/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. WIRE
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
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
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
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
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
Liabilities $95,726 $712,279 - $808,005
Liabilities $0 $2,631,783(1) - $2,631,783(1)
Equity $390,743 $16,586,800 - $16,977,543
(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
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
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
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
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