Creso Exploration Inc.

Creso Exploration Inc.

November 14, 2013 10:17 ET

Creso Announces Proposed Amalgamation With Nichromet

MONTREAL, QUEBEC--(Marketwired - Nov. 14, 2013) -


Creso Exploration Inc. ("Creso" or the "Corporation") (TSX VENTURE:CXT)(OTCQX:CRXEF)(FRANKFURT:C3X) is pleased to announce that it has agreed to enter into a merger agreement with Nichromet Extraction Inc. ("Nichromet") and a wholly-owned subsidiary of Nichromet ("Subco") pursuant to which Creso and Subco will amalgamate (the "Amalgamation") and the amalgamated company will become a wholly-owned subsidiary of Nichromet. Prior to the Amalgamation, Nichromet will be renamed "Dundee Sustainable Technologies Inc."

The Amalgamation

Pursuant to the Amalgamation, Nichromet would, indirectly, acquire all of the issued and outstanding common shares of Creso, which it does not already own, and the shareholders of Creso would receive one subordinate voting share of Nichromet in exchange for two common shares of Creso. Holders of options and warrants of Creso will receive options and warrants, as applicable, of Nichromet based upon the same exchange ratio.

The Amalgamation must be approved by a special majority (66 2/3%) of the votes cast at the Creso shareholders' meeting to be held to consider the Amalgamation. In addition, since Dundee Sustainable Technologies Inc. will have multiple voting shares outstanding (held by Dundee Corporation), the Amalgamation must be approved by a majority of the minority of the shareholders of Creso. In this regard, Creso is preparing a management information circular which will be mailed to each shareholder of Creso. The multiple voting shares of Dundee Sustainable Technologies Inc. will not be listed on any stock exchange and are convertible, at the option of the holder, into subordinate voting shares for no additional consideration.

Assuming completion of the proposed Amalgamation, but excluding any securities issuable pursuant to a future financing in connection with the Amalgamation, Dundee Sustainable Technologies Inc. will have (i) 227,445,202 subordinate voting shares issued and outstanding, of which 27.5% will be held by the current shareholders of Creso (excluding Nichromet) and 72.5% will be held by the current shareholders of Nichromet (including Dundee Corporation), and (ii) 50,000,000 multiple voting shares issued and outstanding, all of which will be held by Dundee Corporation. Accordingly, Dundee Corporation will exercise voting rights in respect of an aggregate of 86.3% of the issued and outstanding voting securities of Dundee Sustainable Technologies Inc.

The parties expect to sign the merger agreement shortly. Completion of the Amalgamation is subject to requisite shareholder and regulatory approvals and standard closing conditions for transactions of this nature.

About Nichromet

Nichromet is a private Canadian company controlled by Dundee Corporation that has developed patented precious and base metal extraction processes that are environmentally friendly in that the residues of mining operations are totally void of contaminants such as sulfur and arsenic. These new processes are based on chlorination and are particularly efficient for the treatment of polymetallic ores either in the form of sulfides, oxides or arsenides. These chloride based patented processes are a substitute to cyanidation, which is commonly used in the mining industry.

Nichromet was awarded a $5 million grant by the Government of Canada through Sustainable Development Technology Canada (SDTC) for the development of an innovative patented technology that will increase efficiency in processing gold while reducing the environmental impact and the construction of a demonstration plant of $27 million. The $5 million grant was part of a $61.8 million investment by the Government of Canada to support 23 clean technology projects across Canada.

Nichromet received a grant of $700,000 from the Québec Ministère du Développement économique, de l'Innovation et de l'Exportation.

Insiders, Officers and Board of Directors of Nichromet

Upon completion of the Amalgamation, it is anticipated that the executive management and board of directors of Dundee Sustainable Technologies Inc. will consist primarily of the current executive management and board of directors of Nichromet. It is expected that the only person that will exercise control or direction over more than 10% of the issued and outstanding shares of Dundee Sustainable Technologies Inc. will be Dundee Corporation.

Non-Arm's Length Party to the Amalgamation

Nichromet currently owns or exercises control or direction over more than 10% of the issued and outstanding shares of Creso. As such, Nichromet may be considered a Non-Arm's Length Party to the proposed Amalgamation. In addition, the proposed Amalgamation may be considered as a "business combination" under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and, accordingly, requires approval by the holders of a majority of the shares of Creso, excluding shares held by interested parties at the shareholder meeting to be held by Creso to seek approval for the Amalgamation, in addition to the requirements under the Canada Business Corporations Act which require that the Amalgamation be approved by at least two-thirds (66 2/3%) of all votes cast at the Meeting. Finally, Creso is exempt from the formal valuation requirement of MI 61-101 in connection with the proposed Amalgamation in reliance on Section 4.4(1)(a) of MI 61-101, as no securities of the Corporation are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ stock market or any other stock exchange outside of Canada and the United States.

Trading Halt

Trading in the common shares of Creso on the TSX Venture Exchange will be halted pending a review, if any, of the proposed Amalgamation by the TSX Venture Exchange and the filing of certain documents by Creso and Nichromet.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested 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 Management Information Circular 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 Creso should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Information for U.S. Creso Shareholders

Due to U.S. securities law considerations, Nichromet will not distribute its subordinate voting shares into the United States or to U.S. Creso shareholders. Accordingly, no U.S. Creso shareholder will be entitled to receive Nichromet subordinate voting shares. All Nichromet subordinate voting shares that a U.S. Creso shareholder would have been entitled to receive under the Amalgamation will instead be issued and delivered to a depositary, and the depositary shall use its best efforts to sell such shares through the facilities of the exchange upon which the subordinate voting shares may be listed as soon as practicable after the Amalgamation, on such dates and at such prices as the depositary determines in its sole discretion, through one or more brokers with whom the depositary transacts business.

About Creso

The Corporation's principal mining exploration holdings are located in the Shining Tree mining camp of Northern Ontario within 100 km of the Timmins and Kirkland Lake mining camps.

Forward-looking Statements

This press release contains forward-looking statements that address future events and conditions, which are subject to various risks and uncertainties. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Amalgamation; the completion of any future financing; use of funds; and the business and operations of the resulting issuer, Nichromet, after the proposed Amalgamation. Actual results could differ materially from those anticipated in such forward- looking statements as a result of numerous factors, some of which may be beyond the Corporation's control. These factors include: general market and industry conditions and other risks disclosed in the Corporation's filings with Canadian Securities Regulators, including those that will be contained in the Management Information Circular that will be prepared and filed in connection with the proposed Amalgamation.

Forward-looking statements are based on the expectations and opinions of the Corporation's management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation expressly disclaims 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 applicable law.

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