PNG Gold Corporation
TSX VENTURE : PGK

PNG Gold Corporation

February 05, 2015 17:57 ET

PNG Gold Corporation and VeroLube Inc. Announce Proposed Business Combination

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 5, 2015) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWSWIRE SERVICES

PNG Gold Corporation ("PNG Gold") (TSX VENTURE:PGK) and VeroLube Inc. ("VeroLube") are pleased to announce that they have entered into a binding term sheet (the "Term Sheet") dated February 4, 2015 providing for the acquisition by PNG Gold of VeroLube, a private company incorporated under the federal laws of Canada (the "Business Combination"). VeroLube is a provider of used motor oil re-refining services using its patented and certified ReGen™ re-refining process. PNG Gold has been engaged in exploration for gold in Papua New Guinea. In connection with the Business Combination, it is proposed that PNG Gold will consolidate its 131,168,368 issued and outstanding share on the basis of one new share for ten old, and will then acquire all of the 51,500,301 issued and outstanding common shares of VeroLube in exchange for common shares of PNG Gold on a 1:1 basis by way of a plan of arrangement or other similar transaction. In addition, all warrants of VeroLube will be exchanged for equivalent securities of PNG Gold. If the Business Combination is completed, it is intended that PNG Gold post-completion (the "Resulting Issuer") will change its name to VeroLube Inc. Upon completion, the Resulting Issuer will carry on VeroLube's present business. Closing is to take place on or before June 30, 2015 (the "Closing Date"). The Business Combination will constitute a "Reverse Takeover" within the meaning of TSX Venture Exchange (the "Exchange") Policy 5.2. Trading in PNG Gold's common shares on the Exchange has been halted, and will remain halted until the Exchange's requirements for resumption of trading have been met, and additional information concerning the incoming principals of the merged company, sponsorship for the Transaction, and financial information concerning VeroLube, has been disclosed.

VeroLube was incorporated on February 23, 2012. In 2013, VeroLube purchased from PetroTex Hydrocarbons LLC the patents which form the foundation for the ReGen™ re-refining technology for producing high yields of high quality hydrocarbon products from used oils. VeroLube's business plan includes acquiring an established sector participant involved in the oil collecting/blending/refining business with a view to building a used oil refinery based on its ReGen™ technology.

PNG Gold has been engaged in the exploration of its Normanby and Sehulea properties in Papua New Guinea. In light of the unfavourable equity markets for resource companies, PNG Gold minimized capital expenditures in 2014 and is not currently conducting or planning additional exploration drilling at its properties. Over the past several months, PNG Gold has been considering various alternatives to increase shareholder value, and believes that the proposed Business Combination with VeroLube represents significant opportunity.

PNG Gold has previously loaned VeroLube approximately $500,000 to pay certain of its liabilities, which is repayable on demand made at any time after March 30, 2015. The loan bears interest at the rate of 20% per annum, is prepayable without penalty and is convertible into common shares of VeroLube at the rate of $0.40 per share. The loan is secured against all of VeroLube's present and after-acquired personal property. As partial consideration for the loan, VeroLube has agreed to issue 250,000 common shares to PNG Gold, and to grant PNG Gold a royalty-free, non-exclusive, perpetual license to use the ReGen™process in Canada, Mexico and Central and South America. It is a condition of closing that prior to the Closing Date PNG Gold lends VeroLube an additional $250,000 to maintain its business, and that upon written request PNG Gold will provide additional loans to VeroLube on terms satisfactory to PNG Gold in its sole discretion.

PNG Gold and VeroLube are arm's length parties, and there are no current non-arm's length parties of PNG Gold who are insiders of VeroLube, or presently hold any direct or indirect beneficial interest in either VeroLube or any of its assets, other than Greg Clarkes, the Chairman of PNG Gold, who holds an aggregate of 2,500,000 common shares of VeroLube (approximately 5%). Mr. Clarkes is resident in British Columbia.

Upon completion of the Business Combination, PNG Gold will appoint 3 and VeroLube will appoint 4 directors to the board of directors of the Resulting Issuer.

Completion of the Business Combination is subject to several customary conditions such as regulatory and shareholder approval, satisfactory completion of due diligence, absence of material changes, absence of litigation and accuracy of representations and warranties. PNG Gold and VeroLube will each seek the approval of their shareholders for the Business Combination at meetings to be held on or before the Closing Date.

The Business Combination cannot close until the approval of shareholders of both PNG Gold and VeroLube and all required regulatory approvals are obtained. There can be no assurance that the Business Combination 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 Business Combination, any information released or received with respect to the proposed Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of PNG Gold should be considered highly speculative.

Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. Examples of such statements are statements relating to VeroLube's business plan and timing of completion of the Business Combination. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of PNG Gold and VeroLube, including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, 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 TSX Venture Exchange has in no way passed upon the merits of the proposed Business Combination and has neither approved nor disapproved the contents of this press release. Neither the 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

  • PNG Gold Corporation
    Neil Halldorson
    President
    604 669 4899

    VeroLube Inc.
    Les Wulf
    Director
    214-679-5263