China Goldcorp Ltd.
TSX VENTURE : CAU.H

November 20, 2013 08:00 ET

China Goldcorp Enters Into Letter of Intent With International Explorers & Prospectors Inc. in Respect of a Proposed Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Nov. 20, 2013) -

Not for distribution to United States newswire services or for release publication, distribution or dissemination directly, or indirectly, in whole or in part, in or into the United States.

China Goldcorp Ltd. (TSX VENTURE:CAU.H) ("China Goldcorp") is pleased to announce that it has signed a letter of intent dated November 15, 2013 (the "LOI") with International Explorers & Prospectors Inc., a corporation existing under the laws of Ontario ("IEP"), which outlines the terms and conditions pursuant to which China Goldcorp and IEP will complete a transaction that will result in a reverse take-over of China Goldcorp by the shareholders of IEP (the "Transaction").

The Transaction is subject to requisite regulatory approval, including the approval of the TSX Venture Exchange (the "TSXV") and standard closing conditions, including the execution of a definitive agreement (the "Definitive Agreement"), completion of due diligence investigations to the satisfaction of each of China Goldcorp and IEP, as well as the conditions described below. The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies, however, it is currently contemplated that the transaction will be structured as a securities exchange.

China Goldcorp is incorporated under the provisions of the Business Corporations Act (Ontario) with its registered and head office in Toronto, Ontario. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. China Goldcorp is a "reporting issuer" in the provinces of Ontario, British Columbia and Alberta.

Since the Transaction is an arm's length transaction, China Goldcorp is not required to obtain shareholder approval for the Transaction.

Trading in the common shares of China Goldcorp has been halted. It is unlikely that the common shares of China Goldcorp will resume trading until the Transaction is completed and approved by the TSXV.

Conditions to Transaction

Prior to completion of the Transaction (and as conditions of closing):

  • IEP must complete a private placement (the "Offering") of common shares to be issued on a flow-through basis under the Income Tax Act (Canada) (the "FT Shares") for minimum gross proceeds of $1,500,000 at an anticipated issue price of $0.75 per FT Share. Further details regarding the Offering will be included in a subsequent press release once additional details become available.

  • The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Transaction.

  • IEP will prepare and deliver to China Goldcorp a National Instrument 43-101 compliant report (the "Technical Report") in respect of its Montclerg exploration property located in the Porcupine and Larder Lake mining divisions of northeastern Ontario (the "Montclerg Project").

  • All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.

The Proposed Transaction

Pre-Closing Capitalization of China Goldcorp

As of the date hereof, China Goldcorp has 6,057,600 common shares outstanding and options to acquire 600,000 common shares.

Pre-Closing Capitalization of IEP

Following completion of a proposed share consolidation, as at the closing date IEP is expected to have 24,884,095 common shares issued and outstanding (prior to completion of the Offering) and no securities exercisable or exchangeable for, or convertible into, or other rights to acquire, IEP common shares.

Terms of the Transaction

China Goldcorp proposes to acquire all of the IEP Shares pursuant to the terms of the LOI, subject to execution and delivery of the Definitive Agreement. It is expected that each shareholder of IEP will receive one common share of China Goldcorp for each IEP common share held resulting in the current shareholders of China Goldcorp holding approximately 19.6% of the common shares of the combined entity (the "Resulting Issuer") and the current shareholders of IEP holding approximately 80.4% of the common shares of the Resulting Issuer upon completion of the Transaction (prior to giving effect to the Offering).

About IEP

IEP has accumulated a portfolio of mineral exploration properties located in northern Ontario and Quebec. The portfolio includes 530 unpatented mining claims totalling approximately 29,040 hectares in Ontario and 5,575 hectares in Quebec, 112 patented mining claims in Ontario totalling approximately 2,416 hectares and 326 mineral leases in Ontario totalling approximately 5,216 hectares.

IEP's material property and primary focus is the Montclerg Project located in the southeastern part of Clergue Township and adjoining parts of Stock and Walker townships, approximately 48 kilometres northeast of Timmins. The Montclerg Project consists of 43 claim units (all but four being contiguous) covering approximately 691 hectares held as freehold patented lands and staked claims. The Montclerg Project was first explored in 1938 and during the period 1938-2007 several exploration programs were undertaken comprising 117 drill holes collared for a total of 22,793 metres.

The largest shareholder of IEP is Explorers Alliance Inc., which will own 8,751,947 IEP Shares immediately prior to closing of the Transaction and is expected to own 8,751,947 common shares of the Resulting Issuer upon completion of the Transaction representing approximately 28.3% of the outstanding common shares of the Resulting Issuer prior to completion of the Offering (26.6% assuming completion of the Offering). Mr. Jean-Claude Bonhomme, an Ontario resident, is the controlling shareholder of Explorers Alliance Inc. Upon completion of the Transaction, it is expected that Mr. Bonhomme will also directly own 2,941,723 common shares of the Resulting Issuer representing approximately 9.5% of the outstanding common shares of the Resulting Issuer prior to completion of the Offering (8.9% assuming completion of the Offering). No other shareholder is expected to own 10% or more of the Resulting Issuer following completion of the Transaction.

IEP has retained auditors to complete the audit requirements prescribed by the TSXV and will disclose further details regarding relevant financial information in a subsequent press release.

Insiders, Officers and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is expected that Charles Beaudry will serve as President and Peter Colbert will serve as Chief Financial Officer of the Resulting Issuer. In addition, it is anticipated that the board of directors of the Resulting Issuer shall be reconstituted to consist of five directors. It is currently intended that the board will be comprised of: Peter Crossgrove, Michael Daren, Thor Eaton, Ned Goodman and Charlie Kuo.

Following completion of the Transaction and the Offering (assuming gross proceeds of $1.5 million), it is anticipated that only Explorers Alliance Inc. (26.6%) will exercise direction or control over more than 10% of the issued and outstanding shares of the Resulting Issuer.

The following sets outs the names and backgrounds of all persons who are expected to be considered insiders of the Resulting Issuer.

Charles Beaudry, M.Sc., P. Geo. - President

Mr. Beaudry is a seasoned mining executive with over 30 years' experience in project generation, business development, exploration geochemistry and international project management. He has been involved in a number of deposit discoveries during his tenure with Noranda/Falconbridge (now Glencore/Xstrata) from 1989 to 2006. In 2008-2009 he was General Manager for New Opportunities for Iamgold where he led the world-wide search for new gold acquisition opportunities and established a new exploration office in Colombia. From 2010 to mid-2013 he was founding President and later CEO of Xmet Inc., leading a seasoned exploration team that outlined an NI 43-101 compliant, 850,000 ounce gold deposit in the Abitibi greenstone belt of Quebec.

Peter Colbert - Chief Financial Officer

Mr. Colbert has extensive operational and financial experience with both private and public mineral exploration companies having responsibilities including financial management and reporting. He has been involved in the mineral exploration industry for over 30 years and has assisted exploration syndicates and companies to develop and manage exploration programs in Ontario and Quebec. He also serves on a number of non-for-profit boards in Timmins, including his present role as Treasurer of the Timmins Symphony Orchestra.

Peter Crossgrove - Director

Mr. Crossgrove is a Member of the Order of Canada and the Order of Ontario. He is currently co-Chairman of Detour Gold and the former Chairman and a founder of Masonite International Corporation. He has been in the mining industry for almost his entire career and sits on various boards of directors including, Lake Shore Gold, Pelangio Exploration and Dundee REIT and previously served on the Board of Barrick Gold and as CEO and Vice Chairman of Placer Dome Inc. He has also served as a management and volunteer leader in Ontario's health care sector. He holds a Bachelor of Commerce and MBA and was a Sloan Fellow in the Doctorate Program at Harvard University.

Thor Eaton - Director

Mr. Eaton is a highly regarded, well known Canadian businessman and philanthropist. Mr. Eaton serves as Chairman of Notae Investments Ltd. and the Eaton Foundation. He has sat on the boards of a number of publicly traded companies in the mining sector. Mr. Eaton created the Thor E. and Nicole Eaton Family Charitable Foundation, which contributes to the livelihood of hospitals, environmental groups and Canadian cultural institutions, such as the Royal Ontario Museum, St. Michael's Hospital, the National Ballet of Canada and the Atlantic Salmon Association.

Ned Goodman - Director

Mr. Goodman has been a leader in the global mining industry for more than four decades and is widely recognized as one of Canada's most successful investment counselors. He is the President and CEO of Dundee Corporation, an independent asset management company focused in the areas of real estate and infrastructure, energy, resources and agriculture, and President, CEO and Chief Investment Officer of Ned Goodman Investment Counsel Limited, a portfolio manager. He is the founder and benefactor of the Goodman Institute of Investment Management, a graduate school for investment management at Concordia University and the Goodman School of Mines, which is under development at Laurentian University. He is also the Chancellor of Brock University in Ontario, Chairman Emeritus of the Canadian Council of Christians and Jews, a Governor of Junior Achievement of Canada and a former Director of the Mount Sinai Hospital Foundation. He is also a founding director of the Roasters Foundation, the Jodamada Foundation and the Dynamic Fund Foundation.

Charlie Kuo - Director

Mr. Kuo is a corporate securities lawyer with expertise in corporate finance and China practice. He was a member of the Securities Law Group of the Toronto office of Fraser Milner Casgrain LLP (now Dentons LLP) from September 2005 to October 2009. His transactional experience includes domestic and cross-border public and private corporate finance transactions representing issuers and underwriters as well as stock exchange listing applications, corporate restructuring and M&A transactions. Mr. Kuo has a Bachelor of Commerce degree, a Bachelor of Common Law degree and a Bachelor of Civil Law degree from McGill University.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. China Goldcorp is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that China Goldcorp will ultimately obtain this exemption. China Goldcorp intends to include any additional information regarding sponsorship in a subsequent press release.

Further Information

All information contained in this news release with respect to China Goldcorp and IEP was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, 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.

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 PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Offering; future exploration and testing; use of funds; and the business and operations of the Resulting Issuer after the proposed transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of current exploration and testing. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. China Goldcorp and IEP disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information

  • For further information regarding the Transaction,
    please contact:
    Maurice Colson
    China Goldcorp Inc.
    Facsimile: 416-947-6046

    Lionel Bonhomme
    International Explorers & Prospectors Inc.
    E-mail: bonhomme@vianet.ca