Sagittarius Capital Corporation
TSX VENTURE : SCX.H

April 05, 2011 15:27 ET

Sagittarius Capital Announces Amendment to LOI with and Corporate Update for Alpaca Resources

TORONTO, ONTARIO--(Marketwire - April 5, 2011) - Sagittarius Capital Corporation (TSX VENTURE:SCX.H) ("Sagittarius" or the "Company"), a capital pool company, and Alpaca Resources Inc. ("Alpaca"), a private Ontario-based junior copper exploration company, are pleased to announce further developments in connection with their proposed business combination, which will be Sagittarius's qualifying transaction (the "Qualifying Transaction") pursuant to the policies of the TSX Venture Exchange (the "Exchange"). Details of the proposed Qualifying Transaction are available in the Company's press release dated September 7, 2010 on SEDAR at www.sedar.com.

A filing statement in respect of the proposed Qualifying Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than 7 business days prior to the closing of the proposed Qualifying Transaction. A press release will be issued once the filing statement has been filed as required pursuant to Exchange policies.

Highlights:

  • Sagittarius and Alpaca amend terms of the Letter of Intent for proposed Qualifying Transaction

  • Sagittarius and Alpaca have proposed management and directors for the Resulting Issuer

  • Alpaca closes a Pre-QT Financing for total gross proceeds of $3,293,003

  • Alpaca plans to spin out the Iron Butte Property to form a new gold company; Alpaca to focus on its flagship Hill Copper project

  • Alpaca acquires the Promissory Note secured against the Rae-Eastman Property, which includes surface and mineral rights related to Hill Copper project

Amendment to the Letter of Intent

The Company has further amended the terms of the letter of intent dated September 1, 2010, as amended on September 30, 2010 and October 31, 2010 (the "Letter of Intent") that sets out the basic terms of the proposed business combination between Sagittarius and Alpaca, which is more particularly described in the press release of the Company dated September 7, 2010 available on SEDAR at www.sedar.com.

The amendments to the Letter of Intent include the following: (i) as a result of the planned spin-out of the Iron Butte Property (as described below), the share consolidation (the "Share Consolidation") of the common shares of Sagittarius (the "Common Shares") that is expected to take place immediately prior to the completion of the Qualifying Transaction has been amended from 1:1.8 basis (being one (1) post-Share Consolidation Common Share for every 1.8 pre-Share Consolidation Common Shares) to 1:1.4 basis (being one (1) post-Share Consolidation Common Share for every 1.4 pre-Share Consolidation Common Shares); (ii) the exchange ratio of the securities of Sagittarius for the securities of Alpaca has been amended from 1:1 basis (being one (1) security of the Company for each one (1) security of Alpaca) to 1:2 basis (being one (1) security of the Company for each two (2) securities of Alpaca); and (iii) the shareholders of Alpaca will not be asked to approve a consolidation of the common shares of Alpaca (the "Alpaca Shares") on a 1:2 basis (being one (1) new Alpaca Share for every two (2) old Alpaca Shares).

The Share Consolidation will result in Sagittarius shareholders holding 2,992,857 post-Share Consolidated Common Shares and 335,000 post-Share Consolidation stock options in the resulting issuer (the "Resulting Issuer") versus 2,327,778 post-Share Consolidation Common Shares and 260,556 post-Share Consolidation options prior to the amendment. Prior to giving effect to the financing that Alpaca will undertake concurrently with the completion of the Qualifying Transaction, the Resulting Issuer will have 37,358,515 Common Shares, 9,696,393 warrants, 1,277,193 broker's warrants and 2,322,500 options issued outstanding.

Proposed Management and Directors of Resulting Issuer

The following are brief descriptions of the proposed management and directors of the Resulting Issuer:

Yannis Banks, CEO and Director

Mr. Yannis Banks will assume the role of CEO as well as a director of the Resulting Issuer. Mr. Banks has been with Foundation Markets Inc., a Toronto-based merchant and investment bank focused on the natural resource sectors and one of the founders of Alpaca, since 2007. Mr. Banks has been involved in financing and providing strategic advisory services to a number of early-stage natural resource companies and evaluating and acquiring mineral projects in North and South America and Asia. Mr. Banks also serves as the CEO of Quia Resources Inc., a Colombian gold exploration company listed on the TSXV, and is on the board of directors of Lakeside Minerals Corp., Caldera Geothermal Inc. and Arkose Energy Inc., all of which are private companies.

Andres Tinajero, CFO

Mr. Andres Tinajero, currently the CFO of Alpaca, will continue serving as the CFO for the Resulting Issuer. Mr. Tinajero has over 15 years of business experience, having supported a broad range of industries, including not-for-profit, manufacturing, mining, and retail; establishing a strong accounting and business skill set, transitioning into the public sector serving in leadership roles for small and medium-sized companies in extractive industries. During this same period, he has served as Controller and CFO of a number of start-ups and medium sized public companies across Canada. He holds degrees in Business Administration and an MBA, and is also a Member of the Canadian Institute of Certified Management Accountants and a member of the Certified Practicing Accountants of Australia

Richard Cleath, President and COO

Mr. Richard Cleath, currently the Vice President of Exploration of Alpaca, will assume the role of the President and COO of the Resulting Issuer. Mr. Cleath has more than 25 years of experience as a geologist and in managing, organizing, budgeting, planning and executing various mining exploration projects globally. Most recently, Mr. Cleath played an integral role as Vice President Exploration with U3O8 Corporation ("U3O8"). Prior to U3O8, Mr. Cleath was Vice President, Exploration with Absolute Resources Corp., where he negotiated and acquired the Chaparra mesothermal gold vein project in southern Peru and led the acquisition of the advanced-stage Andorinhas high-grade gold project in Brazil as Peru Country Manager of Reliance Mining.

Michael Newbury, Director

Mr. Michael Newbury, currently the President, CEO and director of Alpaca, will remain as a director for the Resulting Issuer. Mr. Newbury is an engineer with 40 years experience in the operation, financing and evaluation of natural resource projects. He was a former partner at Endeavour Financial, which provided financial and technical advisory services to mining companies. Previous involvements also include member of senior management at Credit Suisse and Vice-President of Barclay's Bank of Canada.

Adam Szweras, Director

Mr. Adam Szweras will serve as a director for the Resulting Issuer. Mr. Szweras is a partner with the law firm Fogler, Rubinoff LLP and a co-founder of Foundation Markets Inc., a Toronto-based investment and merchant bank and Exempt Market Dealer. He has practiced securities law for over 12 years and in his corporate finance and legal practice focuses on financing and going public transactions. He acts for mid-market companies looking to raise capital or make acquisitions and assists private companies in the going public process.

Bill Williams, Director

Mr. Bill Williams will serve as a director for the Resulting Issuer. Mr. Williams is currently Vice-President, Corporate Development of Orvana Minerals Corp. ("Orvana"). He has held various positions in minerals exploration and project development throughout the Americas with Western Mining, Northern Orion, Phelps Dodge and Freeport McMoran Inc. He received his Ph.D. in Economic Geology from the University of Arizona.

Scott Jobin-Bevans, Director

Mr. Scott Jobin-Bevans will serve as a director for the Resulting Issuer. Mr. Jobin-Bevans is a geologist with more than 20 years of mineral exploration industry experience, Co-Founder and Director of Caracle Creek International Consulting Inc., President of Treasury Metals Inc., Director of Mukuba Resources Ltd., and President of the Prospectors and Developers Association of Canada (PDAC).

Richard Brown, Director

Mr. Richard Brown will serve as a director for the Resulting Issuer. Mr. Brown is a geologist with extensive experience in the Americas and a track record for sourcing and acquiring projects, currently COO of Amarillo Gold Corp. and Vice President, Business Development of Quia Resources Inc. For the last 15 years he has lived in South America, establishing local companies and acquiring a portfolio of mining properties in Ecuador, Peru, Argentina and Brazil. Mr. Brown combines a thorough knowledge of the local business culture with an extensive network of industry contacts and a track record of acquiring significant assets.

Stanley B. Keith, Director

Mr. Stanley B. Keith will serve as a director for the Resulting Issuer. Mr. Keith is a geologist responsible for discovery of 18 mineral deposits on 3 continents.

Jay Vieira, Corporate Secretary

Mr. Vieira is a partner with law firm Fogler, Rubinoff LLP specializing in corporate finance and securities law. Mr. Vieira has acted for both domestic and international corporations and investment dealers and has been involved in a broad range of transactions including public offerings, private placements and acquisitions, involving both domestic and international corporations.

Pre-QT Financing of Alpaca

Further to the Company's press release dated September 24, 2010 available on SEDAR at www.sedar.com, Alpaca has completed a private placement consisting of four tranches for total gross proceeds of $3,293,003 (the "Pre-QT Financing"), pursuant to which it has issued 32,930,030 units (the "Units") at $0.10 per Unit. Each Unit is comprised of one (1) Alpaca Share and one half of one (1/2) Alpaca Share purchase warrant (an "Alpaca Warrant"). Each Alpaca Warrant is exercisable into one Alpaca Share at an exercise price of $0.25 for a period of 24 months.

Foundation Markets Inc., Canaccord Genuity Corp. and Union Securities Ltd. (collectively, the "Agents") acted as agents for a portion of the Pre-QT Financing, with the balance being non-brokered. Commission of 8% cash and 8% broker's warrants was paid to the Agents.

After giving effect to the Pre-QT Financing, Alpaca has 68,851,316 Alpaca Shares, 19,392,785 Alpaca Warrants, 2,554,385 broker's warrants and 3,975,000 options issued and outstanding.

Alpaca plans to use the proceeds of the Pre-QT Financing for exploration, evaluating further acquisition opportunities, and general corporate purposes.

Iron Butte Spin-Out into New Gold Company

Prior to the completion of the Qualifying Transaction, it is expected that Alpaca will spin out the Iron Butte gold property (the "Iron Butte Property"), which is currently held by its wholly owned subsidiary Arizona-Alpaca Resources Corp. ("AARC"), into a new gold company ("GoldCo"). Initially, Alpaca plans to retain up to 40% interest in GoldCo, while the balance of the shares of AARC will be returned to the Alpaca shareholders as a capital dividend. Alpaca's initial interest in GoldCo, and following completion of the Qualifying Transaction, the resulting issuer's interest in GoldCo, is expected to be diluted by a financing which will be undertaken to fund the GoldCo. It is expected that GoldCo will focus on becoming a publicly listed gold company initially focusing on drilling at the Iron Butte Property with the aim of establishing a 43-101-compliant resource as well as pursuing other synergistic gold property acquisitions. The formation of GoldCo will allow Alpaca to focus on its flagship Hill Copper project while unlocking the value in the Iron Butte Property asset, and will allow its shareholders to have focused exposure to both copper and gold in two pure-play vehicles.

Rae Eastman Promissory Note

On March 1, 2011, SOGC Resources Corp. ("SOGC"), a wholly owned subsidiary of Alpaca, entered into a Note Purchase Agreement ("Agreement") with Lesco Enterprises Inc., Stephen M. Rae, David A. Rae. Cochise County Reality Inc. and Allred Law Office. The acquisition was completed on March 14, 2011, pursuant to which SOGC has purchased a promissory note (the "Promissory Note") dated April 17, 2008 with an original principal sum of $1,014,000 secured against the Deed of Trust of certain real property located in Cochise County, Arizona, which includes surface rights and mineral rights (the "Rae-Eastman Property") related to the Hill Copper project. Alpaca has paid $819,062 for the Promissory Note. The Promissory Note is in default and foreclosure proceedings are in process, which Alpaca plans to continue.

About Sagittarius Capital Corporation

The Company is a NEX-listed company and was formerly classified as a Capital Pool Corporation as defined in the TSX Venture Exchange Policy 2.4. The Company's principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction within the meaning of Exchange policies.

In accordance with the Exchange policies, the Common Shares are currently halted from trading, and it is intended that they will remain halted until completion of the Qualifying Transaction.

About Alpaca Resources Inc.

Alpaca is a Canadian junior exploration company with advanced and early-stage copper and gold exploration properties in the Western United States. Alpaca's focus is on its flagship Hill Copper project in Arizona, which is in the advanced exploration stage. Alpaca's objective is to define a 43-101 resource at the Hill Copper project and continue to advance the project towards feasibility.

Other Information

Completion of the Qualifying Transaction is subject to a number of conditions including, but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed, or at all.

Investors are cautioned that, except as disclosed in the information circular or filing statement 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 information disclosed in this press release regarding Alpaca was provided by Alpaca without review or investigation by Sagittarius, and as such, Sagittarius does not accept any responsibility for the accuracy of such disclosure.

Forward-Looking Statements

This press release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this press release is made as of the date of this press release, and each of Sagittarius and Alpaca disclaim any intention or obligation to update or revise such information, except as required by applicable law.

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 press release. Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

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