VLM Ventures Ltd.
TSX VENTURE : VVL.P

June 22, 2011 15:36 ET

VLM Ventures Ltd. Announces Agreement for Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 22, 2011) - VLM Ventures Ltd. ("VLM") (TSX VENTURE:VVL.P), a Capital Pool Company ("CPC") trading on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a binding letter of intent dated June 20, 2011 (the "Agreement") regarding a proposed transaction (the "Transaction") with Altan Nevada Minerals Limited ("Altan Nevada"), a privately held company incorporated under the Business Corporations Act (British Columbia), which operates as a mineral exploration company with various mineral exploration interests in Nevada.

It is intended that the Transaction will constitute VLM's "Qualifying Transaction" in accordance with Policy 2.4 of the Exchange. VLM and Altan Nevada are at arm's length; accordingly the Qualifying Transaction is not a "Non-Arm's Length Qualifying Transaction". As such, it is anticipated that the approval of the shareholders of VLM will not be required. Subject to any regulatory, director or other approvals that may be required, the completion of satisfactory due diligence by VLM and other conditions contained in the Agreement, it is intended that VLM will acquire 100% of the common shares of Altan Nevada (the "Altan Nevada Shares") in a reverse takeover transaction which will be effected by way of a three cornered amalgamation (the "Amalgamation") pursuant to which a newly formed wholly-owned subsidiary of VLM will amalgamate with Altan Nevada, resulting in the amalgamated company becoming a wholly-owned subsidiary of VLM. Pursuant to the Amalgamation, 32,500,000 Consolidated VLM Shares, as defined hereafter, will be issued to the existing shareholders of Altan Nevada. Upon completion of the Qualifying Transaction, it is expected that the Resulting Issuer, as defined in Exchange Policy 2.4, (the "Resulting Issuer") will be listed on the Exchange as a Tier 2 mining issuer.

As a condition of the Amalgamation, the shareholders of VLM will be asked to approve a consolidation (the "Share Consolidation") of VLM's common shares ("VLM Shares") on the basis of two and half (2.5) old shares for one (1) new share. The VLM Shares as so consolidated are hereinafter referred to as the "Consolidated VLM Shares". Concurrently with closing of the Qualifying Transaction, VLM will change its name to "Altan Nevada Minerals Ltd." or such other name as may be selected by Altan Nevada. If requested and approved, the Share Consolidation would become effective prior to completion of the Qualifying Transaction. All share numbers and pricing herein assumes completion of the Share Consolidation prior to closing of the Qualifying Transaction.

VLM and Altan Nevada confirm that there are no finder's fees or other similar fees payable to any person or party with respect to the Qualifying Transaction.

Capital Structure of Altan Nevada

The principal stakeholders of Altan Nevada, who as a group own beneficially, directly or indirectly, or exercise control or direction over 20,724,966 Altan Nevada Shares, representing approximately 51.67% of the issued and outstanding Altan Nevada Shares, are founding shareholders Messrs. Evan Jones (of Perth, Australia), John Jones (of Perth, Australia), and Kelly Cluer (of Carson City, Nevada). Mr. Evan Jones is a beneficiary of a trust that is the sole shareholder of 0809979 B.C. Ltd that owns 18,517,422 Altan Nevada Shares or 46.17% of the issued and outstanding Altan Nevada Shares, Mr. John Jones through Jonmin Superannuation Fund owns 150,054 Altan Nevada Shares or 0.37% of the issued and outstanding Altan Nevada Shares and Mr. Kelly Cluer owns 2,057,490 Altan Nevada Shares or 5.13% of the issued and outstanding Altan Nevada Shares. The remaining 19,384,721 Altan Nevada Shares are held by approximately 150 other shareholders. These shareholders include Mr. Murray Seitz of VLM who owns 33,500 Altan Nevada Shares or 0.08% of the issued and outstanding Altan Nevada Shares and Mr. Robert Scott of VLM who owns 16,666 Altan Nevada Shares or 0.04% of the issued and outstanding Altan Nevada Shares.

Altan Nevada currently has 40,109,687 Altan Nevada Shares issued and outstanding. Altan Nevada also has 10,654,729 warrants outstanding, exercisable into an equivalent number of Altan Nevada Shares at an exercise price of $0.42 per share.

Contemplated Financings

In conjunction with the Qualifying Transaction, VLM has entered into an engagement letter dated June 10, 2011 with Haywood Securities Inc. (the "Agent") to undertake a private placement (the "Offering") to raise gross proceeds of up to $1,000,000. Under the terms of the Offering, VLM would issue up to 2,500,000 units (each a "Unit") at a price of $0.40 per Unit. Each Unit will consist of one Consolidated VLM Share and one-half of one common share purchase warrant (the "Warrant"). Each whole Warrant will entitle the holder to acquire one Consolidated VLM Share at the exercise price of $0.50 for a period of two years from closing.

As compensation for completion of the Offering, the Agent will be paid a commission of 7% of the gross proceeds of the Offering. In addition, the Agent will receive Agent's warrants entitling the Agent to acquire a number of Consolidated VLM Shares equal to 7% of the number of Units sold under the Offering at a price of $0.50 per share for a period of two years from closing, and a corporate finance fee of 50,000 Consolidated VLM Shares to be issued upon completion of the Offering.

It is expected that the net proceeds of the Offering will be used to complete additional exploration and a subsequent drill program on the Radar and Star Lake Properties (as defined and described below) in Nevada, as well as for general working capital purposes.

Resulting Issuer Capital Structure

Assuming completion of the Share Consolidation and the Amalgamation and that the Offering is fully subscribed, the Resulting Issuer will have outstanding 36,950,000 Consolidated VLM Shares, 9,883,293 warrants, 175,000 broker warrants, and 80,000 agent's options.

Closing Conditions

The closing of the Qualifying Transaction with Altan Nevada is subject to a number of conditions, including, but not limited to the following:

  1. completion of all due diligence reviews;
  2. receipt of all director and shareholder approvals as may be required under applicable laws or regulatory policies;
  3. execution of a formal amalgamation agreement;
  4. the Altan Nevada shareholders entering into such escrow agreements as may be required by the Exchange and applicable securities regulatory policy;
  5. completion of the proposed Offering;
  6. confirmation of ownership of key mineral exploration properties in Nevada;
  7. confirmation that the Altan Nevada Shares will be free and clear of all liens, claims, charges or encumbrances;
  8. there being no material actions, suits or proceedings at the time of closing involving either party;
  9. there being no material adverse change to the assets, technology, liabilities, business, operations, or financial condition of either party at the time of closing;
  10. completion or waiver of sponsorship;
  11. receipt of all required regulatory approvals, including the approval of the Exchange, of the Qualifying Transaction;
  12. satisfaction of the Minimum Listing Requirements of the Exchange and all requirements under the Exchange rules relating to completion of a "Qualifying Transaction";
  13. a new slate of directors be appointed as agreed by the parties; and
  14. the VLM Shares be consolidated prior to closing;

Altan Nevada has agreed to reimburse VLM up to a maximum of $100,000 for costs and fees incurred in connection with the Qualifying Transaction.

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 seven 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.

Sponsorship

Sponsorship of the Qualifying Transaction of a CPC is generally required by the Exchange, unless exempted in accordance with Exchange policies. VLM intends to apply for an exemption from the sponsorship requirement based on the considerations as contemplated in section 3.4 (Exemptions from Sponsorship) of Exchange Policy 2.2 on the following basis:

  1. VLM is not a foreign issuer;
  2. Management of VLM meets a high standard, such that the directors and senior officers of the Resulting Issuer collectively possess the appropriate experience, qualifications and history; and
  3. The Resulting Issuer will become a mining issuer that:
    1. satisfies at least the Tier 2 minimum listing requirements as set forth in Exchange policy 2.1; and
    2. will have a current geological report for each of its principal properties.

There is no assurance that VLM will be able to obtain such an exemption.

Altan Nevada

Altan Nevada was incorporated on May 18, 2011 pursuant to the Business Corporations Act (British Columbia). Altan Nevada's head office and registered office are located in Vancouver, British Columbia. Altan Nevada was formed to spin-out Altan Rio (US) Inc. ("Altan US") from its parent company Altan Rio Minerals Limited to the stockholders of Altan Rio Minerals Limited as a separate company. The spin-out of Altan US was completed on May 31, 2011 and is now a wholly-owned subsidiary of Altan Nevada. Altan US was incorporated on December 3, 2007 pursuant to the Nevada Revised Statute 78.055. Since incorporation, Altan US has been actively involved in the business of exploring and developing mineral concessions, and has amassed numerous mineral concessions located in Nevada. Altan Nevada's primary focus, and assuming the completion of the Amalgamation, the Resulting Issuer's primary focus over the 12 months following the Amalgamation, will be the Radar Gold Exploration Project (the "Radar Project") and Star Lake Gold Project ("Star Lake Project") owned by Altan US in Nevada.

The Radar Gold Exploration Project is an early stage gold-silver conceptual exploration target, located immediately adjacent to the gold-silver-mercury past producing Paradise Peak mine in western Nevada. Altan US controls the property 100%, through the location of 204 unpatented mining claims (approximately 4070 acres) subject only to annual claim maintenance payments to the BLM, and other state and county annual fees. In the prior 36 month period, Altan US has expended approximately $243,000 USD on the property, including claim holding fees. Altan US has conducted surface exploration on the property consisting of geological mapping, geochemical sampling, and geophysical surveys, the results of which have defined drill targets and are sufficiently positive to justify exploration drilling. The primary exploration target is volcanic hosted disseminated and/or vein type gold-silver mineralization. The project is permitted and drill ready.

A National Instrument 43-101 ("NI 43-101") compliant technical report in respect of the Radar Project is being prepared by Allan V. Moran, RG (Oregon), CPG (AIPG) of SRK Consulting. Mr. Moran is an independent "qualified person" within the meaning of NI 43-101.

The Star Lake Gold Exploration Project is an early stage conceptual exploration target for a district scale extension to the Carlin Gold Trend, Nevada. Altan US has conducted surface exploration on the property consisting of geological mapping, geochemical sampling, and geophysical surveys, the results of which have defined drill targets and are sufficiently positive to justify exploration drilling. Altan US controls, through the location of unpatented mining claims, 670 claims (approximately 13,400 acres) of land subject only to annual claim maintenance payments to the BLM, and state county fees.

In the prior 36 month period, Altan US has expended approximately $370,000 USD on the property. Claim holding fees for the prior 36 month period have been $497,000 USD. Additionally, $576,000 USD was spent on drilling four holes on an expanded land position in 2009 which, while not on (immediately to the south) the current property, has much geological relevance to the current property and targeting.

A National Instrument 43-101 ("NI 43-101") compliant technical report in respect of the Star Lake Project is being prepared by Allan V. Moran, RG (Oregon), CPG (AIPG) of SRK Consulting. Mr. Moran is an independent "qualified person" within the meaning of NI 43-101.

Financial Position. Altan Nevada has cash on hand and a current working capital surplus in excess of $3 million as at today's date (unaudited). A more detailed summary of financial information in respect of Altan Nevada, and an audited balance sheet, will be included in the Filing Statement which will be prepared and filed by VLM on SEDAR in connection with the proposed Qualifying Transaction.

About VLM

VLM, a capital pool company within the meaning of the policies of the Exchange, was incorporated in British Columbia on April 4, 2008 and was listed on the Exchange on September 24, 2009. VLM does not have any operations and has no assets other than cash. VLM's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction.

Officers, Directors, and Insiders of Resulting Issuer

Following the completion of the Qualifying Transaction, the officers, directors and insiders of the Resulting Issuer will be as follows:

Evan Jones, Chief Executive Officer, President and Director

Mr. E. Jones serves as the Chief Executive Officer, President and director of Altan Nevada Minerals Limited and Altan Rio Minerals Limited, both private mineral exploration companies. Prior to that, he was the Commercial Manager of Troy Resources Brasil Participacoes Ltd., a subsidiary of Troy Resources NL, a public mining company listed in Canada and Australia. He also worked as an Executive Advisor with Westchester Corporate Finance in Australia. Mr. E. Jones has a Bachelor of Information Technology (Information Systems) and a Bachelor of Commerce (Finance & Management) from Bond University in Australia.

John L.C. Jones, Chairman & Director

Mr. J.L.C. Jones has been a prominent player in the gold mining sector for over 30 years with a long list of successes. He serves as a Chairman and director of Altan Nevada Minerals Limited and Altan Rio Minerals Limited, both private mineral exploration companies. He has been a director of Troy Resources NL since mid 1988 and was its Chairman from late 1988 until October 2008. Since 1990, he has been Chairman of Anglo Australian Resources NL. He was formerly Chairman and director of North Kalgurli Mines Limited and was a founding director of Jones Mining NL. Mr. J.L.C. Jones has been a member of the Australasian Institute of Mining and Metallurgy since 1977.

Kelly Cluer, Exploration Director & Director

Mr. Cluer serves as Exploration Director and Director of Altan Rio Limited and Altan Nevada Minerals Limited, both private mineral exploration companies. He was previously the Exploration Manager Mongolia for Centerra Gold Inc., a public gold mining and exploration company and a Senior Geologist with Cameco Corp. Mr. Cluer is a Certified Professional Geologist by the American Institute of Professional Geologists. He obtained a Bachelor of Science (Geology) from Idaho State University and a Masters of Science (Geology) from the University of Arizona.

Murray Seitz Director

Mr. Seitz graduated with a Bachelor of Business Administration with a concentration in finance. After spending five years in financial planning, he joined a mineral exploration management group where he spent 5 years providing corporate compliance and business development/corporate communications services. Mr. Seitz specializes in capital raising and corporate communications. His extensive network has continually provided substantial equity capital for partner/client companies and generated a variety of opportunities that have added value to their businesses. Mr. Seitz is also President of Corex Management Inc., a private company that provides administration services to public and private companies.

Michael Doggett, Director

Dr. Doggett is President and a COO of HanOcci Group – a resource investment and mining advisory company based in Toronto and Vancouver. He holds a B.Sc. degree from Mount Allison University and M.Sc. and Ph.D. degrees from Queen's University where he spent 10 years as Director of the Mineral Exploration Masters Program in the Department of Geological Sciences and Geological Engineering. He continues to act as an Adjunct Professor in both Geology and Mining at Queen's University. Dr. Doggett sits on the Board of Directors for multiple junior mining companies as well as the Prospectors and Developers Association of Canada. In addition to consulting activities with a range of domestic and international clients, Dr. Doggett has taught professional development seminars in exploration and project evaluation to more than 1200 industry participants in a dozen countries.

Robert Scott, Chief Financial Officer

Mr. Scott has over 14 years of professional experience in the areas of corporate finance, accounting and merchant and commercial banking. He is a C.A., a CFA Charterholder and earned a B.Sc. from the University of British Columbia. Mr. Scott currently serves as the Chief Financial Officer of Riverside Resources Inc., a TSX-V listed mineral exploration company with early stage mineral projects in Mexico and the United States, and is the CFO of Corex Management Inc., a private company that provides administration services to public and private companies.

The directors and officers and or companies controlled by them collectively will own a total of 17,561,634 shares of the Resulting Issuer. Information as to the individual shareholdings of each of the current officers and directors of VLM is available on SEDAR.

Cautionary Statement

Completion of the 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 transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management 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 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.

Forward-Looking Statements

This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of VLM. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. VLM does not undertake to update any forward looking statements, oral or written, made by itself or on its behalf.

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

  • VLM Ventures Ltd.
    Murray Seitz
    President and Chief Executive Officer
    (778) 327-5799