Melior Resources and Firestone Ventures Announce Proposed Friendly Acquisition of Firestone Ventures and Bridge Loan
05 Luglio 2013 - 2:00PM
Marketwired Canada
Melior Resources Inc. (TSX VENTURE:MLR) ("Melior") and Firestone Ventures Inc.
(TSX VENTURE:FV) (FRANKFURT:F5V) ("Firestone") announced today that they have
entered into a letter of intent (the "Letter of Intent") in connection with a
proposed transaction (the "Proposed Transaction") pursuant to which Melior would
acquire all of the issued and outstanding common shares of Firestone in
consideration for the issuance to Firestone shareholders of one Melior common
share for each 2.895 Firestone common shares held. The Proposed Transaction is
subject to a number of conditions, including confirmatory due diligence by
Melior and the negotiation of mutually satisfactory definitive acquisition
documentation. There can be no assurance that any such definitive documentation
will be entered into or that the Proposed Transaction will be completed. Melior
and Firestone also announced today that Melior has agreed to provide Firestone
with a bridge loan (the "Bridge Loan") of up to C$500,000.
Proposed Transaction
Pursuant to the terms of the Proposed Transaction, Firestone shareholders would
receive one Melior common share for each 2.895 Firestone common shares held.
Based on Melior's unaudited net asset value per share as of June 30, 2013, this
represents a premium of 45.7% to the volume weighted average price of
Firestone's common shares for the 20 trading days preceding the date of this
release. Melior's net assets consist of cash, liquid securities (valued at the
volume weighted average price of those securities for the 20 trading days
preceding the date of this release) and other working capital (for example,
pre-payments and accounts payable). It is currently anticipated that the
Proposed Transaction would be completed pursuant to a plan of arrangement under
the provisions of the Business Corporations Act (Alberta).
Firestone has granted Melior a three-month period of exclusivity to complete its
confirmatory due diligence and negotiate definitive acquisition agreements.
Conditions to entering into definitive agreements include the approval of the
boards of directors of Melior and Firestone, satisfactory completion of
confirmatory due diligence review by each of Melior and Firestone and execution
of support agreements by each of the directors and officers of Firestone
together with Firestone common shareholders who collectively hold at least
33.33% of the issued and outstanding Firestone common shares. To date
shareholders of Firestone holding approximately 41.6% of Firestone's issued and
outstanding common shares have agreed to vote in favour of, or tender to, as the
case may be, the Proposed Transaction. The Board of Directors of Firestone has
engaged Paradigm Capital Inc. ("Paradigm Capital") as financial advisor in
connection with the Proposed Transaction. Paradigm Capital has provided the
Board of Directors of Firestone with an opinion that, as of the date of the
opinion and based on and subject to the assumptions, limitations and
qualifications stated at the time of delivering such opinion, the consideration
to be received by Firestone shareholders under the Proposed Transaction is fair,
from a financial point of view. Accordingly, the Board of Directors of Firestone
is recommending the Proposed Transaction.
Conditions to closing the Proposed Transaction will include the execution of
definitive agreements; the approval of 66 2/3% of the votes cast at a meeting of
Firestone shareholders in person or by proxy or by the tender to any bid of not
less than 66 2/3% of the issued and outstanding Firestone shares, as applicable
receipt of all necessary regulatory, corporate and third party approvals and
other conditions customary for a transaction like the Proposed Transaction.
There can be no assurance that any such definitive acquisition agreements will
be entered into or that the Proposed Transaction will be completed.
The Letter of Intent contains binding provisions regarding the payment of a
break fee by Firestone in certain circumstances. In the event that Firestone
breaches the no-shop and exclusivity provisions contained in the Letter of
Intent, Firestone must pay Melior a fee of $800,000 in cash plus the amount of
Melior's costs and out-of-pocket expenses associated with the Proposed
Transaction to a maximum of $400,000 (collectively, the "Break Fee"). The Break
Fee is also payable by Firestone to Melior in the event Melior completes its
confirmatory due diligence investigations and confirms in writing that it is
prepared to pursue the Proposed Transaction on the terms set forth in the Letter
of Intent and the parties are subsequently unable to negotiate and execute
mutually satisfactory definitive agreements in respect of the Proposed
Transaction prior to the expiry of the three-month exclusivity period, provided
such failure has not been caused by Melior's bad faith.
Bridge Loan
Melior and Firestone have entered into a revolving credit facility pursuant to
which Melior has agreed, subject to the satisfaction of certain conditions, to
provide Firestone up to $500,000 for certain stipulated corporate purposes. The
Bridge Loan matures on January 4, 2014 and bears interest at a rate of 20% per
annum.
Drawdown under the Bridge Loan by Firestone is subject to certain conditions,
including the grant by Firestone in favour of Melior of a first-priority
security interest over all of its assets, a pledge of the shares Fuegoestrella,
S.A. ("Fuegoestrella") Firestone's Guatemalan subsidiary in favour of Melior, a
guarantee from Fuegoestrella of Firestone's obligations under the terms of the
Bridge Loan and the grant by Fuegoestrella of a first-priority security interest
over all of its assets, including its surface rights and exploitation licence in
respect of the Torlon Hill Zinc-Lead-Silver Project. In the event of an event of
default under the terms of the Bridge Loan, Melior will be entitled to enforce
on its security over Firestone and Fuegoestrella.
About Melior
Melior is an investment company with a focus on making strategic investments in
resource-based opportunities offering capital appreciation potential, in
particular debt or equity participation in investee companies with projects
nearing maturity.
About Firestone
Firestone is a Canadian-based exploration and development company with
zinc-lead-silver and copper projects in Central America and has been working in
Guatemala since 2004. Our main project is the Torlon Hill Zinc-Lead-Silver
Project in Guatemala. The current NI 43-101 oxide resource (see news release 18
November 2008 on www.sedar.com) is summarized in the following table and the
deposit remains open to expansion. The NI 43-101 resource used a 3% zinc
equivalent cut-off grade and a 35.5% zinc top-cut.
Torlon Deposit Oxide Mineral Resource - as at March 6, 2013
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Zinc
Tonnes Zinc % (lbs)(i) Lead %
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Measured and Indicated 1,891,636 7.32 304,905,997 2.41
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Inferred 169,705 4.42 16,502,114 1.96
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Torlon Deposit Oxide Mineral Resource - as at March 6, 2013
----------------------------------------------------------------------------
Lead (lbs)(i) Silver (g/t) Silver (oz)(i)
----------------------------------------------------------------------------
Measured and Indicated 100,294,541 14.25 866,663
----------------------------------------------------------------------------
Inferred 7,317,680 12.53 68,367
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(i) The total contained metal assumes 100% metal recovery and does not
indicate economic viability
Smithsonite (ZnCO3) is the prevalent zinc mineral at Torlon, occurring as a
replacement to limestone and resulting in high grade mineralization locally
exceeding 40% zinc. Other non-sulphide zinc minerals are relatively rare and
there is no evidence of deleterious zinc-clay minerals.
In addition to Torlon, Firestone also has a large land position covering a
significant portion of the Central Guatemala Zinc District with four drill ready
targets and over fifty zinc mineral occurrences. The land position has excellent
exploration potential and with systematic exploration could develop as the
world's next major zinc district. The common shares of Firestone are currently
listed on the TSX Venture Exchange (symbol FV) and the Frankfurt Stock Exchange
(symbol F5V).
The technical information in this news release has been reviewed and approved by
Pamela Strand, P.Geol., President of Firestone and a Qualified Person in
accordance with NI 43-101.
FORWARD LOOKING STATEMENTS
This news release may contain certain statements regarding future events,
results or outlooks that are considered forward looking statements within the
meaning of securities regulation. These forward looking statements reflect
management's best judgment based on current facts and assumptions that
management considers reasonable and include the words "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "potential" and
"should". Forward looking statements contain significant risks and
uncertainties. A number of circumstances could cause results to differ
materially from the results discussed in the forward looking statements
including, but not limited to, changes in general economic and market
conditions, metal prices, political issues, permitting, environmental,
exploration and development success, continued availability of capital and other
risk factors. The forward looking statements contained in this document are
based on what management of Melior and Firestone believes to be reasonable
assumptions, however, we cannot assure that the results will be compatible to
the forward looking statements as management assumes no obligation to revise
them to reflect new circumstances. Readers should not place reliance on forward
looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Firestone Ventures Inc.
Pamela Strand
President
1-888-221-5588
Melior Resources Inc.
Charles Entrekin
Chairman and Chief Executive Officer
416-644-1217
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