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
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
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.
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.
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
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
For further information:
For more information please email Buck Morrow at email@example.com or telephone 604 681-6855