NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA
Himalayan Capital Corp. (TSX VENTURE:HIM.P) ("Himalayan" or the "Company"), a
capital pool company, is pleased to announce the closing of its Qualifying
Transaction (the "Transaction") within the meaning of the policies of the TSX
Venture Exchange (the "Exchange") described in the Company's filing statement
(the "Filing Statement") dated December 22, 2011. Pursuant to the policies of
the Exchange, the Company will no longer be a capital pool company and will be
classified as a Tier 2 Mining Issuer. The Transaction was an arm's length
transaction and therefore was not subject to approval of the shareholders of
Himalayan.
On January 9, 2012, the Exchange issued its conditional acceptance of the
Transaction. The Company's common shares ("Himalayan Shares") will resume
trading on the Exchange under the ticker symbol "HIM" after the Exchange's
conditions for listing are satisfied and the Exchange issues its final exchange
bulletin confirming the completion of the Transaction. The Company will issue a
news release once the Exchange issues its final exchange bulletin and will then
advise of the expected listing date.
The Transaction consisted of a definitive agreement with Minera Azul Ventures
Limitada, a private Chilean limited liability partnership company ("Minera
Azul"), and holders of partnership interests therein, dated December 22, 2011
(the "Definitive Agreement") pursuant to which Himalayan acquired 99% of the
issued and outstanding registered securities (and 100% of the beneficial
securities) of Minera Azul. As consideration for the Transaction, Himalayan
issued to the partners of Minera Azul an aggregate of 10,000,000 Himalayan
Shares at a deemed price of $0.25 per share, for a total acquisition price of
$2,500,000 and an additional 1,000,000 Himalayan Shares at a deemed price of
$0.25 per share and 300,000 Himalayan Share purchase warrants ("Himalayan
Warrants") at an exercise price of $0.30 and valid for a period of 5 years from
the issuance thereof pursuant to the terms of an Option Agreement to the
respective property owner, Mr. Gerardo Findel of Chile.
In addition, Himalayan also assumed $1,500,000 in debentures previously issued
by Minera Azul (the "Azul Debt") and immediately upon the closing of the
Transaction, Himalayan settled the Azul Debt with the issuance of 6,000,000
Himalayan Shares, at a deemed price of $0.25 per share.
Minera Azul, through six option agreements (the "Option Agreements") with six
different arm's length property owners, has the rights to acquire a 100%
interest in a prospective copper-gold property in La Higuera, Chile (the "La
Higuera Property"). A breakdown of the timing of the payments to complete the
earn-in requirements of the Option Agreements follows:
-- On signing agreements - Cash payments totalling US$230,000 - paid;
-- On completion of Transaction - Issuance of 1,000,000 Himalayan Shares -
issued;
-- On completion of Transaction - Issuance of 300,000 Himalayan Warrants -
issued;
-- February 2012 - Issuance of 250,000 Himalayan Shares;
-- June/July 2012 - Cash payments totalling US$640,000 and the issuance of
250,000 Himalayan Shares;
-- June/July 2013 - Cash payments totalling US$1,130,000 and the issuance
of 250,000 Himalayan Shares;
-- January 2014 - Cash payments totalling US$100,000; and
-- June/July 2014 - Cash payments totalling US$2,330,000 and the issuance
of 250,000 Himalayan Shares.
The remaining 1,000,000 Himalayan Shares are to be issued to Inversiones y
Mineria Andale Limitada (100% beneficially owned by an arm's length party).
In addition, under one of the Option Agreements, the respective property owner
will retain a net smelter return royalty of 1% (the "NSR") over that portion of
the La Higuera Property, to be paid on a quarterly basis from the beginning of
commercial production from those claims. The NSR may be acquired by Minera Azul
through either a cash payment of US$500,000 or the equivalent in Himalayan
Shares, at the election of the current owner.
The Filing Statement, which describes the terms of the Option Agreements and
includes audited financial statements of Minera Azul, along with the National
Instrument 43-101 technical report with respect to the La Higuera Property, have
been filed with the Exchange and applicable securities commissions and are
available on SEDAR under the Company's profile at www.sedar.com.
In connection with the Transaction, K. Peter Miller, Neil Halldorson and
Narinder Nagra stepped down from the Company's board of directors (the "Board")
and David O'Connor, Mike Hoffman and Tony Wonnacott were appointed to the Board
and will comprise the Audit Committee of the Company going forward. In addition,
K. Peter Miller stepped down as the President, Chief Executive Office, Chief
Financial Officer and Corporate Secretary of the Company and the following
individuals were appointed officers of the Company:
-- David O'Connor, President and Chief Executive Officer
-- Brad Boland, Chief Financial Officer and Corporate Secretary
-- Francisco Schubert Seiffert, Country Manager
For further details on the Company's directors and officers, please see the
Filing Statement (a copy of which is available at www.sedar.com).
In connection with the Transaction, holders of escrow shares of the Company
transferred within escrow 750,000 Himalayan Shares to Brad Boland (375,000
Himalayan Shares), Tony Wonnacott (375,000 Himalayan Shares) and Mike Hoffman
(100,000 Himalayan Shares) (collectively, the "Transfers").
Immediately prior to the closing of the Transaction there were 2,350,000
Himalayan Shares outstanding. Following the completion of the Transaction, the
settlement of the Azul Debt and the issuance of the initial Himalayan Shares
pursuant to the Option Agreement with Mr. Gerardo Findel, there were 19,350,000
common shares outstanding. The original shareholders of Himalayan Shares hold
approximately 8.3% of the issued and outstanding common shares of the resulting
issuer. Securities holders of Minera Azul (including those who received
Himalayan Shares as a result of the settlement of the Azul Debt) own
approximately 91.7% of the resulting issuer. The Himalayan Shares issued as part
of the Transaction (excluding those shares issued in settlement of the Azul
Debt) are subject to the surplus escrow requirements of the Exchange, with
commons shares being released from escrow on the following schedule:
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Percentage of Total Escrowed
Release Dates Securities to be Released
---------------------------------------------------------------------------
Date of Final Exchange Bulletin
approving the Acquisition 5%
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6 months following Final Approval 5%
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12 months following Final Approval 10%
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18 months following Final Approval 10%
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24 months following Final Approval 15%
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30 months following Final Approval 15%
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36 months following Final Approval 40%
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The Company also granted 1,575,000 stock options to directors, officers and
consultants of the Company. The options have an exercise price of $0.30 per
share and expire in five years.
Early Warning
Pursuant to the Transaction (including the settlement of the Azul Debt), David
O'Connor acquired direct ownership of 2,575,000 Himalayan Shares and indirect
ownership (through direct ownership by Elizabeth Bowles, the spouse of David
O'Connor) of 1,160,000 Himalayan Shares. In addition, David O'Connor was granted
stock options to purchase an aggregate of 300,000 Himalayan Shares with an
exercise price of $0.30 per Himalayan Share that expire on January 12, 2017.
Collectively, these Himalayan Shares and stock options represent 20.5% of the
issued and outstanding common shares of Himalayan on a partially diluted basis
assuming the exercise of the stock options held by David O'Connor (David
O'Connor has undertaken not to exercise the stock options if it would result in
him owning more than 20% of the issued and outstanding common shares of
Himalayan).
Additionally, pursuant to the Transaction (including the settlement of the Azul
Debt), Francisco Schubert Seiffert acquired direct ownership of 2,555,000
Himalayan Shares and indirect ownership (through direct ownership by Susana
Etienne Solares, the spouse of Francisco Schubert Seiffert) of 1,180,000
Himalayan Shares. In addition, Francisco Schubert Seiffert was granted stock
options to purchase an aggregate of 250,000 Himalayan Shares with an exercise
price of $0.30 per Himalayan Share that expire on January 12, 2017.
Collectively, these Himalayan Shares and stock options represent 20.3% of the
issued and outstanding common shares of Himalayan on a partially diluted basis
assuming the exercise of the stock options held by Francisco Schubert Seiffert
(Francisco Schubert Seiffert has undertaken not to exercise the stock options if
it would result in him owning more than 20% of the issued and outstanding common
shares of Himalayan).
Additionally, pursuant to the Transaction (including the settlement of the Azul
Debt and the Transfers), Tony Wonnacott acquired direct ownership of 1,855,000
Himalayan Shares. In addition, Tony Wonnacott was granted stock options to
purchase an aggregate of 250,000 Himalayan Shares with an exercise price of
$0.30 per Himalayan Share that expire on January 12, 2017. Collectively, these
Himalayan Shares and stock options represent 10.7% of the issued and outstanding
common shares of Himalayan on a partially diluted basis assuming the exercise of
the stock options held by Tony Wonnacott.
Additionally, pursuant to the Transaction (including the settlement of the Azul
Debt and the Transfers), Brad Boland acquired direct ownership of 525,000
Himalayan Shares and indirect ownership (through direct ownership by Kirsten
Nicolson, the spouse of Brad Boland) of 1,250,000 Himalayan Shares. In addition,
Brad Boland was granted stock options to purchase an aggregate of 250,000
Himalayan Shares with an exercise price of $0.30 per Himalayan Share that expire
on January 12, 2017. Collectively, these Himalayan Shares and stock options
represent 10.3% of the issued and outstanding common shares of Himalayan on a
partially diluted basis assuming the exercise of the stock options held by Brad
Boland.
Each of Mr. David O'Connor, Mr. Francisco Schubert Seiffert, Mr. Tony Wonnacott
and Mr. Brad Boland acquired the Himalayan Shares for investment purposes and
may acquire or dispose of Himalayan Shares as circumstances or market conditions
warrant.
A report respecting this transaction will be electronically filed with the
Securities Commissions in British Columbia, Alberta and Ontario and will be
available for viewing at www.sedar.com. A copy of the report can be obtained by
contacting Brad Boland, Chief Financial Officer and Corporate Secretary of
Himalayan Capital Corp. at 416-907-7363.
About the La Higuera Property
The La Higuera Property is a prospective copper-gold property in La Higuera,
Chile (about 600 kilometres north of Santiago). The La Higuera Property was
assembled as a result of the first-time consolidation of mining rights in a
historical copper-gold mining center and is located in a prolific I.O.C.G. belt
surrounded by excellent infrastructure in a mining friendly jurisdiction.
The La Higuera Property covers a historic copper mining district with mining
activity dating back to at least the late 18th century; however, there has been
no known modern exploration conducted on the property. Since the consolidation
of the mining rights in June 2011, Minera Azul has initiated a rock sampling
program and completed geophysical work.
Cautionary Statements
Certain statements contained in this press release constitute forward-looking
information. These statements relate to future events or future performance. The
use of any of the words "could", "intend", "expect", "believe", "will",
"projected", "estimated" and similar expressions and statements relating to
matters that are not historical facts are intended to identify forward-looking
information and are based on the Company's current belief or assumptions as to
the outcome and timing of such future events. Actual future results and
developments may differ materially from those contemplated by these statements
depending on, among other things, the risks that the parties will not proceed
with the proposed Qualifying Transaction and associated transactions, that the
ultimate terms of the proposed Qualifying Transaction and associated
transactions will differ from those that currently are contemplated, and that
the proposed Qualifying Transaction and associated transactions will not be
successfully completed for any reason. Various assumptions or factors are
typically applied in drawing conclusions or making the forecasts or projections
set out in forward-looking information. Those assumptions and factors are based
on information currently available to the Company. The material factors and
assumptions include obtaining final Exchange approval for the Transaction as a
Qualifying Transaction and the approval of all other necessary regulatory and
third party approvals and consents; TSX-V policies not changing; and the
satisfaction of the conditions to the Transaction as contained in the Definitive
Agreement, Option Agreements and associated Transaction documents. Other risk
factors that could cause actual results or outcomes to differ materially from
the results expressed or implied by forward-looking information include, among
other things: conditions imposed by the Exchange; changes in tax laws, general
economic and business conditions; and changes in the regulatory environment. The
Company cautions the reader that the above list of risk factors is not
exhaustive. The forward-looking information contained in this release is made as
of the date hereof and the Company is not obligated to update or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required by applicable securities laws. Because
of the risks, uncertainties and assumptions contained herein, investors should
not place undue reliance on forward-looking information. The foregoing
statements expressly qualify any forward-looking information contained herein.
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