VANCOUVER, May 8, 2019 /CNW/ - Colorado Resources Ltd.
(TSXV: CXO) ("Colorado") and Buckingham Copper Corp. ("Buckingham")
are pleased to announce that they have entered into a non-binding
letter of intent (the "LOI") contemplating a potential acquisition
by Colorado of all of the issued
and outstanding common shares (the "Buckingham Shares") of
Buckingham (the "Proposed Transaction").
Proposed Transaction Highlights
- Adds key ground to Colorado's Golden Triangle land package.
Buckingham holds an option to earn a 100% interest in the Moat
Property (Figure 1) which is strategically located between
Colorado's Kinaskan-Castle
Property, and GT Gold's Tatogga1 Property.
Tatogga1 contains high-grade, epithermal
gold-silver-copper vein-style mineralization at Saddle
South1 (GT Gold1 news February 12, 2019) and high-grade, large tonnage
gold-copper porphyry mineralization at Saddle North1 (GT
Gold1 news January 9,
2019). Similar styles of mineralization have been documented
at Colorado's Castle Central and
Castle East occurrences, reflected in large-scale gold-copper soil
geochemical with coincident IP geophysical anomalies, located only
4 km along geological trend to the west of Tatogga1
(Colorado news October 22, 2018). High-quality gold-copper
targets outlined by Colorado
during the 2016-2018 field seasons have yet to be drill
tested.
- Additional copper-gold porphyry target in British Columbia. Buckingham owns 100% of
the Sofia Property (Figure 2) which covers 9,113 Ha and is located
approximately 30 km north of Centerra's Kemess1 Project.
The Property includes several large copper-gold porphyry targets
based on coincident geophysical-geochemical anomalies, and numerous
precious-metal vein prospects as well.
- Experienced technical team. Buckingham's highly
experienced technical team includes Michael
Cathro, Dr. Jim Oliver,
Mark Rebagliati, Alex Walcott and Justin
Himmelright. The team is very familiar with the Colorado land tenure, and possess world-class
expertise in the regional geology of the Golden Triangle, having
worked extensively on its contained gold-copper porphyry and
epithermal gold-silver-copper mineral systems. The Buckingham and
Colorado combined teams have
long-standing positive relationships with local communities and BC
government regulators.
- Complementary leadership and management.
Colorado will retain three
existing directors, including Patrick
Soares who will continue as Chairman of the Board.
Buckingham will propose two directors, including Michael Cathro. Joseph
Mullin, Buckingham's CEO, an experienced restructuring and
M&A professional who has worked for Goldman Sachs, Invesco Ltd.
and Millennium Global Investments, and has held a number of
operating roles, will be appointed CEO of Colorado replacing Robert Shaw, Colorado's current President and CEO. In
addition, a newly appointed CFO and Corporate Secretary will
replace Terese Gieselman. Both Mr.
Shaw and Ms. Gieselman are leaving to pursue other interests and
are thanked for their service to Colorado.
- Provides 2019 funding for exploration at
Kinaskan-Castle-Moat. Under the agreement Buckingham will be
bringing through the Concurrent Financing a minimum of $2.5 million, a $1.5
million work program is being planned for exploration at
Castle and Moat. Work is expected to include ground based
exploration leading to drilling in Q3. Colorado holds a valid permit for exploration
drilling at Kinaskan-Castle (Colorado Resources news October 22, 2018).
- Minimal Dilution to CXO Shareholders: As contemplated,
the Proposed Transaction and Concurrent Financing will result in
existing Colorado shareholders
owning approximately 76.9%, Buckingham shareholders owning
approximately 7.7% and the participants of the Concurrent Financing
owning approximately 15.4% of the post-closing issued and
outstanding Colorado Shares.
Terms of Transaction
Under the terms of the LOI, should the Proposed Transaction be
implemented, all of the Buckingham Shares will be exchanged for
Colorado common shares ("Colorado
Shares") on the basis of 0.50 of a Colorado Share for each
Buckingham Share (the "Exchange
Ratio"). The Exchange Ratio implies consideration of C$1,249,054 for 100% of the Buckingham Shares at
an equivalent price of C$0.10 per
Colorado Share. This represents a premium of 67% based on the
closing price of Colorado Shares on the TSX Venture Exchange
("TSXV") on May 3, 2019.
In order to provide Colorado
with bridge financing, Buckingham has provided a C$200,000 non-recourse subordinated loan to
Colorado upon signing of the LOI
("Loan").
In addition to the other conditions identified below, Buckingham
is required to raise a minimum of C$2,500,000 via a subscription receipt
("Subscription Receipt") offering at a weighted average minimum
price of C$0.10 per Subscription
Receipt. The Subscription Receipts will ultimately be exchanged for
Colorado Shares and Colorado share purchase warrants on
closing of the Proposed Transaction ("Concurrent Financing").
The Proposed Transaction is subject to a range of conditions,
including, but not limited to, Buckingham and Colorado entering into a definitive agreement
relating to the Proposed Transaction (the "Definitive Agreement")
containing terms and conditions, including representations and
warranties customary non-solicitation covenants, board support and
fiduciary-out provisions all customary for transactions of this
nature.
The entering into of the Definitive Agreement is subject to,
among other things, completion of the parties' respective due
diligence and approval of the Boards of Colorado and Buckingham. There is no certainty
that the parties will be able to conclude the Proposed Transaction.
The LOI is non-binding and neither Colorado nor Buckingham is under any
obligation to enter into, or continue negotiations regarding, the
Definitive Agreement or to proceed with the Proposed
Transaction. Other than as specifically set out in the LOI,
no binding agreement will exist between Colorado and Buckingham relating to the
Proposed Transaction unless and until the Definitive Agreement has
been finalized and executed.
Colorado President and CEO, Robert
Shaw, states "We are very excited about this opportunity
to consolidate land tenure, and technical and management teams with
Buckingham, to the mutual benefit of both companies and their
shareholders. We view this as a real "win-win" transaction, which
will provide Colorado with strong
technical and financial underpinning, in order to spearhead 2019
exploration along the Saddle1-Castle Au-Cu (Ag)
belt, which is emerging as one of the most prospective trends
presently being explored in the Golden Triangle."
LOI Conditions and Steps to Definitive Agreement
Buckingham and Colorado have
agreed to a 30 day exclusivity period during which they will
negotiate exclusively with each other with a view to settling the
Definitive Agreement. In the event that the Definitive
Agreement is entered into between the parties, and subject to the
final transaction structure, the closing of the Proposed
Transaction will be subject to additional conditions precedent
including, but not limited to, the receipt of all required third
party and regulatory agencies approvals, including the TSXV.
In the event that:
(i) Colorado breaches the
exclusivity provisions of the LOI or accepts an alternative
transaction between the end of the exclusivity period and the date
that is 3 months from the date hereof, a break fee of $100,000 shall be payable by Colorado to Buckingham; and
(ii) Buckingham breaches the exclusivity provisions of the LOI
or accepts an alternative transaction between the end of the
exclusivity period and the date that is 3 months from the date
hereof, the Loan shall be immediately and fully discharged and
forgiven.
Buckingham and Colorado will
issue further information about the Proposed Transaction in the
near future. However, there is no obligation on the part of either
party to consummate the Proposed Transaction or to enter into the
Definitive Agreement.
There can be no assurances that any component of the Proposed
Transaction will proceed, nor can there be any assurance as to the
final definitive terms thereof.
ABOUT COLORADO
Colorado Resources Ltd. is currently engaged in the business of
mineral exploration for the purpose of acquiring and advancing
mineral properties located in the "Golden Triangle" British
Columbia. The Company's main exploration projects within
British Columbia include KSP,
North ROK, Kingpin and Kinaskan-Castle.
ABOUT BUCKINGHAM
Buckingham Copper Corp. is a public reporting Canadian
exploration company focused on exploring and developing its
Sofia and its Moat Property. The
Properties are located in the Toodogone and Golden Triangle
districts respectively, in British
Columbia. For additional information please visit
www.sedar.com.
Technical Disclosure
This press release contains certain scientific and technical
information of Buckingham and Colorado. Each party is solely responsible for
the contents and accuracy of any scientific and technical
information disclosure relating to it.
Michael Cathro, P.Geo., Director
of Buckingham and a Qualified Person under National Instrument
43-101, has reviewed and approved the Buckingham scientific and
technical information contained in this press release.
Bill Yeomans P.Geo., Independent
Consultant to Colorado Resources and a Qualified Person under
National Instrument 43-101, has reviewed and approved the
Colorado scientific and technical
information contained in this press release.
ON BEHALF OF THE BOARD OF DIRECTORS OF BUCKINGHAM COPPER
CORP.
"Joseph Mullin"
Joseph Mullin
Chief Executive Officer
ON BEHALF OF THE BOARD OF DIRECTORS OF COLORADO RESOURCES LTD.
"Robert Shaw"
Robert Shaw
President and Chief Executive Officer
Cautionary Note 1 release and figures
1 This news release contains information
about adjacent properties on which Colorado and Buckingham have no right to
explore or mine. Readers are cautioned that mineral deposits on
adjacent properties are not indicative of mineral deposits on the
Company's properties.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and assumptions and accordingly, actual results and
future events could differ materially from those expressed or
implied in such statements. You are hence cautioned not to place
undue reliance on forward-looking statements. All statements other
than statements of present or historical fact are forward-looking
statements, including statements with respect to the Letter of
Intent and the likelihood that the definitive agreement(s) will be
entered into and that Proposed Transaction will be consummated on
the terms and timeline provided herein or at all, the benefits of
the Proposed Transaction to Colorado and Buckingham and the receipt of all
required approvals including without limitation the shareholders of
Buckingham and applicable regulatory authorities and applicable
stock exchanges. Forward-looking statements include words or
expressions such as "proposed", "will", "subject to", "near
future", "in the event", "would", "expect", "prepared to" and other
similar words or expressions. Factors that could cause future
results or events to differ materially from current expectations
expressed or implied by the forward-looking statements include
general business, economic, competitive, political and social
uncertainties; the state of capital markets; risks relating
to (i) the preliminary and non-binding nature of the LOI,
(ii) the ability of the parties to satisfy the conditions precedent
to the execution of any definitive agreement(s) or to ultimately
agree on definitive terms, (iii) the impact on the respective
businesses, operations and financial condition of Buckingham and
Colorado resulting from the
announcement of the Proposed Transaction and/or the failure to
enter into definitive agreement(s) or to complete the Proposed
Transaction on terms described or at all, (iv) a third party
competing bid materializing prior to the effective date of any
definitive agreement(s) or the completion of the Proposed
Transaction, (v) delay or failure to receive board, shareholder
regulatory or court approvals, where applicable, or any other
conditions precedent to the completion of the Proposed Transaction,
(vi) unforeseen challenges in integrating the businesses of
Buckingham and Colorado, (vii)
failure to realize the anticipated benefits of the Proposed
Transaction, (viii) other unforeseen events, developments, or
factors causing any of the aforesaid expectations, assumptions, and
other factors ultimately being inaccurate or irrelevant; and other
risks described in Colorado's and
Buckingham's documents filed with Canadian securities regulatory
authorities. You can find further information with respect to these
and other risks in filings made by Colorado and Buckingham with the Canadian
securities regulatory authorities and available at www.sedar.com.
Colorado's documents are also
available on their website at www.ColoradoResources.com. We
disclaim any obligation to update or revise these forward-looking
statements, except as required by applicable law.
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.
SOURCE Buckingham Copper Corp.