/Not for distribution to United States newswire services or for release publication, distribution or dissemination directly, or indirectly, in whole or in part, in or into the United States./
TORONTO, March 26, 2012 /CNW/ - China Goldcorp Ltd. (NEX: CAU.H) ("China Goldcorp") is pleased to announce that it has signed a definitive agreement (the "Agreement") with First Iron Group, PLC, a corporation existing under the laws of Jersey, Channel Islands ("First Iron"), which outlines the terms and conditions pursuant to which China Goldcorp and First Iron will complete a transaction that will result in a reverse take-over of China Goldcorp by the shareholders of First Iron (the "Transaction"). The Agreement was negotiated at arm's length and is effective as of March 21, 2012.
The Transaction is subject to requisite regulatory approval, including the approval of the TSX Venture Exchange (the "TSXV") and standard closing conditions, including the approval of the directors of each of China Goldcorp and First Iron of the Agreement and completion of due diligence investigations to the satisfaction of each of China Goldcorp and First Iron, as well as the conditions described below. The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies, however, it is currently contemplated that the transaction will be structured as a three-cornered amalgamation.
China Goldcorp is incorporated under the provisions of the Business Corporations Act (Ontario) with its registered and head office in Toronto, Ontario. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. China Goldcorp is a "reporting issuer" in the provinces of Ontario, British Columbia and Alberta.
Since the Transaction is not a non-arm's length transaction, China Goldcorp is not required to obtain shareholder approval for the Transaction, subject to seeking shareholder approval to complete the amalgamation, if necessary.
Trading in the common shares of China Goldcorp has been halted. It is unlikely that the common shares of China Goldcorp will resume trading until the Transaction is completed and approved by the TSXV.
The Proposed Transaction
Pre-Closing Capitalization of China Goldcorp
As of the date hereof, China Goldcorp has 6,057,600 common shares ("China Goldcorp Shares") outstanding and no securities exercisable or exchangeable for, or convertible into, or other rights to acquire, China Goldcorp Shares.
Terms of the Transaction
China Goldcorp proposes to acquire all of the common shares of First Iron ("First Iron Shares") pursuant to the terms of the Agreement. It is expected that all First Iron Shares (inclusive of any First Iron Shares issued pursuant to the Debt Conversion or upon the exercise of any convertible securities) will be exchanged for an aggregate of 54,518,400 newly issued China Goldcorp Shares at a deemed price of $1.00 per share resulting in the China Goldcorp shareholders holding approximately 10% of the common shares of the resulting entity (the "Resulting Issuer") and the former First Iron shareholders holding approximately 90% of the common shares of the Resulting Issuer upon completion of the Transaction (prior to giving effect to the Private Placement). In addition, the securities issued under the Private Placement will be exchanged for the same securities of China Goldcorp (see description of Private Placement below).
Conditions to the Transaction
Prior to completion of the Transaction (and as conditions of closing):
- First Iron must complete a brokered private placement (the "Private Placement") of units of First Iron (the "Units") for minimum gross proceeds of not less than $5,000,000 and up to a maximum gross proceeds of $10,000,000 at an anticipated issue price of $1.00 per Unit. Each Unit is expected to be comprised of one common share (a "Private Placement Share") and one-half of one common share purchase warrant (each whole warrant, a "Private Placement Warrant") of First Iron. Each Private Placement Warrant shall entitle the holder thereof to purchase, for a period of 24 months from the closing of the Private Placement, one First Iron Share upon payment of $1.50. On closing of the Transaction, the Private Placement Shares will be exchanged for China Goldcorp Shares on a one for one basis. The Private Placement Warrants will be exchanged on a one for one basis for common share purchase warrants of China Goldcorp with the same terms and conditions as the Private Placement Warrants. Further details regarding the Private Placement will be included in a subsequent press release once additional details become available.
- First Iron use its best efforts to cause substantially all holders of outstanding convertible bonds of First Iron with an aggregate value of USD$7,950,000 and other loans and accounts payable in the aggregate amount of £5,499,562 to agree to convert their outstanding convertible bonds and loans and accounts payable to First Iron Shares prior to the completion of the Transaction (the "Debt Conversion"). First Iron is currently in discussions with its bond and debt holders to participate in the Debt Conversion, and is expected to finalize such discussions and agreements within the next 30 days.
- The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Transaction.
- All common share purchase options and warrants of First Iron shall be cancelled or exercised into First Iron Shares (other than the Private Placement Warrants).
- China Goldcorp and First Iron will obtain the requisite shareholder approvals for the Transaction and any ancillary matters contemplated in the Agreement, as required.
- All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.
About of First Iron
First Iron was incorporated on November 16, 2007 as RAM Resources Ltd. under the laws of Jersey and subsequently changed its name to First Iron Group, PLC on June 13, 2011. First Iron is the parent company of a mineral assets development and management group, which was established in order to develop the large iron ore deposits on the Russian side of the Valerianov trend in the Kurgan region of the Russian Federation. The Valerianov trend is a well known iron ore producing belt that hosts several producing iron ore mines located south of the Russian border.
First Iron holds two 25 year exploration and production licences on the Valerianov trend, being Petrovskoe and Glubochenskoe South. First Iron believes that the acquisition of these licences has provided First Iron with a significant opportunity to establish a first mover advantage in opening up a new major iron ore province through its prospectivity, strategic location and established infrastructure, inside a mature and well-known steel producing region.
First Iron has three main operating subsidiaries - Petrovskoe LLC, Ural Mining LLC and KGEC LLC.
Petrovskoe LLC was founded for the purpose of exploring and developing the Petrovskoe deposit. The 25 year Petrovskoe Licence was acquired via a government auction, and issued to Petrovskoe LLC in April 2010. Ural Mining LLC was founded for the purpose of exploring and developing the Glubochenskoe deposit. The 25 year Glubochenskoe South Licence was acquired via a government auction and issued to Ural Mining LLC in December 2006. First Iron (formerly RAM Resources Limited) became the group holding company in 2007 following a group reorganisation.
KGEC LLC was formed in July 2007 to acquire assets previously held by the Kurgan Geological and Exploration Company (KGEC), a regional government-owned geological exploration company founded in 1958 with extensive historical experience and data on the Kurgan region's mineral deposits. KGEC was acquired by First Iron in April 2008, providing First Iron with KGEC's in-house local geological expertise, drilling capacity, a base for future operations, as well as an extensive database of Soviet geological information and core samples from the Kurgan region, covering prospective deposits of iron ore as well as multiple other minerals.
Ms. Turunzh Yakubova, a resident of the Russian Federation, currently owns or has control or direction over approximately 33% of the issued and outstanding First Iron Shares.
Financial Information Concerning First Iron
The table below sets out certain selected financial information regarding First Iron as at June 30, 2011 (unaudited), and as at and for the 12 months ended December 31, 2010 (audited). The selected information was prepared in accordance with International Financial Reporting Standards (IFRS).
|Balance Sheet||As at June 30, 2011||As at December 31, 2010|
|Total liabilities and equity||8,442,414||7,678,662|
| Statement of
| For the six months ended
June 30, 2011
| For the year ended
December 31, 2010
|Net Loss for the Period||(1,259,833)||(4,636,588)|
Insiders, Officers and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the board of directors of the Resulting Issuer shall be reconstituted to consist of 5 to 8 directors. It is currently intended that the board will be comprised of: Kirk Adams, Michael Hellenbrand, Helen Teplitskaia, Norman Brown, Mikhail Kopeikin and three independent directors to be determined. In addition, it is expected that Elena Pochapski shall be an officer of the Resulting Issuer.
Following completion of the Transaction, the Private Placement (assuming gross proceeds of $10 million) and the Debt Conversion, it is anticipated that no single shareholder will exercise direction or control over more than 10% of the issued and outstanding shares of the Resulting Issuer.
The following sets outs the names and backgrounds of all persons who are expected to be the directors and officers of the Resulting Issuer.
Kirk Adams, Director
Kirk has 28 years of executive mining experience in Russia, Kazakhstan, Southern Africa and Eastern Europe, including 10 years in large scale underground mines ultimately as underground manager. He has been instrumental in raising over $250 million dollars for mining development projects, taking projects from exploration, through feasibility, operation and through initial public offerings. Specifically, Kirk has taken large mechanized underground mines into production. He has an MBA from Cranfield School of Management, and a BSc in Mining Engineering from the Camborne School of Mines.
Michael Hellenbrand, Director
Michael co-founded First Iron and has served as its Chief Executive Officer from 2006-2011 before handing over the CEO role to Kirk Adams, and assuming the responsibility of Executive Vice-Chairman, and most recently of Chairman of the board of directors. During his time as CEO, he has been responsible for the substantial licenses and assets acquisition strategy and execution of First Iron, building the company to its current status. Michael is a member of the Advisory Council of the American-Russian Business Institute.
Elena Pochapski, Officer
Elena has more than two decades of experience in accounting and finance, having worked as a chief accountant and as an auditor for a number of Russian, North-American and international firms. From 1996 to 1999 Elena worked in a senior capacity in the Audit and Business Assurance department of PriceWaterhouseCoopers in Moscow, Russia. She specialized in audits and IAS restatements of the companies in the Energy, Utilities and Mining sector, such as mining companies AO Uralkali and AO Silvinit, the two largest potash fertilizer producers in Russia, and an oil producing mid-sized company Khanty-Mansiisk Neftegaz Geologia.
She has extensive experience in public accounting, audits, corporate finance and Russian accounting procedures. Furthermore, Elena is experienced in translating Russian financial statements into US GAAP and IAS. Elena is certified as a CPA (State of Maine,USA) and CGA (Canada). She also holds a Bachelor of Economics degree from Moscow State University.
Helen Teplitskaia, Director
Helen Teplitskaia is an executive with over 20 years of experience in international management and finance. Prior to joining RAM Resources, she was a Managing Partner and Head of Russia and Eurasia consulting practice at Imnex International, Inc., advising government agencies and multinational companies, including the US Agency for International Development (USAID), Ministry of Foreign Affairs of the Republic of Uzbekistan, Pepsi-Cola, Motorola, Morgan Stanley, Case-New Holland, Ingersoll Rand, Heidelberg Cement and Gazprom with operations in new markets, cross-border mergers and acquisitions, direct investment, privatizations, corporate governance and political interfacing. She is a founder and President of the American-Russian Chamber of Commerce & Industry and formerly a professor of international business at Northwestern University Kellogg Graduate School of Management, where she also received an MBA.
Norman Brown, Director
Norman has 38 years in investment banking, ultimately as a Managing Director at Credit Suisse First Boston in the Global Industrial & Services Group. Previously he spent 15 years at Donaldson, Lufkin & Jenrette during which he was in Mergers & Acquisitions Group; established and headed the Restructuring Group, and was Head of Global Metals & Mining. Norman was also a Director at Macquarie Infrastructure. He serves as Senior Managing Director of Brock Capital Group LLC. He received an MBA from the Wharton School of the University of Pennsylvania.
Mikhail Kopeikin, Director
Mr. Kopeikin is Deputy Chairman and Management Board member of Vnesheconombank (VEB) and Chairman of the Supervisory Board of the Russian Bank for Development, positions he has held since December 2008. Previously, he has spent much of his career in senior positions in the administration of the Russian Federation, including Deputy Chief of Administration of the Government of the Russian Federation, where he also served as head of the Economics and Investment Department. Prior to joining the Government Administration, he held senior positions at the Ministry of Economy and Ministry of Finance of the Russian Federation. Mr. Kopeikin is a Doctor of Economics and Professor at the Higher School of Economics. Graduate of the Ordzhonikidze Management Institute in Moscow, where he received a Bachelor and Candidate of Science degrees in Economics, he is an Honoured Economist of the Russian Federation, and author of four monographs and more than 80 papers on a wide range of subjects in banking, finance and political economy.
Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. China Goldcorp is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that China Goldcorp will ultimately obtain this exemption. China Goldcorp intends to include any additional information regarding sponsorship in a subsequent press release.
All information contained in this news release with respect to China Goldcorp and First Iron was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.
Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the 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.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Private Placement; future exploration and testing; use of funds; and the business and operations of the Resulting Issuer after the proposed transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of current exploration and testing. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. China Goldcorp and First Iron disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For further information:
For further information regarding the Transaction, please contact:
Maurice Colson, Chief Executive Officer, China Goldcorp Inc.
Michael Hellenbrand, Chairman, First Iron Group, PLC