Robert L. Card, President of Gulfside Minerals Ltd. ("Gulfside" or
the "Company") (TSX VENTURE: GMG), is pleased to report that the
Company is now a 5% owner of the Erdenetsogt coal project as a
result of a civil lawsuit filed against the vendors of the coal
project. On February 18, 2009, the parties appeared in court
wherein the Judge ruled in favour of the Company and awarded the
Company a 5% interest in ECM LLC, which owns the underlying license
under the terms of the Cooperation Agreement of June 17, 2007. The
Vendors have appealed the Court verdict. In addition, the Company
will be filing a new further complaint against the vendors for
damages and redress for lost business opportunities and will be
seeking damages and a further interest in the project license. This
will be in addition to the 5% interest awarded to the Company by
the courts.
The Company would like to provide some background and
history.
A Cooperation Agreement was first signed in June 17, 2007 with
the vendor of the Erdenetsogt coal project. During the ensuing
months, the Company conducted exploration activities including the
drilling of numerous holes on the coal deposit. Norwest Corp., of
Salt Lake City, UT, was commissioned to oversee the drilling and
prepare a National Instrument 43-101 ("NI 43-101") compliant report
on the project. In the meantime, the Company had been negotiating
with the vendor on a final Acquisition Agreement ("Agreement") for
the project. By October 2007, the vendors had agreed that Gulfside
would acquire 100% of the project for a price of US$36.2 million.
There was a delay on the part of the vendor to execute the final
Agreement and changes were constant. In early December 2007, Robert
Card journeyed to Hong Kong to meet with the vendor to execute a
final Agreement. Upon arrival, the vendor had changed his mind and
signed off on a letter offering only a 49% share with the promise
of 51% at a later date. However, the revised Agreement was still
without signature.
In the meantime, under British Columbia Securities Commission
("BCSC") rules the Company was required to file a NI 43-101 report
on the property. Although the report was substantially completed,
the Company felt that for competitive reasons it did not want to
reveal its findings to the public or the vendor. As a result, the
BCSC issued a Cease Trade Order against the Company shares on
December 21, 2007. Until the Company owned an interest in the
property, Gulfside did not feel it was in its best interest to file
the NI 43-101 report. Norwest Corporation has now completed the NI
43-101 report on the Erdenetsogt property, which will be filed on
SEDAR once the BCSC has no objections to the filing. The Company
will proceed to take the required steps of application to have the
cease trade order lifted.
In late February 2008, Mr. Card met again with the vendor in
Beijing, China and finally obtained an Agreement from the vendor
after a change in terms which included a provision for the issuance
of shares of Gulfside to the vendor in lieu of cash, along with
other cash payments. This Agreement was executed and reported in
our news release of March 14, 2008. However, the vendor, for
reasons unknown, declined to provide information required by the
TSX Venture Exchange and the Agreement languished.
In early June 2008, Mr. Card met with the vendor in Ulaanbaatar,
Mongolia, in an attempt to get the stalled Agreement moving. The
vendor made new and additional demands for changes in the
Agreement. A revision was agreed to and the documents were
redrafted by the Company's lawyers but once again the vendor would
not sign off. This act led to the Company filing for an Arbitration
hearing in London, UK, as provided for in the March Agreement for
the 49% interest. In the meantime, the Company had numerous
communications with the vendor in an attempt to get the project
back on track. This did not look promising so the Company
instituted legal proceedings in Mongolia, in late October 2008,
based on the June 17, 2007 Agreement. One of the conditions of that
Agreement was the obligation of the vendor to deliver 5% of the
project to Gulfside upon paying or expending $500,000.
On January 9, 2009, Mr. Card travelled to Ulaanbaatar, Mongolia
to meet the four partners/shareholders from Mongolia and Russia,
who own the Erdenetsogt coal project. Meetings took place over the
course of the week to discuss the terms of an acceptable Agreement.
On Thursday, January 15, 2009, an agreement was reached, with all
the participants present, whereby, Gulfside would acquire 100% of
the project for a series of payments over 42 months totalling US$35
million. Gulfside engaged its lawyers to revise and produce a Share
Purchase Agreement ("SPA") to reflect the terms of the agreed
acquisition. Over the next ten days a draft SPA and other items
were produced and sent to the vendors for consideration.
On January 28, 2009, a court date was pending in Ulaanbaatar to
hear Gulfside's complaint, filed in late October 2008, against the
vendors for non-compliance with the original Agreement of
Cooperation relating to the Erdenetsogt license signed June 17,
2007. Because of the pending January 15th Agreement, the court date
was put off until February 18, 2009.
The Gulfside team made numerous attempts to have the January 15,
2009 Agreement ratified but the vendors became ambiguous, changed
their minds and came up with new proposals. The Company moved to
accommodate the new proposals but still could not obtain a signed
Agreement. The judgment in our favour was the result of the
February 18, 2009 court date.
The Company intends to proceed with the Arbitration proceeding
in London which resulted from the inaction of the vendor to deliver
certain information to the TSX Venture Exchange in support of the
Company's filing for approval of the March 7, 2008 acquisition of
49% of the company holding the shares of ECM LLC, the holder of the
Erdenetsogt mineral license. The Company is confident of winning
the Arbitration, which ruling is enforceable in Mongolia under
International Legal Agreements.
The Company is now a 5% owner of the Erdenetsogt project and
fully expects to prevail on the Arbitration in London for the 49%
interest acquired under the March 7, 2008 Agreement. The Company
expects it will be able to claim monetary damages or an additional
share of the Project with the additional suit against the vendors
to be filed in Mongolia. In the meantime, the vendors may decide to
honour their many agreements and come to terms with the
Company.
On behalf of the Board of Directors
Gulfside Minerals Ltd.
Robert L. Card, President
All statements, other than statements of historical fact, in
this news release are forward-looking statements that involve
various risks and uncertainties, including, without limitation,
statements regarding the potential extent of mineralization and
reserves, exploration results and future plans and objectives of
Gulfside Minerals Ltd. These risks and uncertainties include, but
are not restricted to, the amount of geological data available, the
uncertain reliability of drilling results and geophysical and
geological data and the interpretation thereof, and the need for
adequate financing for future exploration and development efforts.
There can be no assurance that such statements will prove to be
accurate. Actual results and future events could differ materially
from those anticipated in such statements. These and all subsequent
written and oral forward-looking statements are based on the
estimates and opinions of management on the dates they are made and
are expressly qualified in their entirety by this notice. The
Company assumes no obligation to update forward-looking statements
should circumstances or management's estimates or opinions change
except as required by securities law.
Neither 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.
Contacts: Delmor Enterprises Ltd. Del Thachuk Investor Contact
604-538-5995 Delthachuk@shaw.ca www.gulfsideminerals.com
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