Jardincap Inc.

March 04, 2008 13:04 ET

Jardincap Inc. Announces Proposed Acquisition of Mining Exploration Company as Qualifying Transaction

CONCORD, ONTARIO--(Marketwire - March 4, 2008) - Jardincap Inc. (TSX VENTURE:JAR.P) ("Jardincap" or the "Corporation") announced today that it has signed a letter agreement dated February 11, 2008, pursuant to which Jardincap has conditionally agreed to amalgamate (the "Amalgamation") with Tawsho Mining Inc. ("Tawsho"). The Amalgamation will constitute Jardincap's Qualifying Transaction as defined in Policy 2.4 of the TSX Venture Exchange Inc. (the "Exchange") Corporate Finance Manual. Jardincap is currently classified as a capital pool company pursuant to the policies of the Exchange, and its common shares are listed on the Exchange under the symbol JAR.P. It is anticipated that the Resulting Issuer will continue under the name "Tawsho Mining Inc.".

If the Amalgamation and the Tawsho Private Placement (described below) are completed, the Resulting Issuer ("Amalco") will have a maximum of approximately 22,326,360 common shares issued and outstanding. It is expected that Tawsho will raise a minimum of $2 million and a maximum of $4 million pursuant to the Tawsho Private Placement (as defined below).

About Tawsho Mining Inc.

Tawsho is a private Ontario corporation and has its head office in Concord, Ontario. Tawsho is party to an agreement with GeoNova Explorations Inc. to acquire 239 mining claims situated in the Townships of Queylus, Hauy and Fancamp in the Province of Quebec (the "Chevrier Property").

The Chevrier Property currently consists of 239 claims for a total of 4,052 hectares grouped together into two contiguous areas. The Fancamp, Haufan, Diana-Obatogamau and Dolbo blocks are contiguous and are predominantly located in the northeast sector of the Fancamp Township with some parcels in the southern half of the Hauy Township. The Diana block is located in the southwestern quarter of the Queylus Township. An area of some 183 claims for a total of some 4,056 hectares is claimed and awaits official registration (and numbers) for the claims. A second group of claims for some 71 claims for a total of 1,136 hectares is applied for. When the official registration is complete and the applications are confirmed, the total area claimed for Tawsho will consist of some 493 contiguous claims for approximately 9,244 hectares (approximately 95 sq. km.).

The Chevrier Property is located about 30 km southeast of Chapais and 35 km south of Chibougamau, Quebec. The Fancamp, Haufan, Diana-Obatogamau and Dolbo claims are accessible by a forestry road that crosses the northwest portion of the property, and by water via the lakes and streams of Obatogamau. The Diana claims are accessible via a forestry road with a regional road which connects Chibougamau with St-Felicien. This block of claims is also accessible by water via the lakes of Obatogamau and Chevrier.

The Chibougamau area is known for its historic mining activities which, however, have declined over the last few years. The human resources for a labor force, for supplies and for equipment as well as its maintenance are sufficient to sustain the exploration of the Chevrier Property. The town of Chibougamau has some 8,000 inhabitants and has geological and mining firms of which the project can obtain personnel. All major services are available in Chibougamau or in Val d'Or.

In 1995, GeoNova Explorations Inc. ("GeoNova") became the owner of the properties and continued exploration and study work until 2002. GeoNova carried out diamond drilling campaigns in 1996, 1997 and 2002 and prepared resource estimates and preliminary mining studies. In 2007 Tawsho purchased the Chevrier Property from GeoNova.

A National Instrument 43-101 ("NI 43-101") technical report on the Chevrier Property dated January 10, 2008, was prepared by SNC-Lavalin Inc. in Montreal, Quebec (the "SNC Lavalin Report"). The authors of the SNC Lavalin Report are independent of Jardincap and Tawsho.

A considerable amount of geological and geophysical exploration has been carried out on the Chevrier property and the existence of some eight gold mineralizations are indicated. The Chevrier zone, the most important showing, was explored the most extensively and the majority of the data is therefore available for this zone. All drilling was carried out without detailed surveys for elevation and although a large amount of drilling was carried out the detailed (non-compliant with NI 43-101) resource estimates were based on the less precise polygon method.

Strong indications were found for the existence of the Chevrier Sud zone but little detailed drilling and interpretation of the extent of that zone was developed. The other anomalies ("East", "West", RO, Coyote, Lipsett and des Tranchees showings) were only partly drilled or not further investigated. The incomplete database and the existence and extent of the indicated gold mineralizations suggest that there is sufficient merit to restart exploration work on the property and obtain additional data for a compliant with NI 43-101 resource estimate.

NI 43-101 Recommendations

A geophysical review of the Chevrier Property was undertaking by Mr. Camille St-Hilaire, P.Geo, as a consultant to Tawsho. This review was not a part of the SNC Lavalin Report but its conclusions were included in the SNC Lavalin Report. The review recommended that aeromagnetic survey be conducted by helicopter. It further recommended an InfiniTEM ground survey (deep EM time-domain survey) to test conductive mineralization in the Chevrier and Chevrier Sud zones. Both of these surveys have now been completed. In addition, it recommended that three drill holes be drilled in locations where previous induced polarization detected anomalies have not yet been investigated.

Mr. P.J. Lafleur, P.Eng, a consultant to Tawsho, carried out the review of the database for the Chevrier zone as well as the modeling for that zone. Mr. Lafleur also reviewed the hand drawn sections for the Chevrier Sud zone. Following this work and because of the requirement of winter drilling, a drilling program of some 9,260 meters has been proposed, 6,250 meters for the Chevrier zone, 2,300 meters for the Chevrier Sud zone and 710 meters to investigate other anomalies.

Estimated Budget Cost of the Confirmation and Exploration Program

Estimated budget cost of the geophysical work $ 206,400
Diamond Drilling (including assays) $1,018,600
Re-sampling and assaying of earlier drill holes $ 5,000
Fieldwork $ 60,000
Compilation and Technical and Evaluation Report $ 250,000
Subtotal $1,540,000
Contingencies (10%) $ 150,000
Estimated Total Budget Cost of Phase I $1,690,000

Since its incorporation on November 28, 2006, Tawsho has raised gross proceeds of approximately $4,177,000 through the issuance of seed shares to founders and private placements to arm's length parties. The founders, as a group, currently hold approximately 46.7% of the total number of issued and outstanding shares of Tawsho.

According to the audited financial statements for the year ended December 31, 2007, Tawsho had assets of $4,966,352 and liabilities of $791,271, no revenues and working capital of $2,560,766 at the year end. Tawsho recorded expenses of $49,310 for the year ended December 31, 2007. Tawsho has spent a total of $1,400,000 for the acquisition of the Chevrier Property.

About Jardincap Inc.

Jardincap is a capital pool company which currently has 3,058,070 common shares issued and outstanding ("Jardincap Common Shares"), 303,332 Jardincap Common Shares reserved for stock options granted to directors and officers of Jardincap ("Jardincap Stock Options") and 125,263 Jardincap Common Shares reserved for options granted to Canaccord Capital Corporation (the "Jardincap Agent's Options"). Jardincap will complete a one "new" for each three "old" Jardincap Common Shares consolidation so that, as of the closing of the Amalgamation, Jardincap will have outstanding 1,019,357 Jardincap Common Shares and 101,111 Jardincap Stock Options at an exercise price of $0.45 per share. Jardincap will also have outstanding, at the closing, 41,754 Jardincap Agent's Options exercisable at $0.45 per share.

About the Tawsho Private Placement

Concurrently with the Amalgamation, Tawsho will undertake a private placement of units of one common share and one-half of a common share purchase warrant ("Units") for a minimum of $2 million and maximum of $4 million gross proceeds at a deemed price of $1.00 per Unit (the "Tawsho Private Placement"). Each whole common share purchase warrant will be exercisable for $1.25 for a period of 24 months from closing of the Tawsho Private Placement. It expected that a portion of the Tawsho Private Placement will be brokered and that a cash commission of 2.5% will be paid on brokered proceeds. Tawsho does not expect to be paying any finder's fees in relation to the Tawsho Private Placement.

About the Amalgamation

Each shareholder of Tawsho will receive one common share in the capital of Amalco, in exchange for each share held in Tawsho prior to the transaction at a deemed price of $1.00. The existing 7,773,501.5 warrants in Tawsho will be exchanged on a one for one basis for warrants of Amalco but otherwise remain unchanged. Tawsho will have up to approximately 21,307,003 Tawsho common shares issued and outstanding after completion of the maximum Tawsho Private Placement, but before the exercise of any Tawsho warrants. All of such Tawsho common shares will be validly issued and outstanding as fully paid and non-assessable shares of Tawsho.

Each shareholder of Jardincap will receive one common share in the capital of Amalco, in exchange for each post-consolidated Jardincap Common Share held in Jardincap immediately prior to the Amalgamation at a deemed price of $1.00. The existing 428,595 options in Jardincap will be consolidated on the same basis as the Jardincap Common Shares and then exchanged on a one for one basis for options of Amalco but otherwise remain unchanged. Jardincap will have 1,019,357 Jardincap Common Shares issued and outstanding after completion of the consolidation.

Upon closing of the Amalgamation, Amalco will reserve up to 10% of its issued and outstanding common shares for stock options to be granted to directors, officers, consultants and employees of Amalco. Such stock options will have an exercise price of $1.00 per share of Amalco. It is estimated that the current shareholders of Tawsho will hold approximately 85% and the current shareholders of Jardincap will hold approximately 5% of the shares in the capital of Amalco after completion of the Amalgamation and the minimum private placement.

The proposed Amalgamation Agreement will contain customary covenants, representations and warranties to be given by Tawsho and its shareholders as well as Jardincap. The completion of the Amalgamation is subject to a number of conditions. These include finalizing and performance of the terms of the proposed Amalgamation Agreement, satisfaction of the minimum listing requirements of the Exchange, receipt of Exchange approval, receipt of Majority of the Minority Approval (as defined in Exchange Policy 2.4) and filing of articles of amendment by Jardincap to consolidate the Jardincap Common Shares. There can be no assurance that the transaction will be completed, either as proposed or at all.

The principal shareholders of Tawsho (and their approximate percentage ownership) of the Resulting Issuer (based on completion of the minimum Tawsho Private Placement) are Zoran Arandjelovic, of Maple, Ontario (23.9% - directly and indirectly), Raymond Savoie, of Montreal, Quebec (3.4%), Bretman Financial Corporation, a private corporation based in Toronto, Ontario (4.7%), and 3 Miracles Holdings Inc., a private corporation based in Toronto, Ontario (7.9%).

Amalco's auditors will be Deloitte LLP, and its head office will be located in Concord, Ontario. Jardincap will also request its shareholders to approve the size of the board of directors of Amalco to be five directors, initially Zoran Arandjelovic, Raymond Savoie, Michael Talmage, Gary Perkins and Camille St-Hilaire as directors (see bio information below).

The transaction constitutes, in part, a non-arm's length Qualifying Transaction. Mr. Zoran Arandjelovic is President, Chief Executive Officer and a director of Jardincap and a director of Tawsho. None of the non-arm's length parties to Jardincap have any interest in Tawsho, are insiders of Tawsho or otherwise have any relationship with the non-arm's length parties of Tawsho.

As part of the completion of the Amalgamation, Tawsho's current management will assume management responsibilities for Amalco. Accordingly, the existing directors and officers of Jardincap will resign and the following individuals are proposed to be elected as directors in their place.

Raymond Savoie - President, Chief Executive Officer and Director

Mr. Savoie is currently President and CEO of Ditem Explorations Inc., junior mining company listed on the TSX Venture Exchange, as well as Gastem Inc. an oil and gas company listed on the TSX Venture Exchange. Mr. Savoie is also currently a director of Epsilon Energy Ltd., an oil and gas exploration and production company listed on the TSX (since 2007). He has been involved with various aspects of oil and natural gas exploration and development for the past 25 years and is a board member of several public and private companies. After practicing law in Val-d'Or, Quebec, Mr. Savoie was Quebec's Minister of Mines from 1985 to 1991, and from 1991 to 1994, was Minister of Revenue. Mr. Savoie received both his undergraduate and graduate degrees from Universite Laval.

Zoran Arandjelovic - Chairman and Director

Mr. Arandjelovic has worked in the real estate industry since 1982, as President of his wholly owned company, Zoran Real Estate Ltd. He has also been involved with several publicly-traded companies including, Epsilon Energy Ltd., an oil and gas exploration and production company listed on the TSX (Executive Chairman and director since 2005), Martinrea International Inc., an automotive parts manufacturer listed on the TSX (director since December 2001), Black Hat Capital Inc., a capital pool company listed on the Exchange (director from May 2004 to October, 2006), Hawk Precious Minerals Inc., a junior mining company listed on the CNQ exchange (director since 2004 and Chief Financial Officer from May 2004 to December, 2006), Jardincap (President, Chief Executive Officer and director since 2007) and Largo Resources, a junior mining company listed on the TSX Venture Exchange (director from April 2004 to June 2006). He is also President and owner of Capital Z Corporation, an investment firm, since 1986. Mr. Arandjelovic received his Bachelor of Arts from York University in Toronto, Ontario, in 1982. His membership as a TREB Broker in the Toronto Real Estate Board is current. He received his real estate broker designation with the Real Estate Council of Ontario in 1982 and that designation is still current.

Michael Talmage - Chief Financial Officer and Director

Michael Talmage is a professional accountant with 13 years of experience in the automotive retail sector. He has been Chief Financial Officer of H.J. Pfaff Motors Inc., a private automotive retailer, since 1997. Mr. Talmage is also currently a director and the Chairman of the Compensation and Audit Committees of Epsilon Energy Ltd., an oil and gas exploration and production company listed on the TSX (since 2006). He began his professional career with KPMG in public accounting in 1989, working on a variety of private and public clients. In 1992, Mr. Talmage accepted a position as Controller with H.J. Pfaff Motors Inc. In addition to his regular duties as Chief Financial Officer at H.J. Pfaff Motors Inc., Mr. Talmage has led the organization through a number of major renovation and new-build projects. Mr. Talmage holds a Bachelor of Arts degree from the University of Western Ontario (1986) and a Bachelor of Commerce degree from Windsor University (1989). Mr. Talmage attained his Certified General Accountant designation in 1995. In August 2006, Mr. Talmage became a director of Epsilon Energy Ltd. He chairs the Corporation's Audit Committee and the Compensation and Corporate Governance Committee.

Gary Perkins - Director

Based in Toronto, Ontario, Gary Perkins has been in corporate finance for more than 20 years, as President of Seapoint Financial Corporation, a private lease finance company, from 1986 to 1993 and, since 1993, as President of Surefund Capital Corporation, a private financial consulting company. Having taken more than three dozen companies public, Mr. Perkins has extensive experience in corporate finance and equity capital markets. Mr. Perkins has a B.Comm from the University of Witwatersrand, Johannesburg, South Africa.

Camille St-Hilaire - Director

Camille St-Hilaire is a professional geophysicist and has been providing his services through his own consulting company, Geophysique Camille St-Hilaire Inc., since June 2007. From April 2001 to June 2007, Mr. St-Hilaire was Interpretation and Marketing Manager for Fugro Airborne Surveys Corp. He served as a project manager, dataman and field manager on a variety of airborne and land surveys for Sial Geosciences Inc. from 1995 to April 2001. Prior to this Mr. St-Hilaire has held positions as Vice President of a geophysical company, an assistant professor, consultant and Chief Geophysicist with several companies and educational institutions. Mr. St-Hilaire has undertaken doctorate studies in geophysics, specialised in environment, at the Ecole Polytechnique de Montreal (1985) and holds a M.A.Sc., Geophysics (Ecole Polytechnique de Montreal -1975) and a B.Sc., Physics (University of Montreal - 1972). He is a member of A.P.P.G.Q. (Quebec Professional Association of Geologists and Geophysicists) and O.G.Q. (Ordre des geologues du Quebec).


Joseph Feldman has been President of Joseph Feldman Consulting Services Inc., a private Ontario corporation providing consulting services and business advice, since January 1, 2008. From June 1975 to December 2007, Mr. Feldman was engaged in the practice of law in the Province of Ontario. From August 1977 to December 2007, Mr. Feldman was a partner in the law firm of Torkin Manes, LLP, a mid-sized downtown Toronto law firm. During the course of his legal career, Mr. Feldman advised many small and mediuim sized businesses primarily in the real estate industry in the Province of Ontario. Mr. Feldman holds a Bachelor of Arts degree from the University of Toronto (1969), a Master of Arts Degree from the University of Kent (1970), a Bachelor of Law Degree from Queens University (1973) and a Master of Laws Degree from Osgoode Hall Law School (2001).

Completion of the proposed Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange approval, Majority of the Minority Approval by shareholders of Jardincap and approval of the shareholders of Tawsho for the Amalgamation. 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.

A general policy of the Exchange requires that a sponsor be retained to prepare a sponsor report in compliance with Exchange Policy 2.2. Jardincap will apply for an exemption from sponsorship requirements, however, there is no assurance that it will obtain this exemption. Trading in the shares of Jardincap will remain halted until receipt by the Exchange of satisfactory documentation.

Camille St-Hilaire, PGeo, consultant, a "qualified person" as defined by National Instrument 43-101, has read this news release and reviewed and approved the technical information set out in this news release relating to the Chevrier Property.

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 a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release. 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 news release.

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