Concordia Resource Corp.
TSX VENTURE : CCN

Concordia Resource Corp.

September 06, 2011 08:30 ET

Concordia Resource Corp. Signs Letter of Intent to Acquire Swala Resources Inc.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 6, 2011) - Concordia Resource Corp. (TSX VENTURE:CCN) ("Concordia") and Swala Resources Inc. ("Swala") are pleased to announce that they have entered into a letter of intent, dated August 31, 2011, in which Concordia will acquire Swala via a share exchange. Swala will bring to Concordia an extensive exploration portfolio in the resource endowed regions of Burkina Faso, Gabon, the Democratic Republic of Congo, Zimbabwe and Mozambique with a land package totaling over 12,400 km2, as well as an experienced management team and board of directors with extensive expertise in Africa. With the completion of the merger Concordia will have an established operating platform from which it can pursue an aggressive growth strategy towards becoming a leading African gold exploration company. "Swala's highly prospective African exploration portfolio represents a new platform and direction for Concordia. Our strong cash position and unique public markets experience combines well with Swala's African focused operations team. Swala provides a good spread of exploration projects, including their most advanced one in Burkina Faso, early access to an exciting deal flow, in-depth African experience that can go a long way to identify and mitigate political risk, a first class technical team, and the means to straddle the Anglo/French lingual and cultural context that is part of the African business and political environment. This acquisition builds on a strategy to create shareholder value in some of the most productive geologic environments in the world," stated Edward Flood, CEO of Concordia.

The Transaction

Under the letter of intent, the parties will negotiate and enter into a definitive agreement pursuant to which Concordia will acquire Swala, by way of a plan of arrangement. In accordance with the terms of the letter of intent, Concordia is proposing to exchange each share of Swala for 1.9 shares of Concordia. Swala currently has 13,449,210 shares issued and outstanding, or committed to be issued, 1,342,500 share options with a weighted exercise price of $1.41/share issued or committed to be issued, and 2,985,121 warrants. It is proposed that options will be exercised for Swala shares before the transaction completes (the "Closing"), or will be exercised on Closing for Concordia shares, on a cashless, in-the-money value basis, using the same 1:1.9 share exchange ratio. Each unexercised warrant will be exchanged for 0.5 Concordia warrants, with a weighted average strike price of $0.86.

Assuming satisfactory completion of due diligence, it is anticipated that the definitive agreement will be entered into by October 17, 2011. The definitive agreement will provide for conditions precedent that are standard for a transaction of this nature, including receipt of all regulatory and TSX Venture Exchange approvals, and approval by Swala's shareholders. Swala will be free of all debt and will not have a negative working capital at Closing. Lockup agreements will be entered into with shareholders who hold, in aggregate, 30% or more of the issued and outstanding shares of Swala.

The combined company will retain the Concordia name and remain headquartered in Vancouver, Canada. Swala will become a wholly owned subsidiary of Concordia and Swala shareholders will become shareholders of Concordia, holding approximately 30% of the issued and outstanding shares of Concordia post-Transaction.

The Financing

Concordia has also agreed that concurrent with the execution of the Definitive Agreement by the parties it will acquire, through a private placement (the "Private Placement") of units of Swala, comprised of that number of Swala Shares that will equal approximately 9.9% of the then issued and outstanding Swala Shares, plus 450,000 Swala Warrants with a strike price of $1.93, at a price of $1.36 per unit, for gross proceeds of approximately C$2,000,000. The purpose of the Private Placement is to provide funds for an accelerated drill program on the Araé-Gassel project in Burkina Faso during the completion of the merger transaction.

ABOUT SWALA

Swala is a private company founded in 2007 by African mining investors with a history of successful development in Africa, and a group of former Anglo American and De Beers executives with extensive experience of operations throughout the African continent.

Swala is an African-focused explorer with an emphasis on developing gold deposits holding the potential of one million ounces upwards. The current program is designed to create value with an accelerated drilling campaign on its exploration projects in Burkina Faso, where it owns 100% of the Araé-Gassel property, and in the two Guéguéré properties, where it is earning into 80% ownership in a joint venture with SearchGold Resources.

Swala also holds a 20% option on any discoveries made by AngloGold Ashanti on two licences in Gabon totaling 4,000 km2 that were sold to them by Swala in an agreement reached in 2009. This is basically a carried interest to Feasibility Study.

In addition, Swala is in the process of finalizing a new joint venture agreement to finance and carry out a large early stage exploration venture covering some 7,500km2 in the Democratic Republic of the Congo to which it owns the rights. This is jointly owned with Bugeco, a private Belgian geological consultancy with close links to Swala (www.bugeco.com), who identified the target and owned the data. It is a target that is characterized by anomalous levels of platinum, palladium, nickel, copper cobalt, chromium, vanadium and magnesium from geochemical analysis of widely spaced stream sediment samples and overlies a Norils'k Ni-Cu type flood basalt setting.

ABOUT CONCORDIA

Concordia Resource Corp. is a mineral exploration company with property holdings in North and South America and Spain. Concordia holds a 100% interest in the Albisu gold discovery in Nevada, and is the operator of a joint venture with Renaissance Gold Inc., whereby it is earning a 70% interest in the Baza gold-copper project in Spain. Through its wholly owned South American subsidiary, Meryllion Minerals Corp., Concordia has an option to purchase 100% of the historic La Providencia silver mine located in the Puna of northwestern Argentina and has also acquired an option to purchase the 14,000 ha Cerro Amarillo-Cajon Grande copper-gold property located in the Malargüe District of Argentina. Concordia has its head office and executive management team in Vancouver, Canada; and its technical team is based in Reno, Nevada.

On behalf of the Board of Concordia Resource Corp.

R. Edward Flood, Chairman

Forward Looking Statements

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of the Ontario Securities Act, including the receipt of necessary permits to conduct exploration and construction, timing of anticipated exploration program, the number of the holes and meters to be drilled and future plans of the Company. Forward-looking information is subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks and uncertainties relating to risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described in each management discussion and analysis. Forward-looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of metals; appropriate equipment and sufficient labour and that the political environment where the Company operates will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information. Accordingly, readers are advised not to place undue reliance on forward-looking information.

The TSX-V has neither approved nor disapproved the contents of this press release. Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this press release.

Contact Information