Mano River Resources Inc.
TSX VENTURE : MNO
AIM : MANA

Mano River Resources Inc.

April 15, 2009 08:33 ET

Mano River Resources Inc Announces Proposed Business Combination With African Aura Resources Ltd.

TORONTO, ONTARIO--(Marketwire - April 15, 2009) -

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Mano River Resources Inc ("Mano" or the "Company") (TSX VENTURE:MNO)(AIM:MANA) the TSX Venture Exchange ("TSX-V") and AIM listed exploration and development company focused on iron ore, gold and diamonds in West Africa is pleased to announce that the Company has entered into a legally binding Letter of Intent ("LOI") to conclude a broader agreement to merge with TSX-V listed African Aura Resources Ltd. ("Africa Aura")(TSX VENTURE:AAZ) pursuant to which Mano will offer 1.57 Mano shares for every one African Aura share in order to acquire the entire issued share capital of African Aura. The obligation of Mano and African Aura to enter into the broader agreement is subject to certain conditions being met, including the approval of the TSX-V and satisfactory completion of due diligence. The merger will significantly strengthen Mano's position in West Africa, creating a well capitalised iron ore and gold exploration and development company.

Highlights of the Agreement:

- All share transaction whereby African Aura shareholders will receive 1.57 Mano shares for each African Aura share, representing a premium of 18.7% to African Aura's 60 day volume weighted average share price at market close on 14 April 2009, based on Mano's 14 April 2009 closing AIM price and an exchange rate of C$1.80 to Pounds Sterling 1.

- Merged entity to be renamed African Aura Mining Inc. which, at completion, will be owned 75% by Mano shareholders and 25% by African Aura shareholders.

- Proposed board of directors:

-- Luis da Silva - President and CEO

-- David Netherway - Non-Executive Chairman

-- David Evans, Guy Pas and Steven Poulton - Non-Executive Directors

-- Kirill Zimin, who was previously nominated by Severstal Resources to be its representative on Mano's Board after their investment in the Putu Range project, is expected to be appointed as a Non-Executive Director in the coming weeks and will remain post-merger in light of Severstal's strategic investment.

- A proposed 1 for 6 Mano share consolidation, as previously approved my Mano's shareholders, expected to take place concurrently with the completion of the proposed merger.

Strategic Rationale for the Merger:

- Strong operational synergies with highly prospective iron ore and gold assets in West Africa which will considerably enhance Mano's presence in the region with the addition of the following projects wholly-owned by African Aura:

-- 12km long Nkout iron deposit in southern Cameroon. Reconnaissance sampling along a 5km section returned an average grade of 54% iron.

-- Batouri gold project in western Cameroon. Intersections to date include 132g/t Au over 1.0m and 49g/t over 1.5m.

- Significantly strengthens Mano's financial position with the addition of C$5.9m to treasury (as at 30 March 2009).

- Geographic diversification and risk reduction by stepping out of Mano's traditional operating countries.

- The proposed Board of Directors of the combined company will be strengthened by drawing on the skills and expertise of the African Aura management team.

In a joint statement Luis da Silva, President & CEO of Mano and John Gray, President & CEO of African Aura commented:

"We believe that the merger of Mano and African Aura to create African Aura Mining Inc. is a market leading transaction of two companies with similar strong cash positions and highly prospective assets. The transaction is consistent with our respective corporate strategies and will provide both companies with the opportunity for transformational growth. The merged company will on completion of the transaction have an approximate cash position of C$11m / Pounds Sterling 6.0m and a well diversified portfolio of advanced iron and gold assets in Liberia and Cameroon. We believe these two commodities create a compelling natural hedge for our shareholders in the current uncertain global economic climate. Furthermore, the combination will forge a strong Board of Directors and management team comprising individuals with notable track records in the discovery and development of significant resources, including Guy Pas who co-founded Addax & Oryx, Afren and SAMAX which was acquired in 1998 by Anglogold Ashanti and David Netherway who spearheaded Afcan until it was acquired by Eldorado Gold in 2005."

Dave Evans, Chairman of Mano River, added:

"In unanimously agreeing to merge, the Boards of Mano and African Aura are seeking to create shareholder value by capitalizing on the numerous corporate and exploration synergies that exist between our two companies and which will serve to reduce exploration risks by bringing together our complementary assets and technical expertise. We are confident that the resulting company with its larger capitalization will generate enhanced news flow and be more attractive to a greater number of potential shareholders. This in turn will serve to greatly improve the liquidity in the merged company's shares. We plan to create shareholder value by developing our existing assets, continuing to grow the resource base through cost efficient exploration, undertaking appropriate cost and risk sharing joint ventures with major partners and by pursuing further mergers and acquisitions in sub-Saharan Africa."

For further information on Mano River Resources and its exploration programme, you are invited to visit the Company's website at www.manoriver.com.

Summary of the Transaction

The LOI provides the key elements by which Mano and African Aura will enter a broader transaction agreement to combine the two companies ("Transaction Agreement"). The transaction is currently expected to be structured as a merger under the corporate laws of the British Virgin Islands (the "BVI") whereby, subject to the approval of a majority of the votes cast by shareholders of African Aura at a shareholders meeting, a wholly-owned BVI subsidiary of Mano will merge with African Aura and Mano will thereby acquire all of the issued and outstanding common shares of African Aura. The consideration will be the issuance to shareholders of African Aura of 1.57 Mano shares for each African Aura share they hold (the "Exchange Ratio"). This represents a value of approximately C$0.099 per African Aura share, based on the closing price of Mano on the AIM market on 14 April 2009 at an exchange rate of C$1.80 to Pounds Sterling 1, representing an 18.7% premium to the 60-day volume weighted average African Aura share price.

Mano will issue 105,264,638 new shares in exchange for the 67,047,540 issued outstanding common shares of African Aura on an undiluted basis. Former African Aura and former Mano shareholders will account for 25% and 75%, respectively, of the common shares of African Aura Mining Inc. on an undiluted basis.

As well, all outstanding African Aura warrants and African Aura options will be converted into Mano warrants and Mano options, based upon the Exchange Ratio pro rata to the amounts held. At completion of the transaction, Mano intends to change its name to African Aura Mining Inc. Mano also intends to undertake a share consolidation at, or prior to, completion of the transaction - the Exchange Ratio will be adjusted accordingly if the consolidation takes place prior to completion. Subject to regulatory approval, African Aura Mining Inc. will trade on the TSX-V and AIM.

The proposed new Board of Directors will comprise six directors, Mano will nominate four directors, of which three will be existing directors of Mano (namely, Luis da Silva who will serve as President and CEO, Guy Pas and David Evans, who will both be non-executive directors) and African Aura will nominate two directors (namely David Netherway who will be appointed as non-executive Chairman and Steven Poulton who will serve as a non-executive director). In accordance with Severstal Resources' strategic investment in Mano and their investment in the Putu Range iron ore project, Kirill Zimin is expected to be appointed to Mano's Board of directors in the coming weeks. He will subsequently remain on the Board of Directors of the merged company making him the fourth Mano director.

As a condition to Mano entering into the Transaction Agreement, the directors and officers of African Aura, holding, in total, 11.69% of the issued share capital of African Aura, will enter into an agreement to vote in favour of the transaction.

African Aura will convene a meeting of its shareholders for the purpose of approving the transaction by no later than 30 June 2009. In the interim it will prepare and mail a circular and all other required documents to African Aura shareholders on or before 8 June 2009. The transaction is expected to complete on or around 15 July 2009.

The obligation of Mano and African Aura to enter into the Transaction Agreement is subject to certain conditions precedent, including:

- Each party being satisfied, acting reasonably, of the results of its legal, financial and technical due diligence review of the other party;

- Obtaining any necessary consents of the TSX-V to the transaction, on terms satisfactory to Mano;

- Each party having determined that there does not exist and has not occurred any material adverse condition, event or development related to the other party.

Pursuant to the LOI, African Aura has agreed not to solicit an alternative transaction prior to the earlier of the date of execution of the definitive Transaction Agreement or May 15, 2009. A compensation fee of C$250,000 will be payable to Mano by African Aura in the event that, among other events, African Aura enters into an agreement with a third party concerning an alternative transaction prior to such date. Furthermore, in the event that the Transaction Agreement has not be entered into on or before May 15, 2009 and either African Aura or Mano terminates the LOI, African Aura will be required to reimburse Mano for all documented expenses, costs and fees incurred by it in connection with the transaction, up to C$125,000. In addition, where Mano fails to provide information reasonably required by African Aura to complete its shareholders circular a reimbursement fee of C$75,000 is payable by Mano to African Aura. Completion of the transaction will be subject to customary conditions, including a favourable vote of at least 50% of the holders of African Aura common shares voted at a special meeting of shareholders and the receipt of all necessary regulatory approvals.

Additions to the Mano Portfolio Post Transaction

Iron Project

- A 100% interest in the 12km long Nkout iron project in southern Cameroon being advanced by African Aura. The project is defined by airborne geophysical data and geological mapping, with drill testing scheduled to commence in May 2009. Reconnaissance sampling undertaken by African Aura along a 5km section of the prospect returned an average grade of 54% iron and a maximum of 65% iron from hematitic banded iron and itabarite formations.

Gold Project

- A 100% interest in the Batouri gold project in western Cameroon being advanced by African Aura. Sixty six holes of an initial resource drilling programme have been completed to date which defines a significant gold stockwork system covering an area up to 500m wide along 3 km of strike. Intersections to date include 132g/t Au over 1.0m and 49g/t Au over 1.5m.

Uranium Projects

- A 70% interest in Ridgeway Energy Ltd which holds a total of 3,480km2 across four exploration licences in Cameroon. Mapping by the BRGM and reconnaissance exploration by African Aura have indicated the potential for new uranium discoveries.

About African Aura

African Aura (TSX VENTURE:AAZ) has a 'first-mover' exploration strategy, focused on the discovery of economic iron, gold, and uranium deposits in sub-Saharan Africa. The Company commenced exploration in 2004 and has established a portfolio of exploration licences totalling approximately 9,480km2, targeting areas of active artisanal gold mining within Archaean greenstone and Proterozoic volcano-sedimentary belts. The portfolio includes the 12km long Nkout iron project in southern Cameroon, the Batouri gold project in eastern Cameroon, the Fula Camp gold project in western Liberia, and a pipeline of significant prospects for drill testing as well as numerous other gold, uranium and iron ore targets that require follow up exploration. African Aura trades on the TSX-V under the symbol AAZ. More information can be found on line at www.african-aura.com and at SEDAR's website: www.sedar.com.

African Aura Technical Information

African Aura's Qualified Person under National Instrument 43-101 responsible for reviewing and approving the African Aura technical information in this release is its Chief Operating Officer, Mark Biddulph, who holds a BSc Hons in Geology, and GIS from Rhodes University, and a GDE in Mining Engineering (Mineral Economics) from the University of Witwatersrand in South Africa. Mark is a Professional Natural Scientist under the South African Council for Natural Scientific Professions (SACNASP). The potential grades in this release are conceptual in nature. There has been insufficient exploration to define a mineral resources and it is uncertain if further exploration will result in the targets being delineated as a mineral resource.

Forward-looking Statements

This press release includes certain Forward-Looking Statements. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralisation and reserves, exploration results and future plans and objectives of Mano and/or African Aura, are forward-looking statements that involve various known and unknown risks and uncertainties as well as other factors. Such forward-looking statements include statements concerning the completion of the transaction (including the entering into of the Transaction Agreement), the cash position and market capitalization of the merged company, the merged company's ability to complete future mergers and acquisitions, improvements to the liquidity in trading of the merged company's shares, the merged company's objectives and plans and the intention of Mano to change its name and consolidate its shares. Such forward-looking statements are subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including the failure of Mano and African Aura to negotiate definitive agreements and delays in obtaining or failure to obtain required regulatory and shareholder approvals. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Any forward-looking statements speak only as of the date hereof and, except as may be required by applicable law, Mano disclaims any obligation to update or modify such forward-looking statements, either as a result of new information, future events or for any other reason.

Neither 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.

Contact Information

  • Mano River Resources Inc
    Luis da Silva
    CEO
    +44 (0) 20 7299 4212
    www.manoriver.com
    or
    Evolution Securities Limited
    Simon Edwards / Chris Sim / Neil Elliot
    +44 (0) 20 7071 4300
    or
    Pelham Public Relations
    Charles Vivian / James MacFarlane
    +44 (0) 20 7337 1500