:
Owners of the parent			4,602				832				7,326				1,420
Non-controlling interests			(1	)			11				531				18
			4,601				843				7,857				1,438
Other comprehensive income
Items that may be reclassified subsequently to net income:
Foreign currency translation adjustment			(196	)			(36	)			(339	)			(86	)
Loss and comprehensive loss for the period			4,405				807				7,518				1,352
Attibutable to:
Owners of the parent			4,406				796				6,987				1,334
Non-controlling interests			(1	)			11				531				18
Loss and comprehensive loss for the period			4,405				807				7,518				1,352
Basic and diluted loss per share ($ per share)		$	0.01			$	0.00			$	0.01			$	0.00
Weighted average shares outstanding (000's)			651,930				574,040				651,930				529,917

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 

Coro Mining Corp.

Condensed Interim Consolidated Statements of Shareholders’ Equity

For the six months ended June 30, 2018 and 2017

(Unaudited, expressed in U.S. dollars, except where indicated)

 

		Attributable to owners of the parent
		Shares
		Number								Contributed																				Total
		of shares				Amount				Surplus				AOCI				Deficit				Total				NCI				Equity
		#000's				$000's				$000's				$000's				$000's				$000's				$000's				$000's
Balance at January 01, 2017			483,425				74,477				7,155				571				(60,708	)			21,495				779				22,274
Shares issued (note 10)			107,680				11,699				-				-				-				11,699				-				11,699
Warrants exercised			2,163				244				-				-				-				244				-				244
Share-based payments (note 11)			-				-				512				-				-				512				-				512
Comprehensive income (loss)			-				-				-				86				(1,420	)			(1,334	)			(18	)			(1,352	)
Balance at June 30, 2017			593,269				86,420				7,667				657				(62,128	)			32,616				761				33,377
Balance at January 01, 2018			651,930				92,635				7,789				439				(74,331	)			26,532				(4,810	)			21,722
Share-based payments (note 11)			-				-				213				-				-				213				-				213
Comprehensive income (loss)			-				-				-				339				(7,326	)			(6,987	)			(531	)			(7,518	)
Acquisition of non-controlling interest (note 3)			-				-				-				-				(7,179	)			(7,179	)			5,341				(1,838	)
Balance at June 30, 2018			651,930				92,635				8,002				778				(88,836	)			12,579				-				12,579

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 

Coro Mining Corp.

Condensed Interim Consolidated Statements of Cash Flows

For the three and six months ended June 30, 2018 and 2017

(Unaudited, expressed in U.S. dollars, except where indicated)

 

		Three months ended								Six months ended
		June 30				June 30				June 30				June 30
		2018				2017				2018				2017
		$000's				$000's				$000's				$000's
Cash flows from operating activities
Loss for the period			(4,600	)			(843	)			(7,856	)			(1,438	)
Items not affecting cash
Depreciation and amortization			23				6				43				11
Writedown and impairments (note 6)			2,641				220				4,262				220
Share-based payment expense			122				294				214				495
Fair value on debt interest			16				-				16				-
Accretion expense			26				-				51				-
Other			-				1				4				(12	)
			(1,772	)			(322	)			(3,266	)			(724	)
Change in non-cash operating working capital
Decrease (increase) in receivables and prepaid			104				(5	)			173				(3	)
Decrease (increase) in inventory			(874	)			(522	)			(1,159	)			(75	)
Decrease in accounts payable and accruals			(74	)			(442	)			135				(11	)
			(2,616	)			(1,291	)			(4,117	)			(813	)
Cash flows from financing activities
Deferred consideration			-				(281	)			-				(563	)
Finance lease payments			-				(47	)			(30	)			(120	)
Issuance of common shares net			-				10,031				-				11,943
Repayment of loans (note 9)			(375	)			-				(563	)			-
Other debt (note 9)			11,000				750				16,000				750
			10,625				10,453				15,407				12,010
Cash flows from investing activities
Proceeds from investments			-				-				21				-
Property, plant and equipment (note 6)			(9,721	)			(5,193	)			(17,605	)			(10,841	)
Proceeds from pre-commercial production sales			4,271				2,563				9,617				5,149
Rayrock acquisition			-				(5,347	)			-				(5,347	)
Deferred exploration and evaluation assets (note 7)			(1,276	)			(908	)			(3,082	)			(1,720	)
Payments to acquire non-controlling interest (note 3)			(500	)			-				(500	)			-
			(7,226	)			(8,885	)			(11,549	)			(12,759	)
Effect of exchange rate changes on cash			195				34				339				85
Decrease (increase)  in cash and cash equivalents			978				311				80				(1,477	)
Cash and cash equivalents: beginning of the period			1,913				2,469				2,811				4,257
Cash and cash equivalents: end of the period			2,891				2,780				2,891				2,780

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 

1 Nature of operations and going concern

 

Coro Mining Corp. (the “Company” or “Coro”) and its subsidiaries are engaged in the exploration and development of copper projects in Chile. The Company was incorporated on September 22, 2004 and commenced activities in 2005. The Company’s registered office is Suite 2600, Oceanic Plaza, 1066 West Hastings Street, Vancouver, British Columbia, Canada.

 

Going concern

 

These condensed interim consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”) applicable to interim financial reporting and to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. For the six months ended June 30, 2018, the Company reported a $7.9 million loss and cash outflows from operating activities of $4.1 million. As at June 30, 2018, the Company had a working capital deficit of $17.8 million, principally arising from its subsidiary Sociedad Contractual Minera Berta (“SCMB” or “SCM Berta”).  These circumstances indicate the existence of a material uncertainty related to events or conditions that may cast significant doubt about the Company’s ability to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. 

 

In April 2018, Coro entered into a $12 million SCMB financing arrangement for the SCM Berta operation with Coro retaining an interest in the existing SCM Berta operation and the right to participate in the future capital development of the project. Coro agreed to a binding term sheet with Greenstone Resources II (“GSII”), an affiliate of Coro’s largest shareholder, Greenstone, whereby GSII would invest up to $12 million directly in SCMB by way of a convertible loan (the “SCMB Financing”). The SCMB Facility is structured as a secured loan; convertible into shares of Coro’s newly formed wholly owned subsidiary Rising Star Copper Limited (“RSC”) which holds a 100% interest in Minera Coro Chile SpA (“MCC”) (formally Minera Coro Chile Limitada). As at June 30, 2018, MCC held a 100% interest in SCM Berta. 

 

As at June 30, 2018, an initial $9 million of the $12 million had been advanced under the GSII convertible loan.

 

On August 7, 2018, the Company announced the closing of a non-brokered private placement for $10 million and the launch of a sub-guaranteed rights offering for $26 million which is expected to be completed at the end of September 2018. These financings combined provide confidence in the near-term financial viability of the Company (See note 17). 

 

In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The Company's ability to continue operations, fund its mining interest expenditures and meet its obligations as they fall due is dependent on management's ability to secure additional financing. These financial statements do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying financial statements. These adjustments could be material. 

 

2 Significant accounting policies

 

a) Statement of Compliance

 

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the International Accounting Standards Board ("IASB"), and its interpretations. Accordingly, these Financial Statements do not include all of the information and footnotes required by IFRS for complete annual financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as at and for the year ended December 31, 2017 and the consolidated interim financial statements as at and for the period ended March 31, 2018.

 

These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on August 13, 2018.

 

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosures of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

 

2 Significant accounting policies (continued)

 

Actual results could differ from those estimates. Significant accounts that require estimates and judgments as the basis for determining the stated amounts include exploration and evaluation assets, restoration provision and share-based payments. Differences may be material.

 

b) Consolidation

 

These unaudited condensed interim financial statements include the accounts of the Company and its wholly-owned subsidiaries: Minera Cielo Azul Ltda., Minera Rayrock Ltda., Inversiones Cielo Azul Ltda and Rising Star Copper Limited. As of June 30, 2018 and under the Company’s restructuring plan (See note 3), RSC is a newly formed wholly owned subsidiary which has a 100% interest in MCC. MCC has a 100% interest in SCM Berta. All intercompany transactions, balances, income and expenses have been eliminated on consolidation.

 

c) New accounting standards adopted by the Company

 

The Company has adopted IFRS 9 Financial Instruments (“IFRS 9”) and IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) effective January 1, 2018.  These changes to the Company’s significant accounting policies have not had a significant impact on the financial statements.

 

(i) IFRS 9, Financial instruments

 

Effective January 1, 2018, the Company has adopted IFRS 9 retrospectively. There were no quantitative impacts from adoption or any significant disclosure impact. See the condensed interim consolidated financial statements for the period ended March 31, 2018 for full disclosure.

 

(ii) IFRS 15, Revenue from contracts with customers

 

Effective January 1, 2018, the Company has adopted IFRS 15 using the modified retrospective method, although no adjustment to the opening deficit was required at the date of initial application. See the condensed interim consolidated financial statements for the period ended March 31, 2018 for full disclosure.

 

d) New accounting standards issued but not yet effective

 

IFRS 16, Leases

 

IFRS 16 addresses accounting for leases and lease obligations. It replaces the existing leasing guidance in IAS 17, Leases. The objective of the new standard is to report all leases on the statement of financial position and to define how leases and lease liabilities are measured. IFRS 16 is effective January 1, 2019 with early adoption permitted for companies that also apply IFRS 15. The Company is currently assessing the impact of IFRS 16.

 

There are no other IFRS’s or IFRIC interpretations that are not yet effective that are expected to have a material impact on the Company.

 

3 Reorganization of SCMB

 

a) SCMB Financing

 

During the quarter, Coro entered into the SCMB Financing, whereby GSII agreed to invest up to $12 million directly into SCM Berta. The SCMB Financing is in the form of secured convertible loan, convertible into common shares of RSC, bears interest at a rate of 15% per annum, commencing upon the completion of the SCMB reorganisation (which is expected to be within 60 days of the initial drawdown date) and matures 125 days from the initial drawdown date. One of the conditions of the SCMB Financing was the consolidation of the ownership of SCM Berta to be held 100% by MCC. (See note 3(b) below).

 

An initial $9 million was advanced on April 19, 2018. On July 30, 2018, an additional $0.6 million of the remaining $3 million financing was advanced to MCC (See note 17).

 

Should GSII convert its loan, GSII would hold a 75% interest in RSC and Coro would retain a 25% interest. Coro retained an option to fund an additional $4 million into RSC which would increase its interest in RSC to 50%. The Coro option matures 125 days from the initial drawdown date of April 19, 2018.

 

 

b) Acquisition of ProPipe S.A. Non-Controlling Interest

 

Under the SCM Berta Amended Shareholders Agreement, ProPipe S.A. (“ProPipe”) held a 35% interest in SCM Berta. In April 2018, the Company acquired ProPipe’s 35% interest in SCM Berta for a purchase price of $2.0 million, payable as follows: (i) $0.5 million upon execution of sale agreement which was May 2018; (ii) $0.5 million payable 12 months following the initial payment; (iii) $0.5 million payable 18 months following the initial payment; and (iv) $0.5 million payable 24 months following the initial payment (25^th May 2018).

 

The purchase price fair value was estimated at $1.9 million, with $1.4 million included in accounts payable related to the future payments. The transaction was considered a change in the ownership of a controlled subsidiary and accordingly, it has been accounted for as an equity transaction. The Company recorded a total of $7.2 million directly to its accumulated deficit and reduced the non-controlling interest relating to ProPipe to $nil.

 

4 Accounts receivable and prepaid expenses

 

$000's		June 30, 2018				December 31, 2017
Trade receivable			-				143
Value added taxes			2,819				2,442
Prepaid expenses and other receivables			1,592				714
			4,411				3,299

 

5 Inventories

 

$000's		June 30, 2018				December 31, 2017
Consumable parts and supplies			531				160
Ore stockpiles			654				258
Copper in circuit			868				1,083
Finished goods			1,062				455
			3,115				1,956

 

 

6 Property, plant and equipment

 

$000’s		Mineral property & mine development				Berta facilities				Nora  plant				Ivan  plant				Other				Construction in progress				Total
Cost
January 1, 2017			7,900				-				12,597				-				65				336				20,898
Disposals			-				-				(270	)			-				-				-				(270	)
Acquisition			-				-				-				10,786				-				-				10,786
Equipment transfers			-				37				132				(169	)			-				-				-
Impairments			-				-				(15,683	)			-				-				-				(15,683	)
Additions			86				5,681				7,224				76				126				(72	)			13,121
December 31, 2017			7,986				5,718				4,000				10,693				191				264				28,852
Impairments			-				-				(4,262	)			-				-				-				(4,262	)
Additions			(8	)			12				4,262				-				119				-				4,385
June 30, 2018			7,978				5,730				4,000				10,693				310				264				28,975
Accumulated depreciation
January 1, 2017			-				-				-				-				(37	)			-				(37	)
Depreciation			-				-				-				-				(25	)			-				(25	)
December 31, 2017			-				-				-				-				(62	)			-				(62	)
Depreciation			-				-				-				-				(43	)			-				(43	)
June 30, 2018			-				-				-				-				(104	)			-				(104	)
Net book value
January 1, 2017			7,900				-				12,597				-				28				336				20,861
December 31, 2017			7,986				5,718				4,000				10,693				129				264				28,790
June 30, 2018			7,978				5,730				4,000				10,693				206				264				28,871

 

SCM Berta operational assets comprise the Berta mineral property & mine development (“Berta Mine”), Berta Facilities and the Nora Plant. None of the SCM Berta operational assets have been depreciated as the Company is yet to declare commercial production as of June 30, 2018.

 

Impairment assessments for the Berta Facilities and for the Nora Plant

 

As of June 30, 2018, the Company continued to capitalize costs on the Berta Facilities and the Nora Plant as it has not yet reached commercial production.

 

As of December 31, 2017, the Company concluded that an impairment indicator existed in respect of the Berta Facilities and the Nora Plant. Collectively these assets have not yet been able to operate in the manner intended by management and they have not been capable of generating positive returns. Accordingly, as part of its impairment assessment, the Company concluded that the Berta Mine and the Berta Facilities would be treated as one cash-generating unit (“CGU”) and that the Nora Plant would be treated as a separate CGU.

 

The key assumption for the Nora Plant is that it will be used to process ore from deposits in a closer proximity to the plant than the Berta Mine, such as the Company’s El Jote project. This is because without the pipeline to link the Berta Facilities and the Nora Plant, the performance of the combined assets has not proven economic to date.

 

In respect of the Nora Plant, the Company recognized an impairment of $15.7 million reducing the carrying value of the Nora Plant to $4 million. In determining the fair value, the Company considered the future uses of the plant, the original acquisition cost and the current operating condition of the Nora Plant.

 

 

6 Property, plant and equipment (continued)

 

As there were no significant changes in the assumptions relating to the net recoverable amount of the Nora plant from December 31, 2017, the Company recorded a further impairment of $4.3 million as of June 30, 2018.

 

The Company assessed the impairment of the Berta Facilities CGU on the basis that an SXEW plant would be constructed at the Berta mine. The key assumptions for the assessment of the fair value less costs to dispose of the Berta Facilities are as follows:

 

-	Average copper price for over the expected seven year mine life of $3.10 per pound.

-	Income tax rate of 35%

-	Discount rate of 10%.

 

The impairment assessment for the Berta Facilities did not result in an impairment charge to that CGU. A reduction in the average copper price estimate of 1% would result in the carrying value of the Berta Facilities being equal to its fair value less costs to dispose.

 

As there were no significant changes in the assumptions relating to the net recoverable amount of the Berta Facilities from December 31, 2017, no impairment charge was recorded as of June 30, 2018.

 

Berta Facilities

 

In December 2016, the Company commenced building the Berta Facilities (completed in June 2017) which included a crushing and agglomeration circuit and leach pads to produce Pregnant Leach Solution (“PLS”). Total Berta Facilities additions for the current year were $0.01 million (as at December 31, 2017: $5.7 million).

 

Nora Plant

 

Total additions for the current year at Nora Plant are net of pre-commercial production expenditures of $3.4 million (December 31, 2017: $6.3 million) and after sales proceeds of $9.6 million (December 31, 2017: $14.1 million). The Company also included other additions of $0.2 million (December 31, 2017: $0.5 million) and a capitalization of administration, financing and interest costs of $0.7 million (December 31, 2017: $0.3 million).

 

Ivan Plant

 

On June 8 2017, Coro acquired 100% of Minera Rayrock Ltda (“Rayrock”) from Compañia Minera Milpo S.A.A (“Milpo”). Rayrock owns 100% of the Ivan SXEW (solvent extraction and electrowinning) plant located about 18 km south of the Company’s Marimaca project. Milpo also retains a 2% of the net smelter return (“NSR”) on all production from the Rayrock mineral properties. Coro has the right to acquire 50% of the NSR for $2 million at any time and will have a right of first refusal over the NSR. The Rayrock acquisition was considered to be an asset acquisition for total purchase consideration of $6.6 million, of which $10.8 million was allocated to the Ivan Plant. The Ivan Plant was purchased with the intention that it be used to process ore from the Marimaca property. The Ivan Plant is not currently operative and will be kept in care and maintenance until it is necessary to start commissioning and testing. For the current year, the Company expensed $0.7 million for care maintenance cost associated to Ivan Plant.

 

 

7 Exploration and evaluation assets

 

		Marimaca Properties																Others
$000’s		MC				LA				SM				NAG				Prat				Ivan				El Jote				Total
Balance- January 1, 2017			-				-				-				-				220				583				135				938
Exploration and evaluation costs			5,100				415				-				-				-				56				180				5,751
Property acquisition costs			-				100				-				-				-				-				-				100
Writedown of exploration and evaluation assets			-				-				-				-				(220	)			-				-				(220	)
Reclassified to property, plant, equipment			-				-				-				-				-				(639	)			-				(639	)
Balance at December 31, 2017			5,100				515				-				-				-				-				315				5,930
Exploration and evaluation costs			1,956				608				-				-				-				-				-				2,564
Property acquisition costs			130				-				100				200				-				-				125				555
Balance at June 30, 2018			7,186				1,123				100				200				-				-				440				9,049

 

⁽¹⁾ Property acquisition costs for Rayrock/Ivan Plant include due diligence and evaluation costs.

 

a) Marimaca properties, Chile

 

Marimaca claims (“MC”)

 

In August 2014 and subsequently amended in April 2017, the Company entered into an agreement to acquire up to a 75% interest in the Marimaca claims. The Company can earn a 51% interest by paying $185,000 in two payments, $60,000 (paid initially) and the remaining $125,000 (paid in June 2018) following the completion of the NI 43-101 compliant resource estimate and engineering study demonstrating the technical and economic feasibility of an operation producing a minimum 1,500tpy of copper cathode by August 2018 (completed). Coro can acquire a further 24% interest by obtaining project construction finance or contributing the Ivan Plant. The owner of the property will maintain a 25% interest with a 15% interest free carried to commercial production and a 10% participating interest that is subject to dilution.

 

Commencing January 1, 2017, the costs associated with the Marimaca property were capitalized.

 

After completing all the milestones to acquire 51% interest in the Marimaca option agreement and subsequent to June 30, 2018, the Company announced a completed private placement and a sub-guaranteed Rights Offering and outlined the plans for the Marimaca Claim and its surrounding acquisitions (See note 17).

 

La Atomica claims (“LA”)

 

Under the terms of the August 2017 La Atomica Letter of Intent (“LOI”) (Option Agreement signed October 2017), the Company may acquire 100% of the La Atomica property by paying a total of $6.0 million as follows: $100,000 (paid); $0.5 million on the 12-month anniversary date; $1.0 million on the 24-month anniversary date; and $4.0 million on the 36-month anniversary date. A 1.5% NSR is payable on the claims, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million at any time.

 

La Atomica claims are an important part in the development plan of the Marimaca claim because the claims are very close to the limits of the Marimaca claim. Subsequent to June 30, 2018, the Company announced a completed private placement and a sub-guaranteed Rights Offering and outlined the plans for the Marimaca Property and its surrounding acquisitions (note 17).

 

Sierra Miranda claims (“SM”)

 

Under the terms of the January 2018 Sierra Miranda LOI, the Company may acquire 100% of Sierra Miranda mining claims (the “SM Claims”) immediately adjoining its Marimaca claims for a total cash consideration of $6.0 million of which $100,000 was paid in Q1 2018 and in August 2018, the remaining balance of $5.9 million was paid on completion of due diligence and certain transfers of title. In addition, the claims will be subject to a 2% NSR.

 

 

7 Exploration and evaluation assets (continued)

 

Considered a crucial part in the development plan of Marimaca, the Sierra Miranda claims will be part of the Company’s exploration plans announced subsequent to June 30, 2018 (See note 17).

 

Naguayan claims (“NAG”)

 

Under the terms of the October 2017 Naguayan LOI (Option Agreement signed January 2018), the Company may acquire 100% of the Naguayan property for a total of $6.5 million; $200,000 (paid); $300,000 on the 12-month anniversary date; $700,000 on the 24-month anniversary date; $1.75 million on the 36 month anniversary date; and $3.55 million on the 48-month anniversary date. A 1.5% NSR is payable, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million within the first 12 months following the start of commercial production on the property. As the Naguayan claims are not located adjacent to the known mineralization, only acquisition costs are capitalized at this time.

 

The real geological potential of the Marimaca District still has to be determined by the Company.

 

b) Other properties, Chile

 

El Joté

 

In May 2016, SCMB optioned the El Joté (formerly called “Salvadora”) a copper project located ~ 30km NW of the Nora Plant and 58 km NE of the port of Chañaral in the III Region of Chile. Under the terms of the agreement, SCMB may acquire a 100% interest in the property by completing the following option payment schedule totalling $3.0 million; $320,000 on or before May 2016 (paid); $250,000 on or before May 2018 (paid $125,000) and $2.43 million on or before May 2019. The final payment may be made in eight equal instalments of $0.3 million plus interest at LIBOR, and SCMB may start production with the first instalment payment. A 1.5% NSR is payable, which can be purchased for $1.5 million at any time.

 

On May 2018, the company paid $125,000 and signed an agreement to defer the remaining $125,000 of the $250,000 payment due on May 2018 to August 15, 2018.

 

El Jote is a potential additional source of future feed for Nora Plant, so the Company is evaluating the results of the work done recently in the property in order to know its full potential (See note 17).

 

8 Accounts payable and accrued liabilities

 

$000's		June 30, 2018				December 31, 2017
Accounts payable			5,034				6,451
Accrued liabilities			3,074				4,368
			8,108				10,819

 

Approximately over 72% ($6.9 million) of the accounts payable and accrued liabilities balances are related to SCMB as at June 30, 2018 (December 31, 2017 - $9.7 million).

 

 

9 Other debt

 

$000’s		June 30, 2018				December 31, 2017
Greenstone shareholder loans (a)			17,586				2,940
Greenstone shareholder convertible loan (a)			2,048				-
Finance leases			-				160
ProPipe loan (b)			1,354				250
Deferred revenue			-				312
Total other debt			20,988				3,662
Current portion			(20,135	)			(3,412	)
Non-current portion			853				250

 

a) Greenstone shareholder loans

 

Loan 1

 

In December 2017, Coro entered into a credit agreement with its major shareholder Greenstone, pursuant to which Greenstone advanced $3 million to the Company. Under the terms of the credit agreement, the loan has an eleven-month term and bears interest at 12% per annum until March 31, 2018, after which the interest has increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement.

 

As of June 30, 2018, the Company owes $3.3 million, including accrued $0.3 million in interest and fees.

 

Loan 2

 

In February 2018, Coro entered into a further credit agreement with Greenstone pursuant to which Greenstone advanced $5 million to Coro. Under the terms of the credit agreement, the loan has an eleven-month term and bore interest at 12% per annum until June 30, 2018, after which the interest rate increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement.

 

As of June 30, 2018, the Company owes $5.3 million, including accrued $0.3 million in interest and fees.

 

Loan 3

 

In April 2018, Coro signed a convertible loan agreement with Greenstone for a $2 million convertible loan to fund ongoing working capital requirements including Marimaca project costs and associated corporate costs. The convertible loan has a maturity date of the earlier of an equity raising by Coro of not less than $5 million and 30 January 2019. The $2 million is convertible into common shares of Coro at a price equal to the greater of: CA$0.09 and the Coro common share price of any equity raising by Coro. The convertible loan will attract interest of 12% for the first 6 months and 15% interest thereafter.

 

The conversion feature represent embedded derivatives as the Company will be required to deliver a variable number of its own shares (priced at the greater of CA$0.09 per share and the Coro common share price of any equity raising by Coro) in exchange for a fixed amount of U.S. dollars. These derivatives are of nominal value.

 

As of June 30, 2018, the Company owes $2.05 million, including $0.05 million in interest and fees. Subsequent to June 30, 2018, the loan was converted into Coro’s shares (See note 17).

 

Loan 4

 

In April 2018, Coro entered into a $12 million SCMB Financing for the SCM Berta operation with Coro retaining an interest in the existing SCM Berta operation and the right to participate in the future capital development of the project. Coro agreed to a binding term sheet with GSII, whereby GSII would invest up to $12 million directly in SCMB. The SCMB Financing was structured as a secured loan; convertible into shares of Coro’s newly formed wholly owned subsidiary RSC which has a 100% interest in MCC. As at June 30, 2018, MCC is a wholly owned subsidiary that has a 100% in SCM Berta.

 

 

9 Other debt (continued)

 

As of June 30, 2018, an initial $9 million of the $12 million were advanced to MCC.

 

b) ProPipe shareholder loan

 

The SCMB Financing was conditional on Coro acquiring the remaining 35% minority interest for an initial upfront payment of $0.50 million, with three future instalments of $0.5 million falling 12, 18 and 24 months after the initial payment. The Company also agreed to pay an outstanding $0.25 million loan to ProPipe.

 

As of June 30, 2018, the Company repaid the $0.25 million loan to ProPipe and advanced $0.5 million towards the acquisition of the 35% minority interest in SCMB and recorded $1.4 million as the fair value of the future unpaid liabilities (See note 3(b)).

 

10 Common shares

 

Authorized

 

The Company has an unlimited number of authorized common shares without par value.

 

Issued

 

As of June 30, 2018, the Company had 651,929,511 (December 2017: 651,929,511) common shares issued and outstanding.

 

Capital risk management

 

The Company considers its components of shareholders’ equity as capital. As the Company is in the development stage, its principal source of funds is from the issuance of common shares. It is the Company’s objective to safeguard its ability to continue as a going concern, so that it can continue to explore and develop its projects for the benefit of its stakeholders (See note 1).

 

11 Share stock options

 

The Company has a stock option plan that permits the granting of stock options to directors, officers, key employees and consultants. Terms and pricing of options are determined in accordance with the plan. A total of 10% of the issued and outstanding common shares of the Company may be allotted and reserved for issuance under the stock option plan.

 

		June 30, 2018								December 31, 2017
		Number of shares				Weighted average exercise price CA$				Number of shares				Weighted average exercise price CA$
Outstanding - January 1			33,450,000				0.13				34,290,000				0.16
Granted			4,900,000				0.09				1,000,000				0.16
Granted			-				-				5,000,000				0.11
Exercised			-				-				(600,000	)			0.10
Exercised			-				-				(1,500,000	)			0.04
Expired			-				-				(3,740,000	)			0.41
Expired			-				-				(500,000	)			0.20
Expired			-				-				(500,000	)			0.14
Outstanding - June 30			38,350,000				0.13				33,450,000				0.13

 

 

11 Share stock option (continued)

 

At June 30, 2018 the following stock options were outstanding:

 

Number of options outstanding				Number of options vested and exercisable				Exercise price CA$				Expiry date
	3,200,000				3,200,000				0.10				2019
	10,250,000				10,250,000				0.04				2021
	14,000,000				3,800,000				0.20				2021
	1,000,000				1,000,000				0.16				2022
	5,000,000				3,333,333				0.11				2022
	4,900,000				166,667				0.09				2023
	38,350,000				21,750,000

 

During the six months ended June 30, 2018, the Company granted 4,900,000 stock options in two tranches to certain officers and directors with an exercisable price of CA$0.09 for a period of 5 years. 166,667 vested immediately and the remaining will vest within a three-year period.

 

Options were priced based on the Black-Scholes option pricing model using the following weighted average assumptions to estimate the fair value of options granted:

 

$000's		June 30, 2018				June 30, 2017
Risk-free interest rate			0.76%-1.05	%			0.76% to 1.05	%
Expected life			2.0 to 3.5 years				2.5 to 3.5 years
Expected volatility			118	%			122	%
Expected dividend			0	%			0	%

 

For the six months ended June 30, 2018, total share-based compensation expense was $214,000 (2017: $495,000). For the three months ended June 30, 2018, total share-based compensation expense was $121,494 (2017: $213,903).

 

12 Exploration expenditures

 

		Three months ended June 30, 2018
$000's		El Jote				Marimaca District				General				Total
Drilling & trenching costs			5				-				174				179
General & administration costs			-				113				108				221
Property investigations			-				-				(21	)			(21	)
Total			5				113				261				379

 

 

12 Exploration expenditures (continued)

 

		Three months ended June 30, 2017
$000's		El Jote				Marimaca District				General				Total
General & administration costs			-				-				14				14
Property investigations			-				-				24				24
Total			-				-				38				38

  

 

		Six months ended June 30, 2018
$000's		El Jote				Marimaca District				General				Total
Drilling & trenching costs			4				61				175				240
General & administration costs			7				131				419				557
Property investigations			-				-				1				1
Total			11				192				595				798

 

 

		Six months ended June 30, 2017
$000's		El Jote				Marimaca District				General				Total
General & administration costs			-				-				29				29
Property investigations			-				-				27				27
Total			-				-				56				56

 

a) Marimaca District, Chile

 

The Marimaca District is a new exploration area for the Company located northeast of the Marimaca project, which is located 22 kms. East of the Port of Mejillones in the II Region of Chile. Exploration activity in Marimaca District, Chile includes other property exploration expenditures and costs associated with the wholly owned Naguayan property.

 

b) General, Chile

 

General exploration includes the costs associated with the Celeste, Llancahue, Gloria, Ivan, and Sierra Medina claims.

 

c) El Jote, Chile

 

El Jote (formerly called “Salvadora”) group op claims is an exploration copper project optioned by SCMB in May 2016. Located approximately 30km NNW of the Nora Plant, in the III Region of Chile. SCMB may acquire a 100% interest in the property by completing $3.0 million distributed into annual payments. The focus of the current exploration program is to explore and discover potentially open pitable & leachable copper resources to be treated at the Nora Plant.

 

 

13 Related party transactions

 

The Company considers related party all key management personnel having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any directors (whether executive or otherwise) of the entity.

 

$000’s		Three months ended								Six months ended
		June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
Paid to related parties
Short-term employee benefits			282				241				834				746
Share-based payments			76				279				162				467
Total			358				520				996				1,213

 

 

 

As at June 30, 2018, a total of $19.7 million was payable to the Company’s major shareholder Greenstone; included under current portion of other debt. Subsequent to June 30, 2018, a $2 million loan from an affiliate of a major shareholder Greenstone was converted into Coro’s shares (note 17).

 

14 Geographic Information

 

The Company operates in a single operating segment, mineral exploration and development. The following table provides geographic information about the Company’s assets and operations.

 

$000's		Canada				Chile				Total
June 30, 2018
Non-current assets			545				37,375				37,920
Total assets			998				47,339				48,337
Total liabilities			10,887				24,871				35,758
December 31, 2017
Non-current assets			565				34,155				34,720
Total assets			2,074				40,712				42,786
Total liabilities			3,290				17,774				21,064

 

15 Financial instruments

 

Financial instruments include cash and any contracts that give rise to a financial asset to one party and a financial liability or equity instrument to another party. As at June 30, 2018, the Company's carrying values of cash and cash equivalents, accounts receivable and loans approximate their fair values due to their short term to maturity.

 

The fair value of the Company’s accounts payable and accrued liabilities may be significantly lower than the carrying value given the Company’s going concern uncertainty and the fair value is not readily determinable.

 

The three levels of the fair value hierarchy are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

 

Level 3 – Inputs that are not based on observable market data.

 

 

15 Financial Instruments (continued)

 

Credit risk

 

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company deposits cash and cash equivalents with high credit quality financial institutions as determined by rating agencies.

 

Currency risk

 

The Company is subject to currency risk on financial instruments which are denominated in currencies that are not the same as the functional currency of the entity that holds them. Exchange gains and losses would impact profit or loss.

 

The Company’s significant subsidiaries are located in Chile and the parent company is in Canada. As a result a portion of the Company’s accounts receivable, accounts payable and accruals are denominated in the Chilean Peso and Canadian Dollars and are therefore subject to fluctuation in exchange rates.

 

As the Company’s parent company functional currency is the Canadian dollar, a 100 basis point (one per cent) increase-strengthening (decrease-weakening) in the U.S. dollar at period end would have resulted in the net loss being $155,570 higher (a greater loss) or $155,570 lower.

 

Interest rate risk

 

The Company was exposed to interest rate risk on cash and cash equivalents held as at June 30, 2018. A 100 basis point (1%) increase or decrease in the interest rate would resulted in approximately $28,506 change in the Company’s reported loss for the period ended June 30, 2018 based on average cash holdings during the period.

 

The Company is also subject to interest rate risk with respect to the off-take advance on Berta copper production. A 100 basis point (1%) increase or decrease in the interest rate would not result in a significant change to the Company’s reported loss for the period ended June 30, 2018.

 

Liquidity risk

 

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities.   The Company is reliant upon equity issuances as its sole source of cash.  The Company manages liquidity risk by maintaining an adequate level of cash and cash equivalents to meet its ongoing obligations. The Company continuously reviews its actual expenditures and forecast cash flows and matches the maturity dates of its cash equivalents to capital and operating needs. For further information related to liquidity and going concern (See note 1).

 

16 Commitments and option payments

 

The following table sets out the commitments and option payments of the Company as of June 30, 2018.

 

$000's		Six months 2018				2019				2020				Thereafter				Total
Property option payments (note 6)
El Jote			125				2,440				-				-				2,565
La Atomica			500				1,000				4,400				-				5,900
Marimaca			125				-				-				-				125
Naguayan			-				300				700				5,300				6,300
Sierra Miranda			5,900				-				-				-				5,900
Total property payments			6,650				3,740				5,100				5,300				20,790
Operating leases			54				95				70				-				220
Total			6,704				3,835				5,170				5,300				21,010

 

 

17 Subsequent events

 

Additional drawdown under SCMB Facility

 

On July 30, 2018, the Company drew an additional $0.6 million from the remaining $3 million available under the SCMB Financing to increase the total outstanding convertible debt to $9.6 million (See note 9).

 

Private placement & rights offering

 

On August 7, 2018, the Company announced a CAD$46.7 million (approximately $36 million) financing plan which is comprised of a closed premium non-brokered CAD$13.2 million (approximately $10 million) private placement with an entity of the Tembo Capital private equity group and a forthcoming CAD$33.6 million (approximately $26 million) rights offering (“Rights Offering”) for which Tembo Capital has agreed to provide a stand-by guarantee. The proceeds will be used to repay debt, acquire surrounding properties and fund exploration program and resource expansion at Coro's flagship Marimaca project and commence a fully funded exploration program on these properties.

 

The Company issued 109,733,334 common shares at a price of CAD$0.12 per common share pursuant to the private placement, generating gross proceeds of CAD$13.2 million.

 

$5.9 million option payment for Sierra Miranda claims

 

On August 3, 2018, the Company paid $5.9 million under an option agreement to complete the acquisition of the Sierra Miranda claims, which are adjacent to Coro’s Marimaca property.

 

$2 million loan conversion

 

On August 9, 2018, triggered by the previously announced and completed private placement, the Company converted a $2 million loan, held by Greenstone, into 21,883,492 common shares at a conversion price of CAD$0.12 per common share.

 

 

 

14

Exhibit 99.5

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

This Management’s Discussion and Analysis (“MD&A”) of financial position and results of operations of Coro Mining Corp. (“Coro” or the “Company”) has been prepared based upon information available to Coro as at August 13, 2018 and should be read in conjunction with Coro’s unaudited condensed interim consolidated financial statements and related notes as at and for the three and six months ended June 30, 2018 and 2017. The unaudited condensed interim consolidated financial statements and MD&A are presented in U.S. dollars (unless otherwise indicated) and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements in accordance with IAS 34 Interim Financial Reporting.

 

Readers are cautioned that the MD&A may contain forward-looking statements and that actual results may vary from management’s expectations. Readers are encouraged to read the “Cautionary Statement on Forward-Looking Information” at the end of this MD&A and to consult Coro’s audited consolidated financial statements for the years ended December 31, 2017 and 2016 and the corresponding notes to the financial statements which are available on the Company’s website at www.coromining.com and on SEDAR at www.sedar.com.

 

Additional information related to Coro, including our Annual Information Form, is available on SEDAR at www.sedar.com. These documents contain information on the Company’s activities as well as a descriptions of risk factors affecting the Company.

 

Table of Contents:

 

1	OVERVIEW & OUTLOOK	2
2	MARIMACA DEVELOPMENT PROJECT	5
3	FINANCIAL POSITION REVIEW	12
4	EXPENDITURES REVIEW	18
5	SCMB REORGANISATION & OPERATION	20
6	RISKS AND CRITICAL ACCOUNTING ESTIMATES & POLICIES	22

 

 

 

 

 

1 OVERVIEW & OUTLOOK

 

Profile and Strategy

Coro is an exploration and development company, focusing its geological expertise on identifying, exploring and developing copper projects in Chile. Following the recent completion of a strategic review, the Company has decided to focus on its flagship Marimaca copper project, located close to the city of Antofagasta in the II Region of northern Chile (“Marimaca”). The Company’s objective with Marimaca is to continue to explore the project with the goal of increasing the overall resource on the project.

 

The Company also holds a 100% interest in a small producing copper project, called Berta (“SCMB” or “SCM Berta”), located approximately 20 kilometres west of the village of Inca de Oro in Chile. The Company is in the process of reducing its interest in SCMB to 50%.

 

The Company has the following interests in exploration, development or producing assets:

•

Marimaca Project (earning up to an 75% interest) (Please refer to Section 2 – Marimaca);

•

Ivan solvent extraction & electrowinning (“SXEW”) plant;

•

Sierra Miranda claims (purchase completed in August 2018);

•

La Atomica and Naguayan claims, comprising 38,253 hectares of mineral claims (earning up to a 100% interest);

•

Ivan and Sierra Medina claims, which were acquired with the acquisition of the SXEW plant; and

•

A 100% interest in SCMB (Please refer to Section 5 – SCMB Reorganization & Operations).

 

 

Highlights and Corporate Developments

 

(a)                 Financing

On August 7, 2018, Coro announced a financing plan to raise up to $36.0 million (Cdn$46.7 million), comprised of a non-brokered private placement of $10.0 million (Cdn$13.2 million) (“Private Placement”) with an entity of the Tembo Capital private equity group (“Tembo Capital”) and a forthcoming $26.0 million (Cdn$33.6 million) rights offering (“Rights Offering”) for which Tembo Capital has agreed to provide a stand-by guarantee.

 

Under the Private Placement, the Company issued 109,733,334 common shares at a price of Cdn$0.12 per common share, raising gross proceeds of Cdn$13.2 million. The proceeds will be used to fund the acquisition of the Sierra Miranda claims, which are adjacent to the Marimaca property, fund additional exploration work at Marimaca and for working capital purposes.

 

Under the Rights Offering, shareholders of the Company will be issued rights to subscribe for an aggregate of up to 671,591,957 common shares of the Company. The subscription price will be Cdn$0.05 per common share, raising an aggregate of Cdn$33.6 million. The Company will issue one right for each outstanding common share, with each 1.1667 rights will entitle a shareholder to acquire one common share at a price of Cdn$0.05 per common share.

 

On August 9, 2018, triggered by the completion of the private placement, the Company converted a $2 million loan, held by Greenstone Resources LP, Coro’s major shareholder, (“Greenstone”) into 21,883,492 common shares at a conversion price of CAD$0.12 per common share.

 

(b)                 Environmental Impact Declaration

On June 28, 2018, the Company announced that it had received approval for the Environmental Impact Declaration (“DIA”) for the Marimaca Project, Phase I. (Please refer to Section 2 – Marimaca).

 

(c)                 Definitive Feasibility Study – Marimaca 1-23 Claims

On June 22, 2018, the Company announced the results of a Definitive Feasibility Study (“DFS”) on claims 1-23 on the Marimaca Project, which was a condition in its earn-in to acquire up to a 75% interest in the Marimaca 1-23 Claims.

 

 

Highlights of the DFS include:

•

Proven and probable mineral reserves of oxide ore of 24.6 million tonnes at 0.8% copper, containing 196,800 tonnes (434 million pounds) of copper;

•

Robust project economics with an after-tax internal rate of return (“IRR”) of 58.8% and a net present value (“NPV”) of $114.0 million (using a 5% discount rate):

•

Mine life of 12 years plus 3 years processing stacked ore;

•

Annual copper production of 10,000 tonnes (year 2-10);

•

Initial capital costs of $22.6 million; and

•

Life-of-mine operating costs of $2.05/lb.

 

(Please refer to Section 2 – Marimaca).

 

(d)                 SCMB

On May 9, 2018, the Company announced that it had received its mining permit for Berta Sur Mine Pit Phase 1, which is the primary mine pit in the Berta operations. In addition, the Company also announced that its subsidiary Minera Coro Chile Limitada (“MCC”) had acquired the 35% interest of SCMB owned by ProPipe S.A. (“ProPipe”), resulting in a 100% ownership of SCMB in the subsidiary.

 

(e)                 Strategic Review

In the first quarter of 2018, the Company undertook a strategic review of its operations which identified a funding solution for SCMB and a decision to focus its expertise and resources on its flagship Marimaca project.

 

With the objective of minimising future value dilution of Marimaca from SCMB funding requirements, the Company decided that all future funding for SCMB will be raised at the SCMB level (subsidiary level) and not at the corporate level.

 

In April 2018, Coro entered into a $12 million SCMB financing arrangement for the SCM Berta operation with Coro retaining an interest in the existing SCM Berta operation and the right to participate in the future capital development of the project. Coro agreed to a binding term sheet with Greenstone Resources II (“GSII”), an affiliate of Coro’s largest shareholder, whereby GSII would invest up to $12 million directly in SCMB by way of a convertible loan (the “SCMB Financing”). The SCMB Financing is structured as a secured loan; convertible into shares of Coro’s newly formed wholly owned subsidiary Rising Star Copper Limited (“RSC”) which holds a 100% interest in MCC, which held a 65% interest in SCMB. MCC acquired the remaining 35% of SCMB from ProPipe in May 2018 (Please refer to (d) above). As at June 30, 2018, MCC held a 100% in SCM Berta. 

 

An initial $9 million was advanced on April 19, 2018 and an additional $0.6 million was advanced on July 30, 2018 under the SCMB Facility.

 

Should GSII convert its loan, GSII would hold a 75% interest in RSC and Coro would retain a 25% interest. Coro retained an option to fund an additional $4 million into RSC which would increase its interest in RSC to 50%. The Coro option matures 125 days from the initial drawdown date.

 

In addition, Greenstone provided a $2.0 million convertible loan to Coro. The convertible loan has a maturity date of the earlier of an equity financing of not less than $5.0 million and January 30, 2019. The loan is convertible into common shares at a price equal to the greater of (i) $0.09; and (ii) the common share price under an equity financing of not less than $5.0 million. Interest on the convertible loan will be 12% per annum for the first 6 months and 15% thereafter. On August 9, 2018, triggered by the completion of the Private Placement, the Company converted the $2 million loan into 21,883,492 common shares with a conversion price of CAD$0.12 per common share.

 

(f)                  Loan Arrangement

On February 27, 2018, the Company announced a $5.0 million loan agreement with Greenstone. The loan bears interest at 12% per annum until June 30, 2018, after which interest increased to 15% per annum, and matures eleven months from the effective date.

 

(g)                 Sierra Miranda Acquisition

On January 22, 2018, the Company agreed to purchase 379 hectares of mining claims (the “SM Claims”) which are immediately adjacent to the north and south of its Marimaca project. Under the agreement, the Company will pay $6.0 million in cash, payable as follows: $100,000 paid upon signing of the agreement and $5.9 million upon the completion of due diligence and certain other transfers of title. On August 3, 2018 the Company paid the $5.9 million option payment to complete the acquisition of the SM Claims.

 

 

(h)                 Board and Management

In April and May 2018, the Company appointed Armando Veliz and Nick Bias to positions of Chief Financial Officer and VP, Corporate Development, respectively. In addition, Petra Decher was appointed to the Board of Directors.

 

Outlook

In February 2018 the Company commenced a strategic review that has concluded that the Marimaca project offers significant upside potential and represents the greatest opportunity to create value for Coro shareholders. Consequently, the Board of Directors has agreed to focus on the exploration, further development and financing of this flagship project.

 

The SCMB Financing will provide a funding solution for the SCMB operations without financial recourse to Coro. Coro will retain an interest in the existing SCMB operation and will have an option to participate in the future capital development of the project.

 

In line with the longer-term vision being established by the Board, the Company completed the acquisition of the SM Claims surrounding Marimaca on August 3, 2018 and announced a financing plan that has paid for the claims and will raise the funds needed to conduct an 10,000 metre exploration program with the aim to reveal the real geological potential of the Marimaca District so that the best value opportunities for the project can be determined.

 

With the DFS for Marimaca Phase 1 now released, the legal process for Coro to be granted the 51% ownership on the Marimaca claims has been initiated. It is envisaged that this occurs during the course of Q3 2018. Coro may increase its interest by 24%, to a total of 75%, if Coro provides financing for developing the project, as described in the DFS or injects the Ivan plant in to a joint venture company, called Newco Marimaca.

 

For SCMB, once the convertible loans have been converted and Coro’s interest has been reduced to 25%, a decision will have to be made whether Coro retains a 25% ownership interest in MCC or commits $4.0 million in additional capital to MCC to increase its ownership to 50%. The deadline to make that decision is the end of August 2018.

 

Marimaca Update

In April 2018, the Company announced an increase of 103% in the Measured and Indicated NI43-101 compliant resources at Marimaca (Please refer to news release dated April 12, 2018).

 

In June 2018, results from the DFS of Marimaca 1-23 Claims were announced. Completion of the DFS was an important milestone enabling the Company to establish its 51% ownership in Compañía Minera Newco Marimaca (“CMNM”), owner of the Marimaca 1-23 Claims. In the future, Coro may acquire an additional 24% interest in CMNM by obtaining financing to build the project or by transferring ownership of its Ivan SXEW processing plant to CMNM.

 

The Company completed its acquisition of the SM Claims during Q3 2018. With the completion of the acquisition of 100% of the SM Claims, a 379-hectare package of mining claims immediately adjoining the Marimaca 1-23 Claims to the north and south, and the optioning of the adjacent La Atómica property, the Company will work towards determining the best development plan for the Marimaca area to maximize value creation for its shareholders.

 

With the successful consolidation of the land surrounding Marimaca and the successful completion of the financing plan, the Company will be well positioned to explore the surrounding area with the objective of increasing size and scale of the project.

 

SCMB Strategic Review Implications

The strategic review included a comprehensive review of SCMB in assessing short and long term options for operational efficiencies. The following were considered in the review: (i) reducing operating costs; (ii) decreasing risk areas; (iii) identifying operational efficiencies; and (iii) minimising Coro’s ongoing funding exposure to SCMB. Despite significant efforts over the past months, it is expected that SCMB will remain a high cost and high risk operation. One of the conclusions of the operation review of SCMB was that the optimal technical and financial solution for SCMB is likely to implement a SXEW or SXCR crystallization circuit with a capacity of 5,000 tonnes per year.

 

 

The Company is also exploring opportunities in and around the Berta and Nora sites. This may result in a model whereby the Berta and Nora sites become independent from each other, in terms of operation and copper production. Synergies with other mine sites/projects close to SCMB assets may also generate M&A opportunities to create further value to shareholders.

 

 

Headquarters Update

As of May 31, 2018, the Vancouver office has been closed. This is in line with the aim to establish the head office of the Company in Chile, where the strength of the team has been increased to give better support to the development of Marimaca. Armando Véliz has been appointed to the role of CFO effective April 16, 2018. Armando is based in Santiago, Chile. A new company secretary (DSA) and legal counsel (Bennett-Jones) were appointed in Canada to enhance shareholder and regulatory communication and compliance. Finally, Nicholas Bias, an experience capital markets specialist, was hired on April 9, 2018, as VP Company Development and Investor Relations.

 

2 MARIMACA: A POTENTIALLY LARGE-SCALE DEVELOPMENT PROJECT

Marimaca is the Company’s flagship asset with significant resource expansion potential over an expanding property position, with near-term production optionality.   Marimaca is a copper oxide development project located 60km north of the city of Antofagasta in the II Region of northern Chile. Being 14km from the highway and powerline, 22km from the port of Mejillones and a one hour drive from Antofagasta makes it an ideal location from a development perspective.

 

The Marimaca project started with the Marimaca Claim (optioned August 2014 to earn a 75% interest). In January 2017, the maiden resource estimate incorporating the first drill results confirmed a new discovery and the potential for a sizeable leachable copper deposit in an area of established infrastructure (section 2.1). This maiden resource also gave the Company the confidence to purchase the existing 10,000 tpy (22,204,000 lbs) Ivan SXEW Plant located 18km south of the Marimaca deposit, (section 2.6) in June 2017 – thus providing the opportunity for near-term production growth.

 

Exploration and acquisition programs have subsequently resulted in a significantly expanded property position in the area including the following acquisitions (100% ownership): in addition to our own staking in the area:

•

Sierra Miranda claims (379 hectares) – Acquisition completed

•

Naguayan claims (1,075 hectares) – Option Agreement

•

La Atómica claims (50 hectares) – Option Agreement

 

To date, Coro’s approach to the Marimaca project has been two-fold:

1.

In 2017, it completed an infill drill program on the Marimaca Claim to convert its resources to reserves to advance the project through completion of a DFS (completed).

2.

While at the same time it completed an exploration program that extended the known mineralization 300m NW onto the La Atómica Claims and 300m NE on the original Marimaca Claim. The Company’s exploration objective in 2018 is to significantly expand the resources on these combined properties, and also on the recently acquired SM claims. For Naguayan, the Company also intends to conduct some exploratory drilling this year. The Company anticipates releasing a full exploration program for Marimaca in due course.

 

In June 2018, the Company was granted the Environmental Impact Declaration for its Marimaca Claim according DFS Phase 1 stage.

 

 

2.1           Marimaca Claim

 

In April, 2018 Coro announced a significantly increased resource estimate for the Marimaca claim, with highlights including:

•

A 103% increase in contained copper tonnes (CuT) in the measured and indicated categories to 303,698 tonnes compared to previous January 2017 resource estimate.

 

 

 

•

Excellent conversion of resources to higher confidence categories as a result of infill drilling.

•

Updated resource does not include the results from drilling completed in 2017 and early 2018 on the neighbouring La Atómica claim, nor from holes drilled elsewhere on the Marimaca claim.

 

a). Maiden NI 43-101 Resource - January 2017

Prior to Coro’s ownership, the Marimaca property had never been drilled. In May 2016, final results from Coro’s 16-hole, 2,680m reverse circulation (“RC”) drilling program were announced, which intersected substantial copper mineralization in all holes. The first eight holes included MAR-04 which intersected 200m at 0.71% CuT. The second eight holes included MAR-10 which intersected 150m at 1.13% CuT.

 

In October 2016, the results from a 44-hole (38 RC and 6 diamond drill (“DD”)), 11,060m drill program confirmed the extent and continuity of the deposit. The results were released in three batches with the following highlighted intercepts:

- 190m @ 0.80% CuT & 256m @ 0.62% CuT

- 330m @ 0.80% CuT, 236m @ 0.81% CuT & 188m @1.06% CuT

- 192m @ 0.83% CuT, 102m @ 0.79% CuT & 82m @ 0.83% CuT

 

The Marimaca maiden resource estimate was released in January 2017, which defined sufficient resources to proceed with and complete the Rayrock acquisition.

 

 

b). Updated NI 43-101 Resource Estimate - April 2018

Apart from the original drilling campaign conducted in 2016, an infill drilling program was conducted in 2017. This program comprised approximately 10,000 metres of reverse circulation drilling for a total of 50 holes using two drill rigs. In addition, a program of 1,500 metres of diamond drilling in 14 drill holes was executed in order to provide geotechnical and samples for metallurgical column test work in support of the Marimaca DFS on this property.

 

Details of the Updated Resource at a 0.20% CuT cut-off grade are presented in the following table, where CuT means total copper and CuS means acid soluble copper:

 

Table 1: Resource Estimate at a 0.20% CuT cut-off grade
Category	tonnes	%CuT	%CuS	Cu tonnes
	x 1000			CuT	CuS
Measured	22,407	0.70	0.49	156,398	108,672
Indicated	24,347	0.61	0.39	147,300	95,197
Measured + Indicated	46,754	0.65	0.44	303,698	203,869
Inferred	11,043	0.48	0.28	52,894	30,367

 

In-Pit Resource

To demonstrate the potential economic viability of the Marimaca claim resource, a series of Whittle pit optimizations were completed utilizing appropriate operating costs, results obtained from metallurgical test work, and a variety of copper prices. The resources were estimated only for oxide and mixed-enriched copper mineralization which can be processed by heap leaching (“HL”) and run-of-mine (“ROM”) leaching to produce cathode copper. Due to their differing metallurgical characteristics, the resources were categorised according to mineral type. No resources were estimated for primary sulphide mineralization, occurring in deeper portions of the deposit. At a $3.50/lb long-term copper price, the in pit resource was estimated to be:

 

Table 2: In-Pit Resource
Category	tonnes	%CuT	%CuS	Cu tonnes
	x 1000			CuT	CuS
Measured	21,456	0.72	0.50	153,469	107,079
Indicated	21,555	0.64	0.42	137,023	90,422
Measured + Indicated	43,012	0.68	0.46	290,492	197,501
Inferred	5,685	0.58	0.35	32,773	19,706

 

As with the January 2017 resource estimate, the in pit resource is constrained by the Marimaca claim property limits, such that all blocks occurring outside the property were assigned a 0%CuT grade. Accordingly, this limited pit design contains 68,271kt of waste and has a strip ratio of 1.4:1. For full information on the updated resource reference should be made to the Company’s news release dated April 12, 2018. It is important to note that it is expected that this early stage resource will change as the acquisition of surrounding ground has the potential to expand the resource and increase the size and scale of mining operations.

 

Furthermore, the resource did not include the scout holes drilled to the NE of the Marimaca resource. Thick mineralization averaging 180m @ 0.58%CuT was intersected from surface in one of the scout holes drilled some 300m NE of the Marimaca resource, indicating that the deposit continues in this direction. A second hole intersected 42m @ 1.82%CuT at depth as mixed and primary mineralization in the area immediately NE of the resource. Of the remaining five holes, three hit partially leached mineralization, possibly associated with faulting, while the other two appear to have defined the southern boundary of the leachable deposit in this part of the claim.

 

 

c). Definitive Feasibility Study - June 2018 (Early Stage Marimaca 1-23 Claims only)

 

It should be noted that the Feasibility Study only relates to the early stage Marimaca 1-23 Claims and does not represent the full potential for Marimaca.

 

Reserves & Resources

Mineral reserves for the Marimaca 1-23 Claim Project have been estimated by NCL Consultants, using industry best practices and conforming to the CIM Definition Standards for Mineral Resources and Mineral Reserves (10 May 2014).

 

 

Mineral Reserves and Mineral Resources are summarized in the table below and have respective effective dates of 22 May 2018.

 

Table 3: Mineral Reserves and Mineral Resources
	Tonnes			Cu Contained
Category	Mt	% CuT	% CuS	Mlbs
Proven	12.7	0.83	0.62	232
Probable	11.9	0.78	0.56	204
Proven + Probable	24.6	0.80	0.59	434
Measured	22.4	0.70	0.49	345
Indicated	24.3	0.61	0.39	325
Measured + Indicated	46.8	0.65	0.44	670
Inferred	11.0	0.48	0.28	117

 

CuT: total copper tonnes

CuS: acid soluble copper tonnes

Mineral reserves are reported as constrained within measured and indicated pit design and supported by a mine plan featuring a constant throughput rate. The pit design and mine plan were optimized with slopes angles varying from 42.3° to 52.2°, ore and waste mining average cost of $2.47/t, process and G&A of $12.14/t, SX-EW of $0.30 USD/lb, selling costs of $0.07 USD/lb at a copper price $3.0 USD/lb, as well as a variable recovery as function of solubility ratio. The average processing recovery is 65% and for this average, the cut-off is 0.32% CuT.

Mineral Reserves considers 1% of mining dilution.

Mineral Resources are inclusive of mineral reserves.

Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content

Tonnage and grade measurements are in metric units. Contained copper is reported in millions of pounds.

 

 

Estimated Capital Costs

 

Table 4: Estimated Capital Costs
Area		Equipment ($000’)	Construction ($000’)	Total ($000’)
Mine			1,541	1,541
Crushing		1,181	482	1,663
Agglomeration		111	27	138
Leaching		1,188	3,076	4,264
SX-TF-EW		4,952	1,944	6,895
Sulphuric Acid & Reagents		187	165	351
Infrastructure		1,048	1,062	2,110
Total Direct Capex Costs		8,666	8,297	16,964
Project Administration				469
Detail Engineering				330
Commissioning & Start-up				256
First Fill				1,710
Total Indirect Capex Costs				2,765
Project Contingency 10%				1,749
Project Grand Total				21,478
Owner Allowances (5%)				$1,074
Total				22,552

 

In addition, $8.1 million has been considered for sustaining capital and $4.4 million for mine and plant closure costs. In total, investment costs for the project life will be $35 million. The capital cost estimated excluded losses or gains that may arise from foreign exchange rate variations, cost escalation and other factors.

 

Operating Costs

 

Table 5: Estimated Operating Costs
Items	$/t ore	$/lb
Mining	$8.18	$0.71
Plant	$12.27	$1.07
G&A	$3.19	$0.28
Total	$23.64	$2.05

 

 

Plant Refurbishment

 

This early stage feasibility study envisaged that the Ivan Plant Facilities will be refurbished and updated to process 1.8 Mt per year and secure the 10,000 tpa of copper production. The principal works include:

•

Existing No1 crushing line expanded and modified by adding a closed circuit tertiary crushing line

•

Existing agglomeration line overhauled

•

Leaching will take place on 3 heap leach pads located at Ivan

•

The solvent extraction mixers-settlers will be replaced with conventional technology

•

Electrowinning refurbishment includes civil rehabilitation, cell tanks, piping distribution and electric busbars maintenance works

 

 

After-tax Sensitivity

 

Table 6: After- tax Sensitivity Analysis
Sensitivity Analysis		(20%)	(10%)	--	10%	20%
Recovery	NPV5%	$28	$72	$114	$156	$198
	IRR	21%	41%	58%	75%	90%
Opex	NPV5%	$174.9	$144.5	$114.1	$84.7	$53.1
	IRR	83%	71%	58%	46%	32%
Capex	NPV5%	$118.7	$116.4	$114.1	$111.8	$109.6
	IRR	70%	64%	58%	54%	50%
Cu grade	NPV5%	$28.4	$72.4	$114.1	$156.2	$198.2
	IRR	21%	41%	58%	75%	90%
Cu Price	NPV5%	$24.0	$70.3	$114.1	$158.3	$202.4
	IRR	18%	40%	58%	75%	92%

 

 

2.2           Properties Adjacent to Marimaca Claim

These are claims that are immediately adjacent to the known mineralization at Marimaca.

 

La Atómica Claims (50 hectares)

This property, held under an October 2017 option agreement (section 3.6), directly adjoins the Marimaca project to the northwest. In January 2018, the Company announced the results from the extension drilling on the Atómica property and the results from drilling on the NE of the Marimaca claims. The drilling at La Atómica intersected leachable copper mineralization in ten out of twelve holes, with the remaining two holes confirming the location of the SW faulted boundary of the deposit. The mineralized holes contained multiple intersections of oxides similar in grade and thickness to Marimaca, highlighted by 140m at 0.46%CuT from surface, with some mixed and remnant enriched mineralization at depth, highlighted by 72m at 1.34%CuT.

 

The resource noted above does not include any of the extension drilling on the Atómica property or on the NE of the Marimaca claim which extended the known mineralization of Marimaca to the NW. Follow up drilling is planned in 2018.

 

Sierra Miranda Claims (379 hectares)

In January 2018, the Company entered into an agreement to acquire a 379 hectares’ package of mining claims (the “SM Claims”) immediately adjoining its Marimaca property to the north and south (section 3.6). Although subsequent to the period under review, this acquisition was completed in early August 2018.

 

2.3           Marimaca District Claims

Includes properties that are not immediately adjacent to the known mineralization on the Marimaca claims.

 

Naguayan Claims (1,075 hectares)

Prospective for Marimaca type mineralization, the property, held under a January 2018 option agreement (section 3.6), comprises a large block of exploitation claims located northeast of the Marimaca claims.

 

2.4           Other Exploration Properties, Chile

In June 2017, through the Rayrock acquisition, Coro acquired an additional 38,253 hectares of mining claims (the Ivan claims and Sierra Medina claims).

 

Ivan Claims (23,748 hectares),

The mining claims extend between Marimaca and the Ivan Plant.

 

 

Sierra Medina Claims (14,505 hectares)

Located in an attractive and emerging region in Chile, Coro now controls an important package of land in this district comprising 14,505 hectares of mining claims (35,842 acres), which are strategically located 40km from Antofagasta Minerals’ Antucoya mine and Rencoret project, 50km from Mantos Blancos mine; and 60km from Marimaca (section 3.6).

 

In 2015, the previous owner of the Sierra Medina claims, indicated undefined resources of 12.2 million tonnes at 1.18%CuT & 0.86%CuS at a 0.7%CuT cut-off. Coro has not conducted any due diligence on these resources and cannot give any assurance regarding their economic viability. Both the Ivan claim block and Sierra Medina claim block resources are believed to have been estimated to industry standards, but are not compliant with NI43-101 and therefore should not be relied on. These claims have a high geological potential.

 

 

2.5           Rayrock Acquisition

In addition, the acquisition of Rayrock included a large block of claims between Marimaca and the Ivan Plant, which significantly extends the Company’s land package in the region. The following table sets out the details of the Rayrock purchase:

 

Table 8: Rayrock Purchase Consideration ($000’s)
Cash			6,219
Transaction costs			389
Total purchase consideration			6,608
The purchase price was allocated as follows:
Current assets			23
Ivan plant			10,786
Total assets			10,809
Current liabilities			216
Restoration provision			3,985
Total liabilities			4,201
Net identifiable assets acquired			6,608

 

2.6           Marimaca Development Plan

The decision to implement the Marimaca Plase 1 as outlined in the DFS, will be dependent on results of the exploration program planned for later in 2018, following the successful completion of the financing plan.

 

In August 2017, the Company initiated an early stage DFS with the mine plan being undertaken by NCL Ingeniería y Construcción S.A. (“NCL”) and INGEROC conducting the geotechnical work. Environmental & permitting work was undertaken by Bordoli Consultores Asociados and was successfully submitted to the Chilean authorities. As part of the DFS, the Company has also conducted additional metallurgical test work and infill drilling, with the results being used to update the geological resource (and subsequently the in pit resource). The DFS was completed and filed in SEDAR during Q2 2018.

 

 

The initial DFS which allows Coro to earn into the Marimaca claims will include 10,000 tonnes (22,046,030 lbs) of copper cathode per year via the Ivan Plant. The DFS considers trucking ore from Marimaca to the Ivan Plant. The DFS work also included completing infill and geotechnical drilling.

 

Whilst the near-term focus will be on examining the greater opportunities of an enlarged Marimaca, some development activities over the next 12-months will be undertaken to confirm the capex figures generated in the Marimaca DFS. In parallel, it is intended to develop and submit documentation for the sectorial permits to be processed and granted by the Chilean authorities, so that should a decision ever be made on develop the Phase 1 the project it would be fully permitted.

 

 

3 Financial Position Review

 

3.1       Cash and Working Capital

 

		December 31,				June 30,
Table 9: Cash and Working Capital ($000’s)		2017				2018
Cash and cash equivalents			2,811				2,891
Accounts receivable and prepaid expenses			3,299				4,411
Inventories (table 10)			1,956				3,115
Accounts payable and accrued liabilities			(10,819	)			(8,108	)
Current portion of other debt (note 8)			(3,412	)			(20,135	)
Net working capital (including current portion of debt)			(6,165	)			(17,826	)
Net working capital (excluding current portion of debt)			(2,753	)			2,309

 

During the six months ended June 30, 2018, the Company financed its activities principally with $16 million loans from its shareholders Greenstone and GSII (section 3.3.1). A $5 million loan in Q118, a $2 million convertible loan and a $9 million convertible loan for SCMB funding plan (reorganization) in Q218. Cash outflows mainly included $8 million in funding requirements for SCMB, $3.1 million to advance its development and exploration programs at Marimaca, $0.5 million to purchase SCMB minority interest, $0.6 in loan repayments and the remaining for general working capital requirements.

 

As of June 30, 2018, accounts receivable balance increased from $3.3 million to $4.4 million compared to as of December 31, 2017, mainly due to an increase in the environmental bonding requirements at SCMB of $1.1 million.

 

As of June 30, 2018, accounts payable balance decreased to $8.1 million from $10.8 million compared as of December 31, 2017, mainly due to the decrease in accounts payables and accruals after receiving the funding from Greenstone and GSII, partially offset by the increase in the aforementioned unpaid environmental bond of $1.1 million.

 

Current debt increased from $3.4 million to $20.1 million and it is mainly due to a $5 million loan received in February 2018 and a $2 million convertible loan in April 2018 and $9 million convertible loan in April 2018 (section 3.3.1), and the accrual of the interest and fees and the fair value of the remaining payments in the future related to the buyout of the Company’s 35% minority interest in SCMB (ProPipe).

 

 

		December 31,				June 30,
Table 10: Inventories ($000’s)		2017				2018
Consumable parts and supplies			160				531
Ore stockpiles			258				654
Copper in circuit			1,083				868
Finished goods			455				1,062
Total inventory			1,956				3,115

 

 

3.2       Other Assets

 

		December 31,				June 30,
Table 11: Other Assets ($000’s)		2017				2018
Property, plant and equipment			28,790				28,871
Berta mine development (section 5)			7,986				7,978
Nora plant (section 5)			4,000				4,000
Ivan plant (section 5)			10,693				10,693
Berta facilities (section 5)			5,718				5,730
Construction in progress (other)			264				264
Other			129				206
Exploration & evaluation assets			5,930				9,049
Marimaca (section 2.1)			5,100				7,186
La Atomica			515				1,123
El Jote			315				440
Sierra Miranda			-				100
Naguayan			-				200
Total other assets			34,720				37,920

 

Ivan Plant

Purchased in June 2017 (section 2.6), the Ivan Plant is not currently operative and will be kept in care and maintenance until it is necessary to start commissioning and testing. The Company expensed a total of $0.7 million for care maintenance costs associated with the Ivan Plant for the six months ended June 30, 2018.

 

Total assets of Coro as at June 30, 2018 were $48 million (Dec 2017: $43 million).

 

 

3.3       Other Liabilities

 

		December 31,				June 30,
Table 12: - Other Liabilities ($000’s)		2017				2018
Current			3,412				20,135
Finance lease			160				-
Shareholder loans (section 3.3.1)			2,940				19,633
ProPipe loan			-				502
Deferred revenue			313				-
Non-current			6,833				7,515
Other debt			250				853
Restoration provision			6,583				6,662
Total other liabilities			10,245				27,650

 

As of June 30, 2018 Shareholders’ loans increased by $17.2 million, from $2.9 as at December 31, 2017 to $20.1 at June 30, 2018. The change is mainly due to Loan 2, Loan 3 and Loan 4 described below.

 

 

3.3.1       Shareholder loans

 

Loan 1 (To be repaid using the proceeds from the Rights Offering announced on 7 August 2018)

In December 2017, Coro entered into a credit agreement with its major shareholder Greenstone, pursuant to which Greenstone advanced $3 million to the Company. Under the terms of the credit agreement, the loan has an eleven-month term and bears interest at 12% per annum until March 31, 2018, after which the interest has increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement.

 

As of June 30, 2018, the Company owes $3.3 million, including accrued $0.3 million in interest and fees.

 

Loan 2 (To be repaid using the proceeds from the Rights Offering announced on 7 August 2018)

In February 2018, Coro entered into a further credit agreement with Greenstone pursuant to which Greenstone advanced $5 million to Coro. Under the terms of the credit agreement, the loan has an eleven-month term and bore interest at 12% per annum until June 30, 2018, after which the interest rate increased to 15%. Greenstone will receive a 3% arrangement fee payable at the end of the loan term under the credit agreement.

 

As of June 30, 2018, the Company owes $5.3 million, including accrued $0.3 million in interest and fees.

 

Loan 3 (To be converted as part of the Comprehensive Financing Plan, announced on 7 August 2018)

In April 2018, Coro signed a convertible loan agreement with Greenstone for a $2 million convertible loan to fund ongoing working capital requirements including Marimaca project costs and associated corporate costs. The convertible loan has a maturity date of the earlier of an equity raising by Coro of not less than $5 million and 30 January 2019. The $2 million is convertible into common shares of Coro at a price equal to the greater of: CA$0.09 and the Coro common share price of any equity raising by Coro. The convertible loan will attract interest of 12% for the first 6 months and 15% interest thereafter.

 

The conversion feature represent embedded derivatives as the Company will be required to deliver a variable number of its own shares (priced at the greater of CA$0.09 per share and the Coro common share price of any equity raising by Coro) in exchange for a fixed amount of U.S. dollars. These derivatives are of nominal value

 

As of June 30, 2018, the Company owes $2.05 million, including $0.05 million in interest and fees. On August 9, 2018 the loan was converted into Coro’s shares. A total of 21,883,492 common shares were issued to Greenstone at a conversion price equal to the private placement price of CAD 0.12 per share.

 

Loan 4

In April 2018, Coro entered into the SCMB Financing for the SCM Berta operation with Coro retaining an interest in the existing SCM Berta operation and the right to participate in the future capital development of the project. Coro agreed to a binding term sheet with GSII, whereby GSII would invest up to $12 million directly in SCMB. The SCMB facility was structured as a secured loan; convertible into shares of Coro’s newly formed and 100% owned subsidiary Rising Star Copper Limited which has a 100% interest in MCC. MCC is now the subsidiary that has a 100% interest in SCMB.

 

As of June 30, 2018, an initial $9 million of the $12 million had been advanced to MCC and an additional $0.6 million was drawn under the SCMB in August 2018.

 

The proceeds were used to reduce creditor balances, funds required for capital expenditures, perform engineering, test work and option payments and make an initial payment of $0.5 million to acquire the 35% minority interest in SCMB.

 

 

3.4       Equity and Financings

 

		December 31,				June 30,
Table 13: Shareholders’ Equity ($000’s)		2017				2018
Common shares (table 15)			92,635				92,635
Contributed surplus			7,789				8,002
Accumulated other comprehensive income ("AOCI")			439				778
Deficit			(74,331	)			(88,836	)
Non-controlling interest (“NCI”)			(4,810	)			-
Total shareholders’ equity			21,722				12,579

 

 

Equity instruments

 

		December 31,				June 30,
Table 14: Equity Instruments		2017				2018
Common shares outstanding			651,929,511				651,929,511
Options outstanding			33,450,000				38,350,000
Weighted average exercise price			CA$0.13				CA$0.13
Market capitalization ($000’s)			CA$78,231				CA$67,056
Closing share price			CA$0.12				CA$0.10

 

Coro was incorporated in 2004 and is listed on the Toronto Stock Exchange, under the symbol “COP”. As of June 30, 2018 the Company had 651,929,512 (December 31, 2017: 651,929,512) shares outstanding and a market capitalization of CA$67.1 million. The Company has its registered corporate office in Vancouver BC, Canada.

 

Table 15: - Use of Proceeds Table
Description	Shares (000’s)	Price CA$	Gross  Proceeds ($000’s)	Intended Use	Actual Use
Feb 16 – Share Issuance	79,800	$0.04	CA$3,192	Marimaca, Berta & working capital	As intended
May 16 – Conversion	106,730	$0.10	Conversion of Convertible Debenture (no proceeds received)
July 16 – Share Issuance	100,000	$0.10	CA$10,000	Marimaca, Berta & working capital	As intended
Dec 16 – Share Issuance	37,523	$0.14	CA$4,000	Marimaca, Berta & working capital	As intended
Mar 17 – Share Issuance	15,592	$0.15	CA$2,300	Marimaca, Berta & working capital	As intended
Apr 17 – Share Issuance	92,088	$0.15	CA$13,800	Marimaca, Rayrock & working capital	As intended
Sep 17 – Share Issuance	35,900	$0.13	CA$4,667	Marimaca DFS & working capital	As intended
Oct 17 – Share Issuance	20,662	$0.13	CA$2,686	Marimaca DFS & working capital	As intended

 

 

3.5       Non-controlling Interest

 

Acquisition of Propipe 35% interest in SCMB

Under the SCM Berta Amended Shareholders Agreement, ProPipe held a 35% interest in SCM Berta. In April 2018, the Company acquired ProPipe’s 35% interest in SCM Berta for a purchase price of $2.0 million, payable as follows: (i) $0.5 million upon execution of sale agreement; (ii) $0.5 million payable 12 months following the initial payment; (iii) $0.5 million payable 18 months following the initial payment; and (iv) $0.5 million payable 24 months following the initial payment (25^th May 2018).

 

The purchase price fair value was estimated at $1.9 million, with $1.4 million included in other debt related to the future payments. The transaction was considered a change in the ownership of a controlled subsidiary and accordingly, it has been accounted for as an equity transaction. The Company recorded a total of $7.2 million directly to its accumulated deficit and reduced the non-controlling interest relating to ProPipe to $nil.

 

 

3.6       Commitments and Option Payments

 

The following table shows the contractual obligations of the Company including property options payments as at June 30, 2018:

 

Table 16:  - Contractual Obligations and Option Payments ($000’s)	Six Months 2018	2019	2020	Thereafter	Total
Property option payments
Marimaca	125	-	-	-	125
La Atómica	500	1,000	4,400	-	5,900
Sierra Miranda	5,900	-	-	-	5,900
Naguayan	-	300	700	5,300	6,300
El Jote	125	2,440	-	-	2,565
Total property option payments	6,650	3,740	5,100	5,300	20,790
Operating leases	54	95	70	-	220
Total	6,704	3,835	5,170	5,300	21,010

 

As of the day of the MD&A, the Company paid the $5.9 million toward its Sierra Miranda Option Agreement and $125,000 to the Marimaca Option Agreement.

 

a)

Marimaca properties, Chile

 

Marimaca claims (“MC”)

In August 2014 and subsequently amended in April 2017, the Company entered into an agreement to acquire up to a 75% interest in the Marimaca claims. The Company can earn a 51% interest by paying $185,000 in two payments, $60,000 (paid initially) and the remaining $125,000 (paid in June 2018) following the completion of the NI 43-101 compliant resource estimate and engineering study demonstrating the technical and economic feasibility of an operation producing a minimum 1,500tpy of copper cathode by August 2018 (completed). Coro can acquire a further 24% interest by obtaining project construction finance or contributing the Ivan Plant. The owner of the property will maintain a 25% interest with a 15% interest free carried to commercial production and a 10% participating interest that is subject to dilution.

 

Commencing January 1, 2017, the costs associated with the Marimaca property were capitalized.

 

After completing all the milestones to acquire 51% interest in the Marimaca option agreement and subsequent to June 30, 2018, the Company announced a completed private placement and a sub-guaranteed Rights Offering and outlined the plans for the Marimaca Claim and its surrounding acquisitions.

 

La Atomica claims (“LA”)

Under the terms of the August 2017 La Atomica Letter of Intent (“LOI”) (Option Agreement signed October 2017), the Company may acquire 100% of the La Atomica property by paying a total of $6.0 million as follows: $100,000 (paid); $0.5 million on the 12-month anniversary date; $1.0 million on the 24-month anniversary date; and $4.0 million on the 36-month anniversary date. A 1.5% NSR is payable on the claims, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million at any time.

 

La Atomica claims are an important part in the development plan of the Marimaca claim because the claims are very close to the limits of the Marimaca claim. Subsequent to June 30, 2018, the Company announced a completed private placement and a sub-guaranteed Rights Offering and outlined the plans for the Marimaca Claim and its surrounding acquisitions.

 

Sierra Miranda claims (“SM”)

Under the terms of the January 2018 Sierra Miranda LOI, the Company may acquire 100% of Sierra Miranda mining claims (the “SM Claims”) immediately adjoining its Marimaca claims for a total cash consideration of $6.0 million of which $100,000 was paid in Q1 2018 and in August 2018, the remaining balance of $5.9 million was paid on completion of due diligence and certain transfers of title. In addition, the claims will be subject to a 2% NSR.

 

 

Considered a crucial part in the development plan of Marimaca, the Sierra Miranda claims will be part of the Company’s exploration plans announced subsequent to June 30, 2018.

 

Naguayan claims (“NAG”)

Under the terms of the October 2017 Naguayan LOI (Option Agreement signed January 2018), the Company may acquire 100% of the Naguayan property for a total of $6.5 million; $200,000 (paid); $300,000 on the 12-month anniversary date; $700,000 on the 24-month anniversary date; $1.75 million on the 36 month anniversary date; and $3.55 million on the 48-month anniversary date. A 1.5% NSR is payable, with the Company retaining an option to purchase 0.5% out of the 1.5% for $2.0 million within the first 12 months following the start of commercial production on the property. As the Naguayan claims are not located adjacent to the known mineralization, only acquisition costs are capitalized at this time.

 

The real geological potential of the Marimaca District still has to be determined by the Company.

 

b)

Other properties, Chile

 

El Joté

In May 2016, SCMB optioned the El Joté (formerly called “Salvadora”) a copper project located ~ 30km NW of the Nora Plant and 58 km NE of the port of Chañaral in the III Region of Chile. Under the terms of the agreement, SCMB may acquire a 100% interest in the property by completing the following option payment schedule totalling $3.0 million; $320,000 on or before May 2016 (paid); $250,000 on or before May 2018 (paid $125,000) and $2.43 million on or before May 2019. The final payment may be made in eight equal instalments of $0.3 million plus interest at LIBOR, and SCMB may start production with the first instalment payment. A 1.5% NSR is payable, which can be purchased for $1.5 million at any time.

 

On May 2018, the company paid $125,000 and signed an agreement to defer the remaining $125,000 of the $250,000 payment due on May 2018 to August 15, 2018.

 

El Jote is a potential additional source of future feed for Nora Plant, so the Company is evaluating the results of the work done recently in the property in order to know its full potential.

 

 

 

4 Expenditures Review

 

The following table details the Company’s quarterly expenditures for the last 8 quarters.

 

Table 17: ($000’s)
Expenditures Summary		Q316				Q416				Q117				Q217				Q317				Q417				Q118				Q218
Expenses
Exploration expenditures (table 19)			1,157				423				18				38				6				89				420				379
Writedown exploration and evaluation asset							-				-				220				-				-				-				-
Inpairments																			-				15,683				1,621				2,641
Ivan plant care and maintenance			-				-				-				-				324				249				406				306
Depreciation and amortization			4				5				5				6				7				6				19				23
Legal and filing fees			12				13				25				28				4				7				30				92
Other corporate costs			61				131				156				106				139				181				168				142
Salaries & management fees			183				139				229				177				258				309				444				344
Share-based payments			304				426				201				294				115				101				92				122
Operating loss			1,720				1,136				634				870				854				16,627				3,200				4,049
Finance income			(60	)			(88	)			-				-				-				(10	)			28				85
Foreign exchange loss (gain)			16				(134	)			68				96				21				63				25				462
Unrealized loss (gain) on held-for-trading			(3	)			(9	)			(12	)			1				4				(1	)			3				5
Loss per quarter			1,674				905				690				966				878				16,678				3,256				4,601
Attributable to:
Owners of parent			1,653				907				588				832				717				11,485				2,724				4,602
Non-controlling interest			20				(2	)			7				11				20				5,551				532				(1	)
Other comprehensive loss (income)			(42	)			114				(50	)			(36	)			68				150				(143	)			(196	)
Comprehensive loss			1,632				1,019				546				807				805				17,185				3,113				4,405
Attributable to:
Owners of parent			1,612				1,021				538				796				785				11,634				2,581				4,406
Non-controlling interest			20				(2	)			7				11				20				5,551				532				(1	)
Basic loss (earnings) per share ($)			0.00				0.00				0.00				0.00				0.00				0.02				0.00				0.01
Fully diluted loss per share ($)			0.00				0.00				0.00				0.00				0.00				0.02				0.00				0.01

 

As of June 30, 2018, the Berta/Nora complex had not reached a state of commercial production and therefore has not recorded any sales or revenues.

 

In Q4 2017, the Company recorded an impairment charge against the Nora asset of $15.7 million (section 5.2). Q2 2017 includes the write off of the deferred exploration costs associated with the Planta Prat project. A further $1.6 million and $2.6 million impairment charges were recorded in Q118 and Q218 respectively at Nora Plant as a result of the capitalization of additional losses incurred during those periods.

 

The Ivan Plant is not currently operating, and therefore the related care and maintenance costs are required to be expensed and therefore the Ivan Plant holding costs at the Ivan Plant have been expensed and reflected in the statement of loss.

 

Other corporate costs mainly include corporate travel costs, audit and accounting fees, insurance, rent and investor communications costs. Included within Q216, Q416, and Q117, are costs associated with an increasing marketing effort surrounding the $12.0 million financing (section 5.1). In Q217 and Q317, expenses include accounting fees for taxation matters related the 2016 amalgamation and other tax related filings, travel expenses for a board meeting in Chile and costs in connection with the marketing efforts towards the $6 million private placement closed in October 2017. In Q417, costs are related to corporate travel for a second board meeting in Chile and also investor relations travel and conferences costs. Q118 and Q218 expenditures are consistent with the same periods in 2017.

 

Salaries and management fees are limited to corporate salaries and do not include any Chilean-based exploration and development team members. The increase in Q317 is due to the incorporation of the new President and CEO in June 2017. The increase in Q316 is associated with a one-off payment made in respect of the retirement of a founder and executive director of the Company. In addition, effective September 1, 2016, the Company began paying fees to Directors who had previously not been compensated for services provided. Q1 and Q217 costs are higher due to the appointment of our VP Communications and investor relations, and the President and CEO in June 2017. The increase in Q118 is associated with severance costs. In Q218, due to the Company’s restructuring plan, the expenses for the quarter reflect the new salaries for the new CFO and staff in Chile partially offset by the elimination of salaries from the Vancouver office in May 2018.

 

 

The variation in the share-based compensation is consistent with the various options granted.

 

In Q218, the foreign exchange loss is significant due to the strength of the USD compared to CAD and CLP, mainly related to the increase in loans and debts at Canada and Chile.

 

 

4.1        Other Exploration Costs

 

The Company’s other exploration properties include Marimaca District, Celeste and El Jote. The group others include Llancahue, Gloria, Sierra Medina, and Ivan claims.

 

Table 18: ($000’s)		Quarterly																																YTD
Exploration Chile		Q316				Q416				Q117				Q217				Q317				Q417				Q118				Q218				2016				2017				2018
Consult, lab & prof.			87				104				-				-				-				-				-				-				253				-				-
Drilling & trenching			929				171				-				-				-				80				61				179				1,445				80				240
General & admin costs			47				96				15				14				6				9				336				221				349				44				557
Property investigations			94				52				3				24				-				-				22				-21				194				26				1
Property acquisition			-				-				-				-				-				-				-				-				-				-				-
Total exploration costs			1,157				423				18				38				6				89				420				379				2,241				150				798
By Project:
Marimaca			1,231				396				-				-				-				-				-				-				2,101				-				-
Marimaca District     (incl. Naguayan)			-				-				-				-				-				80				79				113				-				80				192
Celeste			-				-				-				20				-				-				22				-21				19				20				1
El Jote			-				-				-				-				-				-				7				5				-				-				11
Others			(74	)			27				18				18				6				9				312				282				121				51				594
Total exploration costs			1,157				423				18				38				6				89				420				379				2,241				150				798

 

Exploration expenses dropped significantly in Q117 as a result of starting to capitalize exploration expenditures on Marimaca following the release of the NI 43-101 resource and management’s belief that these costs can now be recovered. General and Administration costs include a portion of all administrative costs of running the Company’s Santiago office and a provision for VAT. In Chile, VAT is not refundable in cash and is applied against other VAT credits. Property investigations costs in Q216 principally relate to the payment of annual Patentes (mining taxes) on the Celeste and Llancachue’s exploration properties; and from Q316 and Q416 mainly relate to Marimaca District’s exploration property assays and mining claims payments. Q118 includes the payment of claim fees associated with the Company’s enlarged land position. In Q218 expenditures include drilling expenditures at Sierra Medina and other properties and general and administrative expenses for the same claims.

 

 

4.2       Related Party Disclosure

 

The Company considers related party all key management personnel having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any directors (whether executive or otherwise) of the entity.

 

Table 19: Key Management		Quarterly																																YTD
Personnel Compensation ($000’s)		Q316				Q416				Q117				Q217				Q317				Q417				Q118				Q218				2016				2017				2018
Short-term employee benefits			264				185				505				235				308				308				552				282				839				1,356				834
Share-based payments			261				364				188				279				110				95				86				76				683				672				162
Total			525				549				694				515				419				402				638				358				1,522				2,028				996

 

 

 

Loan Disclosures

On August 9, 2018, triggered by the previously announced and completed Private Placement, the Company converted a $2 million loan, held by Greenstone, into 21,883,492 common shares at a conversion price of CAD$0.12 per common share.

 

5 SCMB REORGANIZATION & OPERATION

 

5.1       Reorganization & Financing Overview

 

On April 19, 2018, the Company entered into the $12 million SCMB Facility to provide a funding solution for the SCMB operations without financial recourse to Coro which was approved by disinterested shareholders at the annual general and special shareholders’ meeting on June 27, 2018. Under the terms of the SCMB Facility, Coro retains an interest in the existing SCMB operation with the opportunity to participate in the future capital development of the project if it is further de-risked. Notwithstanding the achieved and potential operational improvements, it is expected that SCMB will remain a higher cost and higher risk operation due to the requirement to haul Pregnant Leach Solution, especially challenging in a lower copper price environment. For SCMB, once the $12 million in convertible debt has been converted, a decision will have to be made whether Coro retains a 25% interest in SCMB or contributes an additional 4 million to buy back to the 50% ownership. The deadline to make this decision is the end of August 2018.

 

5.2       SCMB Operation

 

The SCMB operation includes the Nora Plant and the Berta deposit (“Berta”). The primary feed for Nora to date has been Berta, which is located ~20km west of the village of Inca de Oro and 62 kilometres by road south of Nora, in the III region of Chile.

 

The following table shows the copper production and sales from SCMB since inception.

 

		Quarterly																																Annual								YTD
Table 20: SCMB KPIs		Q316				Q416				Q117				Q217				Q317				Q417				Q118				Q218				2016				2017				2018			LTD
Cathode produced			490				508				421				496				644				765				828				747				1,775				2,326				1,575			5,758
Cathode sold			458				528				459				477				627				753				829				653				1,804				2,317				1,482			5,602

 

In December 2016, construction of the Berta crushing, agglomeration, and leaching facilities commenced and trucking of PLS to the Nora Plant started in June 2017 which explains the increase in production in Q3 2017. Decreased SCMB production was reported during Q2, compared to Q1. This unplanned result was due to a variety of operational problems, especially in the SX and EW sections in Nora, which required additional capital investment to resolve.

 

As a steady state production level has not yet been achieved, no unit cost (cost per pound) information has been provided for SCMB and this will continue to be the case until when production can be ramped up toward the intended project capacity.

 

In June 2017, SCMB was granted an operating permit for the Berta plant based on static pads from Sernageomin, the Chilean Mining Authority. In April 2018, through Exempt Resolution N°1203/2018, SCMB was granted the Berta Sur Pit Phase 1 mine technical permit. As subsequently, due to the need for improving leaching recoveries, the static pads had to be modify to dynamic pads, in addition to the associated changes to installations, the plant operating permit will again have to be modified. A modified DIA, which should include a new SXEW or SXCR plant in Berta is under preparation and should be submitted to the Chilean authorities during Q3. Furthermore, at the mining operations, the remaining pits (other than Berta Sur), information and data are being prepared for submission to Sernageomin for the granting of a permit.

 

 

Development and Capitalized Operational Expenditure Analysis

 

 

Table 21: SCMB Expenditure Summary ($000's)		2013 to 2016				2017				2018			LTD
Nora plant (net)			12,597				7,086				4,262			23,944
Acquisition costs			4,583				-				-			4,583
Remediation, refurbishment and start up costs			1,850				-				-			1,850
Capitalized interest and finance costs			2,095				315				728			3,138
Other additions (net of disposals)			1,506				511				166			2,184
Pre-commercial sales proceeds			(8,382	)			(14,144	)			(9,617	)		(32,143	)
Capitalized production costs			10,945				20,404				12,984			44,333
Mine development			7,900				86				(8	)		7,978
Berta facilities			-				5,718				12			5,730
Capitalized development costs			20,497				12,889				4,265			37,652
Construction in progress (other)			336				(72	)			-			264
Expensed evaluation costs			-				-				-			4,428
Total expenditure			20,833				12,817				4,265			42,344

 

a)       Nora Plant

 

Impairment Review

 

As of June 30, 2018, the Company continued to capitalize costs on the Berta Facilities and the Nora Plant as it has not yet reached commercial production. As there were no significant changes in the assumptions from year end 2017, the Company recorded a further impairment of the Nora Plant of $1.6 million in Q1 2018 and $2.6 million in Q2 2018

 

Under accounting rules, the Company is required to review the carrying value of its assets on a continuing basis to ensure that the carrying value does not exceed the fair market value of the underlying asset. For accounting purposes, the Company views the Nora Plant as a standalone cash generating unit (“CGU”) from the Berta Mine and Berta Facilities.

 

As of December 31, 2017, the Company concluded that an impairment indicator existed. In conjunction with its accounting policy on impairment of non-financial assets the Company recognized an impairment charge of $15.7m reducing the carry value of the Nora Plant to $4.0 million. In determining the fair value, the Company considered the future uses of the plant and the current operational performance. It also considered that over the course of the ramp-up period the Company incurred operating losses that were capitalized to the Nora Plant which resulted in the Nora asset being carried at value above its fair market value.

 

The Company also undertook an impairment review of the Berta Mine and Berta Facilities (which it considers one CGU) and determined that the carrying value did not exceed its fair market value as of December 31, 2017. In this determination, the Company considered the implementation of SXEW plant at Berta in order to reduce its high current operating costs.

 

As noted above the Company recorded an impairment review as of December 31, 2017. Subsequent to March 31, 2018 the Company announced the SCMB Financing which supports and is consistent with the carrying value of the assets established as of December 31, 2017. In the Company’s view there have been no significant changes since year end and therefore there is significant doubt as to the recoverability of the costs capitalized at the Nora Plant during the first six months of 2018. The Company has recorded a further impairment charge of $4.3 million which re-establishes the carrying values established as of December 31, 2017.

 

All of these impairment related assumptions are highly subjective and subject to change over time; changes in these assumptions could have a significant impact on the underlying assets carrying values.

 

 

b)       Berta Facilities

 

El Jote Copper Project– A potential additional source of future feed for Nora

In May 2016, SCMB optioned the El Jote (formerly “Salvadora”) copper project, located ~ 30km NW of the Nora Plant and 58km NE of the port of Chañaral in the III Region of Chile (section 3.6).

 

6 RISKS and CRITICAL ACCOUNTING ESTIMATES & POLICIES

 

For a full version of the critical accounting estimates and policies reference should be made to the Company’s audited financial statements for the year ended December 31, 2017, which are available on the Company’s website at www.coromining.com. In addition, reference should be made to the most recently filed Annual Information Form available on SEDAR at www.sedar.com.

 

6.1       Disclosure Controls and Internal Control Financial Reporting

 

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is communicated to senior management, to allow timely decisions regarding required disclosure.

 

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements in compliance with IFRS. The Company’s internal control over financial reporting includes policies and procedures that:

•

pertain to the maintenance of records that accurately and fairly reflect the transactions of the Company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS;

•

ensure the Company’s receipts and expenditures are made only in accordance with authorization of management and the Company’s directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized transactions that could have a material effect on the annual or interim financial statements.

 

Management has concluded that, as at June 30, 2018 the Company‘s internal control over financial reporting was not effective due to the existence of a material weakness. A material weakness existed in the design of internal control over financial reporting caused by a lack of adequate segregation of duties in the financial close process. The Chief Financial Officer is responsible for preparing, authorizing, and reviewing information that is key to the preparation of financial reports. He is also responsible for preparing and reviewing the resulting financial reports. This weakness has the potential to result in material misstatements in the Company’s financial statements.

 

Management has concluded, and the audit committee has agreed that taking into account the present stage of the Company's development, the Company does not have sufficient size and scale to warrant the hiring of additional staff to remediate the weakness at this time. There were no changes in the Company’s internal controls over financial reporting during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

 

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

 

 

6.2       Forward Looking Statements

 

Certain statements included in this “MD&A” constitute forward-looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “may”, “should” and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect current expectations regarding future results or events. This MD&A contains forward-looking statements. These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors.

 

Information concerning the interpretation of drill results also may be considered forward-looking statements; as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. The estimates, risks and uncertainties described in this MD&A are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in the Company’s forward-looking statements. In addition, any forward-looking statements represent the Company’s estimates only as of the date of this MD&A and should not be relied upon as representing the Company’s estimates as of any subsequent date. The material factors and assumptions that were applied in making the forward-looking statements in this MD&A include: (a) execution of the Company’s existing plans or exploration programs for each of its properties, either of which may change due to changes in the views of the Company, or if new information arises which makes it prudent to change such plans or programs; and (b) the accuracy of current interpretation of drill and other exploration results, since new information or new interpretation of existing information may result in changes in the Company’s expectations. Readers should not place undue reliance on the Company’s forward-looking statements, as the Company’s actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company’s business, or if the Company’s estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize.

 

6.3       NI 43-101 Compliance Requirements

 

Under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), if an issuer disclosures in writing scientific or technical information about a mineral project on a property material to the issuer, the issuer must include in the written disclosure the name and the relationship to the issuer of the qualified person who: (a) prepared or supervised the preparation of the information that forms the basis for the written disclosure or (b) approved the written disclosure. For the purposes of this MD&A, Luis Albano Tonto, President and CEO of the Company, a mining engineer with more than 30 years of experience is the Qualified Person for the purposes of NI 43-101 has approved the written disclosure in this MD&A. This MD&A references a number of previous news releases in respect of disclosure of technical matters relating to mineral properties and reference should be made to these news releases to fully understand these references.

 

6.4       Government Laws, Regulation & Permitting

 

Mining and exploration activities of the Company are subject to both domestic and foreign laws and regulations governing prospecting, development, production, taxes, labour standards, occupational health, mine safety, waste disposal, toxic substances, the environment and other matters. Although the Company believes that all exploration activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing the operations and activities of the Company or more stringent implementation thereof could have a substantial adverse impact on the Company.

 

The operations of the Company will require licenses and permits from various governmental authorities to carry out exploration and development at its projects. There can be no assurance that the Company will be able to obtain the necessary licences and permits on acceptable terms, in a timely manner or at all. Any failure to comply with permits and applicable laws and regulations, even if inadvertent, could result in the interruption or closure of operations or material fines, penalties or other liabilities.

 

6.5       Other Risks

 

Reference should be made to the Company’s risk and critical accounting policies and practices section of the December 31, 2017, Management Discussion and Analysis for a complete discussion of the risk factors associated with Nature of Operations; NI 43-101 Compliance Requirements, Government Laws, Regulation & Permitting, Key Management and Competition; Title to Properties; Commodity Prices; Foreign Currency Risk; amongst other things.

 

 

6.6       Critical Accounting Policies

 

Reference should be made to the Company’s risks and critical accounting policies and practices section of the December 31, 2017, Management Discussion and Analysis for a complete discussion on the critical accounting policies associated with Estimates and use of judgement, New Accounting Pronouncements; amongst other things.

 

 

 

 

 

 

 

 

 

 

 

Q2 2018 MD&A (expressed in U.S. Dollars)

TSX Symbol: COP

Page| 24

Exhibit 99.6

 

 

CORO MINING CORP.
Suite 1280 – 625 Howe Street
Vancouver, BC V6C 2T6

 

INFORMATION CIRCULAR
(as at May 18, 2018 except as otherwise indicated)

 

SOLICITATION OF PROXIES

 

This information circular (the “Circular”) is provided in connection with the solicitation of proxies by the management (the “Management”) of Coro Mining Corp. (the “Company”). The form of proxy which accompanies this Circular (the “Proxy”) is for use at the annual general and special meeting of the shareholders of the Company to be held on Wednesday, June 27, 2018 (the “Meeting”), at the time and place set out in the accompanying notice of meeting (the “Notice of Meeting”). The Company will bear the cost of this solicitation. The solicitation will be made by mail, but may also be made by telephone.

 

APPOINTMENT AND REVOCATION OF PROXY

 

The person named in the Proxy is an officer of the Company. A registered shareholder who wishes to appoint some other person to serve as their representative at the Meeting may do so by striking out the printed names and inserting the desired person's name in the blank space provided. The completed Proxy should be delivered to Computershare Investor Services Inc. by 10:00 a.m. (Pacific time) on Monday, June 25, 2018 or not less than 48 hours, (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting at which the Proxy is to be used.

 

The Proxy may be revoked by:

 

(a)

signing a proxy with a later date and delivering it at the time and place noted above;

 

(b)

signing and dating a written notice of revocation and delivering it at the time and to the place noted above; or

 

(c)

attending the Meeting or any adjournment of the Meeting and registering with the scrutineer as a shareholder present in person.

 

Provisions Relating to Voting of Proxies

 

The shares represented by Proxy in the form provided to shareholders will be voted or withheld from voting by the designated holder in accordance with the direction of the registered shareholder appointing him or her. If there is no direction by the registered shareholder, those shares will be voted for all proposals set out in the Proxy and for the election of directors and the appointment of the auditors as set out in this Circular. The Proxy gives the person named in it the discretion to vote as such person sees fit on any amendments or variations to matters identified in the Notice of Meeting, or any other matters which may properly come before the Meeting. At the time of printing of this Circular, the Management knows of no other matters which may come before the Meeting other than those referred to in the Notice of Meeting.

 

 

Advice to Beneficial Holders of Common Shares

 

The information set forth in this section is of significant importance to many shareholders, as a substantial number of shareholders do not hold common shares in their own name. Shareholders who hold their common shares through their brokers, intermediaries, trustees or other persons, or who otherwise do not hold their common shares in their own name (referred to herein as “Beneficial Shareholders”) should note that only proxies deposited by shareholders who appear on the records maintained by the Company’s registrar and transfer agent as registered holders of common shares will be recognized and acted upon at the Meeting. If common shares are listed in an account statement provided to a Beneficial Shareholder by a broker, then those common shares will, in all likelihood, not be registered in the shareholder’s name. Such common shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). In the United States, the vast majority of such common shares are registered under the name of Cede & Co., the registration name for The Depository Trust Company, which acts as nominee for many United States brokerage firms. Common shares held by brokers (or their agents or nominees) on behalf of a broker’s client can only be voted or withheld at the direction of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the broker’s clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Meeting.

 

Existing regulatory policy requires brokers and other intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholder meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. The form of instrument of proxy supplied to a Beneficial Shareholder by its broker (or the agent of the broker) is substantially similar to the Proxy provided directly to registered shareholders by the Company. However, its purpose is limited to instructing the registered shareholder (i.e., the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The vast majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions Inc. (“Broadridge”) in Canada. Broadridge typically prepares a machine-readable voting instruction form (“VIF”), mails those forms to Beneficial Shareholders and asks Beneficial Shareholders to return the VIFs to Broadridge, or otherwise communicate voting instructions to Broadridge (by way of the internet or telephone, for example). Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of shares to be represented at the Meeting. A Beneficial Shareholder who receives a Broadridge VIF cannot use that form to vote common shares directly at the Meeting. The VIFs must be returned to Broadridge (or instructions respecting the voting of common shares must otherwise be communicated to Broadridge) well in advance of the Meeting in order to have the common shares voted. If you have any questions respecting the voting of common shares held through a broker or other intermediary, please contact that broker or other intermediary for assistance.

 

The Notice of Meeting, Circular, Proxy and VIF, as applicable, are being provided to both registered shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories - those who object to their identity being known to the issuers of securities which they own (“OBOs”) and those who do not object to their identity being made known to the issuers of the securities which they own (“NOBOs”). Subject to the provisions of National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), issuers may request and obtain a list of their NOBOs from intermediaries directly or via their transfer agent and may obtain and use the NOBO list for the distribution of proxy-related materials directly (not via Broadridge) to such NOBOs. If you are a Beneficial Shareholder and the Company or its agent has sent these materials directly to you, your name, address and information about your holdings of common shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding the common shares on your behalf.

 

 

The Company has distributed copies of the Notice of Meeting, Circular and VIF directly to NOBOs.

 

The Company’s OBOs can expect to be contacted by Broadridge or their brokers or their broker’s agents. The Company will assume the costs associated with the delivery of the Notice of Meeting, Circular and VIF, as set out above, to OBOs by intermediaries.

 

Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting common shares registered in the name of his broker, a Beneficial Shareholder may attend the Meeting as proxyholder for the registered shareholder and vote the common shares in that capacity. NI 54-101 allows a Beneficial Shareholder who is a NOBO to submit to the Company or an applicable intermediary any document in writing that requests that the NOBO or a nominee of the NOBO be appointed as proxyholder. If such a request is received, the Company or an intermediary, as applicable, must arrange, without expenses to the NOBO, to appoint such NOBO or its nominee as a proxyholder and to deposit that proxy within the time specified in this Circular, provided that the Company or the intermediary receives such written instructions from the NOBO at least one business day prior to the time by which proxies are to be submitted at the Meeting, with the result that such a written request must be received by 10:00 a.m. (Vancouver time) on the day which is at least three business days prior to the Meeting. A Beneficial Shareholder who wishes to attend the Meeting and to vote their common shares as proxyholder for the registered shareholder, should enter their own name in the blank space on the VIF or such other document in writing that requests that the NOBO or a nominee of the NOBO be appointed as proxyholder and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker.

 

All references to shareholders in the Notice of Meeting, Circular and the accompanying Proxy are to registered shareholders of the Company as set forth on the list of registered shareholders of the Company as maintained by the registrar and transfer agent of the Company, Computershare Investor Services Inc., unless specifically stated otherwise.

 

Financial Statements

 

The audited consolidated financial statements of the Company for the year ended December 31, 2017, together with the auditor’s report on those statements, will be presented to the shareholders at the Meeting.

 

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

 

As at the date of the accompanying Notice of Meeting, the Company’s authorized capital consists of an unlimited number of common shares without par value. All common shares in the capital of the Company carry the right to one vote. Shareholders registered as at May 18, 2018 are entitled to attend and vote at the Meeting. As of May 18, 2018 (being the record date for voting) there were 651,929,511 common shares outstanding. Shareholders who wish to be represented by proxy at the Meeting must, to entitle the person appointed by the Proxy to attend and vote, deliver their Proxies at the place and within the time set forth in the notes to the Proxy.

 

To the knowledge of the directors and executive officers of the Company, as of May 18, 2018, the following persons beneficially own, directly or indirectly, or exercise control or direction over, directly or indirectly, 10% or more of the issued and outstanding common shares of the Company:

 

Shareholder	Number of Shares	Percentage of Issued Capital
Greenstone Resources L.P. and its affiliate, Greenstone Co-Investment No. 1 (Coro) L.P.	414,085,522	63.5%

 

 

ELECTION OF DIRECTORS

 

The directors of the Company are elected annually and hold office until the next annual general meeting of the shareholders or until their successors are elected or appointed. Management proposes to nominate the persons listed below for election as directors of the Company to serve until their successors are elected or appointed. In the absence of instructions to the contrary, Proxies given pursuant to the solicitation by Management will be voted for the nominees listed in this Circular. Management does not contemplate that any of the nominees will be unable to serve as a director. The number of directors on the board of directors (the “Board”) of the Company was fixed at five and shareholders will be asked at the Meeting to pass an ordinary resolution to fix the number of directors for the ensuing year at six.

 

As part of its on-going review of corporate governance practices, on March 15, 2013 the Board adopted a policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes ‘‘withheld’’ than votes ‘‘for’’ (a “Majority Withhold Vote”) will tender his or her resignation to the Chairman of the Board or the Company’s Corporate Governance and Nominating Committee promptly following the shareholders’ meeting. The Corporate Governance and Nominating Committee will consider the offer of resignation and will make a recommendation to the Board on whether to accept it. The Corporate Governance and Nominating Committee and the Board will evaluate any such tendered offer of resignation, in accordance with their fiduciary duties to, and in furtherance of the best interests of, the Company and its shareholders. The Board may accept or reject the offer of resignation, or it may decide to pursue additional actions, including, without limitation, the following:

 

·

allow the director to remain on the Board and continue to serve but not be nominated for re-election to the Board at the next election of directors;

 

·

defer the acceptance of the resignation until the director vacancy created by the resignation can be filled by the Board with a replacement/successor director meeting all the necessary qualifications and criteria for Company directors and satisfying all other legal and regulatory requirements with respect to the composition of the Board (such as “independence” requirements established by securities regulators or securities exchange listing requirements);

 

·

defer the acceptance of the resignation if it is determined that the underlying cause of the Majority Withhold Vote can be cured by the director or otherwise within a specified period of time (such as if the Majority Withhold Vote was due to the relevant director receiving such vote serving on the board of directors of another entity, by resigning from such other board); or

 

·

defer the acceptance of the resignation for other reasons determined by the Board to be in the best interests of the Company in the exercise of its fiduciary duties and business judgment.

 

The Board’s decision will be disclosed in a news release within four business days after the decision.

 

 

The following table sets out the names, province or state and country of residence of the nominees for election as directors, the offices they hold within the Company, their principal occupations, business or employment within the five preceding years, the period or periods during which each director has served as a director of the Company, and the number of shares of the Company and its subsidiaries which each beneficially owns, directly or indirectly, or over which control or direction is exercised, as of the date of this Circular:

 

Name, province or state and country of residence and positions, current and former, if any, held in the Company	Principal occupation for last five years	Served as director since	Number of common shares beneficially owned, directly or indirectly, or controlled or directed at present(1)
LUIS A. TONDO Santiago, Chile President, Chief Executive Officer and Director	President and Chief Executive Officer of the Company, June, 2017 to present; Chief Operating Officer, Grupo Minera Las Cenizas, September 2015 June, 2017 ; Business and Development and Projects Manager, Grupo Minera Las Cenizas, January 2014 to August 2014	June 15, 2017	Nil
ALAN J. STEPHENS (4) West Sussex, United Kingdom Executive Director and Director Former President and Chief Executive Officer	Executive Director since June 2017. President and Chief Executive Officer of the Company January 2005 to June, 2017.	January 5, 2005	2,547,934(2)
GORDON J. FRETWELL(3)(4) British Columbia, Canada Director Former Chairman	Self-employed Solicitor of Gordon Fretwell Law Corporation since 1991 to present.	June 10, 2009	730,488
Colin Kinley(3)(4)(5) Kansas, United States Chairman and Director	Director and Senior Advisor, President and Chief Executive Officer of Kinley Exploration LLC from 2007 to present; President and Chief Executive Officer of Jet Mining Pty LLC from 2010 to present; Director of Excelsior Mining from 2010 to present; Director and Chief Operating Officer of Eco Atlantic Oil and Gas Ltd. from 2011 to present.	February 5, 2016	100,000
Michael Haworth(3)(5) London, United Kingdom Director	Joint Managing Partner with Greenstone Capital LLP	February 5, 2016.	Nil(6)
pETRA DECHER(3)(4)(5) Ontario, Canada Director	Chairperson of the Board, Red Pine Exploration Inc.; CFO of Honey Badger Exploration Inc.; CFO of Macdonald Mines Exploration Ltd.; Former Vice President, Finance and Assistant Secretary for Franco-Nevada Corporation from 2009 to 2016.	May 7, 2018	Nil

 

Notes:

 

(1)

The information as to common shares beneficially owned or controlled has been provided by the directors themselves.

 

(2)

Includes 66,667 common shares owned by Alan Stephens’ spouse.

 

(3)

Member or proposed member of the Company’s Audit Committee (the “Audit Committee”).

 

(4)

Member or proposed member of the Company’s Corporate Governance and Nominating Committee.

 

(5)

Member or proposed member of the Company’s Compensation Committee (the “Compensation Committee”).

 

(6)

This does not include those 414,085,522 shares of the Company owned by Greenstone Resources L.P. and its affiliate, Greenstone Co-Investment No. 1 (Coro) L.P., which are advised by Greenstone Capital LLP, of which Mr. Haworth is the managing partner.

 

No proposed director is being elected under any arrangement or understanding between the proposed director and any other person or company except the directors and executive officers of the Company acting solely in such capacity.

 

 

Corporate Cease Trade Orders or Bankruptcies

 

Other than disclosed below, no director or proposed director of the Company is, or within the ten years prior to the date of this Circular has been, a director or executive officer of any company, including the Company, that while that person was acting in that capacity:

 

(a)

was the subject of a cease trade order or similar order or an order that denied the company access to any exemption under securities legislation for a period of more than 30 consecutive days; or

 

(b)

was subject to an event that resulted, after the director ceased to be a director or executive officer of the company being the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or

 

(c)

within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

 

Individual Bankruptcies

 

No director or proposed director of the Company has, within the ten years prior to the date of this Circular, become bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

 

EXECUTIVE COMPENSATION

 

For the purposes of this Circular:

 

“CEO” of the Company means each individual who served as Chief Executive Officer of the Company or acted in a similar capacity for any part of the most recently completed financial year.

 

“CFO” of the Company means each individual who served as Chief Financial Officer of the Company or acted in similar capacity for any part of the most recently completed financial year.

 

“NEO” or “named executive officer” means each of the following individuals:

 

(a)

a CEO;

 

(b)

a CFO;

 

(c)

each of the three most highly compensated executive officers of the Company, including any of its subsidiaries, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000, as determined in accordance with subsection 1.3(6) of Form 51-102F6 - Statement of Executive Compensation, for that financial year; and

 

(d)

each individual who would be an NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the Company or its subsidiaries, nor acting in a similar capacity, at the end of that financial year.

 

 

During the financial year ended December 31, 2017, the Company had five NEOs, being: Luis A. Tondo, President and CEO; Alan J. Stephens, Executive Director and former President and former CEO; Damian Towns, Corporate Secretary, and former CFO; Marcelo Cortes, Vice President of Project Development; and Sergio Rivera, Vice President of Exploration and Naomi Nemeth, former Vice President of Investor Relations.

 

Compensation discussion and analysis

 

Compensation Discussion and Analysis

 

The Compensation Committee directs the design and provides oversight of the Company’s executive compensation program and has overall responsibility for recommending levels of executive compensation that are competitive in order to attract, motivate and retain highly skilled and experienced executive officers. The Compensation Committee does not have a formal compensation program with set benchmarks, however, the Compensation Committee does have an informal program which seeks to reward an executive officer’s current and future expected performance and the achievements of corporate milestones and align the interests of executive officers with the interest of the Company’s shareholders.

 

The Compensation Committee has not formally considered the risks associated with the Company’s compensation policies and practices. The Company’s compensation policies and practices give greater weight toward long-term incentives to mitigate the risk of encouraging short term goals at the expense of long-term sustainability. The discretionary nature of annual bonus awards and option grants are significant elements of the Company’s compensation plans and provide the Board and the Compensation Committee with the ability to reward historical performance and behaviour that the Board and the Compensation Committee consider to be aligned with the Company’s best interests.

 

The Company has attempted to minimize those compensation practices and policies that expose the Company to inappropriate or excessive risks.

 

The Company has not established a policy on whether or not a NEO or director is permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director.

 

The compensation awarded to, earned by, paid to or payable to each of the NEOs for the most recently completed financial year is set out under the heading, “Compensation Discussion and Analysis – Summary Compensation Table”.

 

Compensation Review Process / Compensation Governance

 

The Compensation Committee reviews on an annual basis the cash compensation, performance and overall compensation package of each executive officer, including the NEOs. It then submits to the Board recommendations with respect to basic salary, bonus and participation in share compensation arrangements for each executive officer.

 

The Compensation Committee ensures that the Company has an executive compensation plan that is fair, motivational and competitive, so that it will attract, retain and incentivize executive officers of a quality and nature that will enhance the growth and development of the Company.

 

 

In establishing levels of remuneration, stock option and bonus grants, the Compensation Committee is guided by the following principles:

 

	·	compensation is determined on an individual basis by the need to attract and retain talented, qualified and effective executives;
	·	total compensation is set with reference to the market for similar positions in comparable companies and with reference to the location of employment; and
	·	the current market and economic environment.

 

For the year ended December 31, 2017, the Compensation Committee was comprised of three independent directors; Mr. Webster, Mr. Haworth (Chair) and Mr. Kinley. Following the Meeting, the Compensation Committee will be comprised of Mr. Haworth (Chair), Mr. Kinley and Ms. Decher, each of whom is independent. The Board is satisfied that the composition of the Compensation Committee ensures an objective process for determining compensation. All members of the Compensation Committee have had significant experience in the mining sector, including the junior exploration sector and on other boards of directors. The responsibilities, powers and operation of the Compensation Committee are included in the Compensation Committee Mandate which is included in Appendix A.

 

Objectives

 

The objectives of the Company’s NEO compensation program are to: (a) attract, motivate and retain high-calibre NEO’s; (b) align the interests of the NEOs with those of the Company’s shareholders; and (c) incentivize the NEOs to continuously improve operations and execute on corporate strategy. The NEO compensation program is, therefore, designed to reward the NEOs for increasing shareholder value, and improving operations and executing on corporate strategy.

 

Assessment of Individual Performance

 

Individual performance in connection with the achievement of corporate milestones and objectives is reviewed by the Compensation Committee for all executive officers. While awards are generally tied to performance against quantitative objectives, consideration is also given to an individual’s qualitative contribution to the Company. For example, the Compensation Committee will evaluate the individual’s leadership skills, commitment to the Company’s shareholders, innovation and teamwork.

 

As the Company has a small team of executive officers, a high degree of commitment and performance is required from each individual to achieve corporate milestones and objectives. This high degree of commitment and performance was demonstrated in 2017 by each executive officer with the following accomplishments:

 

·

each executive officer?s consistent and focused leadership, evidenced during challenging times;

 

·

each executive officer’s leadership in strengthening the Company’s ability to manage risk; and

 

·

each executive officer’s role in the enhancement of the Company’s profile in the public marketplace.

 

 

Elements of Executive Compensation

 

There are three main elements of direct compensation, namely base salary, contracted bonuses and equity participation through the stock option plan, which was adopted by the Company on July 10, 2007 and subsequently amended on June 29, 2010 and February 18, 2011 (the “Stock Option Plan”). The Stock Option Plan was last approved by the Company’s shareholders at the annual general and special meeting held July 16, 2015 and shareholders are being asked at the Meeting to approve all unallocated entitlements under the Stock Option Plan, as described under the heading, "Particulars of Matters to be Acted Upon - Approval of Unallocated Entitlements under the Stock Option Plan". The Stock Option Plan is further discussed under the heading, “Compensation Discussion and Analysis - Stock Option Plan”.

 

The Compensation Committee relies on the experience of its members as officers and directors of other companies in similar lines of business as the Company in assessing compensation levels. These other companies are identified under the heading “Corporate Governance Disclosure – Directorships” of this Circular. The purpose of this process is to:

 

·

understand the competitiveness of current pay levels for each executive position relative to companies with similar business characteristics;

 

·

identify and understand any gaps that may exist between actual compensation levels and market compensation levels; and

 

·

establish as a basis for developing salary adjustments and short-term and long-term incentive awards for the Compensation Committee's approval.

 

To date, no specific formulas have been developed to assign a specific weighting to each of these components. Instead, the Board considers the Company’s performance and assigns compensation based on this assessment and the recommendations of the Compensation Committee.

 

Base Salary

 

In determining the base salary of an executive officer, the Compensation Committee places equal weight on the following factors;

 

·

current economic and market environment; and

 

·

development stage and opportunities for the Company.

 

The Company has employment agreements with each of its NEOs. The agreements specify the terms and conditions of employment, the duties and responsibilities of the executive during this term, the compensation and benefits to be provided by the Company in exchange for the NEO’s services, the compensation and benefits to be provided by the Company in the event of a termination of employment not preceded by a change of control of the Company and the compensation and benefits to be provided by the Company in the event of a change of control of the Company.

 

The compensation paid to the NEOs other than Mr. Tondo, Mr. Rivera and Mr. Cortes is denominated in Canadian dollars. Mr. Tondo, Mr. Rivera and Mr. Cortes are paid in Chilean Pesos. For the purposes of calculating the Canadian dollar equivalent of the Chilean Peso and the US dollar, the Bank of Canada noon exchange rate on December 31, 2017 was used.

 

Employment Agreement – Mr. Tondo

 

Mr. Tondo currently receives a base salary denominated in US dollars and paid in Chilean Pesos in the amount of US$300,000 per year (the “Base Salary”), pursuant to employment contracts dated June 12, 2017 entered into by the Company and the Company’s 100% owned Chilean subsidiary, Minera Cielo Azul Ltda, pursuant to which, Mr. Tondo provides his services as the President and CEO of the Company. In addition, Mr. Tondo is entitled to a discretionary performance bonus of up to 50% of his Base Salary. Mr. Tondo also received stock options for the purchase of up to 5,000,000 shares of the Company, as more particularly disclosed in the section of this Circular entitled “Incentive Plan Awards”.

 

 

Employment Agreement – Mr. Stephens

 

Mr. Stephens currently receives an amount of $18,333 per month pursuant to an employment agreement dated for reference January 1, 2012, as amended by an agreement dated effective April 1, 2012 entered into by the Company and Mr. Stephens. Effective June 1, 2013, Mr. Stephens temporarily reduced his salary from $18,333 to $8,333 per month in order to conserve the Company’s treasury and on January 1, 2016 Mr. Stephens’ salary was reinstated at $18,333.

 

Employment Agreement – Mr. Towns

 

Mr. Towns received an amount of $16,667 per month pursuant to an employment agreement dated for reference January 1, 2012, as amended by an agreement dated effective July 1, 2015 entered into by the Company and Mr. Towns (these agreements are collectively referred to as the “Towns’ Employment Agreement”), pursuant to which Mr. Towns provided his services as the CFO and Corporate Secretary of the Company. Mr. Towns ceased to be the CFO of the Company effective May 1, 2018 and Mr. Towns will cease being the Corporate Secretary of the Company effective May 31, 2018.

 

Employment Agreement – Mr. Cortes

 

In September 2006, the Company entered into an employment agreement with Mr. Cortes pursuant to which Mr. Cortes is employed for a gross salary denominated in Chilean Pesos until such time as his employment agreement is terminated by the Company or he resigns. Effective January 1, 2014, Mr. Cortes’ employment agreement was terminated and he entered into a consulting contract for CLP 10,414,190 (~US$19,750) a month with quarterly consumer price index adjustments. As of December 31, 2017 his consulting agreement is the equivalent to US$216,469.

 

Employment Agreement – Mr. Rivera

 

On November 1, 2011, the Company entered into an employment agreement with Mr. Rivera whereby Mr. Rivera is employed for a gross salary denominated in Chilean Pesos until such time as his employment agreement is terminated by the Company or he resigns. As is common in Chile, Mr. Rivera’s contract is indexed for cost of living adjustments, his salary as of December 31, 2017 is equivalent to US$263,470. The Company also agreed to the following bonus plan for Mr. Rivera:

 

(a)

a bonus of US$285,000 for each project acquired by the Company or its subsidiaries after January 1, 2012 that reaches the stage of an NI 43-101 resource meeting the Company’s criteria. Three months’ of this bonus may be advanced once the Company considers that a significant discovery has been made;

 

(b)

an additional bonus of US$285,000 for each project acquired by the Company or its subsidiaries after January 1, 2012 that reaches the feasibility stage or that is sold to a third party for more than $10 million;

 

(c)

a bonus of US$142,000 for each project acquired by the Company or its subsidiaries before January 1, 2012 that reaches the stage of an NI 43-101 resource meeting the Company’s criteria; and

 

(d)

an additional bonus of US$142,000 for each project acquired by the Company or its subsidiaries before January1, 2012 that reaches the feasibility stage or that is sold to a third party for more than $10 million.

 

 

 

Employment Agreement – Ms. Nemeth

 

Ms. Nemeth received an amount of $13,750 per month pursuant to an employment agreement dated for reference January 9, 2017. The employment agreement terminated March 28, 2018.

 

Stock Option Plan

 

In the Company’s view, encouraging its executive officers and employees to become shareholders of the Company is the best way to align their interests with those of the Company’s shareholders. Equity participation is accomplished through the Stock Option Plan.

 

The Compensation Committee is mandated to review and make recommendations to the Board regarding the remuneration of executive officers; the granting of stock options to directors, executive officers and key employees and consultants of the Company; and the remuneration and compensation policies of the Company, including the Stock Option Plan. The members of the Compensation Committee are identified under the heading, “Election of Directors”.

 

The purpose of the Stock Option Plan is to advance the interests of the Company and its shareholders by encouraging these individuals to acquire shares, thereby increasing their proprietary interest in the Company and encouraging them to remain associated with the Company. Grants under the Stock Option Plan are intended to provide long-term awards linked directly to the market value performance of the Company’s shares.

 

Individual grants are determined by an assessment of the individual’s current and expected future performance, level of responsibilities, the importance of his or her position, his or her contribution to the Company and previous option grants and exercise prices, including:

 

(a)

the remuneration paid to the employee or consultant as at the award date in relation to the total remuneration payable by the Company to all of its employees and consultants as at the award date;

 

(b)

the length of time that the employee or consultant has been employed or engaged by the Company; and

 

(c)

the quality of work performed by the employee or consultant.

 

Eligible Participants

 

The Stock Option Plan provides that options may be granted to directors, officers, employees or consultants of the Company or its affiliates. The Stock Option Plan does not limit insider participation and does not provide for a maximum number of shares which may be issued to an individual pursuant to the Stock Option Plan and any other share compensation arrangement.

 

 

Shares Available for Issuance

 

The Stock Option Plan provides for the issuance of stock options to acquire at any time up to a maximum of 10% of the Company’s issued and outstanding common shares. The Stock Option Plan is considered a “rolling” stock option plan as the number of common shares available for issue increases with the number of the Company’s issued and outstanding common shares. The Stock Option Plan is also considered an “evergreen” stock option plan as when a stock option expires or otherwise terminates for any reason without having been exercised in full, the number of common shares reserved for issuance under that expired or terminated option again become available for the purposes of the Stock Option Plan.

 

Remaining Securities Available for Grant

 

As of December 31, 2017, a total of 33,450,000 options were outstanding under the Stock Option Plan, and the common shares issuable upon exercise of such options represent in the aggregate 5.13% of the issued and outstanding common shares of the Company as of December 31, 2017. As of December 31, 2017, there were 31,742,951 options available to be granted, or 4.87% of the issued and outstanding shares of the Company.

 

Annual Burn Rate

 

The annual burn rate of the Stock Option Plan for 2017 was 1.0%, for 2016 was 7.7%, and for 2015 was 0.3%. The annual burn rate is calculated by dividing the number of options granted during the applicable fiscal year by the weighted average number of common shares outstanding for the applicable fiscal year.

 

Expiration or Termination

 

A stock option held by an employee or consultant will expire immediately in the event an employee or consultant ceases to be an employee or consultant, as applicable, as a result of termination for cause or as the result of an order of the British Columbia Securities Commission or the Exchange. In the event the employee or consultant ceases to be an employee or consultant as a result of termination without cause or resigns, a stock option will expire 60 days following the date the person ceases to be an employee or consultant. In addition, a stock option will expire 90 days after a director ceases to be a director unless the director continues to be an employee of the Company in which case the expiry date will remain unchanged. If a director ceases to be a director of the Company as the result of: (a) ceasing to meet the qualifications contained in the Business Corporations Act (British Columbia); (b) a special resolution having been passed by the shareholders of the Company; or (c) an order of the British Columbia Securities Commission or the Exchange, the expiry date shall be the date the director ceases to be a director of the Company. In the event of the death of an option holder, the options shall expire on the first anniversary of the option holder’s death.

 

Vesting

 

All stock options granted pursuant to the Stock Option Plan are subject to vesting requirements as may be prescribed by the Exchange or as may be imposed by the Board.

 

Exercise Price

 

The Board has sole discretion to set the exercise price of a stock option; however the exercise price may not be less than the closing price of the Company’s common shares on the day immediately preceding the date of the stock option grant.

 

Assignability

 

The options may not be assigned or transferred provided that a personal representative may exercise an option on behalf of an option holder.

 

 

Term

 

The term of any option shall be the date so fixed by the Board at the time the particular option is awarded, provided that such date shall not be later than the fifth anniversary of the award date of such option.

 

Trading Black Outs

 

Under the Company’s insider trading policies, directors, officers and specified employees are restricted from trading in securities of the Company during periodic trading blackouts imposed by the Company. The Stock Option Plan addresses the situation where an option holder is unable to exercise an option that would otherwise expire during a trading blackout imposed by the Company by providing that the option will continue to be exercisable until the tenth business day following the expiry of the trading blackout.

 

Amendment Procedures

 

The Company may amend the Stock Option Plan and the terms of any stock option without shareholder approval, unless shareholder approval is otherwise required by applicable regulatory authorities. Any substantive amendments to the Stock Option Plan shall be subject to the Company first obtaining the approvals, if required, of the shareholders or disinterested shareholders, as the case may be, of the Company at a general meeting where required by the rules and policies of the Exchange.

 

Bonuses

 

The Stock Option Plan includes a provision which would allow the Board to grant stock options to any director or employee, together with a right to be paid, in cash, an amount equal to the exercise price of such stock options. The number of stock options which may be granted under this provision is limited to 1,000,000 within a 12 month period.

 

Stock Appreciation Rights

 

The Stock Option Plan grants the Board the discretion to grant an option holder a corresponding stock appreciation right. This right allows an option holder to surrender a stock option in exchange for that number of common shares having an aggregate value equal to the excess value of one common share over the purchase price per common share specified in such option, multiplied by the number of common shares called for by the option (the value of the common shares shall be based on the weighted average trading price for the five trading days immediately preceding the exercise).

 

Impact of a Change of Control

 

If a Change of Control (as defined in the Stock Option Plan) occurs, all shares subject to each outstanding option will become vested, whereupon all options may be exercised in whole or in part by the option holders.

 

Performance Graph

 

The common shares of the Company were listed on the Exchange on July 10, 2007. The following graph compares the total cumulative shareholder return for $100 invested in common shares of the Company from December 31, 2012 and for six months increments thereafter until the end of the Company’s last completed financial year with the cumulative total return of the Standard and Poor’s TSX Composite Stock Index (“S&P/TSX Index”) over the same periods.

 

 

Comparison of Six Month Cumulative Total Shareholder Return on the Common Shares

of the Company and the S&P/TSX Index

 

 

The trend on the above graph reflects the trend in the Company’s compensation to executive officers reported in this Circular. Since 2008 the executive officers have not received discretionary cash bonuses and are instead granted incentive stock options in order to align their interests with the Company’s long-term goals.

 

Summary Compensation Table

 

The following table is a summary of compensation paid to the NEOs for the three most recently completed financial years.

 

					Non-equity incentive plan compensation ($)
Name and Principal Position	Year	Salary(1) ($Cdn)	Share-based awards ($)	Option- based awards ($)(2)	Annual incentive plans	Long Term Incentive Plan	Pension value ($)	All Other Compen-sation ($)	Total compensation ($)
Luis A. Tondo(3) President and CEO	2017	$214,155	N/A	$433,878	N/A	N/A	N/A	Nil	$648,033
Alan J. Stephens(4) Executive Director Former President and CEO	2017	$220,000	N/A	N/A	N/A	N/A	N/A	Nil	$220,000
	2016	$220,000	N/A	$668,936	N/A	N/A	N/A	Nil	$888,936
	2015	$99,998	N/A	N/A	N/A	N/A	N/A	Nil	$99,998
Damian Towns(5) CFO and Corporate Secretary	2017	$200,900	N/A	N/A	N/A	N/A	N/A	Nil	$200,900
	2016	$188,400	N/A	$541,501	N/A	N/A	N/A	Nil	$729,901
	2015	$162,500	N/A	N/A	N/A	N/A	N/A	Nil	$162,500
Marcelo Cortes Vice President of Project Development	2017	$262,918	N/A	N/A	N/A	N/A	N/A	Nil	$262,918
	2016	$249,601	N/A	$414,067	N/A	N/A	N/A	Nil	$663,668
	2015	$251,000	N/A	Nil	N/A	N/A	N/A	Nil	$251,000
Sergio Rivera Vice President of Exploration	2017	$325,052	N/A	N/A	N/A	N/A	N/A	$379,217	$704,268
	2016	$303,067	N/A	$23,822	N/A	N/A	N/A	$183,421	$510,310
	2015	$297,004	N/A	Nil	N/A	N/A	N/A	Nil	$297,004
Naomi Nemeth(6) Vice President of Investor Relations	2017	$162,213.33	N/A	111,551	N/A	N/A	N/A	Nil	$273,764

 

Notes:

 

(1)

Includes consulting fees paid to the NEOs.

 

(2)

Dollar amount based on the grant date fair value of the award for the financial year covered in the table.

 

(3)

Mr. Tondo was appointed President and CEO of the Company on June 7, 2017.

 

(4)

Mr. Stephens resigned as President and CEO of the Company on June 7, 2017 and was appointed executive director of the Company on June 7, 2017.

 

(5)

Mr. Towns ceased to be the CFO on April 30, 2018 and will cease to be the Corporate Secretary on May 31, 2018.

 

(6)

Ms. Nemeth ceased to be VP of Investor Relations effective March 28, 2018

 

In determining the fair value of the options granted, the Company followed the principles established under International Financial Reporting Standards which requires the determination of a fair value of the options granted and use of a risk-free statement rate. The audited financial statements state: Options were priced based on the Black-Scholes option pricing model using the following weighted average assumptions to estimate the fair value of options granted: The key assumptions are noted below:

 

	Risk free life	0.76% to 1.05%
	Expected life	2.5 to 3.5 years
	Expected volatility	122%
	Expected dividend	0%

 

Option-Based Awards-Fair Value Calculation

 

The use of option pricing models requires the input of highly objective assumptions including the expected volatility. Changes in the assumptions can materially affect the fair value estimate, and therefore, the models do not necessarily provide a reliable measure of the fair value of the Company’s stock options.

 

 

INCENTIVE PLAN AWARDS

 

Outstanding Share-Based Awards and Option-Based Awards

 

The following table sets forth the outstanding option-based awards held by the Company’s NEOs as of December 31, 2017 and includes awards granted before the most recently completed financial year:

 

	Option-based Awards				Share-based Awards
Name	Number of Securities underlying unexercised options (#)	Options exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($)(1)	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)
Luis A. Tondo President and CEO	5,000,000(2)	$0.11	12-June-22	$50,000(2)	N/A	N/A
Alan J. Stephens Executive Director, Former President and CEO	700,000	$0.10	3-Jan-19	$14,000	N/A	N/A
	2,000,000	$0.04	16-Feb-21	$160,000	N/A	N/A
	5,000,000	$0.20	11-Aug-21	Nil	N/A	N/A
Damian Towns CFO and Corporate Secretary	600,000	$0.10	3-Jan-19	$12,000	N/A	N/A
	2,000,000	$0.04	16-Feb-21	$160,000	N/A	N/A
	4,000,000	$0.20	11-Aug-21	Nil	N/A	N/A
Marcelo Cortes Vice President of Project Development	400,000	$0.10	3-Jan-19	$8,000	N/A	N/A
	2,000,000	$0.04	16-Feb-21	$160,000	N/A	N/A
	3,000,000	$0.20	11-Aug-21	Nil	N/A	N/A
Sergio Rivera Vice President of Exploration	400,000	$0.10	3-Jan-19	$8,000	NA	NA
	1,500,000	$0.04	16-Feb-21	$120,000	N/A	N/A
Naomi Nemeth Vice President of Investor Relations	1,000,000(3)	$0.16	09-Jan-17	Nil	N/A	N/A

 

 

Notes:

 

(1)

The closing price of the Company’s common shares at December 29, 2017, being the last trading day in the Company`s December 31, 2017 financial year end, was $0.12. No value has been given to unexercised options that were out-of-the-money on December 29, 2017.

 

(2)

These options are subject to vesting restrictions, so that 1,666,667 vested on June 12, 2017, 1,666,667 will vest on June 12, 2018 and the remainder will vest on June 12, 2019.

 

(3)

These options are subject to vesting restrictions, so that 333,334 vested on January 9, 2017, 333,334 vested on January 9, 2018 and 333,334 will vest on January 9, 2019.

 

 

Value Vested or Earned for Incentive Plan Awards During the Most Recently Completed Financial Year

 

The following table sets forth details of the value vested or earned for all incentive plan awards during the most recently completed financial year by each NEO.

 

Name	Option-base awards – Value vested during the year(1) ($)	Share-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Luis A. Tondo President and CEO	N/A	N/A	N/A
Alan J. Stephens Executive Director and former President and CFO	N/A	N/A	N/A
Damian Towns CFO and Corporate Secretary	N/A	N/A	N/A
Marcelo Cortes Vice President of Project Development	N/A	N/A	N/A
Sergio Rivera Vice President of Exploration	N/A	N/A	N/A
Naomi Nemeth Vice President of Investor Relations	N/A	N/A	N/A

 

Notes:

 

(1)

The amounts above disclose the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date by determining the difference between the market price of the shares and the exercise price of the options.

 

PENSION PLAN BENEFITS

 

The Company does not have a pension plan that provides for payments or benefits to the NEOs at, following, or in connection with retirement.

 

TERMINATION AND CHANGE OF CONTROL BENEFITS

 

As at December 31, 2017, the Company had contractual arrangements with each of its NEOs, each of which has a termination and a change of control benefits clause. The terms of each of the NEO’s employment agreements are contained in this Circular under the heading “Compensation Discussion and Analysis - Base Salary”.

 

Mr. Tondo, President and CEO In accordance with his employment agreement with the Company, the Company may terminate Mr. Tondo’s services at any time for cause and all compensation and benefits shall cease accruing on the termination date. The Company may terminate his employment at any time without cause following six months’ written notice, or payment of US$150,000 in lieu of such notice. In the event the employment agreement is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Mr. Tondo for Good Reason (as defined in the employment agreement) within six months of a Control Change, Mr. Tondo shall be entitled to US$750,000 and all rights shall become immediately exercisable for a period of 60 business days. If Mr. Tondo terminates the agreement for Good Reason at any other time, Mr. Tondo shall be entitled to US$150,000.

 

Mr. Alan Stephens, Executive Director and Former President and CEO: In accordance with his employment agreement with the Company, the Company may terminate Mr. Stephen’s services at any time for cause and all compensation and benefits shall cease accruing on the termination date. The Company may terminate his employment at any time without cause following six months’ written notice, or payment of six months’ salary in lieu of such notice. In the event the employment agreement is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Mr. Stephens for Good Reason (as defined in the employment agreement) within six months of a Control Change, Mr. Stephens shall be entitled to 2.5 times his annual compensation and all rights shall become immediately exercisable for a period of 60 business days. If Mr. Stephens terminates the agreement for Good Reason at any other time, Mr. Stephens shall be entitled to six months’ compensation.

 

 

Mr. Towns, CFO and Corporate Secretary: In accordance with his employment agreement, the Company may terminate the employment of Mr. Towns for cause without notice and all compensation and benefits shall cease accruing on the termination date. The Company may terminate his employment at any time without cause following six months’ written notice, or payment of six months’ salary in lieu of such notice. In the event his employment is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Mr. Towns for Good Reason (as defined in the employment agreement) within six months of a Control Change, Mr. Towns shall be entitled to 2.5 times his annual compensation and all rights shall become immediately exercisable for a period of 60 business days. If Mr. Towns terminates his employment for Good Reason at any other time, he shall be entitled to six months’ compensation.

 

Ms. Naomi Nemeth, Vice-President, Investor Relations. In accordance with her employment agreement, the Company may terminate the employment of Ms. Nemeth for cause without notice and all compensation and benefits shall cease accruing on the termination date. The Company may terminate her employment at any time without cause following two months’ written notice, or payment of two months’ salary in lieu of such notice. In the event her employment is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Ms. Nemeth for Good Reason (as defined in the employment agreement) within six months of a Control Change, Ms. Nemeth shall be entitled to six months’ salary compensation and all rights shall become immediately exercisable for a period of 60 business days. If Ms. Nemeth terminates her employment for Good Reason at any other time, she shall be entitled to two months’ compensation.

 

Mr. Cortes, Vice President of Project Development: In accordance with his employment agreement, the Company may terminate employment of Mr. Cortes with cause following five days’ written notice and all compensation and benefits shall cease accruing on the termination date. The Company may terminate the employment of Mr. Cortes without cause following six months’ written notice or the payment of US$95,000 (less any other payments due or payable to Mr. Cortes under other contractual arrangements or legal requirements in or outside of Canada). In the event his employment is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Mr. Cortes for Good Reason (as defined in the employment agreement) within six months of a Control Change, Mr. Cortes shall be entitled to a US$477,000 payment.

 

Mr. Rivera, Vice President of Exploration: In accordance with his employment agreement, the Company may terminate the employment of Mr. Rivera with cause following five days’ written notice and all compensation and benefits shall cease accruing on the termination date. The Company may terminate the employment of Mr. Rivera without cause following six months’ written notice or the payment of US$142,500 (less any other payments due or payable to Mr. Rivera under other contractual arrangements or legal requirements in or outside of Canada). In the event his employment is terminated by the Company without cause within six months of a Control Change (as defined in the employment agreement) or by Mr. Rivera for Good Reason (as defined in the employment agreement) within six months of a Control Change, Mr. Rivera shall be entitled to a US$712,500 payment.

 

The following table sets out the maximum amount the Company could be obligated to pay in the event that a NEO was terminated without cause following a Control Change as of December 31, 2017:

 

Name	Termination Payment
Luis A. Tondo President and CEO	US$750,000
Alan J. Stephens Executive Director and Former President and CEO	$550,000
Damian Towns CFO and Corporate Secretary	$500,000
Marcelo Cortes Vice President of Project Development	US$477,000
Sergio Rivera Vice President of Exploration	US$712,500
Naomi Nemeth Vice President of Investor Relations	$82,500

 

The Company would also be obligated to continue the NEO’s option entitlements for the period set out in the Stock Option Plan in the event that a NEO was terminated without cause following a Control Change.

 

The following table sets out the maximum amount the Company could be obligated to pay in the event that a NEO was terminated without cause as of December 31, 2017 assuming such event was not in connection with a Control Change.

 

Name	Termination Payment
Luis A. Tondo President and CEO	US$150,000
Alan J. Stephens Executive Director and Former President and CEO	$110,000
Damian Towns CFO and Corporate Secretary	$100,000
Marcelo Cortes Vice President of Project Development	US$95,000
Sergio Rivera Vice President of Exploration	US$142,500
Naomi Nemeth Vice President of Investor Relations	$27,500

The Company would also be obligated to continue the NEO’s option entitlements for the period set out in the Stock Option Plan in the event that a NEO was terminated without cause assuming such event was not in connection with a Control Change.

 

DIRECTOR COMPENSATION

 

Except as noted below, no other compensation was paid to directors in their capacity as directors of the Company or its subsidiaries, in their capacity as members of a committee of the Board or of a committee of the board of directors of its subsidiaries, or as consultants or experts, during the Company’s most recently completed financial year.

 

The following table sets forth the details of compensation provided to the directors, other than the NEOs, during the Company’s most recently completed financial year. The value disclosed under option-based awards for directors represents the deemed dollar value of the options granted.

 

Name	Fees Earned ($)	Share-based Awards ($)	Option-based Awards ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation ($)	Total ($)
Roderick J. Webster	$25,000	N/A	N/A	N/A	N/A	N/A	$25,000
Gordon J. Fretwell	$25,000	N/A	N/A	N/A	N/A	N/A	$25,000
Colin Kinley	$25,000	N/A	N/A	N/A	N/A	N/A	$25,000
Michael Haworth	$25,000	N/A	N/A	N/A	N/A	N/A	$25,000

 

 

Membership on each committee of the Board is disclosed herein under the heading, “Election of Directors”.

 

All directors are reimbursed for actual expenses reasonably incurred in connection with the performance of their duties as directors.

 

Pursuant to the Stock Option Plan, options to purchase common shares of the Company have been granted to the directors at exercise prices at least equal or greater than the share price of common shares at the date of granting such options during the year-ended December 31, 2017.

 

INCENTIVE PLAN AWARDS

 

The following table sets forth the outstanding options-based awards held by the directors of the Company as of December 31, 2017 and includes awards granted before the most recently completed financial year:

 

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($)(1)	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)
Roderick J. Webster	250,000	$0.10	16-Feb-21	$5,000	N/A	N/A
	500,000	$0.04	16-Feb-21	$40,000	N/A	N/A
	500,000	$0.20	11-Aug-21	Nil	N/A	N/A
Gordon J. Fretwell	250,000	$0.10	16-Feb-21	$5,000	N/A	N/A
	500,000	$0.04	16-Feb-21	$40,000	N/A	N/A
	500,000	$0.20	11-Aug-21	Nil	N/A	N/A
Colin Kinley	500,000	$0.04	16-Feb-21	$40,000	N/A	N/A
	500,000	$0.20	11-Aug-21	Nil	N/A	N/A
Michael Haworth(2)	500,000	$0.04	16-Feb-21	$40,000	N/A	N/A
	500,000	$0.20	11-Aug-21	Nil	N/A	N/A

 

Notes:

 

(1)

The closing price of the Company’s common shares at December 29, 2017, being the last trading day in the Company`s December 31, 2017 financial year end, was $0.12. No value has been given to unexercised options that were out-of-the-money on December 29, 2017.

 

(2)

These options were granted to Greenstone Management Limited, on behalf of Michael Haworth who is a principal of Greenstone Management Limited.

 

 

Incentive Plan Awards – Value Vested or Earned for Incentive Plan Awards During the Most Recently Completed Financial Year

 

The following table sets forth details of the value vested or earned for all incentive plan awards during the most recently completed fiscal year by each director:

 

Name	Option-based awards – Value vested during the year ($)(1)	Share-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Roderick J. Webster	Nil	N/A	N/A
Gordon J. Fretwell	Nil	N/A	N/A
Colin Kinley	Nil	N/A	N/A
Michael Haworth	Nil	N/A	N/A

 

Notes:

 

(1)

The amounts above disclose the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date by determining the difference between the market price of the shares and the exercise price of the options.

 

EQUITY COMPENSATION PLAN

 

The following table sets out those securities of the Company which have been authorized for issuance under equity company compensation plans as at December 31, 2017:

 

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by the securityholders	33,450,000	$0.13	31,742,951
Equity compensation plans not approved by the securityholders	Nil	Nil	Nil
Total	33,450,000	$0.13	31,742,951

 

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

 

None of the current or former directors, executive officers or employees of the Company or any of its subsidiaries, the proposed nominees for election to the Board, nor any associate of such persons is as at the date hereof, or has been indebted to the Company, since the beginning of the most recently completed financial year of the Company. In addition, no indebtedness of these individuals to another entity has been subject of a guarantee, support agreement, letter or credit or similar arrangement or understanding of the Company or any of its subsidiaries.

 

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

 

Except as otherwise disclosed in this Circular, no director or executive officer of the Company, nor any associate or affiliate of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, since the beginning of the Company’s last financial year in matters to be acted upon at the Meeting, other than the election of directors or the appointment of auditors. Shareholders are being asked to approve a transaction between the Company, the Company’s wholly-owned subsidiary, Minera Coro Chile Limitado and Greenstone II L.P., an affiliate of the Company’s majority shareholder, Greenstone Resources L.P., which is more particularly described in the section of this Circular entitled “Particulars of Matters to Be Acted Upon - Approval of Conversion Features of Loan with Greenstone Resources II L.P.”.

 

 

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

 

During the last completed financial year, a total of 143,803,998 common shares of the Company were purchased by Greenstone Resources L.P. or its affiliates (collectively, "Greenstone"), the Company’s majority shareholder, pursuant to private placement transactions. Greenstone currently owns a total of 414,085,522 common shares of the Company, representing approximately 63.5% of the Company’s issued and outstanding shares. In addition, in December 2017, the Company entered into a $3,000,000 credit facility with Greenstone (“December 2017 Loan Agreement”). The funds advanced by Greenstone pursuant to the December 2017 Loan Agreement must be repaid within 11 months from the date on which the funds were advanced and bear interest at 12% per annum until March 31, 2018 and 15% thereafter. Greenstone advanced a further $5,000,000 to the Company pursuant to a second credit facility on February 27, 2018 (“February 2018 Loan Agreement”). The funds advanced by Greenstone pursuant to the February 2018 Loan Agreement must be repaid within 11 months from the date on which the funds were advanced and bear interest at 12% per annum until June 30, 2018 and 15% thereafter. On the respective dates of repayment of the loans granted pursuant to the December 2017 Loan Agreement and the February 2018 Loan Agreement, Greenstone is entitled to received arrangement fees from the Company equal to 3% of the respective principal amounts advanced by Greenstone pursuant to such loans.

 

Except for the above and as otherwise disclosed in this Circular, none of the persons who were directors or executive officers of the Company or a subsidiary of the Company at any time during the Company’s last financial year, the proposed nominees for election to the Board, any person or company who beneficially owns, directly or indirectly, or who exercises control or direction over directly or indirectly (or a combination of both) more than 10% of the issued and outstanding common shares of the Company, nor any associate or affiliate of those persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any transaction or proposed transaction which has materially affected or would materially affect the Company or its subsidiaries.

 

MANAGEMENT CONTRACTS

 

No management functions of the Company or its subsidiaries are to any substantial degree performed by a person or company other than the directors or executive officers of the Company or its subsidiaries.

 

APPOINTMENT OF AUDITORS

 

The Management of the Company intends to nominate PricewaterhouseCoopers LLP, Chartered Accountants, for re-appointment as auditors of the Company. Proxies given pursuant to the solicitation by Management will, on any poll, be voted as directed and, if there is no direction, for the re-appointment of PricewaterhouseCoopers LLP, Chartered Accountants, as auditors of the Company to hold office until the close of the next annual general meeting of the Company, at a remuneration to be fixed by the directors. PricewaterhouseCoopers LLP, Chartered Accountants, were first appointed as auditors of the Company on June 12, 2006.

 

AUDIT COMMITTEE DISCLOSURE

 

Detailed information required by National Instrument 52-110 - Audit Committees is presented in the Company’s Annual Information Form dated March 29, 2018 under the heading “Information on Audit Committee”. The Annual Information Form is available on the SEDAR website at www.sedar.com.

 

 

CORPORATE GOVERNANCE DISCLOSURE

 

National Instrument 58-101 - Disclosure of Corporate Governance Practices, requires all reporting issuers to provide certain annual disclosure of their corporate governance practices with respect to the corporate governance guidelines (the “Guidelines”) adopted in National Policy 58-201 - Corporate Governance Guidelines. These Guidelines are not prescriptive, but have been used by the Company in adopting its corporate governance policies. The Company’s approach to corporate governance is set out below. The Board is constantly engaged in an ongoing review of the Company’s corporate governance practices. The Board considers good corporate governance to be central to the effective and efficient operations of the Company.

 

Board of Directors

 

Management is nominating six individuals to the Board, being Luis A. Tondo, Alan J. Stephens, Gordon J. Fretwell, Colin Kinley, Michael Haworth and Petra Decher, each of whom is a current director of the Company. The board of directors of every reporting issuer should be constituted with a majority of individuals who qualify as “independent”. Of the proposed nominees of the Company, Gordon J. Fretwell, Colin Kinley, Michael Haworth and Petra Decher are considered by the Board to be “independent” and Luis Tondo and Alan J. Stephens are considered to be management directors and are considered to be “non-independent” within the meaning of National Instrument 52-110 - Audit Committees.

 

The Chairman of the Board is Colin Kinley, who is an “independent” director within the meaning of National Instrument 52-110 - Audit Committees.

 

The Chairman is responsible for managing the affairs of the Board and works with the CEO and other management to ensure effective relations with the Board, the shareholders and the public.

 

Directorships

 

The following directors of the Company are directors of other reporting issuers:

 

Director	Other Reporting Issuer(s)
Alan J. Stephens	Weatherly International PLC
Gordon J. Fretwell	Asanko Gold Inc. (Formerly Keegan Resources Inc.) Canadian Rare Earth Corporation Auryn Resources Inc. Lions Bay Capital Inc.
Colin Kinley	Excelsior Mining Corp. Eco Atlantic Oil and Gas Ltd.
Michael Haworth	Excelsior Mining Corp. Ncondezi Energy Limited Zanaga Iron Ore Company Limited Adventus Zinc Corporation Northern Vertex Mining Corp.
Petra Decher	Ascendant Resources Inc. Red Pine Exploration Inc.

 

Meetings of the Board

 

The Board meets on an as needed basis to review, among other things, the performance of the Company. Other meetings of the Board will be called as circumstances arise. In addition, Board memos are prepared as required to ensure the Board is kept informed of all relevant matters.

 

 

The independent directors of the Company also meet on an as needed basis when circumstances arise and through the Audit Committee meetings. The Audit Committee meets quarterly and also has in camera sessions with the auditors without Management present.

 

All directors attended 100% of the full Board meetings that were held during the year ended December 31, 2017.

 

Board Mandate

 

The Board is in the process of updating the Board mandate, which generally speaking, is to manage and supervise the management of the business and affairs of the Company and to act with a view to the best interest of the Company. The Board oversees the management of the Company’s affairs directly and through committees. The Board’s responsibilities include, among other matters, reviewing and approving the Company’s overall business strategies and annual business plan, reviewing and approving the annual corporate budget and forecast, reviewing and approving significant capital investments outside the approved budget, reviewing major strategic initiatives to ensure that the Company’s proposed actions accord with shareholder objectives, and assessing Management’s performance against approved business plans and industry standards.

 

Position Descriptions

 

The Board, together with the Corporate Secretary and CFO, is continually updating the Board policy manual, which will provide position descriptions for the directors and senior officers of the Company, including in respect of limitations to Management’s responsibilities.

 

Currently, the Board has delegated the day-to-day management of the business and affairs of the Company to the executive officers of the Company, and has adopted a table of delegated authorities. Decisions relating to matters that are not in the ordinary course and that involve material expenditures or commitments on the part of the Company require prior approval of the Board. Any responsibility which is not delegated to Management or a committee of the Board remains with the Board.

 

Orientation and Continuing Education

 

The Corporate Governance and Nominating Committee is responsible for ensuring that Management develops an orientation and education program for new members of the Board and an education program for all members of the Board. New directors are provided with an orientation and education program which includes written information about the business and operations of the Company, documents from recent Board meetings, and opportunities for meetings and discussion with senior Management and other directors. The Company will also give tours of its properties to give directors additional insight into the Company’s business. In addition, Management of the Company takes steps to ensure that its directors and officers are updated regarding corporate and securities policies which may affect the directors, officers, committee members and the Company as a whole. The Company continually reviews developments in securities rules and policies, and changes or new requirements are brought to the attention of the directors by way of director meetings or in written reports.

 

Ethical Business Conduct

 

The Board has adopted an Ethics and Business Conduct policy (the “Policy”). Included in this Policy is a whistle blowing policy pursuant to which employees can communicate complaints of alleged violations of law, regulation or internal Company policy. The full text of the Policy is available free of charge to any person on request to the Company at Suite 2600- 1066 West Hastings Street, Vancouver, British Columbia; telephone: 604-682-5546.

 

In addition, certain of the directors of the Company serve as directors and officers of other companies engaged in similar business activities and therefore it is possible that a conflict may arise between their duties as a director or officer of such other companies and their duties as a director or officer of the Company. The directors of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and the required disclosure by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors’ conflicts of interest or in respect of any breaches of duty by any of its directors. All such conflicts must be disclosed by such directors or officers in accordance with the Business Corporations Act (British Columbia).

 

 

Corporate Governance and Nominating Committee

 

For the year ended December 31, 2017, the Corporate Governance and Nominating Committee was comprised of Messrs. Fretwell (Chair), Webster and Kinley. This committee is responsible for identifying new candidates for nomination to the Board. Following the Meeting, the Corporate Governance and Nominating Committee will be comprised by Mr, Kinley, Mr. Stephens and Ms. Decher.

 

The Corporate Governance and Nominating Committee develops and monitors the Company’s overall approach to corporate governance issues and, subject to approval by the Board, implements and administers a system of corporate governance which reflects superior standards of corporate governance practices. In fulfilling this role, the Corporate Governance and Nominating Committee periodically reviews and assesses the adequacy of the Company’s corporate governance principles and develops and recommends to the Board for adoption additional or revised principles as appropriate.

 

The Corporate Governance and Nominating Committee analyzes and reports to the Board the relationship of each director to the Company and significant shareholders as to whether or not such director is considered “independent” within the meaning of applicable corporate and securities law and policies. The Corporate Governance and Nominating Committee also determines the appropriate committee structure of the Board and advises the Board or any of the committees of the Board of any corporate governance issues which the Corporate Governance and Nominating Committee determines ought to be considered. The Corporate Governance and Nominating Committee reviews with the Board the role of the Board, the terms of reference of each of the committees of the Board and the methods and processes by which the Board fulfills its duties and responsibilities. Finally, the Committee proposes to the Board annually, nominees for election or appointment to the Board to fill Board vacancies and the assignment of members to the committees of the Board and the chair for each committee.

 

Compensation Committee

 

For the year ended December 31, 2017, the Compensation Committee members were Messrs. Webster, Haworth (Chair) and Kinley, all of which were independent directors. Following the Meeting, the Compensation Committee will be comprised of Messrs. Haworth (Chair), Mr, Kinley and Ms. Decher, each of whom is an independent director. Information on the Compensation Committee is contained in this Circular under the heading “Compensation Discussion and Analysis”.

 

Assessment

 

Currently, the Board works with the Corporate Governance and Nominating Committee to review the effectiveness of its committees and individual directors. The Board intends to implement formal assessment procedures to be carried out on an annual basis, but does not currently have such procedures in place, but will consider implementing one in the future should circumstances warrant.

 

Term Limits

 

The Board has not adopted policies imposing an arbitrary term or retirement age limit in connection with individuals nominated for election as directors as it does not believe that such a limit is in the best interests of the Company. The Corporate Governance and Nominating Committee reviews the composition of the Board, including the age and tenure of individual directors. The Board strives to achieve a balance between the desirability to have a depth of industry experience from its members on the one hand and the need for renewal and new perspectives on the other hand.

 

 

Gender Diversity

 

The Board recently adopted a policy to reflect its commitment to diversity and inclusion in all levels in the workplace and on the Board (the “Diversity Policy”). The Diversity Policy sets out the guidelines by which the Company and the Board will endeavour to achieve diversity throughout the Company. To this end, the Board is dedicated to cultivating an environment where individual differences are respected, the ability to contribute and access employment opportunities is based on performance, skill and merit, and appropriate attitudes, behaviours and stereotypes are confronted and eliminated. While the Company does not support the adoption of quotas, Management and the Board will consider diversity as an element of the overall selection criteria of candidates.

 

The Board will proactively monitor the Company’s performance in meeting the standards outlined in the Diversity Policy. Ms. Decher was appointed as a director of the Company on May 7, 2018 and the Company believes this is a positive step towards achieving diversity throughout the Company.

 

The Diversity Policy requires that each year the Company report on the proportion of female and minority personnel in senior executive positions and on the Board in the Company’s management information circular. As at December 31, 2017, (a) none of the Company’s personnel at the executive management level were female and none of such personnel identified themselves as part of a minority group and (b) the Company’s Board did not include any female members and none of the Board members identified themselves as belonging to a minority group. However, Ms. Decher was appointed as a director on May 7, 2018.

 

PARTICULARS OF MATTERS TO BE ACTED UPON

 

Approval of Conversion Features of Loan with Greenstone Resources II L.P.

 

On February 27, 2018 the Company announced that it was conducting a strategic review to consider alternative scenarios relating to the Company’s assets and an assessment of the various funding options available to the Company to maximize shareholder value (the “Strategic Review Process”). As part of the Strategic Review Process, the Company engaged an independent consultant to conduct due diligence on the Company’s Berta copper project and the Nora SX-EW plant (together, the “Berta Project”) and perform a site visit. In addition, on behalf of the board of directors, Rod Webster, an independent director and professional engineer, performed a site visit at the Berta Project in February 2018.

 

In early March 2018, the Company formed a committee of its directors (the “Strategic Review Committee”) comprised of Rod Webster, Gordon Fretwell, Alan Stephens and Colin Kinley to consider a possible transaction involving the Berta Project. The majority of the members of the Strategic Review Committee are independent of Greenstone, the Company’s largest shareholder. Mr. Kinley is a nominee director of Greenstone so is not considered independent for the purposes of the Strategic Review Committee however, each of Messrs. Webster, Fretwell and Stephens are considered independent of Greenstone. The Strategic Review Committee engaged outside legal counsel and Evans & Evans, Inc. an independent financial advisor, to complete a valuation report on the Berta Project.

 

Throughout March and April, 2018, the Strategic Review Committee met informally several times to discuss the Strategic Review Process and to consider a proposal from Greenstone Resources II L.P. (“Greenstone II”), an affiliate of Greenstone, to acquire a direct interest in the Company’s Berta Project, on the terms set out in more detail below (the “Greenstone II Investment”). In the course of their review of the proposed Greenstone II Investment, the Strategic Review Committee considered a number of items, including but not limited to, the current and future financial obligations and funding requirements of the Berta Project, the ability of the Company to meet the current and future financial obligations of the Berta Project, and the desire to minimize dilution to Company, and therefore shareholders’ interest in the Marimaca Project, in order to fund the Berta Project. After a consideration these factors, and upon review of the independent valuation report and fairness opinion provided by Evans &Evans Inc. indicating that the proposed Greenstone II Investment was fair, from a financial standpoint, to the Disinterested Shareholders (as defined below), on April 16, 2018, the Strategic Review Committee resolved to recommend to board of directors that they approve the proposed Greenstone II Investment.

 

 

Following the board approval, on April 19, 2018 the Company announced that it had completed its Strategic Review and had concluded that the Company should now focus on the Marimaca Project and that all financing for the Berta Project should be done at the project level without further financial recourse to the Company. As a result, the Company entered into a binding term sheet with Greenstone Greenstone II to complete the Greenstone II Investment. In accordance with the provisions of the term sheet, Greenstone II agreed to invest up to US$12 million by way of a secured convertible loan directly into the Company’s owned subsidiary, Minera Coro Chile Limitada (“MCC”). MCC previously held a 65% shareholding in SCM Berta SA (“SCM Berta”), the entity which holds the Berta Project and which has optioned the El Jote mineral deposit, all of which are located in Chañaral Province, III Region, Northern Chile. The remaining 35% interest in MCC was held by Propipe. It was a condition to the Greenstone II Investment that MCC (or its nominee) acquire this remaining interest (which acquisition has been completed, as a result of which MCC, together with its nominee, currently holds all of the shares of SCM Berta) and to complete an internal reorganization (“MCC Reorganization”) by no later than June 18, 2018 (the “Reorganization Deadline”). The 35% interest in Propipe was acquired by MCC for a total purchase price of US$2.25 million, payable in installments. As part of the MCC Reorganization, Coro intends to incorporate a new offshore investment holding company in a tax efficient jurisdiction (“NewCo”), to hold all of the shares of MCC .

 

Of the US$12 million Greenstone II Investment, an initial US$9 million was advanced on April 19, 2018, with a maturity date of 125 days, with the remaining US$3 million available for drawdown during this period. Assuming the full US$12 million is advanced, the Greenstone II Investment will be convertible into a 75% equity interest in MCC, resulting in the Company’s equity interest in MCC decreasing to 25%. Notwithstanding the foregoing, the Company has retained an option to fund US$4 million into MCC for a period of 120 days. During this period the Company intends to further assess the operational performance of the Berta Project and the progress with the Berta SX-EW plant permitting. To the extent that that the Company funds the US$4 million, US$3 million of this amount would be used to fund MCC (instead of the US$3 million undrawn Greenstone II Investment) and US$1 million would be used to repay Greenstone II such that the outstanding Greenstone II Investment would be reduced from US$9 million to US$8 million. If this option is exercised, this would result, post conversion of the Greenstone II Investment into an equity interest of MCC, in the shareholding of MCC being 50% held by the Company and 50% held by Greenstone II.

 

The Greenstone II Investment is secured against the shares of MCC, SCM Berta and the shareholder loan claim against SCM Berta and will, following the MCC Reorganization, also be secured against the shares in, and assets of, NewCo. Upon the occurrence of an event of default (as defined in the binding term sheet and which includes failure to obtain Disinterested Shareholder Approval, as defined below), MCC (following the MCC Reorganization, and/or NewCo) would be required to repay the Greenstone II Investment and/or Greenstone II would have the option to enforce its security.

 

Interest will accrue monthly on the Greenstone II Investment at a rate of 15% per annum only from the Reorganization Deadline until either conversion or the maturity date and is payable in cash by MCC (following the MCC Reorganization, and/or by NewCo).

 

As part of the Greenstone II Investment, Coro has agreed to provide management services to MCC and SCM Berta through a services agreement which will in time allow for a reduction in operating overheads for the Company by allocating resources between the Marimaca and the SCM Berta operations. Greenstone II and Coro have also agreed the principal terms of a shareholders agreement governing their relationship as indirect shareholders of MCC (through NewCo) following conversion of the Greenstone II Investment. The Company believes that the Greenstone II Investment will provide the necessary capital to secure the future of the Berta Project operation and minimize the Company’s ongoing financial exposure, while allowing the Company to focus its attention and financial resources on its flagship Marimaca Project.

 

 

The Greenstone II Investment will be used for the following:

 

·

Reduction in creditors to achieve a normal operating working capital level;

 

·

Capital expenditure for decreasing operating costs and increasing efficiencies, notably, to replace anode and cathode plates, increase acid storage, install additional control systems, purchase critical spares and other sustaining capital projects.

 

·

Payment of environmental bonds.

 

·

Engineering and permitting for the new Berta SX-EW plant.

 

·

Drilling, test work and option payments at El Jote.

 

·

Initial upfront payment of US$750,000 as part of an agreement to acquire the 35% interest in SCM Berta held by ProPipe.

 

In addition to the Greenstone II Investment, in April, 2018 the Company and Greenstone entered into a facility agreement whereby Greenstone agreed to loan the Company US$2,000,000, convertible into common shares of the Company at a price which is the greater of (i) C$0.0895, and (ii) the price at which the Company completes its next equity financing of at least US$5 million (the “Convertible Loan”). The Convertible Loan bears interest at 12% per annum for the first six months that the Convertible Loan is outstanding and at 15% per annum for the remainder of the term of the Convertible Loan. The principal amount of the Convertible Loan is convertible into up to an additional 28,782,123 common shares of the Company, assuming a conversion price of US$0.0895 per share and based on the Canadian to US dollar exchange rate in effect on the date of this Circular. The Convertible Loan matures on the earlier of January 30, 2019 and the date on which the Company completes an equity financing of at least US$5 million.

 

Greenstone, an affiliate of Greenstone II, is a majority shareholder of the Company and together with its affiliates, currently owns 414,085,522 common shares of the Company, or approximately 63.5% of the Company’s issued and outstanding common shares. Pursuant to the rules of the Exchange, as an affiliate of Greenstone has the potential to receive consideration which is greater than 10% of the current market value of the Company as the result of the Greenstone II Investment, the Exchange requires that the Greenstone II Investment must not be convertible into an equity interest in MCC until shareholder approval to the Greenstone II Investment is obtained, which approval must exclude votes attached to the shares beneficially owned by Greenstone, or its affiliates (“Disinterested Shareholder Approval”).

 

Disinterested shareholders of the Company will be asked to consider, and if thought advisable, to pass with or without variation, an ordinary resolution of the Company, as follows:

 

BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE DISINTERESTED SHAREHOLDERS THAT the conversion features of a US$12,000,000 secured convertible loan granted by Greenstone Resources II L.P to Minera Coro Chile Limitada (“MCC”) which, if converted, would result in the ownership by Greenstone Resources II L.P. of an equity interest of up to 75% (directly or indirectly) in MCC, is hereby authorized and approved.

 

The Board believes that the Greenstone II Investment is in the Company’s best interest and unanimously recommends that shareholders vote FOR the resolution set out above. In order for the resolution to pass, the resolution must be approved by a majority of the votes cast by Disinterested Shareholders in person or represented by proxy at the Meeting. In the absence of instructions to the contrary, the Management proxyholders will vote the common shares represented by each form of Proxy, properly executed, FOR approving the above resolution.

 

 

Approval of Unallocated Entitlements under the Stock Option Plan

 

At the Meeting, shareholders of the Company will be asked to consider, and if deemed advisable, to pass, with or without modification, a resolution (the “Stock Option Plan Resolution”) authorizing and approving the unallocated entitlements under the Stock Option Plan.

 

Information Concerning the Stock Option Plan

 

The Stock Option Plan is a 10% “rolling” plan and, as in accordance with the policies of the Exchange, the Company is required to seek shareholder approval of all unallocated entitlements under the Stock Option every three years. The Stock Option Plan was approved by the shareholders on June 29, 2010 and re-approved in accordance with Exchange policies on July 16, 2015.

 

See “Compensation Discussion and Analysis - Stock Option Plan” for a brief description of the material terms of the Stock Option Plan.

 

Approval of the Unallocated Entitlements under the Stock Option Plan

 

According to the policies of the Exchange, unallocated entitlements under the Stock Option Plan must be approved by:

 

(a)

a majority of the Company’s directors; and

 

(b)

the Company’s shareholders;

 

when the Stock Option Plan is instituted and every three years thereafter.

 

As of the date of this Circular, all of the Company’s directors have approved the unallocated entitlements under the Stock Option Plan.

 

In accordance with the policies of the Exchange, the unallocated entitlements under the Stock Option Plan must be approved by a majority of the votes cast by disinterested shareholders, with insiders or their associates and affiliates to whom shares may be issued pursuant to the Stock Option Plan excluded from voting. Based on the present shareholdings of the insiders or their associates and affiliates to whom shares may be issued pursuant to the Stock Option Plan, a total of up to 422,100,917 common shares (or 65% of the total issued and outstanding common shares) will be excluded from voting on this resolution. Accordingly, disinterested shareholders will be asked to consider and, if thought advisable, to pass the following resolution at the Meeting:

 

BE IT RESOLVED, AS AN ORDINARY RESOLUTION, THAT:

 

1.

all unallocated entitlements under the Company’s Stock Option Plan as described in the Information Circular dated May 18, 2018, including reserving for issuance under the Stock Option Plan at any time a maximum of 10% of the issued and outstanding common shares of the Company, are hereby authorized and approved;

 

2.

the Company be and is hereby authorized to grant stock options under the Stock Option Plan until June 27, 2021, being the date that is three years from the date hereof; and

 

3.

the Company be and is hereby authorized to prepare such documents and make such submissions as the Company may be required to make to give effect to this resolution.

 

 

Shareholders may vote FOR or AGAINST the above resolution. If the unallocated entitlements under the Stock Option Plan are not approved, previously granted options will be unaffected however no further options will be able to be issued under the Stock Option Plan and any previously issued options which are cancelled or expire would be unavailable for re-grant.

 

Management of the Company recommends that shareholders vote in favour of the foregoing resolution. Unless otherwise directed, the persons named in the enclosed form of Proxy intend to vote FOR the approval of the foregoing resolution at the Meeting.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Company may be found under the Company’s profile on SEDAR at www.sedar.com. Financial information about the Company is provided in the Company’s comparative annual financial statements for the year ended December 31, 2017, a copy of which, together with management’s discussion and analysis thereon, can be found on the Company’s SEDAR profile at www.sedar.com. Additional financial information concerning the Company may be obtained by any securityholder of the Company free of charge by contacting the Company at 604-682-5546.

 

 

 

 

 

 

BOARD APPROVAL

 

The contents of this Circular have been approved and its mailing authorized by the directors of the Company.

 

DATED at Vancouver, British Columbia, the 18th day of May, 2018.

 

ON BEHALF OF CORO MINING CORP.

 

(signed) “Luis A. Tondo”

 

Luis A. Tondo,

President and CEO

 

 

 

 

 

 

Appendix A

 

COMPENSATION COMMITTEE MANDATE

 

Purpose

 

The overall purpose of the Compensation Committee (“Committee”) is to develop executive compensation plans that:

 

·

attract and retain skilled and experienced executives and senior managers;

 

·

motivate executives and senior managers to achieve corporate objectives and create shareholder value; and

 

·

encourage executives and senior managers to link their personal financial interest to those of the shareholders.

 

The compensation of executives and senior management shall be based on competitive rates in the marketplace, taking account of location and conditions of employment.

 

Compensation for executives and senior managers shall consist of a combination of a base salary, cash based annual incentive, a long-term incentive and employee benefits.

 

Composition, Procedures and Organization

 

1.

The Committee shall consist of at least three members of the Board, a majority of whom shall be “independent” as that term is defined in National Instrument 58-101 “Disclosure of Corporate Governance Practices” and should exclude Executive Directors wherever possible. In particular, a Committee member shall not:

 

(a)

other than in his or her capacity as a member of the Board or any committees of the Board, accept directly or indirectly any consulting, advisory or other fee from the Company;

 

(b)

have been employed by the Company or any of its affiliates in the current or past two years; or

 

(c)

be an affiliate of the Company or any subsidiaries.

 

2.

The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.

 

3.

Unless the Board shall have appointed a Chair of the Committee, the members of the Committee shall elect a Chairman from among their number.

 

4.

The secretary of the Committee shall be designated from time to time from one of the members of the Committee or, failing that, shall be the Company’s corporate secretary, unless otherwise determined by the Committee.

 

5.

The Committee shall have access to such officers and employees of the Company, its external auditors and legal counsel and to such information respecting the Company and may engage separate independent counsel and advisors at the expense of the Company, all as it considers to be necessary or advisable in order to perform its duties and responsibilities.

 

 

Meetings

 

1.

At the request of the PCEO or any member of the Committee, the Chairman will convene a meeting of the Committee and provide an agenda for such meeting.

 

2.

Any two directors may request the Chairman to call a meeting of the Committee and may attend at such meeting or inform the Committee of a specific matter of concern to such directors, and may participate in such meeting to the extent permitted by the Chairman of the Committee.

 

3.

The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and hear each other.

 

4.

The Committee shall meet at least once in each year on such dates and at such locations as the Chairman of the Committee shall determine and may also meet at any other time or times on the call of the chair of the Committee or any two of the other members.

 

Duties and Responsibilities

 

The duties and responsibilities of the Committee shall be as follows:

 

1.

Review and approve corporate goals and objectives relevant to PCEO compensation, evaluate the PCEO’s performance in light of these goals, and recommend the PCEO’s package to the Board.

 

2.

Make recommendations to the Board on all elements of executive officers’ compensation.

 

3.

Review all compensation information before the Company discloses it publicly.

 

4.

Approve any compensation arrangement for a senior executive of any subsidiary.

 

5.

Review succession planning for senior positions, and make recommendations to the Board.

 

6.

Review appropriate compensation of the independent directors and to provide recommendations of such review for the approval by the Corporate Governance Committee and the PCEO.

 

 

 

Exhibit 99.7

 

AUDITOR’S CONSENT

 

We hereby consent to the inclusion in this Registration Statement on Form F-7 of Coro Mining Corp. (“Coro”) of our report dated March 29, 2018 relating to the consolidated financial statements of Coro as at December 31, 2017 and 2016 and for the years then ended.

 

 

(signed) "PricewaterhouseCoopers LLP"

 

Chartered Professional Accountants

Vancouver, British Columbia, Canada

August 20, 2018

 

 

 

 

 

 

 

Exhibit 99.8

 

CONSENT OF SERGIO ALVARADO

 

In connection with Coro Mining Corp.’s (the “Corporation”) Registration Statement on Form F-7 (the “Form F-7”) being filed with the United States Securities and Exchange Commission, I consent to the references of my name and to the use of information of a scientific or technical nature attributed to me in the Corporation’s Annual Information Form dated March 29, 2018, for the year ended December 31, 2017, being incorporated by reference and filed with the Form F-7.

 

DATED: August 20, 2018

 

      /s/ Sergio Alvarado                           
Sergio Alvarado

 

 

 

 

 

Exhibit 99.9

 

CONSENT OF LUIS OVIEDO

 

In connection with Coro Mining Corp.’s (the “Corporation”) Registration Statement on Form F-7 (the “Form F-7”) being filed with the United States Securities and Exchange Commission, I consent to the references of my name and to the use of information of a scientific or technical nature attributed to me in the Corporation’s Annual Information Form dated March 29, 2018, for the year ended December 31, 2017, being incorporated by reference and filed with the Form F-7.

 

DATED: August 20, 2018

 

   /s/Luis Oviedo                              
Luis Oviedo

 

 

 

 

 

 

Exhibit 99.10

 

 

News Release TSX: COP www.coromining.com

 

 

Coro Announces Comprehensive CAD 46.7 million Financing Plan:
Completed Private Placement and Launches Sub-Guaranteed Rights Offering

 

August 7^th, 2018 - Coro Mining Corp. (“Coro” or the “Company”) (TSX: COP) announces today a CAD 46.7 million (approximately US$36 million) financing plan, comprising of a closed premium non-brokered CAD 13.2 million (approximately US$10 million) private placement (“Private Placement”) with an entity of the Tembo Capital private equity group (“Tembo Capital”) and a forthcoming CAD 33.6 million (approximately US$26 million) rights offering (“Rights Offering”) for which Tembo Capital has agreed to provide a stand-by guarantee.

 

Highlights

·	Total financing package of CAD 46.7 million fully funds Coro for the next 12 months.
·	Proceeds to repay debt, acquire surrounding properties and fund exploration program and resource expansion at Marimaca.
·	Introduction of new shareholder at a premium demonstrates significant value proposition.
·	Rights Offering provides existing shareholders equal opportunity to invest in the Company at an attractive entry price.
·	Completion of acquisition of Sierra Miranda claims, which are adjacent to the flagship Marimaca property of Coro
·	Commitment by Greenstone Resources LP (“Greenstone”) and Tembo Capital to exercise all of their basic subscription privilege in the Rights Offering and standby guarantee by Tembo Capital should ensure a successful outcome of the proposed Rights Offering.

 

Commenting on the financing plan, Coro’s President & CEO Luis Tondo said: “I am pleased today to announce a comprehensive financing plan for Coro. The premium placement and rights offering combination optimises our shareholder and capital structures, which should allow us to move ahead with acquiring the Sierra Miranda claims surrounding Coro’s flagship Marimaca project and commence a fully funded exploration program on these properties, which I believe has significant potential. The proceeds will also be used to pay off debt and fund our working capital needs. Consequently, I am confident that Coro now represents a premier investment opportunity in the junior copper sector, and places us in an unrivalled position to create significant value over the next 12 months.

 

The Board of Directors welcomes Tembo Capital as a shareholder. Their willingness to invest at a premium and provide a standby guarantee for the rights offering is a solid endorsement of our Marimaca project and its growth potential. Tembo Capital is a well known private equity group and we look forward to benefitting from their technical and strategic contributions.”

 

 

Private Placement

The Company has closed the Private Placement consisting of common shares of the Company (“Common Shares”) raising gross proceeds of approximately CAD 13.2 million. Under the Private Placement, the Company has issued 109,733,334 Common Shares at a price of CAD 0.12 per Common Share, representing a premium of 26% to Coro’s closing price on the TSX on August 3^rd_, 2018. Tembo Capital has purchased all of the Common Shares issued pursuant to the Private Placement. Pursuant to the Private Placement Tembo Captial, for so long as it continues to hold at least 10% of the outstanding Common Shares of Coro, on a non-diluted basis, will have (i) the right to nominate one member to the Board of Directors, and (ii) a pre-emptive right to maintain its pro rata interest in the Common Shares of Coro.

 

A significant portion of the proceeds of the Private Placement, being approximately CAD 7,680,030, were used to fund the previously announced acquisition of the Sierra Miranda claims adjacent to the Marimaca property, the balance of such proceeds will be used to advance exploration at the Company’s flagship Marimaca project and for general corporate purposes.

 

Conversion of Greenstone Convertible Loan

The Company separately announces that 21,883,492 Common Shares are expected to be issued in the coming days to Greenstone pursuant to the conversion of its US$2 million convertible loan, at a conversion price equal to the Private Placement price of CAD 0.12 per share (the “Greenstone Loan Conversion”). The Greenstone Loan Conversion is expected to be completed on or about August 9^th, 2018.

 

Following the issue of Common Shares to Tembo Capital pursuant to the Private Placement and the Greenstone Loan Conversion, the total number of Common Shares outstanding will be 783,546,337. The percentage interest of Greenstone in the Common Shares of Coro will have fallen from 63.5% to 55.6%, with Tembo Capital holding 14.0% of the then outstanding Common Shares.

 

Rights Offering

The Board of Directors has approved the undertaking of a prospectus exempt Rights Offering to be made only to holders of record of Common Shares as of August 22^nd, 2018. The Company will issue rights (“Rights”) to subscribe for an aggregate of up to 671,591,957 Common Shares of the Company at a subscription price of CAD 0.05 per Common Share, raising up to approximately CAD 33.6 million. Additional subscription privileges will be extended to all shareholders. The Company intends to use the proceeds of the Rights Offering to primarily fund further exploration work at the Marimaca project, retire outstanding indebtedness and for general corporate purposes.

 

The Rights Offering is being made to the holders of Coro’s Common Shares of record at the close of business on August 22^nd, 2018. The Company will issue one Right for each outstanding Common Share. Each 1.1667 Rights will entitle a shareholder to acquire one Common Share of the Company, upon payment of the subscription price per common share. Fractional shares will not be issued and any fractions will be rounded down to the nearest whole number.

 

 

For example, an eligible holder of 1,000 Common Shares as of the record date would be issued 1,000 Rights, which would entitle the holder to subscribe for 857 additional Common Shares for an aggregate price of CAD 42.85 (857 x CAD 0.05).

 

The following insiders, Greenstone and Tembo Capital, have advised that they intend to exercise, subject to relevant restrictions, all of their basic subscription privileges. The Company has also entered into a stand-by guarantee agreement (the “Stand-By Agreement”) with Tembo Capital. Subject to and in accordance with the terms of the Stand-By Agreement, Tembo Capital has agreed to purchase the Common Shares issuable under the Rights Offering, which remain unsubscribed for by the holders of the Rights, other than Rights issued to Greenstone pursuant to their basic subscription privileges.

 

The persons who currently hold 10% or more of the Company’s Common Shares or would own 10% or more upon completion of the Rights Offering are anticipated to be as follows:

 

	Shares held before Rights Offering		Shares held after Rights Offering(1)
	Number	%	Number	%
Greenstone	435,969,014	55.6%	809,646,063	55.6%
Tembo Capital	109,733,334	14.0%	405,136,468	27.8%

⁽¹⁾ Assumes: (i) the maximum number of Common Shares are issued under the Rights Offering, (ii) no person acquires Common Shares under the Rights Offering other than Greenstone, Tembo Capital and the other insiders of the Company who have indicated an intention to exercise their basic subscription privilege, and (iii) that Tembo Capital will, in such circumstance, fulfil its obligations under the Stand-By Agreement by purchasing all Common Shares available under the Rights Offering (other than those issued to Greenstone and the identified insiders pursuant to their respective basic subscription privilege).

 

 

It is expected that the Rights will trade on the Toronto Stock Exchange under the symbol “COP.RT” commencing on August 21^st, 2018 and will trade until 12:00 p.m. (Toronto Time) on September 20^th, 2018. The Rights will expire at 5:00 p.m. (Toronto Time) on September 20^th, 2018 (the “Expiry Time”), after which time unexercised Rights will be void and of no value. Shareholders who fully exercise their Rights will be entitled to subscribe for additional Common Shares under the Rights Offering, in the event that there remain unexercised Rights at the Expiry Time, subject in all cases to certain limitations set out in Coro’s Rights Offering circular (the “Circular”), which will be filed on SEDAR at www.sedar.com prior to the record date.

 

A Rights Offering notice and Rights certificate will be mailed to each registered shareholder of the Company resident in Canada (and, in certain cases, certain other jurisdictions) as of the record date. Registered shareholders who wish to exercise their rights must forward the completed rights certificate, together with the applicable subscription funds, to the rights agent, Computershare Investor Services Inc., on or before the Expiry Time. Eligible shareholders who own their shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.

 

 

Use of Proceeds

The following table below provides a detailed breakdown of how the Company will use its available funds, including those received pursuant to the Private Placement and Rights Offering:

 

Description of intended use of available funds listed in order or priority:		Assuming 100% of Rights Offering (through exercise of Rights or Standby Commitment) (1)
Repayment of loans from Greenstone		$11,585,130	(2)
Exploration work at Marimaca Project		$10,920,000
Development work at Marimaca Project		$1,450,000
Acquisition of Sierra Miranda Claims		$7,680,030	(3)
Potential land acquisitions		$1,300,000
Transaction costs and expenses		$1,300,000
Working capital, general and administrative expenses		$11,697,287
Total:		$45,932,447

 

⁽¹⁾ Amounts expressed in Canadian dollars.

⁽²⁾ Canadian dollar equivalent of US$8.9 million loans payable to Greenstone, including accrued but unpaid interest and related fees, on the basis of the daily exchange rate published by the Bank of Canada on July 31, 2018 of US$1.00 = CAD 1.3017. The Company has agreed with Greenstone to set-off the principal amount of such loans payable against a portion of the aggregate exercise price of rights to be exercised by Greenstone under its Basic Subscription Privilege. See “Insider Participation”.

⁽³⁾ Canadian dollar equivalent of US$5.9 million purchase price for Sierra Miranda claims, which has already been advanced by Coro, pursuant to a mineral concession purchase agreement «promesa de compraventa de concesiones mineras» dated January 19, 2018 between the Company’s wholly-owned subsidiary Compania Minera Ceilo Azul Lta. And Capax S.A., on the basis of the daily exchange rate published by the Bank of Canada on July 31, 2018 of US$1.00 = CAD 1.3017.

 

 

Further details of the Rights Offering are contained in the Circular, which will be filed in due course on SEDAR under the Company's profile at www.sedar.com and will be posted on the Company’s website at www.coromining.com, or will be available from your dealer representative or by contacting either:

 

 

Coro Mining Corp Nicholas Bias VP Corporate Development & IR +1 604 682 5542 [email protected]

Computershare Investor Services Inc. (Rights Agent) 1-800-564-6253 (North America) 1-514-982-7555 (International) [email protected]

 

 

The Rights Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the acceptance of the Toronto Stock Exchange.

 

The Toronto Stock Exchange has conditionally accepted for listing the new Common Shares issued pursuant to the Private Placement and to be issued pursuant to the Greenstone Loan Conversion and the Rights Offering, which will rank pari passu with the Company’s issued and outstanding Common Shares.

 

Advisors

BMO Capital Markets and Tamesis Partners are acting as financial advisors and Bennett Jones and Bofill Mir & Alvarez Jana as legal advisors to Coro.

 

About Tembo Capital

Tembo Capital is a mining-focused private equity fund group, which specialises in developing countries and has a strong track record of identifying and supporting emerging resource companies. Tembo Capital has a team of experienced private equity investment and mining finance professionals, with a long history of association with developing regions and countries.

 

 

On behalf of the Board of Directors,

LUIS TONDO, PRESIDENT & CEO

 

For further information please contact of visit www.coromining.com or contact:
Nicholas Bias, VP Corporate Development & Investor Relations
+1 (604) 682 5546 x 202 or +44 (0)7771 450 679 | [email protected]

 

 

 

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements in this press release relate to, among other things completion of a feasibility study for the Marimaca claim. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if the Maricunga claim is developed. Actual future results may differ materially. 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. Forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made and are based upon a number of assumptions and estimates that, while considered reasonable by Coro, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements and the parties have made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: the ability of Coro to complete the Rights Offering, the ability of Coro to complete the Greenstone Loan Conversion, the occurrence of unexpected financial obligations, fluctuations in the price of commodities; fluctuations in the currency markets; changes in national and local government, legislation, taxation, controls, regulations and political or economic developments; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding); the presence of laws and regulations that may impose restrictions on mining and employee relations as well as those factors disclosed in the Company’s documents filed from time to time with the securities regulators in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

 

Accordingly, readers should not place undue reliance on forward-looking statements. Coro undertakes no obligation to update publicly or otherwise revise any forward-looking statements contained herein whether as a result of new information or future events or otherwise, except as may be required by law. All amounts in this document are US Dollars unless otherwise stated. Due to foreign exchange conversions, rounding errors may occur.

 

 

 

 

 

 

6

 

Exhibit 99.12

 

STANDBY COMMITMENT AGREEMENT

 

THIS AGREEMENT is made as of the 3rd day of August, 2018.

 

BETWEEN:

 

CORO MINING CORP, 82 Richmond Street East, Suite 400, Toronto, Ontario, M5C 1P1

 

("Coro")

 

AND:

 

NDOVU CAPITAL XIV B.V., an entity having its head office at Hoogoorddreef 15, 1101 BA Amsterdam, The Netherlands.

 

(the "Standby Purchaser")

 

WHEREAS:

 

A.

Coro proposes to create and issue to holders of record of its issued and outstanding Common Shares (as defined below) as at the Record Date (as defined below), rights ("Rights") entitling the holders thereof to subscribe for and purchase Common Shares (the "Rights Offering");

 

B.

Pursuant to the Rights Offering, each holder of Common Shares will be entitled to receive one Right for each Common Share held by such holder on the Record Date, with 1.1667 Rights entitling the holder to purchase one Common Share at a price of CAD $0.05 per Common Share (the "Subscription Price"), for an aggregate of 671,591,957 Common Shares offered under the Rights Offering;

 

C.

As of the date hereof, the Standby Purchaser holds 109,733,334 Common Shares;

 

D.

Any holder of Common Shares who exercises such holder's right (the "Basic Subscription Privilege") to subscribe for all the Common Shares that can be initially purchased upon exercise of all Rights issued to such holder shall be entitled to subscribe for additional Common Shares under the Rights Offering at the Subscription Price (the "Additional Subscription Privilege"), in the manner set forth in the Rights Offering Notice and the Rights Offering Circular (each as defined below);

 

E.

In connection with the Rights Offering, Greenstone Resources L.P., and Greenstone Co-Investment No 1 (Coro) L.P. (with their affiliates, "Greenstone"), holders of 435,969,014 Common Shares, have agreed among other things to exercise only the Basic Subscription Privilege forming part their Rights unless otherwise agreed with the Standby Purchaser;

 

 

F.

Upon and subject to the terms and conditions of this standby commitment agreement (this "Agreement"), the Standby Purchaser has agreed that it, or its permitted assignee(s) in accordance with Section 8.8, will exercise its Basic Subscription Privilege, exercise its Additional Subscription Privilege and purchase from Coro such number of Common Shares available to be purchased, but not otherwise subscribed for, under the Rights Offering at the Subscription Price excluding any Greenstone Shares (as hereinafter defined) (the "Standby Commitment"), so that 671,591,957 Common Shares will have been issued under the Rights Offering, being all of the Common Shares that may be issued under the Rights Offering; and

 

G.

Under the Standby Commitment, the maximum obligations of the Standby Purchaser will be as to a maximum of 297,914,908 Common Shares.

 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree with each other as follows:

 

Article 1
INTERPRETATION

 

1.1

Whenever used in this Agreement (including the recitals hereto), unless the subject matter or context requires otherwise, the following words and terms shall have the following meanings:

 

(a)

"Business Day" means any day other than a Saturday or Sunday on which banks are open for business in Toronto, Ontario and London, England;

 

(b)

"Common Shares" means the common shares in the capital of Coro as constituted as of the date hereof, and as hereafter adjusted for any subdivisions, consolidations or other capital reorganizations;

 

(c)

"Expiry Time" means the time of expiration of the Rights Offering, being 5:00 p.m. (Toronto time) on September 20, 2018;

 

(d)

"Greenstone" has the meaning defined in Recital E;

 

(e)

"Greenstone Shares" means any shares issuable to Greenstone pursuant to Rights associated with its Basic Subscription Privilege;

 

(f)

"IRA" means the Amended and Restated Investor Rights Agreement between Coro Mining Corp., Greenstone Resources L.P., and Greenstone Co-Investment No 1 (Coro) L.P. dated April 13, 2018;

 

(g)

"Placement" has the meaning defined in Section 2.4(c);

 

(h)

"Public Record" means all documents or information filed on SEDAR by Coro under applicable securities laws up to and including the date hereof;

 

(i)

"Record Date" means the date and time at which the Shareholders entitled to Rights pursuant to the Rights Offering, and the number of Rights to which each is entitled, is determined, estimated to be the close of business on or about August 22, 2018;

 

 

(j)

"Rights Offering Circular" means the circular of Coro to be dated on or about August 13, 2018 in respect of the Rights Offering;

 

(k)

"Rights Offering Notice" means the notice of Coro to be dated on or about August 13, 2018 in respect of the Rights Offering;

 

(l)

"Shareholder" means a holder of Common Shares of Coro and "Shareholders" means all of them;

 

(m)

"United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;

 

(n)

"U.S. Person" has the meaning ascribed to it in Rule 902 of Regulation S under the U.S. Securities Act; and

 

(o)

"U.S. Securities Act" means the United States Securities Act of 1933, as amended.

 

1.2

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

Article 2
STANDBY PURCHASE COMMITMENT

 

2.1

Upon and subject to the terms and conditions of this Agreement, the Standby Purchaser hereby agrees that if less than 671,591,957 Common Shares are subscribed for under the Rights Offering, it or its permitted assignee(s) in accordance with Section 8.8, will subscribe for and purchase from Coro and Coro hereby agrees to issue and sell to the Standby Purchaser, or its respective permitted assignee(s), at the Subscription Price such number of Common Shares available to be purchased, but not otherwise subscribed for, under the Rights Offering, excluding any Greenstone Shares, so that 671,591,957 Common Shares will have been issued under the Rights Offering, being all of the Common Shares that may be issued under the Rights Offering. To the extent necessary to fulfill the Standby Commitment and subject to Section 2.2, the Standby Purchaser or its permitted assignee(s) shall:

 

(a)

first, subscribe for such number of Common Shares which the Standby Purchaser or its affiliates is entitled to purchase pursuant to the terms and conditions of the Basic Subscription Privilege attached to any Rights held by the Standby Purchaser or its affiliates;

 

(b)

second, subscribe for such additional number of Common Shares under the Additional Subscription Privilege attached to any Rights held by the Standby Purchaser or its affiliates; and

 

(c)

third, purchase such number of Common Shares which are potentially issuable by Coro under the Rights Offering but not subscribed for by the Shareholders (other than the Standby Purchaser and its affiliates) pursuant to the exercise of the Basic Subscription Privileges and the Additional Subscription Privileges, excluding any Greenstone Shares, provided always that the Standby Purchaser shall not be obligated to purchase Common Shares in an amount in excess of the Standby Commitment.

 

 

2.2

Under the Standby Commitment, the obligations of the Standby Purchaser will be as to a maximum of 297,914,908 Common Shares. For clarity, the Standby Commitment does not require the Standby Purchaser to subscribe for any Greenstone Shares.

 

2.3

The obligation of the Standby Purchaser to complete the Closing (as defined below) shall be subject to the fulfilment, or the waiver by the Standby Purchaser, of the following conditions, each of which is for the exclusive benefit of the Standby Purchaser and may be waived by the Standby Purchaser at any time, in whole or in part, in its sole discretion without prejudice to any other rights that it might have:

 

(a)

all documents to be delivered to the Standby Purchaser hereunder at or prior to the Closing will have been so delivered and will be in form and substance satisfactory to the Standby Purchaser, acting reasonably;

 

(b)

the representations and warranties of Coro contained herein shall be true and correct as of the Closing as if made as of such time after giving effect to the transaction contemplated herein and in the Rights Offering Notice and the Rights Offering Circular and to the exercise of all or any part of the Rights;

 

(c)

Coro shall have duly fulfilled and complied with all of its covenants contained herein to the extent that the same are required to be fulfilled or complied with at or prior to the Closing;

 

(d)

Coro will have made and/or obtained all necessary filings, approvals, orders, rulings and consents of the Toronto Stock Exchange (the "TSX") and all other governmental and regulatory bodies and any other person required in Canada in connection with the Rights Offering, the purchase of the Standby Commitment by the Standby Purchaser pursuant to this Agreement (including, without limitation, those relating to the listing of the Rights, the Common Shares issuable upon exercise of the Rights, and the Common Shares to be purchased by the Standby Purchaser hereunder, on the TSX);

 

(e)

there shall not have developed, occurred or come into effect or existence, or be announced, any event, action, state, condition or occurrence of national or international consequence or any law, action, regulation or other occurrence of any nature whatsoever which, in the opinion of the Standby Purchaser, acting reasonably, materially adversely effects or involves, or is expected to materially adversely effect or involve, financial markets generally or the assets, liabilities (contingent or otherwise), business, affairs, operations, financial condition or capital of Coro and its subsidiaries taken as a whole;

 

(f)

no (i) order issued by any Canadian, United States or other governmental or regulatory authority or body and no statute, rule, regulation or executive order promulgated or enacted by the Canadian or United States government or any other governmental authority shall be in effect which, or (ii) action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency wherein an unfavourable judgment, order, decree, stipulation, injunction, or charge which, would (x) prevent consummation of any of the transactions contemplated by this Agreement or the Rights Offering or (y) cause any of the transactions contemplated by this Agreement or the Rights Offering to be rescinded following consummation (and no such judgment, order, decree, stipulation, injunction, or charge shall be in effect).

 

 

(g)

Coro and the Standby Purchaser shall have received a written undertaking from Greenstone which among other things (i) waives Section 2.1(g) of the IRA to permit the size of the Coro board of directors to be increased, if necessary, to allow for the appointment of a nominee of the Standby Purchaser; (ii) waives Article 4 of the IRA in respect of the Rights Offering and Placement; (iii) waiving section 6.1 of the IRA in respect of the Rights Offering and Placement; (iv) confirms that Greenstone will not to acquire Rights in the Rights Offering in addition to those Rights issued to it in connection with the Common Shares owned by Greenstone prior to the commencement of the Rights Offering, and that Greenstone will exercise only the Basic Subscription Privilege forming part of such Rights unless otherwise agreed with the Standby Purchaser, and (v) provided the Standby Purchaser holds 10% or more of Coro's issued and outstanding Common Shares, confirm's Greenstone's agreement to exercise the voting rights attaching to Greenstone's common shares of Coro to vote in favour of the board nominee to which the Standby Purchaser is entitled to nominate at any general meetings of Shareholders, should the Standby Purchaser nominate a director pursuant to the exercise of such right.

 

2.4

The Standby Purchaser will be released from its obligation to complete the Closing if:

 

(a)

one or more of the conditions precedent to the Closing as set forth in Section 2.3 of this Agreement have not been satisfied or waived by the Standby Purchaser;

 

(b)

Coro fails to comply with its obligation to complete the Closing; or

 

(c)

the closing of the private placement of Coro announced concurrently with the Rights Offering (the "Placement") has not closed with the result that the Standby Purchaser is a registered holder of the 109,733,334 Common Shares purchased by it in the Placement.

 

Article 3
REPRESENTATIONS AND WARRANTIES

 

3.1

Coro represents and warrants to the Standby Purchaser that:

 

(a)

Coro is a corporation validly existing under the laws of the British Columbia and has the requisite corporate power and authority to own its properties and to carry on its business as now being conducted by it;

 

(b)

Coro has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

 

(c)

Coro has taken all requisite corporate action to authorize the creation and issuance of the Rights, the issuance of the Common Shares upon the exercise of the Rights (including the issuance of the Common Shares to be purchased by the Standby Purchaser hereunder), and the execution and delivery of this Agreement and the performance of Coro's obligations hereunder, and the execution and delivery of this Agreement and the performance of Coro's obligations hereunder will not constitute a breach of, or default under, the articles of incorporation or by-laws of Coro, or any of its subsidiaries, or of any agreement to which it, or any of its subsidiaries, is a party;

 

 

(d)

this Agreement has been duly executed and delivered by Coro and constitutes a legal, valid and binding obligation of Coro enforceable against Coro in accordance with its terms;

 

(e)               subject only to the qualifications with respect to same set out in the Subscription Agreement (and the related disclosure letter (the “Disclosure Letter”)) with respect to the placement between Coro and the Standby Purhcaser of even date herewith, Coro is the indirect or direct, as the case may be, beneficial owner of and/or has the right to use the properties, business and assets or the interests in the properties, business or assets referred to in the Public Record; all agreements by which Coro holds an interest in a property, business or asset are in good standing according to their terms, and the properties are in good standing under the applicable laws of the jurisdictions in which they are situated;

 

(f)                Coro has complied and will comply in all material respects with the requirements of all applicable corporate and securities laws, including, without limitation, the Securities Act (Ontario) and its regulations, the TSX Company Manual and the Business Corporations Act (British Columbia) in relation to the issue and trading of its securities and in all matters relating to the Rights Offering;

 

(g)

except as disclosed in the Public Record and the Disclosure Letter, Coro is not a party to any actions, suits or proceedings which could materially affect its business or financial condition, and no such actions, suits or proceedings are contemplated or have been threatened;

 

(h)              upon receipt of full payment therefor, the Common Shares issued pursuant to the Rights Offering will be duly and validly issued;

 

(i)                except as set out in the Disclosure Letter, there are no judgments against Coro, if any, which are unsatisfied, nor are there any consent decrees or injunctions to which Coro is subject;

 

(j)                the Public Record does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein in light of the circumstances under which they were made, and as at the date they were made, not misleading; and

 

(k)

Coro has not engaged in any "directed selling efforts" (as such term is defined in Regulation S under the U.S. Securities Act ("Regulation S")) in respect of the shares purchased pursuant to the Standby Commitment; Coro is, and at Closing will be, a "foreign private issuer" (as defined under Rule 405 of the U.S. Securities Act) and it reasonably believes that there is no "substantial U.S. market interest" (as defined in Regulation S) in the Common Shares; Coro has not taken and will not take any action that would cause the exemptions or exclusions from registration provided by Rule 903 of Regulation S to be unavailable with respect to offers and sales of the shares underlying the Standby Commitment.

 

 

3.2

The Standby Purchaser represents and warrants on its own behalf to Coro that:

 

(a)

it has the legal capacity to enter into and execute this Agreement and perform its obligations hereunder and under any other instruments delivered pursuant hereto;

 

(b)

this Agreement has been duly authorized by the Standby Purchaser, and has been duly executed and delivered by the Standby Purchaser and is a legal, valid and binding obligation of the Standby Purchaser, enforceable against it by Coro in accordance with its terms (except in any case as enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by equitable principles).

 

(c)

the execution and delivery of this Agreement by Standby Purchaser and the consummation of the transactions provided for herein will not result in the violation of, or constitute a default under or conflict with or cause the acceleration of any obligation of the Standby Purchaser under: (a) any provision of the constitutional documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Standby Purchaser, as applicable; (b) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over the Standby Purchaser; (c) any applicable law, statute, ordinance, regulation or rule to which the Standby Purchaser is subject or (d) any of the provisions of any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Standby Purchaser is a party or by which the Standby Purchaser or any of its respective property or assets is bound.;

 

(d)

it is not resident in the United States or a U.S. Person;

 

(e)

it was not, and will not be, offered any Common Shares acquired pursuant to Section 2.1 in the United States;

 

(f)

it was not, and will not be, in the United States at the time the buy order for any Common Shares acquired pursuant to Section 2.1 was or will be placed or this Agreement was executed;

 

(g)

it is not acquiring any Common Shares pursuant to Section 2.1 for the account or benefit of a person in the United States or a U.S. Person;

 

(h)

it has no intention to distribute either directly or indirectly any Common Shares acquired pursuant to Section 2.1 in the United States, except in compliance with the U.S. Securities Act and applicable state securities laws of any state of the United States;

 

(i)

it has not acquired any Common Shares pursuant to Section 2.1 as a result of any form of directed selling efforts (as such term is defined in Regulation S); and

 

 

(j)

it understands that the Common Shares pursuant to Section 2.1 have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, the Common Shares may not be offered or sold, directly or indirectly, in the United States except pursuant to registration under the U.S. Securities Act and the securities laws of all applicable states or available exemptions therefrom, and Coro has no obligation or present intention of filing a registration statement under the U.S. Securities Act in respect of any of the Common Shares pursuant to Section 2.1.

 

Article 4
COVENANTS

 

4.1

Coro covenants and agrees with the Standby Purchaser that:

 

(a)

at the time of filing and at the Closing, the Rights Offering Notice and the Rights Offering Circular will comply in all material respects with the requirements of the securities laws pursuant to which they have been filed and the respective regulations thereunder, including the rules and policies of the TSX and Nasdaq;

 

(b)

certificates representing the Rights shall be delivered to holders of Common Shares resident in Canada and the United States and other jurisdictions where the Rights may be lawfully distributed, but not elsewhere, promptly following the Record Date and, upon such delivery, the Rights will be validly issued and outstanding and the holders thereof will be entitled to the rights and privileges relating thereto described in the Rights Offering Notice and the Rights Offering Circular;

 

(c)

Coro will take or cause to be taken all steps as may be necessary to ensure that the distribution of the Rights, the Common Shares issuable upon exercise of the Rights and the Common Shares to be purchased by the Standby Purchaser hereunder comply in all material respects with all applicable securities laws and regulations and all published rules, policies and notices of all securities commissions, stock exchanges, securities regulatory authorities or other governmental or regulatory bodies having jurisdiction and will use its best efforts to cause such distribution to take place in accordance with all such laws, regulations, rules, policies and notices;

 

(d)

Coro will not enter into a standby commitment agreement, underwriting agreement or similar agreement with any other person in relation to the Rights Offering; and

 

(e)

Coro will not retain any agents to assist with the sale of Rights to any person, and shall not pay any commissions or compensation in the nature of a finder's or broker's fee to any person directly in connection with the Rights Offering.

 

Article 5
CLOSING ARRANGEMENTS

 

5.1

The closing (the "Closing") of the purchase by the Standby Purchaser and sale by Coro of the Standby Commitment pursuant to this Agreement shall be completed at the offices of legal counsel to Coro, at the Expiry Time or at such other time and place as Coro and the Standby Purchaser may agree upon in writing.

 

 

5.2

At the Closing, Coro shall deliver or cause to be delivered:

 

(a)

to the Standby Purchaser: a certificate signed by any two officers of Coro acceptable to the Standby Purchaser, certifying for and on behalf of Coro that:

 

(i)

it has complied with all covenants and satisfied all terms and conditions of this Agreement on its part to be complied with and satisfied at or prior to the Closing;

 

(ii)

there has been no material adverse change (actual, anticipated, proposed or prospective, financial or otherwise) in the business, affairs, operations, assets, financial condition, liabilities (contingent or otherwise) or capital of Coro and its subsidiaries taken as a whole, including any such change resulting from a material adverse change in the financial markets in Canada, from the date hereof to the Closing; and

 

(iii)

the representations and warranties of Coro contained herein are true and correct as of the Closing after giving effect to the transactions contemplated herein and in the Rights Offering Notice and the Rights Offering Circular; and

 

(b)

in accordance with the Standby Purchaser's delivery instructions: a definitive certificate representing the Common Shares to be purchased by the Standby Purchaser pursuant to Section 2.1(c) of this Agreement, if any, registered in the name of the Standby Purchaser or its permitted assignee(s), or such other evidence of the ownership of such Common Shares as the Standby Purchaser may request.

 

against payment by the Standby Purchaser by bank draft, wire transfer or certified cheque to Coro, or as Coro may otherwise direct, of the aggregate purchase price for the Common Shares to be purchased by the Standby Purchaser pursuant to this Agreement.

 

Article 6
INDEMNIFICATION AND CONTRIBUTION

 

6.1

Coro agrees to indemnify and hold harmless the Standby Purchaser and its affiliates (each such person, an "Indemnified Party") to the extent fully permitted by law from and against any losses, claims, damages and liabilities, joint or several (collectively, the "Damages"), to which such Indemnified Party may become subject in connection with or otherwise relating to or arising from (i) any claims by a third party against an Indemnified Party in respect of the obligations of the Standby Purchaser under this Agreement or (ii) any inaccuracy in or breach or nonfulfillment of or noncompliance with any of the covenants or agreements or representations and warranties made by Coro in this Agreement (collectively, the "Indemnifiable Events").

 

6.2

Coro will reimburse each Indemnified Party for all reasonable fees and expenses (including the reasonable fees and expenses of counsel) (collectively, "Expenses") as incurred in connection with investigating, preparing, pursuing or defending any threatened or pending claim, action, proceeding or investigation (collectively, the "Proceedings") arising from an Indemnifiable Event, whether or not such Indemnified Party is a formal party to such Proceeding; provided, that Coro will not be liable to any such Indemnified Party to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted solely from the gross negligence or wilful misconduct of the Indemnified Party seeking indemnification hereunder.

 

 

6.3

If for any reason other than in accordance with this Agreement, the foregoing indemnity is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless in respect of an Indemnifiable Event, then Coro will contribute to the amount paid or payable by an Indemnified Party as a result of Damages (including all Expenses incurred) in respect of an Indemnifiable Event in such proportion as is appropriate to reflect the relative benefits to Coro and/or the Shareholders on the one hand, and the Standby Purchaser and/or any other Indemnified Party on the other hand, in connection with the matters covered by this Agreement or, if the foregoing allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties as well as any relevant equitable considerations. In ascertaining relative fault, reference shall be made to, among other things, whether any alleged untrue statement or omission or any alleged conduct relates to information provided by Coro or other conduct by Coro (or its employees or other agents) on the one hand, or by the Standby Purchaser, on the other hand.

 

6.4

Coro agrees not to enter into any waiver, release or settlement of any Proceeding (whether or not the Standby Purchaser or any other Indemnified Party is a formal party to such Proceeding) in respect of which indemnification may be sought hereunder without the prior written consent of the Standby Purchaser (which consent will not be unreasonably withheld), unless such waiver, release or settlement (i) includes an unconditional release of the Standby Purchaser and each Indemnified Party from all liability arising out of such Proceeding and (ii) does not contain any factual or legal admission by or with respect to any Indemnified Party or any adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.

 

6.5

The indemnity, reimbursement and contribution obligations of Coro hereunder will be in addition to any liability which Coro may have at common law or otherwise to any Indemnified Party and will be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of Coro or an Indemnified Party. The provisions of this Article 6 will survive the modification or termination of this Agreement.

 

Article 7
TERMINATION

 

7.1

The Standby Purchaser may terminate its obligations under this Agreement by notice in writing to Coro if:

 

(a)

the conditions precedent to the Closing, as set forth in Section 2.4 of this Agreement have not been satisfied or waived by the Standby Purchaser by the Expiry Time; or

 

(b)

any order to cease trading the securities of Coro is made by a competent regulatory authority and that order is still in effect; or

 

(c)

the Rights Offering Notice and the Rights Offering Circular are not accepted for filing by the regulatory authorities having jurisdiction within 60 days of the reference date of this Agreement.

 

 

Article 8
GENERAL

 

8.1

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered by personal delivery, prepaid courier, email or facsimile, addressed as follows:

 

(a)

if to Coro:

 

Coro Mining Corp.
82 Richmond St East
Suite 400
Toronto, Ontario
M5C 1P1

 

Attention: Nicholas Bias

Telephone: +44 (0)7771 450 679

Email: [email protected]

(b)

if to the Standby Purchaser:

 

 

Ndovu Capital XIV B.V.

Hoogoorddreef 15,

1101 BA Amsterdam,

The Netherlands

 

Attention:	The Directors
Telephone:	+31 20 5222554
Email:	[email protected]
Facsimile:	+31 20 4422592

 

or to such other address of which written notice is given in the manner specified herein, and each such notice or other communication shall be deemed to have been given and received on the date it is delivered (by personal delivery or prepaid courier) to such address, provided that, if such day is not a Business Day in the place of delivery, then it shall be deemed to have been given and received on the Business Day next following such day. Any notice or other communication transmitted by email or facsimile shall be deemed to have been given and received on the first Business Day at its destination after the date of transmission.

 

8.2

All warranties, representations, covenants and agreements of Coro or the Standby Purchaser contained herein or contained in any document submitted pursuant to this Agreement and in connection with the transaction of purchase and sale herein contemplated shall survive the purchase of Common Shares by the Standby Purchaser and continue in full force and effect for a period of two years notwithstanding any investigation, inquiry or other steps which may be taken by or on behalf of the Standby Purchaser or Coro.

 

8.3

Subject to applicable law and the rules and regulations applicable to Coro and the Standby Purchaser, none of the parties hereto shall issue any press release or public announcement relating to matters provided for herein without the approval of the other parties hereto, which approval may not be unreasonably withheld or delayed.

 

 

8.4

Time shall be of the essence hereof.

 

8.5

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

8.6

Unless specifically otherwise provided, all dollar amounts referred to herein are in Canadian funds.

 

8.7

Coro and the Standby Purchaser shall each sign such further and other documents, cause such meetings to be held, use their best efforts to cause such resolutions to be passed, exercise their vote and influence and do and perform (and cause to be done and performed) such further and other acts or things as may be necessary or desirable in order to give full effect to this Agreement.

 

8.8

The Standby Purchaser may assign this Agreement or any of its rights hereunder to one or more affiliates controlled by the Standby Purchaser or nominate such assignee(s) to perform the Standby Commitment or any part thereof on its behalf provided that: (a) each such assignee is able to provide such representations and warranties and perform such covenants as are necessary in order for Coro to issue the Common Shares to the assignee in compliance with all applicable securities legislation and stock exchange policies and for the assignee to act as guarantor to the Rights Offering in compliance with all applicable securities legislation and stock exchange policies; (b) each such assignee is able to provide the representations and warranties set forth in subsections 3.2(d) through 3.2(j) of this Agreement; and (c) the Standby Purchaser guarantees the obligations of the assignee(s) under this Agreement. The Standby Purchaser hereby guarantees the obligations of its assignee(s) if there is an assignment of this Agreement. Subscription of Common Shares by the assignee(s) of the Standby Purchaser to the amount committed under the Standby Commitment shall be deemed to be the compliance of the Standby Commitment by the Standby Purchaser.

 

8.9

This Agreement may be executed in any number of counterparts, each of which shall constitute an original, and all of which shall constitute one and the same agreement.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

 

 

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first stated above.

 

 

 

CORO MNING CORP.

 

By: _”Signed”_____________________________
Name: Luis Albano Tondo
Title: Chief Executive Officer

 

NDOVU CAPITAL XIV B.V.

 

By: _”Signed”_____________________________
Name: Augentius (Netherlands) B.V.
Title: Managing Director / Authorized Signatory

 

 

 

 

 

 

 

 

 

Signature Page to Standby Commitment Agreement