Prize Mining Corporation

TSX VENTURE : PRZ


Prize Mining Corporation

December 03, 2013 09:00 ET

Prize Signs Share Purchase Agreement to Acquire 1711935 Alberta Inc. and Announces Private Placement

CALGARY, ALBERTA--(Marketwired - Dec. 3, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Prize Mining Corporation (TSX VENTURE:PRZ.H) (the "Corporation" or "Prize") announces that it has entered into an arm's length share purchase agreement (the "Share Purchase Agreement") dated December 2, 2013 with the holders (the "Vendors") of all of the issued and outstanding common shares (the "1711935 Shares") of 1711935 Alberta Inc. ("1711935"). Pursuant to the Share Purchase Agreement, the Corporation will acquire all of the 1711935 Shares (the "Acquisition").

1711935 Alberta Inc.

1711935 is an Alberta corporation that entered into a letter of intent dated October 1, 2013 with two Colombian companies (the "Proyectos"), which sets out the basic terms and conditions by which 1711935 will have the right and option to acquire up to an 80% undivided ownership interest in ten mineral concessions totaling approximately 14,300 hectares and related property located in Colombia (the "Projects") held by the Proyectos (the "Colombia Transaction"). 1711935 will acquire its interest in the Projects as follows: (a) a 51% undivided ownership interest by incurring or funding expenditures amounting to a minimum of US$610,000 on the Projects over a three year period (the "Minimum Commitment Expenditure"); and (b) a 29% undivided ownership interest in the Projects by funding and preparing a scoping study on an alluvial mining project that forms part of the Projects within a five year period.

The Projects are alluvial exploration properties that are prospective for placer mining that are considered "early stage exploration property" as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

Terms of the Acquisition

Pursuant to the Share Purchase Agreement, subject to certain conditions, the Corporation will purchase all of the 1711935 Shares from the Vendors in consideration of the issuance by the Corporation of 500 common shares in the share capital of the Corporation ("Purchase Price Shares") for each one 1711935 Share, for a total of 15,000,000 Purchase Price Shares being issued in connection with the Acquisition. The purchase of the 1711935 Shares by the Corporation is subject to a number of conditions including: (i) the Corporation's receipt of a report prepared in accordance with NI 43-101 in respect of the Projects; (ii) the completion of a private placement of a minimum of 12,000,000 and a maximum of 20,000,000 subscription receipts ("Subscription Receipts") at a price of $0.25 per Subscription Receipt for gross proceeds of a minimum of $3,000,000 and a maximum of $5,000,000 (the "Private Placement") (as described below); (iii) 1711935 and the Proyectos entering into a definitive agreement on terms and conditions acceptable to the Corporation with respect to the Colombia Transaction; (iv) the execution of escrow agreements by each of the Vendors, providing for the release of the Purchase Price Shares, such that the Purchase Price Shares are releasable to each respective Vendor as to 25% on each of the 18, 24, 30 and 36 month anniversaries of the date of the closing of the Acquisition; (v) the receipt of all required regulatory approvals; and (vi) other standard conditions for transactions of this nature.

Subscription Receipt Private Placement

The Corporation is also pleased to announce that it intends to complete a non-brokered private placement of a minimum of 12,000,000 and a maximum of 20,000,000 Subscription Receipts at a price of $0.25 per Subscription Receipt for gross proceeds of a minimum of $3,000,000 and maximum of $5,000,000. Each Subscription Receipt shall be deemed to be exchanged (and upon such exchange, deemed to be cancelled), without payment of any additional consideration and without further action on the part of a subscriber to the Private Placement, into one unit of the Corporation (each a "Prize Unit") upon the satisfaction, or if capable of being waived, the waiver of the following conditions (the "Release Conditions"): (a) the concurrent completion of the Acquisition; and (b) other specific conditions set forth in the subscription receipt agreement to be entered into between the Corporation and Davis LLP, as escrow agent (the "Escrow Agent").

Each Prize Unit will be comprised of one common share in the share capital of the Corporation (a "Common Share") and one-half of one Common Share purchase warrant (a "Prize Warrant"), with each whole Prize Warrant entitling the holder thereof to acquire one Common Share at a price of $0.35 for a period of two years from the completion of the Private Placement (the "Warrant Term"). If, during the Warrant Term, the Common Shares trade at or above $0.45 for a period of twenty consecutive trading days, the Corporation will have the right to reduce the Warrant Term such that the Prize Warrants expire on the 30th day following the date on which the Corporation provides notice to the holder of the Warrants of the reduced Warrant Term.

The gross proceeds of the Private Placement (the "Escrowed Funds"), will be held in escrow on behalf of the subscribers by the Escrow Agent. Upon the Release Conditions being met or waived, the Escrowed Funds and the interest thereon, if any, will be released to the Corporation. If the Acquisition is terminated or the Corporation announces that it does not intend to proceed with the Acquisition, in any case, on or before 5:00 p.m. Calgary time on March 31, 2014, each holder of Subscription Receipts will be reimbursed the original subscription price, plus such holder's pro rata portion of any interest.

The Corporation may pay a finder's fee comprised of cash and warrants in connection with the issue and sale of any or all of the Subscription Receipts.

The net proceeds of the Private Placement will be used to fund the Minimum Commitment Expenditure and for general working capital.

ON BEHALF OF THE BOARD OF PRIZE MINING CORPORATION

Feisal Somji, President and CEO

Forward Looking Information

This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. In particular, this press release contains forward looking information in relation to the completion of the purchase of the 1711935 Shares and the transactions disclosed herein. There is no certainty that the proposed Acquisition will close, that all regulatory approvals for the Acquisition will be received, that the Colombia Transaction will close or that the Private Placement will be completed as proposed or at all. In addition, there is no certainty that if the Corporation acquires all of the 1711935 Shares it will exercise its option on the Projects and there is no certainty that further exploration will identify additional exploration targets. For any forward-looking information given, Management has assumed that the conditions to the Share Purchase Agreement will be met. Management has also assumed that the results it has received and reviewed in relation to the Projects and the interpretation thereof are reliable. Although Management has a reasonable basis for the conclusions drawn, actual results may differ materially from those currently anticipated in such forward-looking information. A description of additional assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Corporation's disclosure documents on the SEDAR website at www.sedar.com. The Corporation does not undertake to update any forward-looking information except in accordance with applicable securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States. These securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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.

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