VANCOUVER,
Dec. 3, 2013 /CNW/ -
The Terms of the Sale
Calico Resources Corp. (TSX-V: CKB)
("Calico") is pleased to announce that it has entered into a
binding Memorandum of Agreement (the "Agreement") with
Rockstar Resources, Inc. ("Rockstar"), a private company
incorporated under the laws of Idaho,
USA, to sell its Grassy Mountain Gold Project by way of
selling (the "Sale") all of the shares in Calico's wholly
owned Nevada subsidiary, Calico
Resources USA Corp. ("Calico
USA"), for the price of US
$30 Million cash and the grant of a
1% net smelter returns royalty to Calico (the "Calico
Royalty"). The Calico Royalty is to be recorded against
the Grassy Mountain Project at the closing.
As a condition of the sale, Seabridge Gold Inc.
(T:SEA) is required to discharge its 10% net profits interest
royalty and related put option which is currently recorded against
some of the property (the "Seabridge 10% NPI and NPI Put")
at the closing of the Sale (the "Seabridge
Discharge"). Rockstar has agreed to pay Seabridge US
$5 Million for the Seabridge
Discharge. Calico has agreed with Seabridge that it will
provide Seabridge at the closing a further $2.5 Million for the Seabridge Discharge.
Therefore Seabridge will receive at the closing a total of US
$7.5 Million for the Seabridge
Discharge. Seabridge has agreed with Calico that it will provide
the Seabridge Discharge, subject to Calico completing the
conversion of the Special Warrants of Calico held by Seabridge into
shares of Calico.
Rockstar paid Calico a US $350,000 down payment (the "Initial Down
Payment") at the signing of the Agreement.
Rockstar is to pay a further US $350,000 down payment (the "Subsequent Down
Payment") by February 1,
2014.
The parties are aiming for a closing on or
before February 28, 2014 (the
"Closing Date"). The Closing Date may be extended by
Rockstar to March 31, 2014 by
Rockstar paying Calico a further down payment of US $350,000 by February 28,
2014 (the "Extension Down Payment").
The sale is subject to both the approval of the
shareholders of Calico (the "Shareholder Approval") and the
approval of the TSX Venture Exchange (the "Exchange
Approval"). Calico has not yet set the date for its
shareholder meeting.
Under the Agreement, Calico must obtain the
Shareholder Approval by February 28,
2014. Failure to do so would cause the Initial Down
Payment and the Subsequent Down Payment to be refundable to
Rockstar. Calico has entered into a support agreement (the
"Seabridge Support Agreement"), with Seabridge. Calico
understands that Seabridge is Calico's largest shareholder and
holds 10,104,000 shares of Calico. Under the terms of the
Support Agreement, Seabridge has agreed to vote its shares in
favour of the Sale conditional upon (a) the Calico Information
Circular being mailed out by February 6,
2014, (b) the Calico shareholder meeting being held by
February 28, 2014 and (c) Seabridge
having the right to terminate its support after receipt of a
superior proposal. Calico reasonably expects to have
shareholder approval by February 28,
2014.
If Calico obtains Shareholder Approval by
February 28, 2014 and Rockstar has
failed to raise its closing funds by that date and Rockstar has not
elected to extend the Closing Date to March
31, 2014, then the Initial Down Payment and the Subsequent
Down Payment will be retained by Calico.
If Rockstar extends the Closing Date to
March 31, 2014 by paying the
Extension Down Payment, then Calico will be obligated to have
obtained both Shareholder Approval and Exchange Approval by
March 31, 2014. If Calico fails to
obtain both Shareholder Approval and Exchange Approval by
March 31, 2014, then Calico is to
refund to Rockstar all down payments. On the other hand, if
Rockstar has failed to raise the closing funds by March 31, 2014, then all deposits will be
retained by Calico, if Calico has met all of its obligations.
There is no guarantee that Rockstar will have raised the closing
funds by either February 28, 2014 or
March 31, 2014.
In the event that Calico does not provide the
Shareholder Approval and the Exchange Approval as set out above,
the sole remedy to Rockstar will be the return of all down
payments, plus 10% interest per annum.
On the other hand, in the event that Rockstar
fails to provide the funding to close the Sale, the sole remedy for
Calico will be the retention of the Down Payments.
Calico USA is
the only subsidiary of Calico and the Grassy Mountain Gold Project
is the only property of Calico.
Calico and Rockstar are to enter into formal
documentation, including a formal share purchase agreement for the
sale by Calico of all of the issued shares in its subsidiary,
Calico USA, to Rockstar.
Buck Morrow, the
President, CEO and Chairman of Calico stated: "The sale of
the Grassy Mountain Project will provide our company with
sufficient funds to grow the business during these difficult times
in the market. The retention of a Net Smelter Return royalty
will provide Calico with an opportunity to enjoy the upside
potential of the project in the future as well. I believe
this is a good outcome for the shareholders going forward and
anticipate shareholder approval."
The Grassy Mountain Gold Project
Permitting Status
Calico is proceeding with its environmental data
collection component of its permitting process. The Company
has completed key tasks related to surface and ground water
resources, wildlife, wetlands and vegetation and is in the process
of gathering other work plan-approved information in order to
prepare all necessary regulatory applications needed to build the
Grassy Mountain Gold Project. We have already begun to
prepare the operating plan, reclamation and closure plan, and
certain permit applications, all of which are required under
Oregon law to support the
project's consolidated permit application.
Calico is very excited about the permitting
progress and its strong working relationship with the State of Oregon, Malheur County, and involved federal
agencies. The DOGAMI Division 37 Chemical Process Mining
Consolidated Permitting Process is designed to streamline and/or
unify the complex environmental permitting process in which we
operate today within the mining industry. See the DOGAMI website,
in particular
(http://www.oregongeology.org/pubs/nr/press-release-2013-03-11.pdf)
DOGAMI press release March 11,
2013.
Location of Grassy Mountain Gold Project
The proposed Grassy Mountain Gold Project is
located in Malheur County, Oregon,
approximately 25 miles south-southwest of Vale, Oregon. The project area includes
patented and unpatented lode mining claims, as well as private land
currently under lease for mineral exploration and
development. The proposed underground mine, mill, and
ancillary facilities are all located on patented mining claims or
private fee land controlled by Calico. The areas are linked
by road on federal land managed by the United States Department of
the Interior Bureau of Land Management. Calico is proposing
to construct an underground mine and surface mill complex to
develop the Grassy Mountain gold resource.
Technical Report
The most recently SEDAR filed Technical Report
is dated November 29, 2012 and was
filed in SEDAR.com on December 4,
2012. The authors of the Technical Report were
Jennifer J. Brown, P.G., SME-RM,
Deepak Malhotra, PhD, SME-RM and
Zachary Black, E.I.T., SME-RM, all
of the engineering firm Gustavson Associates, of Lakewood, Colorado, USA.
Qualified Person
Michael F.
McGinnis, Calico's Project Manager/Exploration, is a
Qualified Person as defined by National Instrument 43-101 is not
independent of Calico, as that term is defined in NI 43-101, and
has reviewed and approved the technical contents of this news
release.
On behalf of the Board,
Arden (Buck)
Morrow, President, CEO and Chairman
Cautionary Statement
This document contains "forward-looking
statements" within the meaning of applicable Canadian securities
regulations. All statements other than statements of
historical fact herein, including, without limitation, statements
regarding exploration plans and other future plans and objectives,
are forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements
will prove to be accurate and future events and actual results
could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from our expectations are disclosed in the Company's
documents filed from time to time via SEDAR with the Canadian
regulatory agencies to whose policies we are bound.
"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."
SOURCE Calico Resources Corporation