Concordia Resource Corp. (TSX VENTURE: CCN) ("Concordia") and Swala
Resources Inc. ("Swala") are pleased to announce that they have
entered into a letter of intent, dated August 31, 2011, in which
Concordia will acquire Swala via a share exchange. Swala will bring
to Concordia an extensive exploration portfolio in the resource
endowed regions of Burkina Faso, Gabon, the Democratic Republic of
Congo, Zimbabwe and Mozambique with a land package totaling over
12,400 km2, as well as an experienced management team and board of
directors with extensive expertise in Africa. With the completion
of the merger Concordia will have an established operating platform
from which it can pursue an aggressive growth strategy towards
becoming a leading African gold exploration company. "Swala's
highly prospective African exploration portfolio represents a new
platform and direction for Concordia. Our strong cash position and
unique public markets experience combines well with Swala's African
focused operations team. Swala provides a good spread of
exploration projects, including their most advanced one in Burkina
Faso, early access to an exciting deal flow, in-depth African
experience that can go a long way to identify and mitigate
political risk, a first class technical team, and the means to
straddle the Anglo/French lingual and cultural context that is part
of the African business and political environment. This acquisition
builds on a strategy to create shareholder value in some of the
most productive geologic environments in the world," stated Edward
Flood, CEO of Concordia.
The Transaction
Under the letter of intent, the parties will negotiate and enter
into a definitive agreement pursuant to which Concordia will
acquire Swala, by way of a plan of arrangement. In accordance with
the terms of the letter of intent, Concordia is proposing to
exchange each share of Swala for 1.9 shares of Concordia. Swala
currently has 13,449,210 shares issued and outstanding, or
committed to be issued, 1,342,500 share options with a weighted
exercise price of $1.41/share issued or committed to be issued, and
2,985,121 warrants. It is proposed that options will be exercised
for Swala shares before the transaction completes (the "Closing"),
or will be exercised on Closing for Concordia shares, on a
cashless, in-the-money value basis, using the same 1:1.9 share
exchange ratio. Each unexercised warrant will be exchanged for 0.5
Concordia warrants, with a weighted average strike price of
$0.86.
Assuming satisfactory completion of due diligence, it is
anticipated that the definitive agreement will be entered into by
October 17, 2011. The definitive agreement will provide for
conditions precedent that are standard for a transaction of this
nature, including receipt of all regulatory and TSX Venture
Exchange approvals, and approval by Swala's shareholders. Swala
will be free of all debt and will not have a negative working
capital at Closing. Lockup agreements will be entered into with
shareholders who hold, in aggregate, 30% or more of the issued and
outstanding shares of Swala.
The combined company will retain the Concordia name and remain
headquartered in Vancouver, Canada. Swala will become a wholly
owned subsidiary of Concordia and Swala shareholders will become
shareholders of Concordia, holding approximately 30% of the issued
and outstanding shares of Concordia post-Transaction.
The Financing
Concordia has also agreed that concurrent with the execution of
the Definitive Agreement by the parties it will acquire, through a
private placement (the "Private Placement") of units of Swala,
comprised of that number of Swala Shares that will equal
approximately 9.9% of the then issued and outstanding Swala Shares,
plus 450,000 Swala Warrants with a strike price of $1.93, at a
price of $1.36 per unit, for gross proceeds of approximately
C$2,000,000. The purpose of the Private Placement is to provide
funds for an accelerated drill program on the Arae-Gassel project
in Burkina Faso during the completion of the merger
transaction.
ABOUT SWALA
Swala is a private company founded in 2007 by African mining
investors with a history of successful development in Africa, and a
group of former Anglo American and De Beers executives with
extensive experience of operations throughout the African
continent.
Swala is an African-focused explorer with an emphasis on
developing gold deposits holding the potential of one million
ounces upwards. The current program is designed to create value
with an accelerated drilling campaign on its exploration projects
in Burkina Faso, where it owns 100% of the Arae-Gassel property,
and in the two Gueguere properties, where it is earning into 80%
ownership in a joint venture with SearchGold Resources.
Swala also holds a 20% option on any discoveries made by
AngloGold Ashanti on two licences in Gabon totaling 4,000 km2 that
were sold to them by Swala in an agreement reached in 2009. This is
basically a carried interest to Feasibility Study.
In addition, Swala is in the process of finalizing a new joint
venture agreement to finance and carry out a large early stage
exploration venture covering some 7,500 km2 in the Democratic
Republic of the Congo to which it owns the rights. This is jointly
owned with Bugeco, a private Belgian geological consultancy with
close links to Swala (www.bugeco.com), who identified the target
and owned the data. It is a target that is characterized by
anomalous levels of platinum, palladium, nickel, copper cobalt,
chromium, vanadium and magnesium from geochemical analysis of
widely spaced stream sediment samples and overlies a Norils'k Ni-Cu
type flood basalt setting.
ABOUT CONCORDIA
Concordia Resource Corp. is a mineral exploration company with
property holdings in North and South America and Spain. Concordia
holds a 100% interest in the Albisu gold discovery in Nevada, and
is the operator of a joint venture with Renaissance Gold Inc.,
whereby it is earning a 70% interest in the Baza gold-copper
project in Spain. Through its wholly owned South American
subsidiary, Meryllion Minerals Corp., Concordia has an option to
purchase 100% of the historic La Providencia silver mine located in
the Puna of northwestern Argentina and has also acquired an option
to purchase the 14,000 ha Cerro Amarillo-Cajon Grande copper-gold
property located in the Malargue District of Argentina. Concordia
has its head office and executive management team in Vancouver,
Canada; and its technical team is based in Reno, Nevada.
On behalf of the Board of Concordia Resource Corp.
R. Edward Flood, Chairman
Forward Looking Statements
Certain of the statements made and information contained herein
is "forward-looking information" within the meaning of the Ontario
Securities Act, including the receipt of necessary permits to
conduct exploration and construction, timing of anticipated
exploration program, the number of the holes and meters to be
drilled and future plans of the Company. Forward-looking
information is subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those
reflected in the forward-looking information, including, without
limitation, risks and uncertainties relating to risks inherent in
mining including environmental hazards, industrial accidents,
unusual or unexpected geological formations, ground control
problems and flooding; risks associated with the estimation of
mineral resources and reserves and the geology, grade and
continuity of mineral deposits; the possibility that future
exploration, development or mining results will not be consistent
with the Company's expectations; the potential for and effects of
labour disputes or other unanticipated difficulties with or
shortages of labour or interruptions in production; actual ore
mined varying from estimates of grade, tonnage, dilution and
metallurgical and other characteristics; the inherent uncertainty
of production and cost estimates and the potential for unexpected
costs and expenses, commodity price fluctuations; uncertain
political and economic environments; changes in laws or policies,
delays or the inability to obtain necessary governmental permits;
and other risks and uncertainties, including those described in
each management discussion and analysis. Forward-looking
information is in addition based on various assumptions including,
without limitation, the expectations and beliefs of management, the
assumed long term price of metals; appropriate equipment and
sufficient labour and that the political environment where the
Company operates will continue to support the development and
operation of mining projects. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in the forward-looking information. Accordingly, readers are
advised not to place undue reliance on forward-looking
information.
The TSX-V has neither approved nor disapproved the contents of
this press release. Neither the TSX-V nor its Regulation Services
Provider (as that term is defined in the policies of the TSX-V)
accepts responsibility for the adequacy or accuracy of this press
release.
Contacts: Concordia Resource Corp. Karl Cahill VP, Investor
Relations +1-858-531-6100 info@concordiaresourcecorp.com
www.concordiaresourcecorp.com
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