Hodgins Announces Acquisition of Prospective Uranium Claims in Athabasca Basin
MELFORT, SK, March 6, 2014 /CNW/ - Hodgins Auctioneers Inc. ("Hodgins" or the "Corporation") (TSXV: HA) wishes to announce that it has entered into a conditional agreement with Majesta Resources Inc. ("Majesta") to acquire a 25% undivided interest in a group of nine contiguous mineral claims with a combined total of 39,125 hectares (98,233 acres) ("Majesta Mineral Claims") located 230 km NW of La Ronge and 445 km north of Prince Albert, Saskatchewan. The northeastern corner of the claims are 10 km from the Key Lake uranium mill.
The Corporation considers the Majesta mineral claims to be in a favourable geological setting because they are on strike with high grade Athabasca Basin uranium discoveries. The basin is a premier geological district famous for the world's richest uranium deposits, politically stable government and a well established exploration and mining industry.
The Corporation is making this unique acquisition because of the low cost relative to similar transactions in the area due to the relationship between two of the insiders of the Corporation and the party which owns the mineral claims. The acquisition will not constitute a "Change of Business" as defined in the TSX Venture Exchange ("TSXV") policies. The transaction is conditional upon TSXV approval and the raising of $350,000 by non-brokered private placement.
The technical information in this news release has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 and reviewed on behalf of the Corporation by Andrew Gracie, P. Geo., Consulting Geoscientist, a qualified person.
Terms of the Agreement
The Corporation is purchasing a 25% undivided interest and acquiring two options (the "Options") to acquire up to an additional 65% . The Corporation will be required to issue 2,000,000 common shares at a deemed price of $0.05 per share for the 25% undivided interest. Majesta will be the operator and will conduct all exploration activities under the terms of a joint operating agreement. Any party failing to make cash call are subject to dilution of their respective working interest. If any party is diluted below an undivided 10% their interest is converted to a 0.75% net smelter royalty which can be purchased for fair market value. The Corporation will issue additional shares to Majesta, along with cash and required work commitments, upon exercise of the Options as follows:
|Purchase||25%||February 20, 2014||up to $100,000 of debt||2,000,000||$300,000||$400,000|
|Option #1||35%||December 31,2014||Nil||4,000,000||$400,000||$400,000|
|Option #2||30%||December 31, 2015||$400,000||2,000,000||Nil||$400,000|
The Corporation has not acquired a valuation of the claims. Majesta, a Saskatchewan corporation, staked the claims in 2008 at a cost of $83,000. The annual expenditure required to maintain the claims is approximately $350,000 per year. Majesta has maintained the claims for more than 5 years. In part, by spending their own money, and by having others carry out exploration on the claims. In 2010, Majesta entered into an option agreement with Kirrin Resources Inc. which traded on the TSXV under the symbol "KYM". Kirrin spent approximately $1,300,000 on the property and then did not raise further funds to continue exploration and maintain its rights under the option agreement.
Interest of Insiders in Majesta
Grant Hodgins and Barrie Jung are officers and directors of the Corporation. Grant Hodgins and Barrie Jung, directly or indirectly, own 33.8% of the issued (12,948,500) and outstanding shares of the Corporation. Grant Hodgins is an officer and director of Majesta. Grant Hodgins and Barrie Jung own 33.66% of the common shares of Majesta.
Randy Studer is a director and officer of Majesta. Randy Studer, directly or indirectly, and together with family members own 64.79% of the common shares of Majesta. Randy Studer lives in La Ronge, Saskatchewan, and his primary occupation for 35 years has been conducting exploration work for mining companies, through a legal entity called Durama Enterprises Limited. Randy Studer was a director and president of a publicly owned mining exploration company on the TSXV from 1995 to 2006 (Explor Resources Inc. "EXS"). Mr. Studer will not become an officer and director of the Corporation. Mr. Studer will not become a control person of the Corporation.
Majesta Mineral Claims
Majesta holds 100% interest in the Majesta Mineral Claims, as listed in the following table.
Majesta does not own the minerals. The Government of Saskatchewan issues a claim by which Majesta has the right to explore, develop and exploit minerals on the mineral claims and such other rights attributed to a "claim" as defined by Part VI the Mineral Tenure Registry Regulations (Saskatchewan) Chapter C-50.2 Regulation 27 (effective December 1, 2012)(as amended by Saskatchewan Regulation 70/2013) promulgated under the Crown Minerals Act (Saskatchewan) Chapter 50.2 (subject to any transitional provisions contained in The Mineral Disposition Regulations 1986 (Saskatchewan).
Under the provisions of the Crown Minerals Act (Saskatchewan), the Province of Saskatchewan owns the minerals. The Government of Saskatchewan provides the holder of a mineral claim certain rights for a 1 year period. There is no obligation to conduct exploration work. The one year period can be extended indefinitely for further 1 year periods provided the holder:
(a) Expend a set sum of money each year on exploration; and
(b) The holder reports the expenditure within the defined period and the expenditures are accepted by the Province of Saskatchewan as qualifying expenditures.
The one year period will be extended for a period determined by dividing the qualifying expenditures by the annual requirement. Expenditures can be allocated from claim to claim subject to certain limitations.
The Corporation has sought TSXV approval for a proposed non-brokered private placement of up to 7,000,000 units at a price $0.05 per unit for gross proceeds of up to $350,000. Five of seven of every common share issued has flow through attributes. Each unit will be comprised of one common share in the capital of Hodgins and one half of one common share purchase warrant. Each full warrant will entitle the holder to purchase one common share at a price of $0.075 per common share exercisable no later than the date that is one year from the date of issuance of such warrant provided. All of the securities issued under the private placement will be subject to a four month resale restriction and will contain a legend which will detail the resale restriction. There is no minimum subscription under the private placement and Hodgins may close the offering in several tranches, however, the private placement must be concluded by April 20, 2014. The proceeds of the private placement will be used to make the claims acquisition.
In connection with this private placement, Hodgins will pay cash finder's fees equal to 8% of the funds raised to eligible finders who introduce subscribers to the private placement and issue one common share and one finder's fee warrant for every 10 units issued to eligible subscribers. Each finder's fee warrant will be issued to finders on the same terms as the warrants comprising the units.
About Hodgins Auctioneers Inc.
Hodgins Auctioneers is an auction company conducting business in Western Canada.
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, but is not limited to, statements with respect to the timing and completion of the proposed private placement and related information. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation.
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)
SOURCE Hodgins Auctioneers Inc.For further information:
Grant Hodgins, CEO, 306.752.2075 or visit www.hodginsauctioneers.com