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Dear Shareholders and Interested Parties

We have decided to spin out our large Finnish gold mine, Laiva to Pilar Gold shareholders as part of our plan to restart production this summer. If we can achieve our medium term goal of 80,000 ounces per year, Laiva Gold will be the largest European pure play gold producer. Our focus is to maximise shareholder value, and we think this structure allows Laiva Gold to re-rate substantially as production grows.


In November 2022, we acquired Laiva in Central Finland debt free and creditor free. The acquisition was in line with our strategy to ´Buy rather than Build´ large, long-life gold mines at a big discount to replacement cost. We bought Laiva for C$30 million through the issuance of 30 million Pilar Gold shares at a deemed price of C$1.00/share along with 10 million warrants with a C$1.50 strike price.


In conjunction with the spin-out, Laiva Gold is launching a seed round to raise up to C$10 million at the same price of C$0.50 per share with no promote. The proceeds will be used primarily for the Laiva mine restart, partial payment to Pilar Gold and general working capital purposes. A pre-money equity market cap of only C$15 million offers a highly attractive entry point for investors in Laiva Gold at a significant discount to asset value.


Largest gold plant in Europe


To build Laiva today and its 6,000 tpd production facility would cost some €400 million and take at least 3 years to complete. We are happy with the progress the team has made to resume production. Finland is considered one of the top mining jurisdictions in the world and routinely ranks #1 in Europe. (Fraser Institute Annual Survey 2021). A visit to Laiva is a must to appreciate just how big this opportunity is for shareholders and why we think this operation will have a 20+ year mine life.


Back in Brazil, Pilar Gold will remain focused on upgrading our fleet at PGDM and restarting our super high grade mine Sertão which will allow production to double and reduce our overall AISC to less than $1,200 per ounce.

Laiva Gold Presentation - Seed Round - March 2023

Jeremy Gray comments: “We consider Finland to be one of the best countries to operate in the industry and have decided to spin Laiva out to Pilar Gold shareholders. We want our Laiva project to have a path to grow and access funding on its own merit. Laiva was first commissioned in 2011 just a few months before the 11-year bear market in gold began. Laiva is fully built and ready to start in hopefully a much better gold price environment as we wrote about in A Brave New World for Gold.”


Laiva has its own management team led by General Manager, Jim Jackson. Jim comments: “The team has spent the last 3 months planning for a re-start during the spring and summer months when the region is blessed with long daylight hours. The time is right to finally show Laiva’s true potential.”

What does this mean for Pilar shareholders?


Pilar sells its Finnish subsidiary Laiva Gold Oy to a newly formed company, Laiva Gold Inc, for C$30 million comprised of C$15 million in cash and 30 million shares of Laiva at a deemed price of C$0.50 per share. The C$15 million cash component will be satisfied by a note payable to Pilar Gold and will have a 5.0% interest rate with repayment over a 3-year period as friendly vendor finance.


The repayment schedule will be subject to Laiva achieving certain milestones of production and will not put Laiva under undue stress to ensure management can focus on delivering the true potential of the Laiva Gold business. We think the previous operators laboured under too much debt and it is important that Laiva is given all the space and time it needs to become a great success.


The 30 million Laiva Gold shares held by Pilar Gold will then be proportionately distributed by dividend to Pilar shareholders of record as at April 15, 2023. There will be no promotor shares or warrants, so Pilar Gold shareholders will receive the same percentage ownership in Laiva Gold corresponding to their Pilar shareholdings, representing a true ground-floor opportunity.


The current Pilar Gold private placement at $C1.00, which includes a full warrant priced at $1.50, remains open until March 31, 2023. Please note, those who subscribe for this Pilar round will also beneficially receive pro-rata shares in Laiva Gold. Based on the current share count for Pilar Gold of 244 million shares, Pilar shareholders will receive approximately 1 new Laiva Gold share for each 8 Pilar Gold shares owned.

Pilar Gold shareholders have first priority in the Laiva Gold private placement at $0.50/share, and we encourage you to take advantage of this ground-floor opportunity to top up your holding. We also welcome new shareholders and look forward to listing in Q4 2023.

Laiva Gold Seed Round Subscription Form - March 2023

This transaction has several benefits for Pilar Gold, Laiva Gold and shareholders of both companies:

  • Pilar Gold can focus on its Brazilian operations and opportunities in the region;

  • Pilar Gold receives C$15 million in cash over a three-year period;

  • Pilar shareholders receive free shares in Laiva Gold on a pro-rata basis to their holding in Pilar Gold and have priority to participate in Laiva Gold’s fundraising;

  • Opportunity to build a stake in Laiva Gold at a very attractive entry valuation with the potential for Laiva Gold’s valuation to rise multiple times;

  • No promoter shares, no warrants. Everyone participates at the same terms;

We are confident that this transaction will create significant shareholder value for Pilar Gold and Laiva Gold shareholders. Please do not hesitate to contact us if you have any questions. We look forward to welcoming you as a shareholder in Laiva Gold.

Kind Regards,

Jeremy Gray | CEO
Jeremy.Gray@PilarGold.com


Charles Chebry | President
Charles.Chebry@LaivaGold.com

Jim Jackson | Country Manager of Laiva Gold
Jim.Jackson@LaivaGold.com

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