E.G. Capital Inc.

June 21, 2010 12:25 ET

E.G. Capital Inc. Announces Reactivation Transaction

CALGARY, ALBERTA--(Marketwire - June 21, 2010) - E.G. Capital Inc. ("EG" or the "Corporation") (TSX VENTURE:EGC.H) today announced details concerning its proposed reactivation transaction involving a business combination with Thanda Resources Inc. ("Thanda"). Thanda is a private company that was formed to participate in diamond exploration and development in Nunavut.

EG has entered into a letter agreement with Thanda and the principal shareholders of Thanda dated June 11, 2010 (the "Letter Agreement"), pursuant to which EG and Thanda intend to complete a business combination (the "Transaction") by way of an amalgamation to form a new company ("Amalco"). Pursuant to the terms of the Transaction: (i) the current holders of the common shares of Thanda (the "Thanda Common Shares") will receive one (1) common share in the capital of Amalco (the "Amalco Common Shares") with a deemed value of $0.10 per share for each Thanda Common Share owned; and (ii) each two (2) issued and outstanding common shares of EG will be exchanged for one (1) Amalco Common Share. The Transaction, when completed, will constitute the reactivation transaction of the Corporation pursuant to policy 2.6 of TSX Venture Exchange Inc. (the "TSX Venture") Corporate Finance Manual.

The Transaction is subject to the policies of TSX Venture relating to reactivation transactions of NEX companies, as well as shareholder approval of EG as prescribed by Policy 5.2 of TSX Venture. Upon completion of the Transaction, EG will be a company focused on diamond exploration in Nunavut.

About Thanda and the Thanda Properties

Pursuant to an agreement dated October 5, 2009 (the "Ferguson Lake Property Agreement") between Thanda and Starfield Resources Inc. ("Starfield"), a public mining company listed on the Toronto Stock Exchange, Thanda has the right to earn up to a 100% participating interest in and to certain diamond rights applicable to the Ferguson Lake property, subject to a royalty interest described below. The Ferguson Lake Property Agreement gives Thanda the right to earn an initial 50% participating interest in a joint venture that will focus on the exploration and development of diamond potential at the Ferguson Lake property by incurring cumulative exploration expenses of $6.5 million over a three year period. After the initial $6.5 million is invested by Thanda, it may choose to commence a prefeasibility study. Upon completion of a prefeasibility study, Starfield may choose to either retain a 30% participating interest in the project by paying its pro-rata share of the costs of the prefeasibility study and future development, or convert to a 3% gross revenue royalty. In the latter case, Thanda will have earned a 100% participating interest in the diamond rights to the Ferguson Lake property.

The Ferguson Lake property is located in the Kivillaq region of Nunavut and lies 240 kilometers west of Rankin Inlet, 160 kilometers south-southwest of Baker Lake and 765 kilometers north of Thompson, Manitoba (the "Ferguson Lake Property"). The Ferguson Lake Property was initially discovered by Canadian Nickel Company Ltd. (now Inco Ltd.) in 1950 and was held in its mineral inventory for over 40 years. Exploration in 1953 defined a major copper-nickel resource, but did not recognize the palladium, platinum and cobalt resources. In 1987, the Homestake Mineral Development Company explored the property for those three metals and found significant quantities. In 1998, the Ferguson Lake Property was acquired by Starfield, which confirmed the presence of those metals and continued to explore and define the resource. During the 2005 and 2006 field exploration program 1100 widely spaced till samples were taken and kept in storage. As part of the 2008 exploration program, these samples were sieved and processed at SGS Mineral Services Lakefield. A diamond was found in a till sample as well as significant amount of kimberlite indicator minerals and diamond indicator garnet grains in nearby samples. These samples were all taken from an area located near the centre of Starfield's claim block and are demonstrate significant exploration potential for diamonds.

43-101 Report

A technical report has been prepared in respect of the Ferguson Lake Property by ACA Howe International Limited dated May 20, 2010 in compliance with National Instrument 43-101 (the "ACA Howe Report"). The ACA Howe Report has been filed with TSX Venture for their review.

Financial Information of Thanda

Based on the audited financial statements of Thanda for the financial year ended December 31, 2009, Thanda had no revenue, exploration expenses of $1,005,514 and incurred a net loss of $1,005,514. In addition, as at December 31, 2009, Thanda had total assets of $47,215 and current liabilities of $1,030,936 and shareholders' deficit of $1,030,936.

Thanda Corporate History and Structure

Thanda was incorporated under the Business Corporations Act (Ontario) on August 24, 2009. The registered office and head office of Thanda are both located at 37 Edgehill Road, Toronto, Ontario M9A 4N1.

Thanda is being reorganized to have between 30,324,851 and 33,707,204 (subject to TSX Venture approval) common shares (the "Thanda Common Shares") issued and outstanding, and no stock options, warrants, anti-dilution or other rights to purchase Thanda Common Shares issued or outstanding. Of the outstanding shares of Thanda, an aggregate of 22,000,000 Thanda Common Shares were issued at a price of $0.05 per share upon conversion of shareholder loans and the balance will be issued for nominal consideration.

The principal shareholders of Thanda are Sheila Ogilvie-Harris and Dr. Matthew Field who own or control, directly or indirectly, 90% and 10% of the outstanding Thanda Common Shares, respectively.

Summary of the Proposed Reactivation Transaction

EG has entered into the arm's length Letter Agreement, pursuant to which EG and Thanda have agreed to complete the Transaction.

Pursuant to the Letter Agreement, the parties have agreed to use their "commercially reasonable efforts" to cause a private placement of Thanda Common Shares to be issued on a "flow-through" basis under the Income Tax Act (Canada) at a price to be determined in the context of the market for gross proceeds of a minimum of $1,400,000 (the "Minimum Thanda Private Placement") and a maximum of $3,700,000, as well as Thanda Common Shares at a price to be determined in the context of the market (the "Offering Price") for gross proceeds of up to $400,000 (collectively, the "Thanda Private Placement").

Thanda has engaged Pope & Company Limited to act as agent (the "Agents") of Thanda on a "commercially reasonable efforts" basis for the Thanda Private Placement and in connection therewith the Agents will be paid a cash commission of 8%. The Agents will also be granted agent's options (the "Thanda Agent's Options") to purchase up to 8% of the number of Thanda Common Shares sold under the Thanda Private Placement, with each Thanda Agent's Option entitling the holder to purchase one Thanda Common Share at the Offering Price for a period of 24 months from the closing of the Thanda Private Placement.

Thanda intends to use the gross proceeds of the Thanda Private Placement for an extensive fixed wing geophysical aerial survey, reconnaissance prospecting, a till sampling programme, and analysis of the results to provide high interest drilling targets in the area, as well as for general corporate purposes.

After completion of the Transaction, the Board of Directors of Amalco will consist of five (5) directors, including four (4) nominees of Thanda, namely Sheila Ogilvie-Harris, Dr. Matthew Field, Donald Page and Fernao Ferreira, as well as one nominee of EG, Bradley D. Griffiths, provided the TSX Venture does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of the Business Corporations Act (Ontario). After the closing of the Transaction, the officers of Almaco will be appointed by the Board of Directors of Amalco and will include Sheila Ogilvie-Harris as Chief Executive Officer and Corporate Secretary, Dr. Matthew Field as Vice-President, Exploration and Donald J. Page as Chief Financial Officer.

Sheila Ogilvie-Harris has over thirty years of diverse managerial experience in both the healthcare and business sectors. She has been responsible for assembling teams, managing staff, developing policy manuals and preparing budgets. She graduated from the University of Liverpool in the United Kingdom with a degree in Modern Languages and undertook a graduate nursing programme at St George's Hospital, London, United Kingdom where she earned the qualifications of State Registered Nurse and Diploma of Intensive Therapy Unit Nursing. Since April 1980, she has been President of Enterprise Management Services, a billing and typing agency for physicians and medical research paper translations which she still runs. A film location rental agency was added to the business in May 1998. In August 2009 she co-founded Thanda. Mrs. Ogilvie-Harris is currently the President, Chief Executive Officer and a director of Thanda. She is also a member of the Board of Out of Peru Exclusive Imports UK. which she has helped to develop and promote since July 2009.

Dr. Matthew Field was the Chief Geologist with De Beers, the world's largest diamond producer, from January 1999 to December 2002 and has extensive experience in target selection, exploration support project evaluation and production geology in both open cast (Orapa and Letlhakane Mines) and underground (Finsch, Kimberley and Koffiefontein) mines. From November 1994 to April 1997, he was Project Geologist at the Orapa Mine and he helped expand the resource beyond the declared mineral reserve. His Canadian experience includes being brought in as a consultant from De Beers to assist De Beers Canada: (i) in April 1993 to evaluate the Fort a la Corne kimberlites in Saskatchewan; (ii) in March 2000 to evaluate the resources at the Victor mine in Northern Ontario; and (iii) in June 2002 to conduct the due diligence on the Snap Lake kimberlite. In his most recent appointment with De Beers from January 2003 to April 2008 as Group Research Geologist with De Beers Group Services U.K. Limited, Dr. Field was chosen to conduct research on speeding resource delivery from discovery to mine production. The Victor, Snap Lake and Gahcho Kue projects featured prominently in this research. After leaving De Beers in 2008 Dr Field established Diakim Consulting Limited. Dr Field has provided consulting geological services to both major companies, De Beers and BHP-Billiton as well to junior diamond companies such as GEM Diamonds and Namakwa Diamonds, most recently consulting in January 2010 at BHP Biliton's Ekati mine in the Northwest Territories. Dr Field is a co-founder of Thanda and is currently a Director and Vice-President, Exploration of Thanda. Dr. Field has a Bachelor of Science Degree in Geology (Honours) and a Master of Science Degree from Rhodes University in South Africa, and a Ph.D. from the University of Bristol in the United Kingdom.

Donald J. Page, C.A., the Chief Financial Officer of Thanda is a senior financial executive who for over 30 years has provided tactical senior management, with an emphasis on the Chief Financial Officer position, and corporate governance advice to entrepreneurial companies. Mr. Page has participated on the boards of directors of several public companies, including technology companies, research and development companies, and mining companies He was a Director of St Genevieve Resources Ltd a public company traded on the CNQ and of Ascendant Copper Corporation a public company listed on the TSX. Mr. Page was Executive Vice-President, Corporate Finance for Groome Capital.com Inc. a Mr. Page was Executive Vice-President, Corporate Finance for Groome Capital.com Inc. a boutique investment dealer specializing in assisting entrepreneurial companies to raise financing from July 1997 to August 2001 He was also Vice-President, Corporate Finance of Desjardins Securities through its expansion phase into Ontario from August 2001 to January 2002. Mr. Page worked for Ernst & Young (formerly Clarkson Gordon) for 10 years where he also provided Chief Financial Officer and tax advice to its clients. From February 2002 to the present Mr. Page, through his own consulting company Glister Limited, has provided financial and corporate governance experience to entrepreneurial companies.

Fernao Ferreira is a retired reinsurance executive with 40 years experience in all aspects of company management, financial activities and contract negotiations. Since 1979 Mr. Ferreira has been a founding Director of International Technology Recruiting Limited, a private company which provides specialists within the technology and data processing fields to clients such as IBM and London Life. From 1980 until his retirement in 1995, Mr. Ferreira was a director of privately owned insurance companies in Toronto which were subsequently taken over by. Since 1995, Mr Ferreira has been a Director of Win-Eldrich Mines Limited. a public mining company listed on TSX Venture that is currently producing molybendum from its wholly-owned Ashdown project in Nevada.

Bradley Griffiths, a current Director of EG and a proposed Director after completion of the Transaction, received his Chartered Accounting designation in 1982 after articling at Peat, Marwick, Mitchell. In 1984 he joined the Canadian Imperial Bank of Commerce as head of the Mergers and Acquisitions group where he was promoted to the position of Vice-President. In January 1989, Mr. Griffiths joined Gordon Capital Corporation ("Gordon Capital") as a Director and Vice-President where he elevated to the position of Head of Corporate Finance and a member of the Executive Committee. In March 1995, Mr. Griffiths founded the brokerage firm Griffiths McBurney and served as its Chairman and Chief Executive Officer until May 1999. Soon thereafter Mr. Griffiths joined Canaccord Capital Corporation ("Canaccord") as Co-Chairman and Head of Capital Markets, and in November 2002 he was honoured as Person of the Year by the Yves Landry Foundation. On January 1, 2003, Mr. Griffiths joined Toronto-based McFarlane Gordon (now "MGI Securities"), acting as Managing Director of Capital Markets where he served until 2008. Mr. Griffiths is now the founder and Chief Executive Officer of Griffiths Energy and Resources Inc., an energy and merchant banking firm.

The completion of the Transaction is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Transaction is also subject to additional conditions precedent, including shareholder approval of EG and Thanda, the completion of the Minimum Thanda Private Placement, satisfactory completion of due diligence reviews by the parties, board of directors approval of EG and Thanda, the entering into of a formal agreement, the entering into of employment and non-competition agreements with certain senior officers of Thanda, and certain other usual conditions.

The Transaction will be an arm's length transaction as none of the directors, officers or insiders of EG own any interest in Thanda.

EG also announces it has reserved a price of $0.10 per share for the grant of stock options to acquire up to 10% of the number of issued and outstanding Amalco Common Shares (the "Stock Options") in the event the Transaction and the Thanda Private Placement are completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Amalco, as determined by the Board of Directors of Amalco following the completion of the Transaction.

The Corporation has made an application to TSX Venture for a waiver from Sponsorship, but there is no assurance that such a waiver will be granted.

Trading of the Common Shares will not resume until TSX Venture has reviewed the National Instrument 43-101 report regarding the Thanda Properties and all other documents required by TSX Venture have been filed. EG will issue a further news release when TSX Venture has received the necessary documentation and trading of the Common Shares is to resume.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. 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 Information Circular of the Corporation 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 the Corporation should be considered highly speculative.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Thanda nor EG will update these forward-looking statements to reflect events or circumstances after the date hereof. 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 EG and Thanda.

The securities of EG being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Neither the TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • E.G. Capital Inc.
    Keith F. Eaman
    (450) 672-7677
    Thanda Resources Inc.
    Donald Page
    Chief Financial Officer
    (416) 500-4818
    For information regarding the Thanda Private Placement
    Pope & Company Limited
    Mark Knapp
    Head of Institutional Sales and Trading
    (416) 588-6419