NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED
STATES
Red Rock Capital Corp. (the "Company" or "Red Rock") (TSX VENTURE:RRD.P), a
capital pool company, is pleased to announce that it has entered into a letter
of intent effective November 18, 2010 with Century Iron Ore Corporation
("Century BVI"), a private company incorporated under the laws of the British
Virgin Islands, domiciled in Amsterdam, Netherlands, and the owner of all of the
issued and outstanding shares of Century Iron Ore Holdings Inc., a British
Columbia corporation ("Century Holdings"). The Letter of Intent contemplates
that the Company will acquire all of the issued and outstanding shares of
Century Holdings in exchange for the issuance of additional common shares of the
Company (the "Acquisition"). Upon completion of the proposed transaction, the
Company plans to engage in the business of mineral exploration. Canadian Century
Iron Ore Corporation ("Canadian Century"), a wholly-owned Subsidiary of Century
Holdings, has entered into an engagement letter with Haywood Securities Inc.
("Haywood") pursuant to which Haywood will act as agent in connection with a
pre-Transaction financing for gross proceeds of approximately $10 million.
Century BVI is controlled by Mr. Sandy Chim, the president and a director of
Century BVI, and Mr. Ben Koon Wong, a principal shareholder of Century BVI. Each
of Mr. Chim and Mr. Wong are residents of Hong Kong, S.A.R. of the People's
Republic of China.
The Company currently has no operations or assets other than cash. To date the
Company's business has been to identify and evaluate businesses and assets with
a view to completing a Qualifying Transaction under the policies of the TSX
Venture Exchange (the "Exchange" or the "TSXV"). The Acquisition is intended to
constitute the Company's Qualifying Transaction (the "Transaction") and will not
be a Non-Arm's Length Qualifying Transaction (as defined by the policies of the
TSXV). Accordingly, the Company will not seek approval of its shareholders in
connection with the completion of the Transaction. The Company will file a
filing statement with the TSXV in connection with the Transaction in accordance
with the policies of the TSXV. The Company plans to seek a waiver of the
sponsorship requirements of Exchange policies under section 3.4(a)(ii) of
Exchange Policy 2.2 on the basis of the brokered financing to be completed in
connection with the Transaction.
Overview of Century Holdings
The Properties
Century Holdings is a private mineral exploration company incorporated under the
laws of British Columbia and the indirect owner of the following material
mineral exploration properties (collectively, the "Properties"):
-- Duncan Lake (currently a 51% interest and an option to increase to a 65%
interest under an option and joint venture agreement with Augyva Mining
Resources Inc. (TSX VENTURE:AUV)),
-- Attikamagen (up to a 60% interest under an option and joint venture
agreement with Champion Minerals Inc. (TSX VENTURE:CHM)), and
-- Sunny Lake (100% owned by Century Holdings).
All of the Properties are located in the Provinces of Quebec and Newfoundland
and Labrador and are held indirectly by Century Holdings through intermediate
Canadian-incorporated subsidiaries. References below to Century Holdings include
references to its subsidiaries as applicable.
Duncan Lake Property
The Duncan Lake property is an advanced exploration stage property comprised of
approximately 99 mining claims covering approximately 4,600 hectares in the
James Bay region of Quebec located approximately 120 to 150 km from the East
coast of James Bay.
Century Holdings has an option to acquire up to a 65% interest in the Duncan
Lake property pursuant to an option and joint venture agreement dated May 20,
2008 with Augyva Mining Resources Inc. ("Augyva"). As of November 11, 2010,
Century Holdings earned an initial 51% interest in the Duncan Lake property by
funding $6 million in the property. Pursuant to the terms of the agreement,
Canadian Century may increase its interest in the property to 65% by expending a
further $14 million within four years. Having earned a 51% interest in the
property, Century Holdings and Augyva will form a joint venture with Canadian
Century becoming the manager and operator of the property.
Based on a NI 43-101 compliant technical report prepared by Met-Chem Canada Inc.
("Met-Chem") of Montreal Quebec, the following is a summary of the mineral
resource estimate based on Augyva's 2008-2009 drilling program using a cut-off
grade of 16% Fe:
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Tonnage Grade (Fe)(i)
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Measured 5.7 million 23.29%
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Indicated 25.6 million 23.84%
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Inferred 821 million 24.56%
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(i)16% Fe cut-off
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Daniel M. Gagnon, Eng of Met-Chem has verified the accuracy of the mineral
resource information set out in this press release.
Attikamagen Property
The Attikamagen Property is an early stage exploration property comprised of
approximately 946 mining claims covering approximately 31,000 hectares in the
Labrador Trough region of Quebec and Newfoundland and Labrador.
Century Holdings is the owner of an option to acquire up to a 60% interest in
the Attikamagen property pursuant to an option and joint venture agreement dated
May 12, 2008 with Champion Minerals Inc. exercisable as follows:
-- to earn 51% interest, an aggregate of $7.5 million in exploration
expenditures by March 26, 2012 (of which $2.5 million required by March
26, 2009 has been incurred),
-- to increase to 56% interest, $2.5 million in exploration expenditures by
March 26, 2013, and
-- to increase to 60% interest, $3.0 million in exploration expenditures by
March 26, 2014.
Sunny Lake Property
The Sunny Lake property is an early stage exploration property comprised of
approximately 494 mining claims covering approximately 24,000 hectares in the
Labrador Trough region of Quebec and Newfoundland and Labrador. Century Holdings
is the 100% holder of the Sunny Lake property.
Financial Information
Red Rock has reviewed the draft financial statements of Century Holdings which
represent the combined operations of the four subsidiaries. Final audited
financial statements will be received by Red Rock prior to finalization of the
filing statement prepared in connection with the Transaction and prior to the
closing of the Transaction.
The Transaction
Amalgamation
It is currently proposed that the Transaction will be completed by way of a
"three-cornered amalgamation" whereby a newly-incorporated B.C. subsidiary of
Red Rock will amalgamate with Century Holdings (the "Amalgamation") and pursuant
thereto, Red Rock will issue common shares to the pre-Amalgamation shareholders
of Century Holdings (the "Acquisition Shares"). For purposes of the Transaction,
Century Holdings will be valued (the "Century Holdings Pre-Offering Valuation")
based on the amount raised and number of shares issued by Century Holdings in
connection with the Offering (as defined below). The parties have agreed that
Red Rock will be valued at $800,000 (the "Red Rock Valuation"). The number of
Acquisition Shares to be issued will be based on the ratio of the Century
Holdings' Pre-Offering Valuation (determined on a post-Financing basis) to the
Red Rock Valuation, multiplied by the number of shares of Red Rock outstanding
prior to the Transaction.
The Offering
Prior to the closing of the Transaction, it is expected that Century Holdings
will complete a private placement (the "Financing") of its securities on a
brokered and non-brokered basis for aggregate gross proceeds of up to US$40
million (the "Offering"). The terms of the Offering, including the price and
number of securities to be issued will be subject to the prior approval of
Century BVI. Through Canadian Century, Century Holdings has retained Haywood as
agent for the brokered portion of the Offering. Customary compensation will be
paid in respect of securities placed in connection with the Offering. It is
further anticipated that the Offering will include a substantial non-brokered
component.
The securities to be offered (the "Offered Securities") will be the subject of
negotiation between Century Holdings and Haywood. The Offering will be
structured such that the Offering will complete and the proceeds from the
Offering will be released to Century Holdings immediately prior to the
completion of the Transaction.
Century Holdings Pre-Offering Share Issuance
It is anticipated that prior to the completion of the Offering, Century Holdings
will complete an offering of securities to employees and consultants of Century
Holdings who will purchase no more than 5% of the pre-Offering outstanding
common shares of Century Holdings at a price not less than 70% of the price of
the securities issued in connection with the Offering. Such shares shall be
subject to contractual lock-up agreement between the employee or consultant with
Century Holdings which shall provide for a lock-up of at least one year
following the completion of the Transaction. In addition to the lock-up, such
shares may be subject to escrow provisions imposed by the Exchange.
Use of Proceeds
The proceeds from the Offering will be used:
-- to fund the exploration programs of Century Holdings;
-- to repay a strategic investor related to Mr. Wong for certain amounts
advanced by him to Canadian Century who (a) in turn advanced such funds
to Augyva to enable Canadian Century to exercise its option to acquire a
51% interest in the Duncan Lake property, and (b) used a portion of such
funds for general corporate purposes;
-- to pay for Transaction expenses; and
-- for general working capital purposes.
Consolidation and Name Change
Immediately prior to the closing of the Acquisition and subject to shareholder
approval, the Company will consolidate its outstanding shares on the basis of
ten pre-consolidated common shares for one post-consolidated common share, or
some other ratio to be agreed upon by the parties in order to achieve the
desired post-transaction capital structure (the "Consolidation").
It is also anticipated that the Company will change its name to "Prosperity
Century Iron Mines Holdings Corp." or such other name to be determined by
Century BVI that is acceptable to the Exchange (the "Name Change").
The approval of the Company's shareholders will be required for the
Consolidation, the Name Change and such other matters in support of the
Transaction, including an increase in the number of directors of the Company in
order to accommodate the Century BVI director nominees to be appointed upon
closing of the Transaction. The Company intends to call a special shareholders'
meeting to be held on or about December 30, 2010 to consider and, if thought
fit, to approve such matters.
Outstanding Securities of the Company
The Company currently has 2,743,600 common shares issued and outstanding and has
outstanding options exercisable into 274,360 common shares of the Company at a
price of CAN$0.20 per share expiring November 23, 2014.
Conditions Precedent
The completion of the Transaction will be subject to at least the following
additional mutual conditions precedent:
-- the execution of a definitive agreement (the "Definitive Agreement");
-- the completion by Century BVI of a corporate reorganization Century
Holdings;
-- the delivery of a final technical report on the Sunny Lake property;
-- the delivery of required financial statements of Century Holdings;
-- the completion of the Offering in an amount not less than $5 million;
-- the approval of the Consolidation and Name Change by the requisite
majority of the votes cast by the shareholders of Red Rock at a properly
constituted meeting of the shareholders of Red Rock;
-- the receipt of all necessary regulatory, corporate and third party
approvals, including the approval of the Exchange, and compliance with
all applicable regulatory requirements and conditions in connection with
the Transaction;
-- the maintenance of Red Rock's listing on the Exchange;
-- the confirmation of the representations and warranties of each party to
the Definitive Agreement as set out in such agreement;
-- the absence of any material adverse effect on the financial and
operational condition or the assets of each of the parties to the
Definitive Agreement;
-- the delivery of standard completion documentation including, but not
limited to, customary legal opinions from legal counsel, officers'
certificates and certificates of good standing or compliance;
-- Red Rock upon completion of the Transaction will be listed on either:
-- the TSXV as a Tier 1 issuer as set out in, and subject to the
satisfaction of initial listing requirements under Exchange Policy
2.1 - Initial Listing Requirements, as amended from time to time; or
-- the TSX, subject to meeting the TSX's original listing requirements;
and
-- other condition precedents customary for a transaction such as the
Transaction.
The completion of the Transaction is also subject to the following conditions
precedent in favour of Century BVI:
-- at closing, except for certain liabilities and obligations agreed to by
Century BVI and obligations to a sponsor or agent appointed jointly by
Red Rock and Century BVI in connection with the Transaction, Red Rock
will have no liabilities or obligations in connection with the
Transaction;
-- the terms and conditions of the Offering, including the price and number
of securities to be offered by Century Holdings to complete the
Offering, will be acceptable to Century BVI; and
-- the termination of all agreements involving Red Rock relating to
administration or leases without any further liability to Red Rock or
the resulting issuer.
The completion of the Transaction is also subject to the following conditions
precedent in favour of Red Rock:
-- Red Rock will have received legal opinions in customary form regarding
Century Holdings' title to the Properties which opinions will be
equivalent in scope and substance as the opinions delivered to Haywood
in connection with the Offering; and
-- the conversion of not less than $4.0 million of existing debt owed by
Century Holdings to Century BVI into common equity of Century Holdings,
which conversion will take place prior to the completion of the
Offering.
The conditions precedent in favour of Red Rock may be waived in whole or in part
by Red Rock and the conditions precedent in favour of Century BVI may be waived
in whole or in part by Century BVI.
Closing
The completion of the Transaction is expected to occur on or about January 15,
2010 or such other date as mutually agreed to by the Parties.
Expenses
Century BVI will agree to pay all legal expenses of Red Rock in connection with
the Transaction (including fees, disbursements and taxes) in excess of $70,000.
In addition, in the event that Century BVI determines not to proceed with the
Transaction as a result of the inability of Century Holdings to complete the
Offering on terms acceptable to Century BVI, then Century BVI will pay for all
legal expenses of Red Rock in connection with the Transaction (including fees,
disbursements and taxes).
Support Agreement
The directors and principal shareholders of the Company, including Harvey
McKenzie, Raymond Mitchell, Ricky Chan and Paul Fornazzari, are expected to
enter into a voting support agreement to approve the Consolidation, Name Change
and such other matters in support of the Transaction.
Overview of Management, Board of Directors and Insiders
Management
It is expected that the management of the resulting issuer will consist of Ben
Koon Wong as Chairman, Sandy Chim as Chief Executive Officer, Ivan Wong as Chief
Financial Officer, Claude Britt as technical advisor to Century BVI, and Michael
Skutezky as General Counsel & Corporate Secretary.
Ben Koon Wong - Mr. Wong is Chairman of Prosperity Mineral Holdings Limited, an
iron ore trader, real estate developer in China, and cement investments holdings
company listed on the Alternative Investment Market of the London Stock
Exchange. He is also Chairman of Prosperity International Holdings Limited, the
parent company of Prosperity Mineral Holdings Limited listed on the Hong Kong
Stock Exchange. He is also legal representative of Anhui Chaodong Cement Co.
Limited, a public company listed on the Shanghai Stock Exchange.
Sandy Chim - Mr. Chim is the Chairman and founder of the Century Iron Ore Group
based in the far East with extensive network experience and expertise in the
international iron ore industry with a focus on developing iron ore resources
targeted to supply iron ore products to China. Mr. Chim has extensive management
experience having served with public companies listed in London, Hong Kong,
China and Australia. He is currently Chairman and CEO of Augyva Mining Resources
Inc., a company listed on the TSXV, the 49% owner of the Duncan Lake Property; a
director of Prosperity Minerals Holdings Limited, an iron ore trader, real
estate developer in China, and cement investments holdings company listed on the
Alternative Investment Market of the London Stock Exchange; and a director of
Sage Gold Inc., listed on the TSXV. He is a member of the Supervisory Board of
Anhui Chaodong Cement Co. Limited, a public company listed on the Shanghai Stock
Exchange in China. He is also a founding partner at Chim & Seto LLP, a chartered
accounting firm in Canada. Mr. Chim is a Member of the Institute of Chartered
Accountants of Ontario and the Institute of Chartered Secretaries and
Administrators in Canada and a Fellow Member of the Hong Kong Institute of
Certified Public Accountants.
Claude Britt - Mr. Britt has over 35 years experience in exploration and mining.
He has previously worked at Iron Ore Company of Canada as a Development
Geologist. From 1994-2000 Mr. Britt was VP Exploration for Pangea Goldfields
Inc. during its ultimate takeover by Barrick Gold.
Michael Skutezky - Mr. Skutezky is a lawyer practicing in association with
Ormston List Frawley LLP of Toronto. He is Chairman of Rhodes Capital
Corporation, a private merchant bank providing services to the resource and
technology industry and an officer of a number of public and private resource
and technology companies. He is General counsel and Secretary of Sage Gold
Inc.(TSX VENTURE:SGX) and a director of Augyva Mining Resources Inc.(TSX
VENTURE:AUV).
Ivan Wong - Mr. Wong is a Fellow Member of the Association of Chartered
Certified Accountants and the Hong Kong Institute of Certified Public
Accountants. His other current appointments are: Independent Non-executive
Director and Chairman of the Audit Committee of Maanshan Iron & Steel Company
Limited, a company listed in Hong Kong and Shanghai, the PRC; and Independent
Non-executive Director and Chairman of the Audit Committee of China Zhongwang
Holdings Limited, a company listed in Hong Kong, the PRC.
Board of Directors
It is the intention of the Company and Century Holdings to establish and
maintain a board of directors with a combination of appropriate skill sets that
is compliant with all regulatory and corporate governance requirements,
including any applicable independence requirements. The board of directors of
the Company currently consists of four members. Upon completion of the
Transaction, the board of Red Rock will be reconstituted to comprise a number of
members to be agreed upon, all of which will be nominated or approved solely by
Century BVI other than one member who will be from the existing board of the
Company, to be approved by Century BVI, subject to applicable policies of the
Exchange and Canadian securities laws. It is presently anticipated that the
board will consist of seven directors. The following are the proposed directors
for the resulting issuer: Sandy Chim, Ben Koon Wong, Patrick Siu Ming Li,
Maurice Strong, Hua Bai, John Reynolds and Ricky Chan. Background information on
Messrs. Chim and (Ben Koon) Wong is set out above.
Patrick Siu Ming Li - Mr. Li is Chief Financial Officer of Prosperity Mineral
Holdings Limited, an iron ore trader, real estate developer in China, and cement
investments holdings company listed on the Alternative Investment Market of the
London Stock Exchange.
Maurice Strong - Mr. Strong has been working for over 30 years at higher levels
in business, government and international organizations and now spends much of
his time in China. His current appointments include: Chairman, Cosmos
International Group and Honorary Professor, Peking University (Beijing). Some of
Mr. Strong's past appointments include: Under Secretary General and Special
Advisor to the Secretary General of the United Nations; Senior Advisor to the
President, World Bank; President, Power Corporation of Canada; Chairman and
Chief Executive Officer, Ontario Hydro and Member, International Advisory Board,
Toyota Motor Corporation, and Vice-Chairman, Chicago Climate Exchange. Mr.
Strong is a Member of the Queen's Privy Council of Canada.
Hua Bai - Mr. Hua Bai is a businessman in Vancouver who possesses a degree in
architecture. He has abundant investment and commercial experiences covering
various fields in China and Vancouver, which have resulted in a successful
portfolio over the years. With more than 20 years of business activities, he has
established an extensive network in China.
John Reynolds - Mr. Reynolds has nearly 40 years of experience at the highest
levels of national and provincial government and in a diverse range of
cross-border business enterprises. As a director of two natural resources
producers, he is familiar with exploration and mine development issues involving
gold, nickel and chromium, in regions as diverse as Kazakhstan, Australia, Ghana
and South Africa. Having served as Minister of Environment for British Columbia,
he has practical knowledge of governmental policy involving the interplay
between land use, economic development and First Nations issues. Also, as a
former president of an American-based venture capital company, Mr. Reynolds
understands private and public financing sources for growing businesses. Mr.
Reynolds is a Member of the Queen's Privy Council of Canada.
Ricky Chan - Mr. Chan has been Vice President of Global Maxfin Capital Inc. (an
investment dealer) since January 2009. He held the position of Vice President of
Maison Placements Canada Inc. (an investment dealer), from September 2005 to
January 2009. He held the position of the Vice President of Northern Securities
Inc. (an investment banking firm) from August 2001 to September 2005. As
President of Pacific Power International Inc., a private company, from June 2004
and to December 2006, Mr. Chan was providing business development and advisory
services for companies interested in accessing the Chinese market. From 1986 to
2001 Mr. Chan held various management and sales positions with a number of major
brokerage firms in both Canada and Hong Kong. Mr. Chan obtained his Bachelor of
Commerce degree from McGill University in 1984.
Other than directors and officers of the resulting issuer, there are not
expected to be any other Insiders of the resulting issuer upon completion of the
Transaction.
About Red Rock Capital Corp.
Red Rock Capital Corp., a capital pool company within the meaning of the
policies of the Exchange, was incorporated in British Columbia on July 10, 2007
and was listed on the Exchange on November 26, 2009. The Company does not have
any operations and has no assets other than cash. The Company's business is to
identify and evaluate businesses and assets with a view to completing a
Qualifying Transaction.
Except for statements of historical fact, all statements in this press 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 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 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.
Disclaimer for Forward-Looking Information
This press release contains forward-looking statements and information that are
based on the beliefs of management and reflect the Company's current
expectations. When used in this press 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.
The forward-looking statements and information in this press release includes
information relating to the business plan of Century Holdings, the Acquisition
(including the structure of the Acquisition), the Transaction (including
shareholder approval, principal shareholder support, and other terms such as the
Consolidation, the Name Change, and the completion or termination thereof), the
Offering (if any), and the directors and management of the resulting issuer upon
completion of the Transaction. Such statements and information reflect the
current view of the Company 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 the completion of the Transaction and matters
relating thereto and the risks associated with the 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, and the volatility of the Company's 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 the Company
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 the Company's actual
results to differ materially from those indicated or implied by forward-looking
statements and information. Such factors include, among others, the availability
of funds, the timing and content of work programs, results of operation
activities and development of mineral properties, the interpretation of drilling
results and other geological data, the uncertainties of resource and reserve
estimates, receipt and security of mineral property titles, receipt of licenses
to conduct mining activities, project cost overruns or unanticipated costs and
expenses, fluctuations in metal prices and general market and industry
conditions.
The Company cautions that the foregoing list of material factors is not
exhaustive. When relying on the Company's forward-looking statements and
information to make decisions, investors and others should carefully consider
the foregoing factors and other uncertainties and potential events. The Company
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 PRESS RELEASE REPRESENTS THE
EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS 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 THE COMPANY MAY ELECT TO, IT DOES NOT
UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED
IN ACCORDANCE WITH APPLICABLE LAWS.
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