|By Marketwire .||
|February 7, 2013 05:07 PM EST||
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/07/13 -- Broome Capital Inc. (the "Company") (TSX VENTURE:BCP.P), a capital pool company pursuant to Policy 2.4 of the TSX Venture Exchange (the "TSX-V"), is pleased to announce that it has entered into a binding letter of intent dated January 14, 2013 to complete a business combination (the "Transaction") with three private Indonesian holding companies: PT Forel Mega Mineral ("Forel"), PT Anak Indonesia Mining ("Anak") and PT For El Shadai ("El Shadai" and collectively the "Minahasa Group") by acquiring all of the issued and outstanding securities of the Minahasa Group from their shareholders. The three companies in the Minahasa Group are all private companies incorporated under the laws of Indonesia, and collectively have the rights to acquire a 100% interest in the Minahasa Gold Project located in Northern Sulawesi, Indonesia. Upon completion of the Transaction, the combined entity will be listed as a Tier 2 mining issuer on the TSX Venture Exchange, carrying on the business of the Minahasa Group, which is the further exploration and development of the Minahasa Gold Project and acquisition and development of further exploration projects in Indonesia.
The Transaction will be effected by the Company issuing not greater than 12,500,000 common shares to shareholders of the Minahasa Group, which will result in the three companies in the Minahasa Group becoming wholly-owned subsidiaries of the Company (the Company after the Transaction being referred to herein as the "Resulting Issuer"). It is currently anticipated that 12,500,000 common shares will be issued at a deemed price of $0.20 per security for an aggregate purchase price of $2.5 million.
The Transaction is an arm's length transaction.
The Company currently has 11,400,000 common shares issued and outstanding, as well as 840,000 Incentive Stock options and 300,000 brokers warrants to acquire common shares at $0.10 per share.
Following the completion of the Transaction (based on the outstanding share capital of each of the Company and each company in the Minahasa Group as of the date hereof,), and the completion of a concurrent financing of 10,000,000 shares at $0.20 per share, the issuance of 187,500 shares to Evans & Evans as a finder's fee, the issuance of 125,000 shares to Mr. In Suk Chung as a finder's fee, and the issuance of 300,000 shares to Canaccord Genuity as a Corporate Finance Fee approximately 34,512,000 common shares of the Resulting Issuer would be issued and outstanding. Broome Capital shareholders will hold common shares representing approximately 33.03% of the outstanding common shares of the Resulting Issuer following the completion of the Transaction and the concurrent financing on an undiluted basis.
The proposed Transaction is subject to a number of terms and conditions, including the entering into by the parties of a definitive agreement with respect to the Transaction (such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature), the completion of satisfactory due diligence investigations, the approval of the directors of each of the Company and of each company in the Minahasa Group, the completion of a financing of the Company generating proceeds of $2 million from the sale of securities, on terms to be determined, at a price of $0.20 per security and the approval of the TSX-V and other applicable regulatory authorities.
The parties intend that the Resulting Issuer will be listed on the TSX-V as a Tier 2 mining issuer following completion of the Transaction. Trading in the common shares of the Company will remain halted pending the satisfaction of all applicable requirements of the TSX-V. There can be no assurance that trading in the common shares of the Company will resume prior to the completion of the Transaction. Further details concerning the Transaction, the Minahasa Group (including additional financial information and technical information respecting the Minahasa Gold Project) and other matters will be announced if and when a definitive agreement is reached.
Information Concerning the Minahasa Group
The Minahasa Group is comprised of three companies organized and existing under the laws of Indonesia. The Minahasa Group in turn jointly holds 100% interest in seven (7) exploration permits in the Minahasa region of Northern Sulawesi, Indonesia. El Shadai and Forel each hold 2 of the permits, with the final 3 permits held by Anak.
The Minahasa Group are related companies the shareholders of which are: Soebali Sudjie, Setiawan Sudjie, Tjiebeng Sukajali, Vigielia Oral Christany Lumoindong, and PT. Multi Mining Utama (MMU) a private Indonesian mining company. All of the individual vendors are resident in Indonesia. The Minahasa Group holds an unencumbered 100% interest in the Minahasa Gold Project.
Information Concerning the Minahasa Gold Project
The Minahasa Gold Project consists of seven exploration permits covering 13,641 hectares, located in the Minahasa Regency of northern Sulawesi island, Indonesia, approximately 65 km south south-west of the regional city of Manado and 2,400 km northeast of Jakarta. The general area is accessible by road with the permit areas variously accessible by 4 wheel drive, and walking tracts. Most of the permits were previously held by a subsidiary of Newmont Mining Corporation.
The geology of the Minahasa Gold project area consists of Miocene volcanic and marine sediments and Pliocene to recent volcanic. The project area displays vein, vein stockwork and contact-replacement style of low sulfidation epithermal gold-silver-arsenic mineralisation, consistent with development distal to a porphyry source.
Mineralised quartz veins hosted in argillised volcanic rock and silicified limestone were first discovered in the area in 1987 by Newmont during a first pass reconnaissance program.
The Minahasa Group has undertaken preliminary reconnaissance of the northern part of their holdings. This has involved mapping and geochemical sampling.
Gold has been mined in the broader region and artisan mining still occurs within the exploration area.
A National Instrument 43-101 compliant technical report has been completed on the Minahasa Gold project, which recommends additional exploration work and a 2nd phase drill program be completed. The report will be filed on the SEDAR system in due course.
Selected Minahasa Group Financial Information
As of September 30, 2012, the Minahasa Group collectively had approximately US$ 770 (approx. CDN$754) in cash and commitments of approximately US $281,000 (approx CDN$278,000) (unaudited).
Management and Board of Directors of Resulting Issuer
Three members of the board of directors and management of the Resulting Issuer will be nominated by the Minahasa Group, with two members of the Company's board remaining. The members of the Board of the Resulting Issuer will be determined and announced as the Transaction progresses.
Sponsorship and Concurrent Financing
Canaccord Genuity Corp., subject to completion of satisfactory due diligence, has agreed to act as sponsor and financial advisor in connection with the transaction. For acting as Sponsor, Canaccord will receive a work fee of $35,000, plus a monthly work fee of $20,000 per month for two months.
An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.
Pursuant to the letter of intent, it is a condition of the completion of the Transaction that the Company complete a financing generating up to $2 million at a price of $0.20 (the "Financing"). Canaccord has also entered into a letter agreement to assist Broome to complete the Financing on a best efforts basis, with $1,500,000 of the financing to be raised through a "president's list". Under the terms of the engagement, Canaccord will also have an over-allotment option to place additional shares to raise up to a further $500,000. For its services in respect to placees under the "president's list, Canaccord will be entitled to receive a cash commission of 4% on gross proceeds from those placees plus Brokers warrants exercisable for a period of 24 months from closing of the Qualifying Transaction to acquire that number of common shares that is equal to 4% of the number of shares sold to the president's list. For placees not on the "president's list" Canaccord will receive 8% cash commission and 8% in Broker's warrants.
Canaccord will also receive 300,000 shares by way of a corporate finance fee upon successful completion of the Financing, and a pro-rata additional number of corporate finance fee shares if the over allotment option is exercised.
Upon completion of the Qualifying Transaction, a finder's fee is payable to (a) Evans & Evans, Inc., in the amount of 3% of the value of the Transaction, which is currently estimated to be $2,500,000, for a finder's fee of $75,000, payable 50% in cash and 50% in shares of the Resulting Issuer at a deemed price equal to the Transaction deemed price and to (b) Mr. In Suk Chung in the amount of 2% of the value of the Transaction for a finder's fee of $50,000, payable 50% in cash and 50% in shares of the Resulting Issuer at a deemed price equal to the Transaction deemed price.
This news release contains certain "forward-looking statements" including, for example, statements relating to the completion of the proposed Transaction, the Resulting Issuer's anticipated share capital. Such forward-looking statements involve risks and uncertainties, both known and unknown. The results or events depicted in these forward-looking statements may differ materially from actual results or events. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding and are implicit in, among other things: receipt of government and third party approvals in respect of transferring assets, the state of the capital markets; tax issues associated with doing business internationally, the ability of the Minahasa Group to successfully manage the political and economic risks inherent in pursuing business opportunities in Indonesia; and the ability of the Minahasa Group to obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business. Any forward-looking statement speaks only as of the date of this news release and, except as may be required by applicable securities laws, the Company and the Minahasa Group disclaim any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.
On behalf of the Board of Directors
Peter Hughes, President, Chief Executive Officer
All information contained in this press release relating to the Minahasa Group was provided by the Minahasa Group to the Company for inclusion herein. The Company has not independently verified such information and shall bear no liability for any misrepresentation contained therein.
Qualified Person Statement.
Mr. Stephen Godfrey, BSc(Hons)(UNE), DipEd(QU), MAIG, MAusIMM, has reviewed the portion of the technical content of this news release as it relates to the Minahasa Gold project.
Completion of the transaction is subject to a number of conditions, including but not limited to, exchange acceptance and if applicable pursuant to exchange requirements, 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-V 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 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.
Broome Capital Inc.
President, Chief Executive Officer
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