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TORONTO, ON and SUDBURY, ON, July 3,
2014 /CNW/ - Darnley Bay Resources Limited (TSXV: DBL)
("Darnley Bay") and Canadian Arrow Mines Limited (TSXV: CRO)
("Canadian Arrow") (collectively the "Companies") and
their respective Boards of Directors (the "Boards") are
pleased to announce they have entered into a non-binding letter of
intent (the "Letter of Intent") with respect to a proposed
business combination (the "Proposed Transaction") of the
Companies. The Proposed Transaction, if completed, will create a
larger exploration and development company with experienced
management.
Pursuant to the terms of the Letter of Intent, Darnley Bay would
issue to Canadian Arrow shareholders 0.82 of a common share in
Darnley Bay (the "Darnley Bay Shares") for every 1 (one)
common share of Canadian Arrow. Holders of options of Canadian
Arrow will receive replacement options in Darnley Bay such that
each former Canadian Arrow option will be exchanged for a Darnley
Bay replacement option, exercisable for that number of Darnley Bay
shares that is equal to the number of Canadian Arrow shares that
would otherwise have been issuable thereunder as adjusted by the
foregoing exchange ratio with the exercise price of such Darnley
Bay replacement option being adjusted based on the exchange
ratio.
Kerry Knoll, Chairman of Darnley
Bay, said of the proposed transaction: "this business combination
will result in a much stronger company with a mine ready to develop
into production and a number of very exciting exploration
targets."
The Kenbridge nickel property held by Canadian Arrow was last
drilled in 2008 and, if the Proposed Transaction is completed, one
of the first undertakings of the combined company will be to
complete a drilling program to drill for a potential strike
extension of hole 07-180, which returned 21.5 metres grading 2.95%
Ni and 0.82% Cu, including 5.5 metres grading 7.2% Ni and 0.67% Cu.
This was not previously followed up on by Canadian Arrow due to
lack of funds. The new company also plans to undertake a bankable
feasibility study on the Kenbridge deposit. Work will also continue
on the Darnley Bay property in the Northwest Territories, which hosts one of the
world's strongest gravity anomalies.
Dean MacEachern, Chief Executive
Officer of Canadian Arrow, said: "Kerry
Knoll and his team have a proven track record of becoming
involved in undervalued advanced projects and doing the necessary
work to bring those projects through feasibility to production.
Kerry's past success and his confidence in the quality of the
Kenbridge Nickel Deposit is a vote of confidence for Canadian Arrow
shareholders."
The Letter of Intent provides that on completion of the Proposed
Transaction the board of directors would initially be composed of
six (6) members consisting of three (3) nominees from Darnley Bay
and three (3) nominees from Canadian Arrow. Kerry Knoll will serve as Chairman, while
Darnley Bay's current President Jamie
Levy will continue to serve as President and Chief Executive
Officer of the combined Companies.
The Letter of Intent includes customary non-solicitation
covenants by both parties together with customary exemptions to
permit the respective boards of directors to exercise their
fiduciary duties. In addition, the agreement provides
for a mutual break fee of $200,000
payable by Darnley Bay or Canadian Arrow, as applicable in certain
situations where the Agreement is terminated or the Transaction is
not completed.
The Letter of Intent is non-binding other than the covenants
with respect to non-solicitation, payment of the above referenced
break fee, access to records to allow the parties to conduct their
respective due diligence investigations, public announcements and
conduct of business prior to completion of the Proposed
Transaction.
Completion of the Proposed Transaction will be subject to
certain standard conditions including, without limitation: (a)
entering into a definitive agreement; (b) receipt of all necessary
consents, waivers, permits, exemptions, orders and approvals,
including the approval of the TSX Venture Exchange (the
"TSXV"); (c) receipt of shareholder approval by Canadian
Arrow shareholders to the Proposed Transaction and (d) completion
of an equity financing to raise not less than $5 million. The
Proposed Transaction will not be subject to the approval of the
shareholders of Darnley Bay.
Full details of the Proposed Transaction will be included in the
management information circular that Canadian Arrow will prepare
and file with the regulatory authorities and mail to its
shareholders in connection with the special meeting of the Canadian
Arrow shareholders to be held to consider the transaction and in
accordance with applicable law.
Dean MacEachern is the Qualified
Person pursuant to National Instrument 43-101 with respect to the
technical information regarding the Canadian Arrow property
disclosed in this press release and has reviewed and approved the
contents of this press release.
About Darnley Bay Resources Limited
Darnley Bay's main focus is exploration for base metals and
diamonds in an area surrounding the hamlet of Paulatuk, located along the shores of Darnley
Bay, in the Inuvialuit Settlement Region, NWT, Canada.
About Canadian Arrow Mines Limited
Canadian Arrow is an experienced exploration and mine operating
team that is focussed on acquiring and developing economically
viable nickel sulphide deposits near existing infrastructure.
Canadian Arrow operates in north-western Ontario, near the towns of Kenora and Dryden. The company's main asset is the
Kenbridge Nickel Project, a nickel-copper sulphide deposit
containing over 98 million lbs of nickel in Measured &
Indicated Resources. The deposit is equipped with a 620m
shaft and has never been mined.
On behalf of the Boards of the Companies,
Jamie Levy
President & Chief Executive Officer
Dean MacEachern
Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
The securities offered will not be registered under the
United States Securities Act of 1933, as amended (the "Act")
and may not be offered or sold in the
United States absent registration or an applicable exemption
from the registration requirements of the Act.
Completion of the Proposed Transaction is subject to a number
of conditions including but not limited to TSXV acceptance and if
applicable pursuant to the TSXV requirements, receipt of approval
by Canadian Arrow shareholders to the Proposed Transaction.
Where applicable, the Proposed Transaction cannot close until the
required shareholder approval is obtained. There can be no
assurance that the Proposed Transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Proposed Transaction, any information
released or received with respect to the Proposed Transaction may
not be accurate or complete and should not be relied upon.
Cautionary Statements to Shareholders – Forward Looking
Statements
This news release contains certain "forward-looking
statements" and "forward-looking information" under applicable
securities laws, and include any statements regarding beliefs,
plans, expectations or intentions regarding the future. All
statements in this release, other than statements of historical
facts are forward-looking statements that involve various risks and
uncertainties. Such forward looking statements include, among
others, that the Proposed Transaction will be completed and that
the combined entity will add opportunity and value for its
shareholders. Forward-looking statements are based on the opinions
and estimates of management at the date the statements are made,
and are based on a number of assumptions and subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking statements. Although the Companies believe
the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees
of future performance and actual results or developments may differ
materially from those in the forward-looking statements.
Assumptions upon which such forward-looking statements are based
include that Darnley Bay and Canadian Arrow will be able to
negotiate and execute definitive transaction documentation, that
the due diligence investigations by each of Darnley Bay and
Canadian Arrow will not identify any materially adverse facts or
circumstances, that all required approvals will be obtained from
the shareholders of each of Darnley Bay and Canadian Arrow, that
all required third party regulatory and governmental approvals to
the Proposed Transaction will be obtained and all other conditions
to completion of the Proposed Transaction will be satisfied or
waived. It is important to note that actual outcomes and actual
results could differ materially from those in such forward-looking
statements. Factors that could cause actual results to vary
materially from results anticipated by such forward-looking
statements include: (1) the failure to complete the Proposed
Transaction for whatever reason; (2) the combined entity's ability
to raise the necessary financing for operations and to complete any
acquisitions or pursue any further exploration and development
opportunities; (3) risks inherent in the mining industry.
Each of Darnley Bay and Canadian Arrow undertake no
obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events, changes in management's estimates or opinions or
otherwise, unless so required by applicable laws or regulatory
policies. For additional discussion of risks and uncertainties,
readers should also refer to the annual Management's Discussion and
Analysis and other filings for each of Darnley Bay and Canadian
Arrow filed with the securities regulatory authorities in
Canada and available at
www.sedar.com. The reader is cautioned not to place undue reliance
on forward-looking statements.
SOURCE Darnley Bay Resources Limited