Concordia Resource Corp. (TSX VENTURE:CCN) ("Concordia") is pleased
to announce that, further to its news release dated September 6,
2011, it has signed an arrangement agreement (the "Agreement") with
Swala Resources Inc. ("Swala"), dated October 20, 2011. Under the
Agreement Concordia has agreed to acquire all of the issued and
outstanding Swala securities pursuant to a plan of arrangement.
Swala brings to Concordia an extensive exploration portfolio in the
resource endowed regions of Burkina Faso, Gabon, the Democratic
Republic of Congo (the "DRC"), Zimbabwe and Mozambique with a land
package totaling over 12,400 km2, as well as an experienced
management team and board of directors with extensive expertise in
Africa. Completion of the plan of arrangement transaction is
expected by December 2011.
Also pursuant to the Agreement Concordia has agreed to fund
existing exploration commitments in Burkina Faso so as not to lose
valuable dry-season drilling and sampling time. This will be done
by subscribing for an unsecured promissory note (the "Note") of
Swala in the principal amount of CDN$2,000,000. While it is hoped
that finality of the Arrangement pursuant to shareholder approval
will be in December, the Note will have a maturity date of March
30, 2012. All principal and interest owing under the Note will be
repaid in full on the Maturity Date by payment in cash or, at the
option of Swala, by the issuance of 1,470,558 shares of Swala and
warrants to acquire an additional 450,000 Swala shares for two
years from the date of issue at a price of $1.93 per Swala share.
If Swala terminates the proposed arrangement by accepting a
superior proposal, the break fee of $500,000 will be due to
Concordia and the Note will be repayable, in cash, within 30
days.
"Signing the arrangement agreement with Swala establishes a
solid framework from which we can begin the process of advancing an
aggressive drill program in Burkina Faso, where Swala owns 100% of
the Kerboule property and is earning up to an 80% joint venture
interest on SearchGold's Gueguere property," stated Edward Flood,
CEO of Concordia. "The focus of the proposed drilling program is to
generate a NI 43-101 qualified resource on the Kerboule property
while expanding the currently identified mineralization on the
Gueguere property. We have worked closely with Swala over the past
two months to prepare a strong foundation for creating future
shareholder value."
Commenting on behalf of Swala, Gerard de la Vallee Poussin,
Executive Chairman, stated, "This is the start of a new era for
Swala's shareholders. In challenging markets we are fortunate to
have found a suitor in Concordia with such enthusiasm for Africa
and a belief in our projects and team. Together we have all of the
elements of a successful exploration company and this transaction
allows the potential of our various projects in Africa to be
realized and in particular the Kerboule gold project in Burkina
Faso."
Results from a 22,000-metre drilling program in the 2010/11 dry
season are expected to be returned in the coming weeks and for the
current drilling season Swala has designed an ambitious program for
both the Burkina Faso projects.
In the DRC, Swala now has two joint ventures in place, one with
Anglo American plc and the other with an aggressive and well-funded
new partner who has pledged to spend $3 million over two years on
an initial exploration program. In Gabon the company has a joint
venture with AngloGold Ashanti Ltd., whose exploration program is
continuing, and in which Swala has an option of participating in
the event of discovery. In Zimbabwe, Swala has received the
necessary government authorizations and is implementing a pilot
program on its tenements with the Zimbabwe Women in Mining
Association.
The Transaction
Pursuant to the Agreement, Concordia will acquire each
outstanding share of Swala for 1.9 shares of Concordia. Swala
currently has 13,617,761 shares issued and outstanding, or
committed to be issued, options to acquire 1,339,334 Swala shares
with a weighted exercise price of $1.41/share issued or committed
to be issued, and warrants to acquire 2,901,135 Swala shares. It is
proposed that the outstanding options will be exercised for Swala
shares before the transaction completes (the "Closing"), on a
cashless, in-the-money value basis, using the 1:1.9 share exchange
ratio. Unexercised options will be cancelled. Following Closing,
Concordia will issue options to acquire an aggregate of 2,221,754
shares of Concordia, with an exercise price of $0.70 per share, to
members of the Swala team. Each unexercised warrant will be
exchanged for 0.5 Concordia warrants, with a weighted average
strike price of $0.86.
The Agreement also provides for conditions precedent that are
standard for a transaction of this nature, including receipt of all
regulatory and TSX Venture Exchange approvals, and approval by
Swala's securityholders. Lockup agreements will be entered into
with the directors of Swala prior to mailing the information
circular to the Swala shareholders, and Swala will make reasonable
commercial efforts to obtain additional lockup agreements from
holders of Swala securities holding, together with the Swala
directors, an aggregate of 30% or more of the issued and
outstanding securities of Swala.
The combined company will retain the Concordia name and remain
headquartered in Vancouver, Canada. Swala will become a wholly
owned subsidiary of Concordia and Swala shareholders will become
shareholders of Concordia, holding approximately 30% of the issued
and outstanding shares of Concordia post-transaction.
Treeline Project
Concordia also announces that its Nevada subsidiary, Western
Energy Development Corp., has entered into an agreement (the
"Assignment Agreement") with Tigris Uranium Corp. ("Tigris")
whereby Tigris will acquire Concordia's Treeline project, which
includes a sandstone hosted uranium deposit, located in McKinley
and Cibola Counties, Grants Uranium District, New Mexico.
The Treeline project consists of a mining lease and certain
unpatented mining claims covering approximately 2,000 acres. In
consideration for the assignment of the Treeline project, Concordia
will receive 200,000 common shares of Tigris. The Assignment
Agreement is subject to several conditions precedent, including
regulatory approval.
ABOUT CONCORDIA
Concordia Resource Corp. is a junior mining exploration company.
The successful acquisition of Swala will add to Concordia's
precious metals portfolio, which includes the past-producing La
Providencia silver mine in Argentina, and will position the company
as a well-financed African explorer with an emphasis on developing
gold deposits holding the potential of one million ounces upwards.
Members of Swala's team are former Anglo American plc and De Beers
executives with extensive experience of operations throughout the
African continent. Concordia has its head office and executive
management team in Vancouver, Canada; its technical team is based
in Reno, Nevada.
About Burkina Faso
Much of West Africa is underlain by the Birimian greenstone
belt, one of the most prolific gold-producing areas in the world.
Many of the world's major gold companies are active in West Africa,
several with producing mines, including: Iamgold Corp., AngloGold
Ashanti Ltd., Randgold Resources Ltd., Gold Fields Ltd. and Newmont
Mining Corp. Burkina Faso is politically and economically stable
and relies on farming and mining as it primary sources of revenue.
Burkina Faso saw gold production double from 2008 to 2010 and is
currently the fifth largest gold-producing country in Africa.
Control Risks, a global consultancy specializing in political,
security and integrity risk, ranked Burkina Faso #3 in their 2011
World Risk Survey - countries with least risk. The World Risk
Survey asked respondents to rank their perception of risk in the
following categories: financial risk, sovereign risk, land access,
green tape, land claims, red tape, social risk, infrastructure,
civil unrest, natural disasters and labour relations.
On behalf of the Board of Concordia Resource Corp.
R. Edward Flood Chairman
Forward Looking Statements
Certain of the statements made and information contained herein
is "forward-looking information" within the meaning of the Ontario
Securities Act, including the receipt of necessary permits to
conduct exploration and construction, timing of anticipated
exploration program, the number of the holes and meters to be
drilled and future plans of the Company. Forward-looking
information is subject to a variety of risks and uncertainties
which could cause actual events or results to differ from those
reflected in the forward-looking information, including, without
limitation, risks and uncertainties relating to risks inherent in
mining including environmental hazards, industrial accidents,
unusual or unexpected geological formations, ground control
problems and flooding; risks associated with the estimation of
mineral resources and reserves and the geology, grade and
continuity of mineral deposits; the possibility that future
exploration, development or mining results will not be consistent
with the Company's expectations; the potential for and effects of
labour disputes or other unanticipated difficulties with or
shortages of labour or interruptions in production; actual ore
mined varying from estimates of grade, tonnage, dilution and
metallurgical and other characteristics; the inherent uncertainty
of production and cost estimates and the potential for unexpected
costs and expenses, commodity price fluctuations; uncertain
political and economic environments; changes in laws or policies,
delays or the inability to obtain necessary governmental permits;
and other risks and uncertainties, including those described in
each management discussion and analysis. Forward-looking
information is in addition based on various assumptions including,
without limitation, the expectations and beliefs of management, the
assumed long term price of metals; appropriate equipment and
sufficient labour and that the political environment where the
Company operates will continue to support the development and
operation of mining projects. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in the forward-looking information. Accordingly, readers are
advised not to place undue reliance on forward-looking
information.
The TSX-V has neither approved nor disapproved the contents of
this press release. Neither the TSX-V nor its Regulation Services
Provider (as that term is defined in the policies of the TSX-V)
accepts responsibility for the adequacy or accuracy of this press
release.
Contacts: Concordia Resource Corp. Karl Cahill VP, Investor
Relations
+1-858-531-6100info@concordiaresourcecorp.comwww.concordiaresourcecorp.com
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