AND EXCHANGE COMMISSION
REPORT PURSUANT TO
13 OF 15(d) OF THE
EXCHANGE ACT OF 1934
of Report (Date of earliest event reported): October 27, 2016
MOUNTAIN RESOURCES, INC.
name of registrant as specified in its charter)
or other jurisdiction
Shaffer Parkway, Suite 201, Littleton, Colorado
of principal executive offices)
telephone number, including area code:
name or former address, if changed since last report)
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Current Report on Form 8-K (including the exhibit filed herewith) contains forward-looking statements that involve risks and uncertainties.
Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement
that does not directly relate to any historical or current fact. Forward-looking statements are not guarantees of future performance
and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements.
Forward-looking statements are only predictions based on our current expectations and projections, or those of third parties,
about future events and involve risks and uncertainties. There are numerous and varied risks, known and unknown, that may prevent
us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operations
may be materially adversely affected. In such case, the trading price of our Common Stock could decline and investors could lose
all or part of their investment. The Company assumes no obligation to revise or update any forward-looking statements for any
reason, except as required by law.
1.01 - Entry into a Material Definitive Agreement.
October 27, 2016 (the “Effective Date”), Star Mountain Resources, Inc., (the “Company”, “we”,
“us”, “our”) signed a binding letter of intent with an unrelated party in a transaction negotiated at
arm’s length (the “Buyer”) to sell the Company’s 100% ownership interest in Balmat Holding Corporation
(“Balmat Holding”). Balmat Holding, through its wholly owned subsidiary, St. Lawrence Zinc Company (“St. Lawrence
Zinc”), is the owner of the mining property known as the Balmat Zinc Mine and certain mining and processing equipment located
in St. Lawrence County, New York (the “Balmat Assets”).
sale price of the Balmat Assets is $6,318,554 payable as follows: $2,768,554 being the outstanding amount owing to TCA Global
Master Fund, LP (the “TCA Debenture”) on or about November 1, 2016, to be paid by an affiliate of the Buyer (the “Buyer’s
Affiliate”) on such date, and TCA assigning the TCA Debenture to the Buyer’s Affiliate with the Company being released
from its obligations under such debenture subject to the completion of the contemplated transaction; $300,000 towards the care
and maintenance of the Balmat Assets, of which $150,000 has been paid to the Company and the balance is to be paid on or before
November 30, 2016 as mutually agreed by the parties; $1,250,000 to be paid on November 30, 2016, the proposed closing date of
the transaction (the “Closing Date”) provided there are no outstanding debts, accounts payable and accrued liabilities
of St. Lawrence Zinc Company and the Balmat Assets are free of any liens or encumbrances; $1,000,000 on February 28, 2017 or three
months from the Closing Date and the balance of $1,000,000 on May 30, 2017 or six months from the Closing Date. In addition, the
Buyer has agreed to issue to the Company 5% of the issued and outstanding common shares (as measured on a post financing basis)
in the public company (“Pubco”) which the Buyer intends to assign the Balmat Assets. In addition, the Buyer has agreed
to assume the Company’s obligations to Hudbay Minerals, Inc. (“Hudbay”) pursuant to the previously disclosed
agreement between the Company and Hudbay dated October 13, 2015. In addition, the Company will have the right to participate in
future equity financings of Pubco to maintain its equity position in Pubco on a post financing basis. All debts of Balmat Holding
and St. Lawrence Zinc shall be paid by the Company at or prior to the Closing Date.
closing of the transaction contemplated by the letter of intent is expected to be completed no later than November 30, 2016 and
will be conditioned upon certain, limited customary representations and warranties to be included in an agreement, as well as
the following conditions to closing:
Company shall maintain the Balmat Assets in good standing until completion of the Definitive Agreement (defined below);
Company will provide the Buyer with all technical, environmental, permit, reclamation, prior work performed and any other data
relative to the Balmat Asset on signing of the letter of intent;
parties will exclusively negotiate in good faith the terms and conditions of a definitive agreement (the “Definitive Agreement”)
which will contain reasonable and usual representations and warranties based on standard industry terms and conditions, not to
be unreasonably withheld, and to be completed within 30 days of the completion of the due diligence period and no later than November
transaction is subject to satisfactory due diligence by the Buyer which shall have 45 days (or a date mutually agreed upon by
the parties) to complete its due diligence.
letter of intent and the Definitive Agreement will be governed in all respects, including validity, interpretation and effect,
by laws of the Province of British Columbia and the laws of Canada applicable therein, without giving effect to the principles
of conflicts of laws thereof unless otherwise mutually agreed among the parties and the parties hereby irrevocably attorn to the
jurisdiction of the Courts of the Province of British Columbia in respect of any matter arising hereunder or in connection herewith.
letter of intent will terminate on the day on which the earliest of the following events occurs: (a) the date the Buyer provides
a notice of termination or a written agreement of the parties to terminate the letter agreement; or (b) the date the Definitive
Agreement is entered in to. Following such termination, the letter of intent shall have no further force or effect and there shall
be no obligation on the part of either of the parties thereunder.
transaction contemplated by the letter of intent shall have been authorized by the board of directors of the Company and the execution
of the letter of intent by the Company shall be conclusive evidence of such authorization.
November 3, 2016 (the “Effective Date”), in connection with acquisition of the TCA Debenture as contemplated in the
letter of intent, an affiliate of the Buyer (the “Lender”) acquired the TCA Debenture and TCA’s collateral and
other rights provided for in the TCA Debenture and related agreements (the “TCA Transaction Documents”). In addition,
the Lender entered into a Forbearance Agreement with the Company on November 3, 2016 (the “Forbearance Agreement”).
The Forbearance Agreement reflects the Company’s acknowledgement that the TCA Debenture is in default as a result of the
Company’s failure to make certain payments due on the obligations owing under the TCA Debenture and that the filing of a
Form 15 with the SEC will not be deemed a default under the TCA Transaction Documents. The Lender has agreed that it will forbear
from exercising any of its rights or remedies under the TCA Debenture as the result of the default until the Forbearance Termination
Date (defined below), provided that, (i) commencing on November 2, 2016 through January 31, 2017, no interest shall accrue on
the unpaid obligations outstanding under the TCA Debenture, and (ii) commencing on February 1, 2017, all unpaid obligations outstanding
under the TCA Debenture will accrue interest at a rate equal to 10% per annum. The Forbearance Termination Date will occur if
any additional defaults occur under the TCA Debenture or related agreements, the Company’s failure to comply with any term
or condition of the Forbearance Agreement, any breach by the Company of any term or condition set forth in the letter of intent,
or the sale of Balmat Holding to the Buyer does not occur on or before January 31, 2017. The Company agreed to pay the Lender’s
reasonable legal fees and costs incurred in connection with the Forbearance Agreement and related transactions.
8.01 Other Events.
the Company’s acquisition of the Balmat Assets in November 2015, it has been unable to secure sufficient financing to commence
operations at the mine. Furthermore, the Company is unable to continue to make the payments due under the TCA Debenture and its
other debt obligations and to finance the care and maintenance activities of the Balmat Assets. Consequently, the Company’s
board believes that the proposed sale of the Balmat Assets is in the best interests of the Company and its shareholders. Furthermore,
the Company’s board of directors has determined that the benefits and costs associated with being publicly traded are no
longer justifiable leading it to the conclusion that deregistration of its common stock is appropriate. For these reasons, the
Company’s board of directors has authorized the Company to voluntarily deregister its common stock under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), by filing a Form 15 with the Securities and Exchange Commission
(the “SEC”). The Company is eligible to deregister its common stock under the Exchange Act because its common stock
is held by fewer than 300 stockholders of record. The Company expects that its common stock will be transferred to a different
tier of the OTC trading marketplace within 90 days after the date of the Form 15 filing.
Company plans to file the Form 15 with the SEC prior to November 14, 2016 (the date the Company’s quarterly report on Form
10-Q for the quarter ended September 30, 2016 would have otherwise been due). Upon such filing, the Company’s obligation
to file certain reports with the SEC, including the annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, respectively,
will be immediately suspended. Other filing requirements will terminate upon the effectiveness of the deregistration, which is
expected to occur 90 days after the filing of the Form 15.
the coming months following the Closing Date and once the number of shares of Pubco received by the Company as part of the consideration
for the sale of the Balmat Assets discussed above are determined, the Company intends to evaluate the potential for distributions
to shareholders which may include the Pubco shares. In addition, the Company will continue to explore the feasibility of pursuing
other mining projects in light of its available working capital.
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
MOUNTAIN RESOURCES, INC.
November 4, 2016
Rich, Chief Financial Officer and Vice President of Finance