Cadan Announces Mining Group Limited Signs Formal Agreements for 80% Interest in Comval Project
December 23 2011 - 4:29PM
Marketwired Canada
CADAN RESOURCES CORPORATION (TSX VENTURE:CXD)(FRANKFURT:AOMZ25) Further to the
company's announcement of November 7, 2011, Cadan is pleased to report that it
has signed a formal share purchase agreement and facilitation agreement (the
"Formal Agreements") with Mining Group Limited (ASX:MNE) ("Mining Group" or
"MGL") whereby Mining Group may acquire an 80% interest in the Comval
copper-gold project located in the Compostella Valley, Philippines. Cadan will
retain a 20% equity interest in the project, which is free carried until the
Mining Group has incurred a minimum of AUD$48 million of expenditures on the
Comval Project.
The Formal Agreements provide Cadan with the right to acquire up to a 17% equity
position in the Mining Group on a fully diluted basis, and the right to nominate
two directors to MGL's board for so long as it holds at least 10% of the issued
shares in MGL, below which it shall be entitled to nominate one director to
MGL's board.
The terms of the Formal Agreements provide that Mining Group will acquire an 80%
interest in Philco Mining Corporation ("PMC"), being Cadan's Philippine based
affiliate which holds Exploration Permits 000001-XI and 000002-09-XI ("Project
Tenements"), comprising the Comval project. Unless otherwise mutually agreed,
closing is scheduled for January 17, 2012. ("Closing").
Terms for the acquisition of 80% of the Comval Project
The Formal Agreements contemplate that among other items, the following will
occur at Closing:
-- MGL will pay to Cadan a facilitation fee of AUD$3,000,000 ("Facilitation
Fee") and issue of 2,600,000 fully paid ordinary shares in MGL.
AUD$1,000,000 of the cash payment will be satisfied by applying the
proceeds of a prior loan from MGL to Cadan in the same amount, and
deeming the loan repaid;
-- Cadan will be issued 2,000,000 ASX listed options in MGL, with an
exercise price of AUDS$0.20 each, subject only to Cadan paying to MGL an
aggregate issue price for the options of AUD$0.01 per option
(AUD$20,000), which may be offset against the Facilitation Fee;
-- Cadan will be issued 500,000 ordinary shares in MGL at a price of
AUD$0.20 per share subject only to Cadan paying to MGL the subscription
price for the shares of AUD$100,000, which may be offset against the
Facilitation Fee;
-- MGL and Cadan will enter into a Shareholders' Agreement setting out
their respective rights as co-owners of PMC and certain provisions
governing the management of the project. The Shareholders' Agreement
will include the following key terms:
-- MGL must incur AUD$48 million in qualifying expenditures over a
period of five years (the "Sole Funding Period"), and conduct
required minimum activities in years 1 and 2 of the Sole Funding
Period, as summarized below:
A. the qualifying activities for years 1 and 2 of the Sole Funding
Period are as follows:
Year 1
- no less than 10,000 meters of drilling on the Project
Tenements;
- the completion of an initial JORC compliant statement of
Mineral Resources (with an obligation to provide same in a NI 43-101
compliant format; and
- the completion of a Scoping Study, re-logging of existing data
and reconfiguration of existing sampling
Year 2:
- no less than 12,500 meters of drilling on the Project
Tenements;
- and ommencement or procurement of commencement of a definitive
feasibility study relating to the Project.
B. Annual qualifying expenditures on the project must comply with a
minimum expenditure condition as follows:
----------------------------------------------------------------------------
Qualifying Cumulative Qualifying
Year Expenditure (AUD$) Expenditure (AUD$)
----------------------------------------------------------------------------
1 5,000,000 None
----------------------------------------------------------------------------
2 5,000,000 None
----------------------------------------------------------------------------
3 5,000,000 15,000,000
----------------------------------------------------------------------------
4 15,000,000 30,000,000
----------------------------------------------------------------------------
5 18,000,000 48,000,000
----------------------------------------------------------------------------
The cumulative qualifying exploration expenditures must be incurred, or funded
in cash contribution to PMC in lieu thereof, within the time frames provided
above, failing which MGL's interest will be diluted at the rate of 1.1% per
AUD$1 million in deficiency or part thereof. The time frames for incurring the
cumulative qualifying expenditures may be extended by an additional year in
certain limited circumstances related to delays in approvals or permits to the
extent they are beyond the control of MGL.
Following the Sole Funding Period, Cadan and MGL will be required to contribute
to further costs in proportion to their interests or their equity interest will
be subject to dilution on a straight-line basis.
-- Cadan will be initially entitled to nominate one director to the board
of PMC (in addition to its right to nominate two directors to the Board
of MGL); Various pre-emptive rights on sale or transfer of shares and
minority shareholder protections relating to certain project decisions.
The Formal Agreements also provide that the following additional payments will
apply:
-- when (and if) MGL's share price trades at or above AUD$1 for 30
consecutive days, MGL will pay a further facilitation fee to Cadan of
2,600,000 shares;
-- subject to certain conditions being met within 24 months of Closing
(which period may be extended by up to a further 24 months) MGL will pay
a further facilitation fee of AUD$1,000,000 to Cadan.
Closing of the transactions contemplated in the Formal Agreements is subject to
various conditions precedents, including transferring certain assets of PMC to
other Philippine entities affiliated with Cadan.
Option to Acquire 80% of the Batoto Gold/Silver Project
The Formal Agreements provide that on Closing Cadan will grant MGL an option to
acquire an 80% interest in the Batoto Gold/ Silver project held by Cadan on the
following terms:
-- MGL must exercise the option within 9 months of Closing;
-- if MGL exercises the option to acquire an 80% interest in the Batoto
project, it must pay to Cadan AUD$3,000,000 and issue a further
5,200,000 shares of MGL to Cadan; and
If MGL exercises the option, it must also incur qualifying exploration
expenditures of AUD$30 million or have its interest diluted at the rate of 1.5%
for each AUD$1 million shortfall (or part thereof). MGL will free carry Cadan's
20% interest in Batoto until it has spent expended the qualifying exploration
expenditures as follows:
--------------------------------------------------
Qualifying Expenditure
Year (AUD$)
--------------------------------------------------
1 3,000,000
--------------------------------------------------
2 5,000,000
--------------------------------------------------
3 6,000,000
--------------------------------------------------
4 8,000,000
--------------------------------------------------
5 8,000,000
--------------------------------------------------
The parties have agreed to prepare and execute a separate agreement in relation
to the Batoto Option.
On behalf of the board of directors,
Robert Butchart, President / CEO
For further information visit our website at www.cadanresources.com or email:
info@cadanresources.com.
Forward Looking Statements
This news release may contain forward-looking statements. Forward-looking
statements address future events and conditions and therefore involve inherent
risks and uncertainties. Actual results may differ materially from those
currently anticipated in such statements. Particular risks applicable to this
press release include risks associated with planned production, including the
ability of the Company to achieve its targeted production outline due to
regulatory, technical or economic factors. There is no guarantee that the
transactions referred to in this press release will close. There are numerous
risks associated with exploration and development of mineral projects, including
commodity prices, permitting issues, local conditions, ability to finance, and
as a result there is no guarantee that the projects referred to above will ever
be economically viable. The reader is referred to the Company's most recent
annual and interim Management's Discussion and Analysis for a more complete
discussion of such risk factors and their potential effects, copies of which may
be accessed through www.cadanresources.com or the Company's page on SEDAR at
http://www.sedar.com.
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