Eloro and Megastar Announce Execution of Definitive Agreements
18 Novembre 2010 - 11:14PM
Marketwired
Eloro Resources Ltd. (TSX VENTURE: ELO)(FRANKFURT: P2Q) ("Eloro")
and Megastar Development Corp. (TSX VENTURE: MDV)(FRANKFURT: M5Q)
("Megastar") are pleased to announce the execution and delivery of,
among other documents, a binding Asset Purchase Agreement and a
Voting Trust Agreement (collectively, the "Acquisition Closing
Documents") with respect to the proposed business combination
previously announced on August 30, 2010.
Eloro's acquisition (the "Acquisition") of Megastar's Simkar
Gold Property near Val-d'Or, Quebec (the "Simkar Property") in
exchange for the issuance of 70,000,000 Eloro common shares (the
"Eloro Common Shares") has closed in escrow, subject to the
occurrence of certain conditions discussed below. The transfer of
Megastar's Simkar Property in exchange for the Eloro Common Shares
will be effected on a tax-deferred basis pursuant to section 85(1)
of the Income Tax Act (Canada).
Eloro will be seeking shareholder approval for the Acquisition
at an annual and special meeting of shareholders to be held on
December 20, 2010. At the same meeting, and in connection with the
Acquisition, Eloro will also be seeking shareholder approval for an
ordinary resolution authorizing Eloro's board of directors, at its
discretion, to consolidate the Eloro Common Shares on the basis of
one new Eloro Common Share for up to every three previously
outstanding Eloro Common Shares (the "Eloro Consolidation"). As at
the date hereof, an aggregate of 76,226,903 Eloro Common Shares are
issued and outstanding. If the Eloro Consolidation is completed on
a 3:1 basis, approximately 25,408,967 Eloro Common Shares will be
issued and outstanding following completion of the Eloro
Consolidation. Any implementation of the Eloro Consolidation will
also be subject to acceptance by the TSX Venture Exchange (the
"TSXV").
The current intention of the parties is that the Acquisition
will be followed by a plan of arrangement (the "Arrangement")
whereby Megastar would distribute the Eloro Common Shares to
Megastar shareholders pursuant to a plan of arrangement under the
Business Corporations Act (British Columbia). The Arrangement will
enable Megastar to distribute the Eloro Common Shares to its
shareholders in a tax-efficient manner.
Megastar will be seeking shareholder approval for the
Arrangement at a special meeting of shareholders to be held on
December 20, 2010. At the same meeting, and in connection with the
Arrangement, Megastar will also be seeking shareholder approval for
a special resolution authorizing Megastar's board of directors, at
its discretion, to consolidate Megastar's common shares (the
"Megastar Common Shares") on the basis of one new Megastar Common
Share for up to every six previously outstanding Megastar Common
Shares (the "Megastar Consolidation"). As at the date hereof, an
aggregate of 39,887,233 Megastar Common Shares are issued and
outstanding. If the Megastar Consolidation is completed on a 6:1
basis, approximately 6,647,872 Megastar Common Shares will be
issued and outstanding following completion of the Megastar
Consolidation. Any implementation of the Megastar Consolidation
will also be subject to acceptance by the TSXV.
The Eloro Common Shares to be distributed to shareholders of
Megastar will be listed for trading on the TSXV. The common shares
of Megastar will continue to be listed for trading on the TSXV.
In accordance with discussions between Eloro and the TSXV, the
Acquisition closed in escrow subject to the occurrence of the
earlier of two conditions, namely: (i) approval of the Acquisition
by Eloro's shareholders, or (ii) completion of Megastar's
Arrangement. The closing of the Acquisition and any subsequent
release of the Acquisition Closing Documents will also be subject
to the usual requirement that the parties are in agreement that the
closing conditions (the "Closing Conditions") in the Asset Purchase
Agreement have been satisfied or waived.
If Eloro's shareholders approve the Acquisition and the parties
are in agreement that the Closing Conditions have been satisfied or
waived, all prior to the completion of the Arrangement, then from
the date that the Acquisition Closing Documents are released from
escrow up to and including the closing date of the Arrangement, the
Voting Trust Agreement among Megastar, Thomas Larsen and Eloro
provides that all Eloro Common Shares held by Megastar are to be
voted by Thomas Larsen (in his capacity as President and Chief
Executive Officer of Eloro) until all such Eloro Common Shares have
been distributed by Megastar.
Completion of the Acquisition and the Arrangement is subject to
receipt of all required consents and approvals, including without
limitation, shareholder approval, TSXV acceptance and, in the case
of the Arrangement, court approval.
About Eloro
Eloro is a junior exploration company focused on discovering and
developing precious metals in the Val-d'Or mining camp, as well as
quality precious and base metal resources in the James Bay region
of northern Quebec. In the James Bay region, Eloro has 11
gold-copper-silver properties (1,062 claims) covering 548 km(2) in
the La Grande and Eastmain Greenstone Belts, proximal to Goldcorp's
Eleonore Gold Project. Eloro also has an option to acquire an
undivided 50% interest in the Simkar Property from Megastar. Eloro
and Megastar have recently signed a letter of intent and the
Acquisition Closing Documents (which are being held in escrow
subject to the conditions noted above) to complete a business
combination pursuant to which Eloro will acquire 100% of the Simkar
Property from Megastar in exchange for 70,000,000 Eloro shares,
which shares are to be distributed pro rata to Megastar's
shareholders (see joint press release dated August 30, 2010).
About Megastar
Megastar is an emerging resource company engaged in the
acquisition, exploration and development of mineral properties in
Canada. Megastar owns gold and base metal properties in Quebec and
British Columbia.
Information in this news release respecting the transactions
involving Eloro and Megastar, including but not limited to the
Acquisition and the Arrangement, constitutes forward-looking
information. Statements containing forward-looking information
express, as at the date of this news release, the companies' plans,
estimates, forecasts, projections, expectations, or beliefs as to
future events or results and are believed to be reasonable based on
information currently available to the companies. Forward-looking
statements and information are based on assumptions that financing
and personnel will be available when required and on reasonable
terms, and all necessary regulatory approvals, shareholder
approvals and court approval will be obtained, none of which are
assured and each of which is subject to a number of other risks and
uncertainties. There can be no assurance that forward-looking
statements will prove to be accurate. Actual results and future
events could differ materially from those anticipated in such
statements. Readers should not place undue reliance on
forward-looking information.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this release.
Contacts: Eloro Resources Ltd. Thomas G. Larsen President and
CEO (416) 868-9168 (416) 361-1333 (FAX) www.elororesources.com
Megastar Development Corp. Dusan Berka, P. Eng. President and CEO
(604) 683-6648 (604) 683-1350 (FAX) www.megastardevelopment.com
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