Brass Capital Corp.
TSX VENTURE : BRZ.P

September 17, 2009 14:29 ET

Brass Capital Corp. to Acquire Heatherdale Resources Ltd.

CALGARY, ALBERTA--(Marketwire - Sept. 17, 2009) -

(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

Brass Capital Corp. (the "Corporation"), a Calgary based Capital Pool Company listed on the TSX Venture Exchange Inc. (the "Exchange") (TSX VENTURE:BRZ.P) announces that it has entered into a letter agreement (the "Letter Agreement") effective September 16, 2009 with Heatherdale Resources Ltd. ("Heatherdale"), to purchase all of the issued securities of Heatherdale (the "Acquisition").

The Acquisition, if completed, will constitute the Corporation's "Qualifying Transaction" under Exchange Policy 2.4. Heatherdale is at arm's length to the Corporation, as such, the Acquisition will not be subject to approval of the shareholders of the Corporation.

Heatherdale

The following is based upon on information provided by Heatherdale and due diligence reviews carried out by the management of the Corporation.

Heatherdale was incorporated pursuant to the Business Corporations Act (British Columbia) on September 4, 2007.

Pursuant to an agreement dated June 30, 2009, Heatherdale holds a 51% interest in a joint venture with CBR Gold Corp. ("CBR Gold") (CBG: TSX-V) in the form of a limited liability company under the Delaware Limited Liability Company Act that is registered to carry on business in the State of Alaska (the "Joint Venture Company"), and which holds 100% of the Niblack copper-gold-zinc-silver project on Prince of Wales Island in southeast Alaska (the "Niblack Project").
Heatherdale will retain its 51% interest in the Joint Venture Company by funding exploration and development expenditures on the Niblack Project totalling in aggregate at least fifteen million dollars (US$15,000,000) within three years (the "Initial Contribution"). Upon completion of its Initial Contribution, Heatherdale shall have additional earn-in options to increase its ownership interest in the Joint Venture Company to 60% by funding additional expenditures of ten million dollars (US$10,000,000) and to 70% by funding completion of a positive bankable feasibility study within an additional three (3) year period. This period may be extended to complete technical work programs for the bankable feasibility study if necessary, but will not exceed six (6) years in any event. All spending requirements are subject to minimum annual expenditure of five million dollars (US$5,000,000). If Heatherdale does not complete its Initial Contribution, it shall be deemed to have resigned and withdrawn from the joint venture, returning its 51% ownership interest in the Joint Venture Company to CBR Gold. If Heatherdale exercises, but does not complete, the additional earn-in options, its ownership interest will remain at the last milestone earned.

The Niblack Project encompasses 6,100 acres of mineral claims (including some 250 acres of patented lands). Volcanogenic massive sulphide ("VMS") mineralization is hosted within a thick sequence of rhyolite and includes six known targets - the Niblack deposit, the Dama Zone, the Lindsy Zone, the Trio Zone, the Mammoth Zone and the Lookout Zone, controlled by fold repetition of the rhyolite sequence.

Financial Disclosure

Selected financial statement information on the financial condition and results of operations for Heatherdale is presented in the following tables. Such information is derived from the audited financial statements of Heatherdale for the financial year ended October 31, 2008 and the unaudited interim period from November 1, 2008 to July 31, 2009, which have been prepared in accordance with Canadian GAAP. The information provided herein is subject to such financial statements, which the reader should closely review when the Corporation files its information circular on SEDAR with respect to the Acquisition.



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Financial
Year Ended Nine Month Interim Period from
Balance October 31, 2008 November 1, 2008 to July 31, 2009
Sheets Data Audited ($) Unaudited ($)
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ASSETS
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Trade and other
receivables 192,057 69,887
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Cash and cash equivalents 5,615,076 5,917,756
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Total Assets 5,807,133 5,987,643
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LIABILITIES
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Trade and other payables 66,371 475,870
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Total Current Liabilities 66,371 475,870
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EQUITY
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Share capital 7,247,276 7,247,376
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Deficit (1,506,514) (1,735,603)
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Total Equity 5,740,762 5,511,773
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Total Liabilities
And Shareholders' Equity 5,807,133 5,987,643
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Financial
Year Ended Nine Month Interim Period from
Statement October 31, 2008 November 1, 2008 to July 31, 2009
of Income Audited ($) Unaudited ($)
----------------------------------------------------------------------------
Revenue
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Interest revenue 160,308 34,658
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Expenses
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Exploration 183,290 658,390
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Administration 308,035 211,603
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Total Expenses 491,325 869,993
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Loss before the following (331,017) (835,335)
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Foreign exchange gain (loss)(1,175,497) 608,253
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Loss before income tax (1,506,514) (227,082)
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Income tax expense - -
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Loss and comprehensive loss
for the period (1,506,514) (227,082)
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Deficit, beginning of period - (1,508,521)
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Deficit, end of the year (1,506,514) (1,735,603)
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Proposed Acquisition

Under the terms of the Letter Agreement, the Corporation will consolidate the common shares of the Corporation (the "Common Shares" or individually, a "Common Share") on the basis of two point five (2.5) pre-consolidated Common Shares for one (1) post-consolidated Common Share (the "Consolidation") and will continue the Corporation out of Alberta and into British Columbia (the "Continuation"), subject to approval of the shareholders of the Corporation.

Following the Consolidation, the Corporation will acquire all of the issued securities of Heatherdale in exchange for the issue of 32,600,001 post-Consolidation Common Shares to the holders of common shares of Heatherdale on a pro-rata basis.

Upon the completion of the Acquisition, Heatherdale will become a subsidiary of the Corporation and the Corporation will carry on its business through Heatherdale.

It is also a term of the Letter Agreement that the Corporation advances a $25,000 refundable deposit to Heatherdale (the "Deposit"). The Deposit will be returned to the Corporation if the Acquisition is abandoned by Heatherdale or if the Acquisition is abandoned due to the non-performance of Heatherdale.

The Corporation expects to call a shareholders' meeting to be held in October or November of 2009 to consider the Consolidation, Continuation and other matters in support of the Acquisition, including and without limitation, increasing the number of directors of the Corporation to six and a change of name to be determined by Heatherdale (the "Meeting Matters"). It is expected that the principal shareholders of the Corporation will enter into a voting support agreement to approve the Meeting Matters at the meeting of the Corporation's shareholders. It is expected that the directors of Heatherdale will enter into a voting support agreement to approve the resolutions required to implement the Acquisition at a meeting of the Heatherdale shareholders.

Proposed Private Placement

The parties intend that either the Corporation or Heatherdale will complete, concurrently with the closing of the Acquisition, a brokered private placement and a non-brokered private placement of at least $5,000,000 in gross proceeds (the "Private Placement") on terms to be determined.

The Corporation will engage an agent for the brokered portion of the financing and customary compensation will be paid to the agent for its agency services.

The proceeds of this Private Placement will be used to fund the work on the Niblack Project, to pay for the transaction expenses, and for general working capital purposes.

Exemption from Sponsorship

The Corporation intends to rely on the exemption from sponsorship in Exchange Policy 2.2 section 3.4(a)(ii).

Securities Issued on Closing

On the closing of the Acquisition and the Private Placement, the Corporation will be classified as a Tier 1 Mining Issuer and will have approximately 33,420,001 issued Common Shares in addition to the Common Shares to be issued in connection with the Private Placement. In addition, the Corporation has granted stock options to the current directors and officers to acquire an aggregate of 82,000 Common Shares (post-Consolidation) at an exercise price of $0.50 per Common Share (post-Consolidation) and has granted an aggregate of 40,000 agent's options (post-Consolidation) in connection with its initial public offering, at an exercise price of $0.50 per Common Share (post-Consolidation).

Conditions of Closing

The closing of the Acquisition will be subject to at least the following conditions precedent:

1. the execution of a definitive agreement between the Corporation and Heatherdale with respect to the Acquisition (the "Definitive Agreement");

2. the receipt of all regulatory, corporate and third party approvals, including the conditional approval of the Exchange, and compliance with all applicable regulatory requirements and conditions necessary to complete the Acquisition;

3. the approval of the Acquisition by the requisite majority of the votes cast by the shareholders of Heatherdale at a properly constituted meeting of the shareholders of Heatherdale;

4. the maintenance of the Corporation's listing on the Exchange;

5. the representations and warranties of the Corporation and Heatherdale as set out in the Definitive Agreement being true and correct at the time of closing of the Acquisition with the same force and effect as if made at and as of such time;

6. the absence of any material adverse effect on the financial and operational condition or the assets of the Corporation and Heatherdale;

7. the approval of the Meeting Matters by the requisite majority of the votes cast by the shareholders of the Corporation at a properly constituted meeting of the shareholders of the Corporation;

8. the completion of the Consolidation; and

9. the completion of the Private Placement.

Directors, Officers and other Insiders

On completion of the Acquisition, the directors, senior officers and insiders of the resulting issuer are anticipated to be:

David J. Copeland, Chief Executive Officer and Director, is a geological engineer with thirty years experience in advancing mineral projects through feasibility, permitting, engineering design and initial development phases. Mr. Copeland has undertaken assignments in the South Pacific, Africa, South and North America and China. His principal occupation is President and Director of CEC Engineering Ltd., a consulting engineering firm that directs and co-ordinates advanced technical programs for companies for which Hunter Dickinson provides services.

Scott D. Cousens, Director and Chairman, provides management and financial services to a number of publicly traded companies managed by Hunter Dickinson. His focus for the past 20 years has been the development of relationships within the international investment community. Substantial financings and subsequent corporate success has established strong ties with North American, European, and Middle Eastern investors.

Robert A. Dickinson, Director, is an economic geologist who has been actively involved in mineral exploration and mine development for over 40 years. He is Chairman of Hunter Dickinson as well as a director and member of the management team of a number of the public companies associated with Hunter Dickinson. He is also President and Director of United Mineral Services Ltd., a private resource company. He also serves as a Director of the BC Mining Museum and a Trustee of the BC Mineral Resources Education Program.

Sharon L. Gardiner, Director, is professional geoscientist who specializes in business communication and advising on technical compliance to Hunter Dickinson and its affiliated companies. With over 25 years of experience in the mining industry, she has worked in mineral exploration, operations and in communications capacities for major and junior companies. An active member of the mining community, she is a Past President of the 5,000-member Association for Mineral Exploration BC.

An additional two directors of Brass will be nominated by Heatherdale. The identities of these additional two directors will be determined by Heatherdale at a later date.

Trevor Thomas, Corporate Secretary, practiced in the areas of corporate commercial, corporate finance, securities and mining law since 1995, both in private practice environment as well as in house positions and is currently in-house counsel for Hunter Dickinson Services Inc. Prior to joining Hunter Dickinson Services Inc., he served as in-house legal counsel with Placer Dome Inc.

General

There can be no assurance that the Acquisition will be completed as proposed or at all. Under Exchange rules, trading in the Common Shares has been halted, and will remain halted pending completion of the Qualifying Transaction.

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.

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. The Corporation undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by the Corporation.


The TSX Venture Exchange Inc. 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 the TSX Venture Exchange nor its Regulation Services Provide (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Brass Capital Corp.
    Mr. Gregory R. Harris
    President, Chief Executive Officer, Chief Financial Officer
    and Director
    (403) 777-9266
    gregoryharris@shaw.ca
    or
    Brass Capital Corp.
    Shawn Wallace
    Investor Relations
    (604) 684-6365
    ShawnWallace@hdgold.com