Quantum Rare Earth Developments Corp. (TSX VENTURE: QRE)(PINK
SHEETS: QREDF)(FRANKFURT: BR3) ("Quantum", the "Company") is
pleased to announce receipt of conditional acceptance from the TSX
Venture Exchange (the "Exchange") of the Company's previously
announced acquisition of the Elk Creek Carbonatite project, located
south of Lincoln, Nebraska (see NR May 4, 2010). Final acceptance
of the acquisition will occur upon the Company satisfying certain
Exchange conditions, including the closing of a private placement,
details of which are noted below.
The Elk Creek Carbonatite, located in southeastern Nebraska, is
an intrusive complex of carbonatite and related rocks and is host
to significant niobium and rare earth element (REE) mineralization.
The Elk Creek Carbonatite is evidenced by diamond drilling in an
oval-shaped magnetic and gravity anomaly approximately 7 kilometers
in diameter, making it one of the largest known carbonatite
complexes.
Historic exploration of the property was conducted by the State
of Nebraska, Cominco American and Molycorp, Inc. during the 1970's
and 1980's. At least 113 core holes, totaling in excess of 150,000
feet, were completed within the outline of the 7-kilometre diameter
geophysical anomaly. Detailed drilling of 25 holes was completed
within a core zone, which identified high-grade niobium
mineralization. This drilling resulted in a historic resource
estimate of "39.4 million tons of 0.82% Nb2O5 and is open to the
north, west and at depth" (Molycorp, Inc. internal memorandum, Feb
05/1986).
A NI 43-101 report on the Elk Creek Carbonatite has been filed
at the Exchange on behalf of the Company and will be available
shortly on the corporate website (www.QuantumRareEarth.com) and on
SEDAR.
PRIVATE PLACEMENT:
In conjunction with the conditional approval of the acquisition,
the Company is pleased to announce that it has arranged a brokered
private placement with MGI Securities of Toronto. The placement
will consist of up to 3,500,000 flow-through units (the
"Flow-Through Units") at a price of $0.30 per Flow-Through Unit for
gross proceeds of up to $1,050,000 and up to 8,000,000 non
flow-through units (the "Hard Dollar Units") at a price of $0.25
per Hard Dollar Unit for gross proceeds of up to $2,000,000.
Each Flow-Through Unit will consist of one flow-through share (a
"Flow-Through Share") which qualifies as a "flow-through share" for
tax purposes of the Income Tax Act (Canada), and one-half of one
common share purchase warrant (a "FT Warrant"). Each full FT
Warrant will entitle the holder thereof to purchase one non
flow-through common share in the capital of the Company for a
period of 36 months from the Closing Date of the Offering at an
exercise price of $0.40 per common share.
Each Hard Dollar Unit will consist of one common share and
one-half of one common share purchase warrant (a "NFT Warrant").
Each full NFT Warrant shall be exercisable into one common share at
a price of $0.35 per common share for a period of 36 months from
the Closing Date.
Proceeds of the flow-through private placement will be used for
qualified exploration expenditures on the Archie Lake, Saskatchewan
rare earth project (see NR July 6, 2010). Proceeds of the non
flow-through private placement will be used to advance the Elk
Creek Carbonatite project and for general working capital.
MGI will receive a cash commission of 8% of the total gross
proceeds raised and compensation warrants equal to 10% of
Flow-Through and Hard Dollar Units sold. Each Hard Dollar
compensation warrant will entitle MGI to acquire one Hard Dollar
Unit of the company, and each Flow-Through compensation warrant
will entitle MGI to acquire one Flow-Through Unit of the Company,
on the same terms and conditions as the respective private
placements.
About MGI Securities Inc.
MGI Securities Inc. is an integrated Canadian investment dealer
offering professional wealth management solutions for individual
investors, a comprehensive range of specialized services for
institutional investors, and corporate finance advisory services
for issuers, including mergers and acquisitions, equity
underwritings, corporate restructuring, structured financings,
market research, and business valuation services. MGI is based in
Toronto, with additional offices in Winnipeg, Saskatoon, Calgary
and London, Ontario. MGI is a member of IIROC and is a subsidiary
of Jovian Capital Corporation (TSX: JOV). MGI has approximately
$1.1 billion in client assets under administration.
Acquisition of Elk Creek Resources
The acquisition by Quantum involves a 3-cornered amalgamation
between the Company, 0886338 BC Ltd., the Company's wholly-owned
subsidiary, and 0859404 BC Ltd., a private British Columbia company
that holds 100% of the issued and outstanding shares of Elk Creek
Resources Corp. Elk Creek is a Nebraskan corporation that has
secured individual agreements to acquire the mineral rights to the
Elk Creek Carbonatite. The agreements are in the form of a
five-year pre-paid lease, with an option to purchase the mineral
rights at the end of the lease. The property was held under a
similar type of option agreement by Molycorp, Inc. in the 1970's
and 1980's.
Upon completion of the amalgamation, the Company will issue a
total of 18,990,539 common shares in exchange, on a one for one
basis, of all the issued and outstanding shares of 0859404 BC Ltd.
The Company has also paid a total of $500,000 to 0859404 BC
Ltd.
The transaction will not constitute a change of control of
Quantum, nor will it create any new control position shareholders
of Quantum. The transaction is not a non-arms-length transaction. A
finders fee in accordance with TSX Venture Exchange policy will be
payable on this acquisition.
For further information on Quantum, contact Peter Dickie,
President and CEO at (604) 669-9330. For further information on the
Private Placement, please contact John McMahon, Investment Banker,
at (416) 777-5178, jmcmahon@mgisecurities.com.
On Behalf of the Board,
Peter Dickie, President, CEO
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: Quantum Rare Earth Developments Corp. Peter Dickie
President and CEO (604) 669-9330 (604) 669-9335 (FAX)
www.QuantumRareEarth.com John McMahon Investment Banker (416)
777-5178 jmcmahon@mgisecurities.com
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