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Montan Mining Corp. (MNY.V) has signed a term sheet with Pacific Alliance Capital Group Ltd. for the purchase, by Montan, of the Peruvian companies Kairos Capital Peru SAC and M&S Transportes y Servicios Generales SRL from Pacific Alliance.

The key assets ("Pacific Alliance Assets") held by the companies under acquisition include the 100% owned 125TPD Mirador Processing Plant located in Chimbote, Peru and six (6) 100% owned mineral concessions as well as options to buy three (3) additional mineral concessions. Montan will be afforded the opportunity to review these options for acquisition during the due diligence process. Two (2) of the Au concessions are located 10km from Montan's Cerro Dorado plant in Arequipa.

The Mirador plant is fully operational and currently has a two (2) months of material stockpiled and quequed for processing through its flotation circuit. The Mirador plant is fully permitted to 125 TPD and currently operating at 100TPD through its 100TPD flotation circuit. The plant also features a 25TPD carbon in pulp ("CIP") gold circuit which is on standby. The Mirador plant is strategically located 450km north of Lima whereas the majority of the toll milling industry is focused in the south of the country in the Chala and Nazca districts.

The operational team of Kairos consists of four (4) full time resident Korean engineers, one (1) of whom will guide the start-up at Montan's newly acquired Cerro Dorado plant.

"The acquisition of Kairos S.A.C and its Mirador plant is a transformative acquisition for Montan Mining. Upon closing of the transaction, Montan will have secured a fully operating asset in the strategic northern part of Peru where there is almost negligible competition and a readily available supply of high grade mineralized material which is currently being trucked over 1,200km south for processing in Chala or Nazca. With this acquisition, Montan will become the first Canadian public company with two geographically strategic plant locations, and will also own one (1) fully permitted mine at Rey Salomon and ten (10) highly prospective and strategically located mineral claims. This integrated precious metals mining and processing model will allow Montan to ensure a secure source of feed for its plants and to deliver cash flow from which to build out future growth," stated Luis F. Zapata, Executive Chairman of Montan Mining.

Acquisition Terms:

Montan will purchase 100% of Kairos and Mirador from Pacific Alliance in exchange for:

  • The payment of USD $3 Million in cash to Pacific Alliance, in compensation for US$3.4 Million in debt currently held by the parent company of Pacific Alliance;
  • The issuance of USD $3 Million in MNY shares at the next major MNY private placement issue price.

Upon the acquisition of Kairos by Montan, Pacific Alliance and Mirador would also transfer the full value of the tax creditable capital allowances of the full US$3.4 Million expended to Montan.

Upon closing of the transaction Montan will allow for Kairos to nominate one (1) director to the Board of the Company.

Pursuant to the Term Sheet, Pacific Alliance grants Montan the exclusive right to close a transaction to acquire Kairos and Mirador on terms reflective of the transaction contemplated in the Term Sheet until June 30th, 2017 (the "Exclusivity Period"); this Exclusivity Period provides Montan with ample time to secure funds to cover the costs of the acquisition of Kairos and Mirador, the expansion capital and operating expenses of its Cerro Dorado acquisition, and to complete all due diligence related to the acquisition.

Pacific Alliance has agreed that during the Exclusivity Period neither it, nor any of its subsidiaries will, solicit, discuss, negotiate, facilitate, or accept any offers for a Transaction with or from any other third party.

Closing of the transaction is conditional upon TSX Venture Exchange approval.

The technical information in this news release has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 and the scientific and technical information in this news release has been reviewed on behalf of the company by Ms. Jenna Hardy, M.Sc., P.Geo., of Nimbus Management Ltd., a Qualified Person.

About Montan Mining Corp.

Montan Mining Corp. is an emerging gold producer focusing on monetizing mining assets in Peru. The company is backed by an experienced management team with diverse technical, market, and finance expertise and is supported by committed and sophisticated investors focused on building long term value for shareholders.