Sphere Resources Inc.

Sphere Resources Inc.

September 05, 2012 08:30 ET

Sphere Resources Inc. Signs Binding Term Sheet for U.S.$2 Million of Financing for Its Subsidiary, Spartan Gold Ltd., from Tamimi Investments & Mining Co.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 5, 2012) - Sphere Resources Inc. ("the Company"), listed on the NEX Board of the TSX Venture Exchange (TSX VENTURE:SPH.H), is pleased to make the following announcement:

The Company announces the signing of a binding Term Sheet for U.S.$2 million of equity financing for its subsidiary, Spartan Gold Ltd ("Spartan"), from Tamimi Investments and Mining Co. ("TIMCO"), a Cyprus corporation. If warrants of Spartan issuable to the Company and TIMCO in connection with the transaction are fully exercised, Spartan will receive a further U.S.$3 million.

TIMCO is a group dedicated to seeking out, acquiring and developing natural resource projects and investments that have the capacity of building significant value for investors and stakeholders. TIMCO has an international reach into major resource and mining regions of the globe, with a presence in London, Australia and the Middle East, and is underpinned by a core team of complementary professionals that have an established track record in sourcing, funding, and building value in projects and assets across a range of industries. Sheikh Fahad Al-Tamimi is the founder of TIMCO and has to date, major interests in a diversified portfolio of natural resource investments.

The main terms are the financing transaction among Spartan, TIMCO and the Company are as follows:

  • Spartan is to undertake a private placement (the "Private Placement") of 40,000,000 shares of common stock of Spartan ("Spartan Shares") at U.S.$0.05 per share for gross proceeds of U.S.$2 million and (b) 30,000,000 warrants of Spartan ("Spartan Warrants") at U.S.$0.001 per Spartan Warrant for gross proceeds of U.S.$30,000, each Spartan Warrant being exercisable to purchase one Spartan Share at U.S.$0.10 per share for a term of 24 months for further potential gross proceeds of U.S.$3 million if these 30,000,000 Spartan Warrants are fully exercised.

  • Subject to the completion of various conditions precedent described below:
    • TIMCO is to subscribe for all 40,000,000 Spartan Shares issuable under the Private Placement for U.S.$2 million.
    • The Company is to subscribe for such number of the 30,000,000 Spartan Warrants issuable under the Private Placement at U.S.$0.001 per warrant that, if and only if exercised, would permit the Company to retain a 30% equity position in Spartan. Up to 14,936,040 Spartan Warrants are to be subscribed for by the Company at U.S.$0.001 per warrant for a total cost of up to U.S.$14,936.04.
    • The balance of the Spartan Warrants (approximately 15,063,960 warrants) are to be subscribed for and exercised by TIMCO at its discretion.

  • TIMCO is to also immediately provide a secured convertible loan (the "Convertible Loan") of U.S.$62,020 to Spartan. Upon successful completion of TIMCO's due diligence investigations on Spartan, the Convertible Loan is to convert into 1,240,400 Spartan Shares at U.S.$0.05 per share.

  • Spartan is to pay TIMCO the following facilitation fees in connection with the transactions:
    • 5% placement fee payable in cash (U.S.$100,000).
    • 2,500,000 Spartan Shares.
    • 2,500,000 Spartan Warrants.

  • The completion of the Private Placement will be subject to the following conditions precedent:
    • TIMCO will have a 45-day period to complete its due diligence investigations on Spartan.
    • Debt owing by Spartan is to be dealt with as follows:
      • An amount of U.S.$122,640 owing to the Company is to be converted into 2,452,800 Spartan Shares at U.S.$0.05 per share.
      • 50% of other debts of Spartan (assumed to be U.S.$270,000 plus other amounts from normal overheads and expenses) is to be converted into Spartan Shares at U.S.$0.05 per share, with the remaining debt to be paid out in cash.
      • Any debts owing by Spartan to directors and management of Spartan is to be converted into Spartan Shares at U.S.$0.05 per share.
      • Any other debt is to be paid out in cash after the Private Placement.
    • The following matters relating to contracts shall have occurred:
      • The Company is to assign 50% of its royalty rights for the Ziggurat and Poker Flats properties to TIMCO or its nominee.
      • All executive and management contracts with Spartan are to be renegotiated.
      • Spartan is to renegotiate the pre-feasibility study condition of its Poker Flats Joint Venture.
    • TIMCO is to have Spartan board/management representation pro rata to its equity interest in Spartan.
    • Spartan is to pay reasonable expenses and legal and documentation costs for the transactions with TIMCO (to be netted from the Private Placement proceeds).

Spartan has an option to earn up to 75% of the Poker Flats and Ziggurat properties from Mexivada Mining Corp. The funds raised will be used for the drilling program previously announced on August 7, 2012 and working capital.

Upon completion of the transactions with TIMCO described above, the Company expects that it will have a 30% diluted equity interest in Spartan assuming exercise of all Spartan Warrants.

The Company's participation in the above transactions is subject to any necessary regulatory approvals.

Malcolm Stevens, Executive Chairman of Sphere Resources Inc. commented, "We are very pleased to have reached an agreement with TIMCO for the funding of Spartan for the next funding stage of Poker Flats and Ziggurat. TIMCO's shareholders and management bring much experience from the resource and construction industries globally."

About Sphere Resources Inc.

Sphere Resources Inc. is focused on identifying and appropriating exploration targets and other high quality assets in major global mining camps with a particular emphasis on precious metals. It is currently involved in exploring for gold mineralization in the Red Lake District of Ontario and in Nevada, USA on the Carlin Trend.

On behalf of Sphere Resources Inc.

Malcolm L Stevens, Executive Chairman and President

Statements in this press release other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.

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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