FRANC-OR RESOURCES CORPORATION
TSX : FOR

FRANC-OR RESOURCES CORPORATION
Crocodile Gold Inc.

Crocodile Gold Inc.

September 23, 2009 08:08 ET

Franc-Or Resources Corporation and Crocodile Gold Inc. Announce Equity Financing and Business Combination Agreement

TORONTO, ONTARIO--(Marketwire - Sept. 23, 2009) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES.

Franc-Or Resources Corporation ("Franc-Or") (TSX:FOR) and Crocodile Gold Inc. ("Crocodile Gold") are pleased to announce that Crocodile Gold has entered into an agreement with a syndicate of underwriters led by Macquarie Capital Markets Canada Ltd. and Cormark Securities Inc. and including GMP Securities L.P., Wellington West Capital Markets Inc., and Fraser Mackenzie Inc. (collectively the "Underwriters"). Under the agreement, the Underwriters have agreed to purchase, on a bought deal private placement basis, 35,000,000 subscription receipts of Crocodile Gold (the "Subscription Receipts") at a price of CDN$1.00 (the "Issue Price") for each Subscription Receipt for total gross proceeds from the private placement of CDN$35,000,000.

Each Subscription Receipt is exercisable into one common share (each, a "Common Share") and one-half of a Common Share purchase warrant (each whole Common Share purchase warrant, a "Common Share Purchase Warrant") of Crocodile Gold. Each Common Share Purchase Warrant will entitle the holder to acquire one Common Share at a price of CDN$1.50 for a period of 2 years following the satisfaction of the Escrow Release Conditions (as defined below). In the event that the closing price of the Common Shares on the Toronto Stock Exchange ("TSX") is in excess of CDN$2.00 for a period of 10 consecutive trading days at any time after the closing of the offering, the issuer may, at its option, accelerate the expiry date of the Common Share Purchase Warrants by giving notice to the holders thereof and in such case the Common Share Purchase Warrants will expire 30 days after the date on which such notice is given by the issuer. Crocodile Gold will grant the Underwriters an option, to purchase up to an additional 20,000,000 Subscription Receipts (CDN$20,000,000), exercisable at the Issue Price at any time up to 48 hours prior to the closing of the offering.

The proceeds from the sale of the Subscription Receipts, less the Underwriters' estimated costs and expenses in respect of the offering, will be held in escrow pending satisfaction of certain conditions, including the satisfaction of the conditions precedent to the completion of the transactions under the Business Combination Agreement (as defined below), the receipt of an indication from the TSX that conditions to the listing of the Common Shares have been satisfied, the delivery of a satisfactory opinion from Australian counsel to Crocodile Gold with respect to the status of the transfer of title to the tenements comprising the Crocodile Gold Assets (being the properties of Crocodile Gold as defined in its asset sale agreement dated June 28, 2009 with GBS Gold International Inc. and others), and Crocodile Gold shall not be in breach or default of post closing covenants or obligations as may be agreed upon under the Underwriting Agreement except those breaches or defaults that have been waived by the Underwriters (collectively the "Escrow Release Conditions"). Upon satisfaction of such conditions, each Subscription Receipt will be automatically converted into one Common Share and one-half of a Common Share Purchase Warrant (without any further action by the holders thereof, including payment of additional consideration). If such conditions are not satisfied by November 30, 2009, Crocodile Gold will repurchase the Subscription Receipts at a redemption price per Subscription Receipt equal to the Issue Price plus interest.

Prior to giving effect to the Franc-Or proposed Consolidation (as defined below), the Issue Price is equivalent to CDN$0.159 per Franc-Or share assuming the completion of the Business Combination. The proceeds received by Crocodile Gold from the sale of the Subscription Receipts will be used to pay the deferred portion of the purchase price of, and to develop, the Crocodile Gold Assets, and for general corporate purposes, including working capital purposes.

Closing of the offering is anticipated to occur on or about October 9, 2009 and is subject to receipt of applicable regulatory approvals including approval of the TSX.

Franc-Or and Crocodile Gold are also pleased to announce that they have signed a definitive business combination agreement (the "Business Combination Agreement") relating to the previously announced business combination of Franc-Or and Crocodile Gold (the "Business Combination"). The Business Combination will be effected by way of a three-cornered amalgamation pursuant to which a wholly-owned subsidiary of Franc-Or will amalgamate with Crocodile Gold (the "Amalgamation") to form a new amalgamated company ("Amalco"), and all of the holders of shares of Crocodile Gold will receive one common share of Franc-Or (on a post-consolidation basis) for each one share of Crocodile Gold so held (the "Share Issuance"). Following completion of the Business Combination, Amalco will indirectly hold all of Crocodile Gold's assets and will be a wholly-owned subsidiary of Franc-Or.

Prior to the effective time of the Business Combination, Franc-Or will complete a consolidation (the "Consolidation") of its issued and outstanding common shares on the basis of one new Franc-Or common share (each, a "New Franc-Or Share") for each 6.3 existing Franc-Or common shares. Prior to completion of the Business Combination, Franc-Or will also change its name to "Crocodile Gold Corp." (the "Name Change"). Conditional upon the completion of the Business Combination, Franc-Or will also continue from the Yukon territory to the province of Ontario under the Business Corporations Act (Ontario) (the "Continuance") and adopt a new general by-law (the "New By-law").

As at September 22, 2009, there were 64,088,664 Franc-Or shares, 24,087,500 Franc-Or warrants and 5,330,000 Franc-Or options issued and outstanding and 91,490,433 Crocodile Gold shares, 17,245,215 Crocodile Gold warrants and 5,680,000 Crocodile Gold options issued and outstanding.

Upon completion of the Business Combination, Franc-Or will have approximately 156,663,236 issued and outstanding new Franc-Or shares (after giving effect to the Consolidation and the equity financing, assuming full exercise of the underwriters' option) on an undiluted basis, 146,490,433 to be held by former shareholders of Crocodile Gold (including those persons that became shareholders of Crocodile Gold as a result of the Equity Financing) and 10,172,803 to be held by former shareholders of Franc-Or which represents ownership of Franc-Or of 93.5% by former shareholders of Crocodile Gold and 6.5% by former shareholders of Franc-Or on an undiluted basis.

If all of the Crocodile Gold warrants (including the Crocodile Gold warrants issued pursuant to the equity financing, assuming full exercise of the underwriters' option) and Crocodile Gold options were exercised, upon completion of the Business Combination, Franc-Or would have approximately 210,388,431 issued and outstanding new Franc-Or shares (after giving effect to the Consolidation and the equity financing, assuming full exercise of the underwriters' option), 200,215,628 to be held by former shareholders of Crocodile Gold (including those persons that became shareholders of Crocodile Gold as a result of the equity financing, assuming full exercise of the underwriters' option) and 10,172,803 to be held by former shareholders of Franc-Or which represents ownership of Franc-Or of 95.2% by former shareholders of Crocodile Gold and 4.8% by former shareholders of Franc-Or.

Crocodile Gold will convene and hold a special meeting of its shareholders (the "Crocodile Gold Meeting") for the purpose of approving the Amalgamation. Franc-Or will convene and hold a special meeting of its shareholders (the "Franc-Or Meeting") contemporaneously with the Crocodile Gold Meeting for the purposes of approving the Share Issuance, the Consolidation, the Name Change, the Continuance and the New By-law. The meetings are expected to be held on October 23, 2009.

Pursuant to the Business Combination Agreement, certain directors and officers of Franc-Or and Aberdeen International Inc., a major shareholder of Franc-Or, have agreed to support the Business Combination and each entered into lock up agreements to vote their shares in favour of the Franc-Or resolutions to be passed at the Franc-Or Meeting.

In the case of all of the directors and senior officers of Franc-Or (other than Mr. George Faught who will not be resigning as a director of Franc-Or following completion of the Business Combination), the provisions of the Business Combination related to the extension of the term of the Franc-Or options that would otherwise terminate within 30 or 90 days may constitute "collateral benefits" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). As a result, the Business Combination may be considered a "related party transaction" for Franc-Or within the meaning of MI 61-101. Franc-Or shares held by a director or senior officer or other related party receiving a "collateral benefit" would be excluded from the minority shareholder vote pursuant to MI 61-101. MI 61-101 excludes from the meaning of "collateral benefit" certain benefits received by a related party solely in connection with the related party's services as an employee or director of an issuer where (a) the benefit is not conferred for the purpose, in whole or in part, of increasing the value of the consideration paid to the related party for securities relinquished under the transaction; (b) the conferring of the benefit is not, by its terms, conditional on the related party supporting the transaction in any manner; (c) full particulars of the benefit are disclosed in the disclosure document for the transaction; and (d) at the time the transaction is agreed to, the related party and his or her associated entities beneficially own, or exercise control or direction over, less than 1% of the outstanding securities of each class of equity securities of the issuer.

At the time the Business Combination was agreed to, Scott Moore, the President and Chief Executive Officer and a director of Franc-Or, held 1,000,000 options exercisable at $0.04 to $0.13 per Franc-Or share, Julian Bharti, a director of Franc-Or, held 200,000 options exercisable at $0.06 per Franc-Or share and Deborah Battiston, the Chief Financial Officer of Franc-Or, held 200,000 options exercisable at $0.06 per common share of Franc-Or. All such options will become exercisable for new Franc-Or shares (which amount of shares and exercise price will be adjusted pursuant to the Consolidation) and will not expire within 30 to 90 days as a result of each of these individuals terminating their respective positions with Franc-Or in connection with the Business Combination but rather will expire on the earlier of (i) the date that is one year following the Effective Date, and (ii) the original expiry date of the options.

To the knowledge of Franc-Or, the only directors or senior officers of Franc-Or who may potentially receive a collateral benefit in connection with the Business Combination, and who may be considered to beneficially own or exercise control or direction over more than 1% of the Franc-Or shares, as at the time the Business Combination was agreed to, are Mr. Scott Moore and Mr. Julian Bharti. Mr. Moore owns 150,000 common shares of Crocodile Gold and has in place a consulting agreement with Franc-Or for his services as the President and Chief Executive Officer of Franc-Or. Mr. Moore has signed a waiver of his right to receive any payment or benefit pursuant to his agreement with Franc-Or otherwise payable to him in connection with the Business Combination and the resulting change of control of Franc-Or. Mr. Julian Bharti owns, directly and indirectly through a company he controls, 550,000 common shares of Crocodile Gold. Each of the common shares of Crocodile Gold held by Mr. Moore and Mr. Julian Bharti, respectively, will be exchanged on the same terms as those common shares held by all other shareholders of Crocodile Gold. The calculation of beneficial ownership has been performed pursuant to the provisions of MI 61-101.

MI 61-101 provides that, unless exempted, a corporation proposing to carry out a related party transaction is required to prepare a formal valuation of the non-cash assets involved in the related party transaction within the meaning of MI 61-101 and provide a summary of such valuation in the disclosure document for the related party transaction. MI 61-101 also requires that, in addition to any other required securityholder approval, in order to complete a related party transaction, the approval of a majority of the votes cast by "minority" shareholders must be obtained, unless an exemption is available or discretionary relief is granted by the applicable securities regulatory authorities. Franc-Or has relied on the exemptions from the formal valuation requirement and the minority shareholder approval requirement of MI 61-101 pursuant to subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, on the basis that neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, in so far as it involves interested parties, exceeds 25% of Franc-Or's market capitalization (calculated in accordance with MI 61-101). No prior valuations of Franc-Or have been conducted.

About Crocodile Gold

Crocodile Gold is a private Canadian company that recently completed the acquisition of a number of past producing gold assets in the Northern Territory of Australia from GBS Gold. These assets are held through its 100% owned subsidiary Crocodile Gold Australia Pty Ltd. The assets comprise the Burnside Project, Pine Creek, Maud Creek and the Tom's Gully Gold Project. The Tom's Gully Gold Project includes the Tom's Gully underground gold mine and is located approximately 90 kilometres east of Darwin, Northern Territory. The Burnside Project includes the Brocks Creek underground gold mine, the Chinese South and North Point open pit gold mines and the Cosmo Deeps undeveloped gold deposits, among others.

About Franc-Or

Franc-Or Resources Corporation is a publicly traded mineral exploration company dedicated to the exploration of precious and base metals. The Corporation currently holds 100% interests in two mineral exploration properties, the Mario property (Zn, Pb, Ag, Au) in central Peru, and the Humboldt Springs property (Au, Ag) in north-central Nevada.

Cautionary Notes

Certain information set forth in this press release contains "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking information which include management's assessment of Crocodile Gold's and Franc-Or's future plans and operations and are based on Crocodile Gold's and Franc-Or's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking information may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking information necessarily involve known and unknown risks and uncertainties, which may cause Crocodile Gold's and Franc-Or's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Crocodile Gold's and Franc-Or's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Crocodile Gold and Franc-Or undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Contact Information

  • Crocodile Gold Inc.
    Michael Hoffman
    President and CEO
    (416) 861-2964
    or
    Franc-Or Resources Corporation
    G. Scott Moore
    President and CEO
    (416) 861-5903