- American Iron Corp. is focused on acquiring and developing a
portfolio of iron ore projects in Minnesota, including a high-grade iron-ore and
tailings
- Additional iron ore projects under evaluation with large
tonnage potential
- American Iron is comprised of experienced North American
mining and management team
- 6 million post-consolidation Reliance shares to be issued on
Closing, with additional 4 million Reliance shares to be issued
thereafter in tranches upon attainment of certain development
milestones
- Reliance to consolidate its shares on 5 for 1 basis and
change its name to "American Iron Corp." on Closing
SYDNEY, Australia, April 7, 2014 /CNW/ - Reliance Resources Limited
(TSXV: RI) ("Reliance") or ("the Company") is pleased to announce
that it has entered into an agreement to acquire Minnesota-based company American Iron Corp.
("American Iron"), an iron ore focused exploration and development
company seeking to acquire projects having potential for low
pre-development capital expenditure and significant exploration
potential in the United States
(the "Mineral Properties").
Pursuant to a definitive acquisition agreement
(the "Agreement") between Reliance and American Iron, American Iron
has agreed to cause its shareholders (the "AI Shareholders") to
sell all of their shares of American Iron (the "American Iron
Shares") to Reliance (the "Transaction") subject to and in
accordance with, among other things, the following terms:
a) Reliance has agreed to acquire the
American Iron Shares by issuing a total of 10 million Reliance
common shares ("RI Shares") on a post-consolidated basis (see
below), as follows:
- 6 million RI Shares on closing of the Transaction (the
"Closing");
- a further 2 million RI Shares subsequent to Closing upon
American Iron publishing a mineral reserve of 30MT contained metal
in respect of any Mineral Property; and
- a further 2 million RI Shares subsequent to Closing upon
American Iron publishing a mineral reserve equivalent to 50MT at
50% iron (Fe) in respect of any Mineral Property;
b) Prior to the Closing, Reliance shall
have completed a share consolidation on the basis of five (5)
existing RI Shares for one (1) new RI Share (the "Consolidation"),
and Reliance shall have changed its name to "American Iron Corp."
(the "Name Change");
c) Prior to the Closing, American Iron
shall have acquired the Mineral Properties and published a National
Instrument 43-101 ("NI 43-101") compliant technical report in
respect of a Mineral Property or Mineral Properties that will be
its qualifying asset;
d) On or before the Closing, Reliance shall
have completed a minimum financing of $2
million at a price to be determined in the context of the
market (the "Financing"). The Financing may be by way of
equity or debt private placement or any other form of financing
acceptable to the parties.
e) Each of Reliance and American Iron shall
have been satisfied of its due diligence review of the other party,
acting reasonably; and
f) On Closing, the Board of Directors and
Officers of Reliance shall consist of the following
individuals:
- George Young - President, CEO
and director
- Gary Lewis - non-executive
Chairman and director
- Geoffrey Hill - director
- John Levings - director
- Ian Mitchell - director
- Dr. Michael Nelson -
director
All of the above individuals, except for
Geoffrey Hill, are current directors
of Reliance. Geoffrey Hill is
an experienced company director and the non-executive Chairman of
ASX-listed Mount Gibson Iron Limited, a leading producer of iron
ore products from three operating mines.
The Agreement contains additional terms and
conditions that are customary for transactions of a similar nature.
The Closing date is scheduled for April 30, 2014 or such later date as the
parties to the Agreement may agree in writing. The Transaction,
Share Consolidation, Name Change and Financing will be subject to
the approval of the TSX Venture Exchange and any necessary
shareholder approval.
Reliance presently has a total of 122,152,099 RI
Shares issued and outstanding. Immediately upon Closing
of the Transaction, the AI Shareholders will hold 6 million
post-Consolidation RI Shares representing approximately 19.7% of
the issued RI Shares on a post-Consolidation basis (not taking into
account any equity dilution which may occur as a result of the
Financing). Subject to the fulfilment of the other conditions
specified in (a) above, the AI Shareholders may increase their
shareholdings in Reliance to up to approximately 29.0% of the total
issued and outstanding RI Shares (not taking into account any
equity dilution which may occur as a result of the Financing). The
AI Shareholders are at arm's length to Reliance and its current
directors and officers. On Closing, no person, either acting
alone, jointly or acting in concert with any other person, shall
directly or indirectly hold or acquire more than 20% of the issued
and outstanding RI Shares (post-Consolidation).
American Iron has been evaluating the Mineral
Properties targeted for acquisition prior to the Closing.
Many of these properties are believed to contain materials that can
be rapidly developed and placed into operation. Potential
products include high-grade iron ore tailings, ore stockpiles, and
conventional high-grade iron ores located in Minnesota, USA. The Company has
submitted its first lease application and has obtained permits for
systematic sampling in connection with the preparation of a NI
43-101 compliant technical report covering a property located near
Hibbing, Minnesota, with high
grade iron tailings and ore stockpiles. Sampling has been
completed on the property, and the technical report is in progress,
and will be filed upon its completion and the granting of a lease
on the property, which the Company hopes will occur in the next few
weeks. The Company is aiming to provide rapid growth and cash
flow from properties being evaluated for acquisition to drive a
growth strategy for shareholders.
The use of the term "iron ore" throughout
this News Release is only intended as a geological description and
does not imply that any economic viability has been
determined.
American Iron is also assessing a number of
properties with potential for large tonnage conventional iron ore
discovery and production in the Midwestern states of the
USA.
Reliance's non-executive Chairman, Gary Lewis, commented:
"The proposed acquisition of American Iron Corp.
is the result of nearly twelve months of negotiation and due
diligence and is an excellent outcome for Reliance. For some time,
we have been assessing a number of project opportunities and the
Board believes that this transaction presents the best potential to
deliver optimum returns for our shareholders.
It is clear that the US economy is in a recovery
and growth phase and having exposure to this market presents
significant upside for Reliance.
American Iron's targeted assets are anticipated
to be highly prospective for near-term, low-cost mine development
and they are located in a favourable mining jurisdiction with
access to domestic and international shipping routes. The region
hosts a number of other large iron ore projects, which will provide
American Iron with consolidation opportunities, and these are now
being assessed for acquisition.
Geoffrey Hill's
appointment to the Board on closing is a great addition. Geoff is a
seasoned company director and brings considerable skills and
understanding of the iron ore sector to the Company. These will be
invaluable as we advance the development of the iron ore portfolio
of assets. He is responsible for bringing this transaction to
Reliance and is committed to realising its full potential
value."
Cautionary note: Until a mineral resource has
been estimated and a project has been positively assessed for its
economic feasibility, there is no certainty that any of the
proposed operations will be economically viable.
While Reliance is working to complete the
Transaction, it is also actively investigating options to obtain
maximum benefit from its existing Indonesian assets. Shareholders
will be notified at an appropriate time on the outcome of these
efforts.
Reliance will update shareholders on the
progress of the Transaction and on American Iron's short-term
milestones.
On behalf of the Board of Directors of
Reliance
Gary Lewis
Non-executive Chairman and Director
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.
Forward-Looking Information
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
information") within the meaning of applicable securities
laws. Forward-looking information is generally identifiable
by use of the words "believes," "may," "plans," "will,"
"anticipates," "intends," "could", "estimates", "expects",
"forecasts", "projects" and similar expressions, and the negative
of such expressions. Forward-looking information in this news
release include statements about the proposed Transaction, proposed
management restructuring, American Iron's proposed acquisition of
its Mineral Properties and the Company's future plans, objectives
and business strategy.
In connection with the forward-looking information contained
in this news release, the Company has made numerous assumptions,
regarding, among other things, the assumption that the parties will
complete the principal conditions for completion of the
Transaction, including but not limited to the Company's completion
of the Financing and American Iron's acquisition of the Mineral
Properties; the receipt of necessary shareholder and regulatory
approvals; and the assumption the Company will continue as a going
concern and will continue to be able to access the capital required
to advance its projects and continue operations. While the
Company considers these assumptions to be reasonable, these
assumptions are inherently subject to significant uncertainties and
contingencies. In addition, there are known and unknown risk
factors which could cause the Company's actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking information contained herein. Known risk
factors include, among others: the inability of American Iron to
acquire the Mineral Properties; the possibility that the Financing
will not be completed; and the possibility that the Company may not
be able to continue as a going concern in the near term.
All forward-looking information herein is qualified in its
entirety by this cautionary statement, and the Company disclaims
any obligation to revise or update any such forward-looking
information or to publicly announce the result of any revisions to
any of the forward-looking information contained herein to reflect
future results, events or developments, except as required by
law.
SOURCE Reliance Resources Ltd.