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EDMONTON, March 19 /CNW/ - Moneda Resources Limited ("Moneda"), a capital pool company ("CPC") listed on the TSX Venture Exchange (the "Exchange"), entered into a letter of intent (the "LOI") dated March 18, 2010 for the acquisition (the "Acquisition") of 100% of Canada Resurgence New Energy Developments Ltd. ("CRNE"), a private company incorporated and existing under the laws of British Columbia. The Acquisition is intended to constitute Moneda's qualifying transaction (the "Transaction") under the policies of the Exchange. CRNE is a British Columbia-based corporation incorporated in 2009 engaged in the business of producing renewable bio-based resources and providing clean energy from biomass wastes through the use of proprietary, patented pyrolysis technology (the "Pyrolvsis IP") and selling licenses to the Pyrolvsis IP. CRNE is presently owned by Zaozhuang Xin Zhong Xing Industrial Company Ltd. ("XZX"), a large, diversified state-owned Chinese company located in Zaozhuang, China. XZX has 19 divisions and is involved in a variety of businesses, including machinery manufacturing, coal mining, forestry logging, processing and importing, real estate and clothing. The proposed acquisition of CRNE is not a non-arm's length transaction as defined by Exchange policies.
Pursuant to the terms of the LOI, the principal terms of the Transaction
are as follows:
- Moneda will consolidate (the "Consolidation") all of its presently
outstanding 5,300,000 common shares into 4,000,000 common shares
(being a consolidation of approximately 0.7547-for-1) together with a
name change (the "Name Change") to Canadian Resurgence Energy Ltd.
(or other acceptable name);
- Moneda will, prior to completion of the Acquisition, settle all but
$75,000 of its accounts payables with its trade creditors;
- CRNE will complete non-brokered equity financings (the "Financings")
in the amount of approximately $1,280,000, comprised of RMB5 million
(approximately $780,000) from its current shareholder, and $500,000
from arms' length investors;
- Moneda will acquire the shares of CNRE in consideration of the
issuance of a total of 38,060,988 post-Consolidation common shares at
a price of $0.05 per share and will cancel all of its 500,000
outstanding stock options. That number of shares issued is based on
acquiring all of the shares of CRNE, including the shares of CRNE
issued pursuant to the Financings and 2,060,988 post-consolidated
shares at a price of $0.05 per share to be issued as a finder's fee
to an arm's length third party finder payable in connection with the
- The $500,000 non-brokered equity financing is expected to be a
private placement (the "Private Placement") to arm's length investors
at a price equivalent to approximately $0.125 per share of Moneda on
a post-Consolidation basis;
- Decrease the size of Moneda's board from six to five directors to be
reconstituted all with nominees of XZX;
- Upon completion of the Transaction after giving effect to the
Financings and the Acquisition, it is expected that Moneda, as the
resulting issuer (the "Resulting Issuer") will have a total of
42,060,988 post-Consolidation common shares issued and outstanding;
- Upon closing, 90% of the presently escrowed 2,300,000 pre-
Consolidation common shares (approximately 1,735,849 post-
Consolidation common shares) of Moneda will be sold to XZX at $0.02
per share and up to that number of other shares of the Resulting
Issuer held by XZX outside of such escrow may be allocated to
minority shareholders as consented by XZX by way of a separate
private agreement (which is not a transfer within escrow) for an
aggregate purchase price of $41,400; and
- Post-Transaction, CRNE will become a wholly-owned subsidiary of
Moneda and the business of CRNE will become the business of Moneda.
As the Transaction does not constitute a non-arm's length transaction, no shareholder approval of Moneda shareholders is required, but Moneda will seek approval of its shareholders for the Contemplated Consolidation, Name Change and to decrease the size of its board from six to five members, as well as to address normal annual corporate business. The Transaction is expressly subject to:
(i) approvals from the boards of Moneda and CRNE;
(ii) completion of the Financings;
(iii) completion of due diligence review by each of Moneda and CRNE
other than confirmatory due diligence;
(iv) execution of the definitive share exchange agreement (the
"Definitive Agreement") to effect the Transaction;
(v) Moneda's shareholder approval of the Consolidation and Name
(vi) accounts payables and accrued liabilities of no more than $75,000
(other than permitted Transaction costs of Moneda);
(vii) maintenance of Moneda's listing on the Exchange;
(viii) the receipt of all necessary regulatory, corporate and third party
approvals, including approval of the Exchange and compliance with
all applicable regulatory requirements and conditions in
connection with the Transaction;
(ix) confirmation of the representations and warranties of each party
to the Definitive Agreement, as set out in the agreement;
* absence of material adverse effect on the financial and
operational condition of the assets of each of the parties to the
Definitive Agreement; and
(xi) delivery of standard Transaction completion documentation and
fulfillment of other customary transaction conditions precedent.
Business of CRNE
CRNE is in the process of acquiring proprietary and patented pyrolysis technology (the "Pyrolysis IP") used to provide renewable, clean energy and industrial by-products of biochar, wood vinegar and creosote from biomass wastes such as sawdust, bark and other forestry waste material. Once acquired, CRNE intends to commercialize the Pyrolysis IP beginning by implementing its technology in pilot plant facilities at XZX's sawmill facilities in Zaozhuang, Shandong Province, China and to market licenses for royalties on use of the technology in North America, Asia and other parts of the world. Eventually, CRNE intends to construct a pyrolysis plant in the area of Terrace, British Columbia where CRNE can make use of a rich supply of forestry waste including those from the forestry processes of XZX's other Canadian subsidiary, Canada Resurgence Developments Ltd., which holds timber licenses in the region.
Pyrolysis is the chemical decomposition of a condensed substance by heating, largely in the absence of oxygen. Such pyrolysis processes may use straw, branches, sawdust, bark, and other agricultural or forestry waste as raw material. Through a process of high temperature and pressure, the pyrolysis process forms a variety of industrial products including biochar, wood vinegar, creosote (which can be further processed into diesel, gasoline and wood tar) and methane (which can be used as fuel to produce electricity). The advantages of pyrolysis include the ability to turn waste products into high value-added products, and to effectively reduce greenhouse gases and sulfur dioxide, nitrogen oxides, soot and other pollutants.
In British Columbia, wood residue - material left over from forestry operations - is the most abundant and readily available source of biomass supply, and represents the largest opportunity for CRNE as a source of low-cost feedstock for its contemplated pyrolysis plant in British Columbia.
The acquisition of CRNE is intended to constitute Moneda's qualifying transaction under the polices of the Exchange and is subject to the prior approval of the TSXV. Moneda and CRNE expect very shortly to engage a sponsor for the Transaction in accordance with the sponsorship requirements of the Exchange and such sponsor may also participate in the Private Placement. Upon completion of the Transaction, but subject to review and approval of the Exchange, it is expected that the resulting issuer of the qualifying transaction of Moneda and CRNE would be a Tier 2, Category 3 Industrial Issuer under the policies of the Exchange.
It is anticipated that in conjunction with the completion the Transaction the present directors of Moneda will resign and will be replaced with Mr. Xuedian Liu, Mr. Ling Jin, Mr Jiaming Zhu and two additional independent director nominees of XZX.
The completion of the Transaction is intended to occur on the tenth business day following the satisfaction or waiver of the conditions precedent or such other date as is mutually agreed by the parties, but in no event later than June 21, 2010. If the Transaction is not completed on or before June 21, 2010, the terms of the LOI or the Definitive Agreement (if applicable) will be terminated. Each party shall be responsible for the payment of its own professional fees (including but not limited to legal and accounting fees) and other expenses incurred by it in connection with the Transaction. Moneda will also be responsible for the payment of 50% of the sponsorship fee and related costs and expenses (including legal fees) of the sponsor for the Transaction from time to time, but CRNE shall make such payments on behalf of Moneda. CRNE's counsel will be responsible for coordinating the Transaction and preparing necessary documentation, so Moneda's legal and auditor expenses (including the 2009 year end audit) shall not exceed $20,000 without prior written authorization of CRNE.
New Legend intends to call a shareholders' meeting to be held on or about March 31, 2009 to consider, among other things, the Consolidation. It is expected that the principal shareholders of New Legend, including Anthony Wong, David Lake, Alexander Nam and Dominic Lam will enter into a voting support agreement to approve the Consolidation at the meeting of the New Legend shareholders.
Principals, Directors and Insiders of CRNE and the Resulting Issuer
Upon completion of the Transaction, it is expected that the director and officers of CRNE will be insiders of the Resulting Issuer as follows: XZX as the sole significant shareholder holding a controlling interest, and Mr. Xuedian Liu, Mr. Ling Jin, Mr Jiaming Zhu and Mr. Bin Li as directors and officers of the Resulting Issuer.
It is the intention of Moneda and CRNE to establish and maintain a board of directors with a combination or appropriate skill sets which is compliant with all regulatory and corporate governance requirements, including any applicable independence requirements. The board of directors of Moneda currently consists of six members. Upon completion of the Transaction, the board of Moneda will be decreased to five members, all to be nominated by XZX, which is expected to include: Mr. Xuedian Liu, Mr. Ling Jin, Mr Jiaming Zhu, and two independent directors to be nominated by XZX. Information respecting the additional directors will be provided in a follow up news release when available.
A brief description of the backgrounds of the insiders of CRNE and intended insiders of the Resulting Issuer are as follows:
Xuedian Liu - Proposed director, President and Chief Executive Officer of the Resulting Issuer. Mr. Liu is a resident of the Peoples' Republic of China (the "PRC") and is the founding director, President and Chief Executive Officer of CRNE. Mr. Liu is currently the Chief Executive Officer and Chairman of XZX. He has also been involved with the Zaozhuang Coal Mining Administration ("ZCMG") in various positions over the last 20 years, from the accounting department to Deputy Manager to Manager. It is intended that Mr. Liu will maintain his positions with CNRE and have the same roles with the Resulting Issuer.
Ling Jin - Proposed director and Deputy Manager of the Resulting Issuer. Mr. Jin is a resident of the PRC and is Vice Chairman of CRNE. Mr. Jin has worked as Deputy Manager of XZX since June 2001 and has over 28 years of experience in financial and accounting roles in the coal mining industry. It is intended that Mr. Jin will maintain his positions with CRNE and have a similar roles with and be a director of the Resulting Issuer.
Jiaming Zhu - Proposed director of the Resulting Issuer. Mr. Zhu is a resident of the PRC, and is the Chief Financial Officer of CRNE. Mr. Zhu began working at XZX in June 2003 as Deputy Chief and is currently the Department Head of Accounting Services at XZX. Mr. Zhu has over 18 years of experience in financial and accounting roles in the coal mining industry. It is intended that Mr. Zhu will continue his involvement in CRNE and will be a director of the Resulting Issuer.
Bin Li - Mr. Li is a resident of the PRC, and is the Chief Technical Officer of CRNE. Mr. Li is currently the Assistant Engineer and General Manager of ZCMG's Machine Manufacturing Division and has over 15 years of experience in the coal mining industry. It is intended that Mr. Li will continue his involvement in CRNE and will have no other role with the Resulting Issuer.
In addition to the foregoing directors and officers, XZX will select two independent directors and a new Chief Financial Officer prior to completion of the Transaction and subject to Exchange approval.
Moneda, a capital pool company within the meaning of the policies of the Exchange, was incorporated April 5, 2007 and was listed on the exchange on or about September 19, 2007. Moneda does not have any operations and has no assets other than cash. Moneda's business is to identify and evaluate businesses and assets with a view to completing a qualifying transaction under the policies of the Exchange.
Trading in the common shares of Moneda has been halted pending satisfaction of the conditions to the proposed Transaction and will resume trading on the completion of the Transaction. Moneda will issue a follow up news release upon engagement of a sponsor and upon any other materially disclosable development in the Transaction. Summary financial information respecting CRNE will also be included in a follow up news release.
Except for statements of historical fact, all statements in this news release, including, but not limited to, statements regarding future plans, objectives and payments are forward-looking statements that involve various risks and uncertainties.
Completion of the contemplated qualifying transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to TSX Venture Exchange requirements, majority of the minority 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 has in no way passed on the merits of the proposed transaction and has neither approved or disapproved the contents of this news 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.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements and information that are based on the beliefs of management and reflect Moneda's current expectations. When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information. Such statements and information reflect the current view of Moneda with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: risks associated with marketing and sale of securities; the need for additional financing; reliance on key personnel; the potential for conflicts of interest among certain officers, or directors with certain other projects; the volatility of our common share price and volume. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and, except as required in accordance with applicable securities legislation, Moneda undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.
There are a number of important factors that could cause Moneda's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to CRNE's business such as failure of the business strategy, integrity of its patents and proprietary intellectual property, availability of raw materials, competition in the biomass pyrolysis energy industry; risks related to CRNE's operations, such as additional financing requirements and access to capital, reliance on key and qualified personnel, environmental risks and hazards of operating a pyrolysis and related processes, storing and shipping pyrolysis products, insurance, intellectual property and reliable supply chains; risks related to CRNE and its business generally such as potential exposure to tax under Canadian income tax and tax in the Peoples' Republic of China (the "PRC"); and risks related to doing business in the PRC such as tax, repatriation of profit and currency conversion, permits and business licences , government corruption and changing political conditions, and enforcement of judgments and a developing legal system.
Moneda cautions that the foregoing list of material factors is not exhaustive. When relying on Moneda's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Moneda has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF MONEDA AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE MONEDA MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE SECURITIES LEGISLATION.
SOURCE MONEDA RESOURCES LIMITED
For further information: For further information: on Moneda please see the corporate profile on SEDAR at www.sedar.com or contact: David Price, President and Chief Executive Officer, Telephone: (250) 590-5353, Facsimile: (780) 426-1293