JJR II Acquisition Inc. and Wellkan Resources Limited announce definitive agreement and additional transaction information for business combination



    
    /NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. WIRE
    SERVICES/
    

    TORONTO, April 22 /CNW/ - JJR II ACQUISITION INC. ("JJR" or the
"Corporation") (JJR.P - TSX Venture) and WELLKAN RE

SOURCES LIMITED ("Wellkan") are pleased to announce that further to their previous release of December 12, 2008 regarding the entering into of the letter of intent dated December 12, 2008 (the "LOI"), JJR, Wellkan, Fit Plus Holdings Limited (the "Controlling Shareholder"), Ma Zhaoyang and Liu Bingqiang have entered into an acquisition agreement dated April 17, 2009 (the "Definitive Agreement"). The Definitive Agreement supercedes the LOI and provides for the acquisition of all issued and outstanding securities of Wellkan by JJR by way of share exchange (the "Share Exchange") which, if completed, will be the qualifying transaction of JJR (the "Proposed Transaction"). The Share Exchange will occur by way of JJR providing an offer to the Wellkan shareholders and the Wellkan shareholders tendering their shares pursuant to letters of transmittal. The Controlling Shareholder has already agreed to tender its common shares of Wellkan ("Wellkan Shares"), representing 51% of the outstanding Wellkan Shares, pursuant to the Proposed Transaction. It is anticipated that the Corporation, which under TSX Venture Exchange (the "TSXV") policies will be the "Resulting Issuer", will meet the Tier 2 listing requirements of the TSXV for a Mining Issuer upon completion of the Proposed Transaction. It is also expected that the Resulting Issuer will change its name to Sino Vanadium Inc., or such other name as is approved by the shareholders and is acceptable to the TSXV and the Ontario Ministry of Consumer and Business Services, at the next meeting of shareholders of the Resulting Issuer. Terms and Conditions -------------------- Pursuant to the terms of the Definitive Agreement and the Letter of Transmittal, subject to receipt of applicable regulatory approvals, JJR and Wellkan shareholders will conduct a share exchange whereby Wellkan will become a wholly owned subsidiary of JJR. Pursuant to the Proposed Transaction, the holders of the Wellkan Shares will exchange their Wellkan Shares for, in aggregate, 50,000,000 common shares of JJR ("JJR Shares") at a deemed price of $0.35 per share. A concurrent non-brokered private placement of up to 5,714,286 JJR Shares at $0.35 per share will be completed at the time of closing of the Proposed Transaction (the "Private Placement") for gross proceeds of $2,000,000. JJR presently has 13,625,000 shares outstanding and it is anticipated that 932,500 options to purchase JJR Shares will be exercised and 462,500 options to purchase JJR Shares will be cancelled such that 70,271,786 JJR Shares will be issued and outstanding at the time of closing of the Proposed Transaction and the Private Placement. Additionally, 4,600,000 options to purchase JJR Shares with an exercise price of $0.35 will be issued upon closing of the Proposed Transaction. Following completion of the Proposed Transaction, the Private Placement and the Seed Share Transfer (defined below) it is anticipated that current shareholders of Wellkan or their nominees will hold approximately 83% of the issued and outstanding JJR Shares. The Proposed Transaction is an arm's length transaction as the directors and officers of JJR have no ownership or other interest in Wellkan. As part of the regulatory approval process, JJR has submitted a filing statement (the "Filing Statement") to the TSXV for review and will file the filing statement on SEDAR upon receipt of approval. The Proposed Transaction will not be subject to shareholder approval of JJR. Trading of the JJR Shares will remain halted until such time as permission to resume trading has been obtained from the TSXV following submission of required documentation to the TSXV. Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to, TSXV acceptance and all Wellkan shareholders tendering their Wellkan Shares to the Proposed Transaction. There can be no assurance that the Proposed Transaction will be completed as proposed or at all. Trading in securities of a capital pool company should be considered highly speculative. Investors are cautioned that, except as disclosed in the Filing Statement to be prepared and filed in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Transfer within Escrow ---------------------- Subject to TSXV approval, certain of the founding shareholders of JJR (the "Founding Shareholders") will transfer within escrow (the "Seed Share Transfer"), subject to regulatory approval, 8,500,000 escrowed JJR Shares for an aggregate consideration of $637,500, to holding companies owned by Ma Zhaoyang and Liu Bingqiang. The remaining 800,000 escrowed JJR Shares will be transferred within escrow to Murray Atkins, a proposed director of the Resulting Issuer for an aggregate consideration of $40,000. These transfers are anticipated to occur concurrently with completion of the Proposed Transaction. About Wellkan Resources Limited ------------------------------- Wellkan was incorporated under the laws of the British Virgin Islands on March 21, 2007. Wellkan is engaged in the acquisition, exploration and development of mineral properties in the Peoples' Republic of China ("PRC") with a focus on Vanadium. Wellkan has two wholly-owned subsidiaries being Shaanxi Wellkan Resources Limited ("Shaanxi Wellkan") and Shangnan Xiangbao Mining Industrial Co., Ltd. ("Shangnan Xiangbao"), both incorporated under the laws of the PRC. Shaanxi Wellkan owns Shangnan Xiangbao and Shangnan Xiangbao owns the mining license (the "Mining License"), valid from July 2, 2008 to July 2, 2030, covering 1.5196 square kilometres in Shangnan County, Shaanxi Province in the central PRC (the "Daquan Property"). 51% of the Wellkan Shares currently outstanding are held by the Controlling Shareholder, a company incorporated under the laws of the British Virgin Islands which is controlled jointly and equally by Ma Zhaoyang and Liu Bingqiang, both of whom are current directors and officers of Wellkan and proposed directors and officers of the Resulting Issuer. The Daquan Property ------------------- A National Instrument 43-101 compliant technical report has been completed on the Daquan Property (the "Technical Report"). The Technical Report identifies a single zone of Vanadium mineralization running through the Daquan Property. The Technical Report will be filed on www.sedar.com at the time of filing the Filing Statement. There has been no mineral production to date on the Daquan Property and thus no income has been received by Wellkan from such. To date, Wellkan has completed the Technical Report and is currently engaged with additional exploration work on the Daquan Property. Further information on the Daquan Property will be provided in the Filing Statement. Selected Consolidated Pro Forma Financial Information of the Resulting ---------------------------------------------------------------------- Issuer as at December 31, 2008 ------------------------------ The following table sets out certain financial information for each of JJR and Wellkan as at December 31, 2008 as well as unaudited pro forma financial information for the Resulting Issuer, after giving effect to the Proposed Transaction. Balance Sheet Data as at December 31, Pro Forma Pro Forma 2008 Issuer Wellkan Adjustments Consolidated ------------- ------------- ------------- ------------- Cash & Cash Equivalents $427,135 $686,965 - $1,114,100 Total Assets $486,469 $19,930,862 - $20,417,331 Total Current Liabilities $95,726 $712,279 - $808,005 Total Long-Term Liabilities $0 $2,631,783(1) - $2,631,783(1) Total Shareholders' Equity $390,743 $16,586,800 - $16,977,543 Note: (1) $1,850,461 due to related parties, directors and shareholders has been deferred, on a non-interest basis with the principal payable June 30, 2011. $717,600 due in the form of a loan payable to an arm's length party is unsecured, non-interest bearing with the principal payable June 30, 2011, and $63,722 due to an employee, non-interest bearing and due on demand. Additional financial information will be provided in the Filing Statement and the information provided herein should be read in conjunction with the Filing Statement. Management of the Resulting Issuer ---------------------------------- Ma Zhaoyang (Proposed Chairman and Director) Mr. Ma Zhaoyang, age 40, holds a Bachelor of Engineering degree from Harbin Industry University (1990) and a Masters of Management Degree from Northwestern Polytechnical University (1997). Mr. Ma Zhaoyang has been a professor of management studies at Northwestern Polytechnical University in Shaanxi, China since 1996. Mr. Ma Zhaoyang has been a director of Taihua PLC (LSE:TAIH) since December, 2006 and an independent director of Xi`an Kaiyuan Holding Group Co., Ltd. (SHE:000516) since May, 2006. Mr. Ma Zhaoyang currently resides in Xi`an, China. Liu Bingqiang (Proposed Chief Executive Officer and Director) Mr. Liu Bingqiang, age 49, holds a Bachelor degree from the Changsha Railway University. Mr. Liu Bingqiang was a project manager from 1996 to 1998 and a branch director from 1998 to 2000 for the 20th Bureau of Railways Ministry in China. From 2001 to present, Mr. Liu Bingqiang has been the chairman of the board for Shaanxi Mingtai Engineering Construction Co., Ltd. Mr. Liu Bingqiang currently resides in Xi`an, China. Elena Masters (née Kalichnikova) (Proposed Chief Financial Officer) Ms. Masters, age 36, is a CGA and holds a Bachelor of Law from the Kemerovo State University, Russia (2001) and a Bachelor of Arts (Financial Management) from Moscow State University of Commerce, Russia (1997). Ms. Masters has been a director of the Issuer from May, 2007 to present. Prior thereto, Ms. Masters held an accounting/bookkeeping position with Beltrade Inc., a private consulting company, from July 2001 to November 2003, and was a senior accountant for Anika and Co. in Russia from January 1997 to June 2001. Ms. Masters currently resides in Toronto, Ontario. Murray Atkins (Proposed Director) Mr. Atkins, age 38, holds a Bachelor of Science degree from the University of Utah (1995). Mr. Atkins has been the President of Blur Investments Ltd. a privately held investment company, since 1998. Mr. Atkins has been a director of Kristina Capital Corp. (TSXV:KCA.P) from June, 2007 to present, a director of Rain Resources Inc. (TSXV:RAN.P) from October, 2006 to present, a director of Radius Resources Inc. (TSXV: RAX-V) from August, 2007 to present and a director of ID Watchdog, Inc. (TSXV: IDW-V) from August, 2008 to present. Mr. Atkins currently resides in Calgary, Alberta. Roy Hudson (Proposed Director) Mr. Hudson, age 51, is a partner with Davis LLP practicing primarily in the area of securities law. Mr. Hudson acts for and serves, or has served, as a director and officer of numerous public companies. Mr. Hudson received a Bachelor of Commerce degree and a LL.B from the University of Alberta. Mr. Hudson was called to the Alberta Bar in 1984. Mr. Hudson currently resides in Calgary, Alberta. James Currie (Proposed Consultant and Director to be nominated for election at the next meeting of Resulting Issuer Shareholders) Mr. Currie is a professional engineer with more than 25 years of international mine development experience. He was Vice President, Operations with Miramar Mining Corp. (Miramar) (TSX:MAE) from 2006 to February 2008 when Miramar was acquired by Newmont Mining Corporation. From 2005 to 2006 Mr. Currie was General Manager of Mauritanian Copper Mines, a subsidiary of First Quantum Minerals Ltd. (TSX:FM) and from 2002 to 2005, President of Luzon Minerals Ltd. (TSXV:LZN). Prior to these responsibilities, he worked in various capacities for Placer Dome Inc., Fording Coal Ltd. and Noranda Mines Ltd. Mr. Currie currently resides in Burnaby, British Columbia. Insiders of the Resulting Issuer -------------------------------- Other than the Controlling Shareholder and the proposed management of the Resulting Issuer as detailed above, there will be no other insiders of the Resulting Issuer. Sponsorship for the Proposed Transaction ---------------------------------------- Clarus Securities Inc. has agreed to act as sponsor in connection with the Proposed Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Proposed Transaction or the likelihood of completion. Further information regarding Wellkan, the Property, selected financial information and management of the Resulting Issuer will be provided in the Filing Statement. Completion of the Proposed Transaction is subject to a number of conditions, including TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholders approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to this Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. Neither the TSXV nor its regulation Services Provider (as that term is defined in the policies of the TSXV) accept responsibility for the adequacy or accuracy of this release. This press release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "proposed", "is expected", "budgets", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This forward-looking information reflects the Wellkan's and JJR's current beliefs and is based on information currently available to Wellkan and JJR and on assumptions Wellkan and JJR believe are reasonable. These assumptions include, but are not limited to, the actual results of exploration projects being equivalent to or better than estimated results in technical reports or prior exploration results, and future costs and expenses being based on historical costs and expenses, adjusted for inflation. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Wellkan and JJR to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: the early stage development of the Wellkan and JJR and their projects; general business, economic, competitive, political and social uncertainties; commodity prices; the actual results of current exploration and development or operational activities; competition; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting Wellkan and JJR; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. Although Wellkan and JJR have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. Wellkan and JJR do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

For further information:

For further information: Ronald Schmeichel, CEO of JJR II Acquisition
Inc., at (416) 972-6294

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JJR II ACQUISITION INC.

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