Matamec Explorations inc.

Matamec Explorations inc.

July 12, 2012 09:44 ET

Matamec and Toyotsu Rare Earth Canada Signed Two Agreements in Connection with the Kipawa HREE Deposit

MONTREAL, QUEBEC--(Marketwire - July 12, 2012) - Matamec Explorations Inc. (TSX VENTURE:MAT)(OTCQX:MHREF)("Matamec" or the "Corporation") is pleased to announce that Toyotsu Rare Earth Canada, Inc. ("TRECan") and the Corporation signed a sale and purchase agreement ("SPA") and a joint venture agreement ("JVA") in connection with the Kipawa HREE Deposit. Through this transaction, the two corporations intend to continue their fruitful collaboration and complete a feasibility study on the Kipawa HREE Deposit, the results of which are expected in the second quarter of 2013.

Under the SPA, TRECan acquired from Matamec an undivided interest of 49% in the Kipawa HREE Deposit for a total consideration not exceeding $16,000,816 CAD which will be used to fund the expenses related to the feasibility study and which will be payable as follows:

  • An amount of $8,500,000 CAD paid at closing; and

  • An amount not exceeding $7,500,816 CAD (the "Second Sale Purchase Price") to be paid by TRECan upon receipt of cash calls in accordance with the joint venture agreement (after the initial $8,500,000 CAD has been spent).

An initial undivided interest of 25% in the Kipawa HREE Deposit has been transferred by Matamec to TRECan on the date hereof and the remaining undivided interest of 24%, currently held in trust by Matamec, will be transferred by the latter to TRECan upon the earlier of (i) the delivery of the feasibility report, or (ii) the full contribution of the Second Sale Purchase Price.

The JVA and the underlying joint venture between the parties will become effective concurrently with the transfer to TRECan and the payment to Matamec of the first 25% undivided interest in the Kipawa HREE Deposit.

The JVA will be governing the joint venture created between the parties to explore the Kipawa HREE Deposit and to prepare the feasibility study. The feasibility study will be prepared in conformity with norm NI 43-101.

Under the terms of the joint venture agreement, a management committee is created and is composed of a representative of both parties. The decisions will be taken by simple majority and the party who holds an interest of more than 50% has a casting vote. Any decision to add new expenditures to the program and the initial budgets of $16,000,816, amongst others, has to be taken unanimously. Matamec will be acting as operator of the joint venture so long as it holds more than 50% of the interest.

Upon the execution of the JVA, the parties agree to begin the search for financing opportunities, and determine a method to calculate the fair market price of the product which will be bought by TRECan and other by-products contained in the Kipawa HREE Deposit on a best efforts basis before the end of 2012.

In the event of a change in the control of a party or its affiliate without the consent of the other participant, the party having a change of control is reputed having offered to sell its interest in the Kipawa HREE Deposit to the other participant in conformity with the method of the fair market value determined in the agreement; the other participant will have sixty days to accept the offer. This mechanism foresees that the fair market value will be determined by three qualified and independent evaluators. Matamec and TRECan will choose one independent evaluator each and the third independent evaluator will be chosen by the two parties, or should they fail to agree, he will be chosen by one of the major Japanese or Canadian firm of auditors who will have been agreed to by the parties.

Change of control is defined in the JVA as the date when one of the participating corporations would be controlled by one person or a different group of persons other than another participant or, when the board of directors of the corporation has determined that there has been a change of control. As to the control of a corporation, it is defined as a person or group of persons holding more than 50% of the voting rights at an annual meeting of the shareholders and/or have the power to control directly or indirectly the board of directors or to be able to vote more than 50% of the voting rights at an annual meeting of the shareholders.

If the Kipawa HREE Deposit is put into production, a mixed rare earths concentrate will be produced. The parties will negotiate an off-take agreement and TRECan will buy this mixed concentrate for a fair market price. Moreover, the parties agree that they will negotiate another agreement for TRECan to market other by-products contained in the Kipawa HREE Deposit at the fair market price.

With respect to the Zeus rare earths property, the parties have agreed to use their best efforts to negotiate in good faith the participation of TRECan in the exploration of various discoveries made outside the Kipawa Deposit.

The SPA and the JVA shall be filed on SEDAR in accordance with the securities regulations. The agreements have obtained the conditional approval of the TSX-Venture Exchange on July 4, 2012.

Andre Gauthier, President of Matamec, says that "the present agreement marks a major milestone for Matamec. It allows an independent feasibility study to be completed leading to a production decision by Q2 2013. TRECan is a reputable partner giving Matamec both the financial and technical support to allow it to catapult to the forefront in the race to production of HREEs outside of China."

As a condition precedent to the execution of SPA and JVA and subject to their execution, Matamec has purchased from Ressources Minérales Mistassini Inc. ("Mistassini") two NSR royalties totaling 1.25% encumbering the Kipawa HREE Deposit for a sum of $310,000. Three of directors of Matamec are also directors of Mistassini.

About Matamec

Matamec Explorations Inc is a junior mining exploration company whose main focus is in developing the Kipawa Deposit and exploring more than 35km of strike length in the Kipawa Alkalic Complex for rare earths-yttrium-zirconium-niobium-tantalum mineralization on its Zeus property.

The company is also exploring for gold, base metals and platinum group metals. Its gold portfolio includes the Matheson JV property located along strike and in close proximity to the Hoyle Pond Mine in the prolific mining camp of Timmins, Ontario.

In Quebec, the Company is exploring for lithium and tantalum on its Tansim property and for precious and base metals on its Sakami, Valmont and Vulcain properties. As well, it is exploring for gold together with Northern Superior Resources Inc. on the Lesperance/Wachigabau property.

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