07:14:06 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Abacus Mining & Exploration Corp
Symbol AME
Shares Issued 214,157,611
Close 2014-07-30 C$ 0.07
Market Cap C$ 14,991,033
Recent Sedar Documents

Abacus Mining to acquire Burnstone Ventures

2014-07-31 09:20 ET - News Release

Mr. Michael McInnis reports

ABACUS ARRANGES CAD$3 MILLION LOAN AND SIGNS AGREEMENT FOR THE ACQUISITION OF BURNSTONE VENTURES

Abacus Mining & Exploration Corp. has entered into a binding letter agreement with Burnstone Ventures Inc., pursuant to which Abacus will acquire, in consideration of Abacus common shares, all of the outstanding securities of Burnstone by way of a statutory court-approved plan of arrangement.

Upon closing of the arrangement, Burnstone will become a wholly owned subsidiary of Abacus. Burnstone's principal asset is the Tomichi copper-molybdenum porphyry project located in the Colorado mineral belt in Gunnison county in south-central Colorado.

Terms of the arrangement

Under the terms of the arrangement:

  • Burnstone shareholders will receive 0.43 of an Abacus share for each one Burnstone common share.
  • All outstanding Burnstone share purchase warrants will be assumed by Abacus and adjusted based on the 0.43 exchange ratio.
  • Burnstone has agreed to complete a debt settlement with certain of its creditors for Burnstone shares, which will be exchanged for Abacus shares under the arrangement.
  • A total of approximately 23 million Abacus shares are expected to be issued in connection with the arrangement, representing approximately 10 per cent of the outstanding Abacus shares on completion of the arrangement.
  • On closing of the arrangement, Gordon Keevil, a current director of Burnstone, will be appointed to the board of Abacus.
  • Each of the directors and officers of Burnstone will execute lock-up agreements agreeing to vote any Burnstone shares they hold in favour of the arrangement.

The arrangement is subject to a number of closing conditions including, but not limited to, a confirmatory due diligence review of Burnstone and its assets by Abacus to be completed on or before Aug. 14, 2014, approval by the shareholders of each of Abacus and Burnstone, receipt of all court and regulatory approvals, including that of the Ontario Superior Court and the TSX Venture Exchange, completion of the debt settlement, and all outstanding Burnstone stock options being cancelled.

Abacus and Burnstone have agreed to enter into a definitive arrangement agreement, incorporating the terms of the letter agreement and other terms and conditions customary for transactions of this nature, on or before Aug. 22, 2014.

Information regarding Burnstone

Burnstone is a TSX-V-listed company which main asset is the Tomichi project in which Burnstone has an option to earn a 100-per-cent interest. The Tomichi project has an initial inferred mineral resource estimate of 2.5 billion pounds copper, 552 million pounds molybdenum, 30 million ounces silver, 320,000 ounces gold and 124,362 kilograms rhenium, or 5.6 billion pounds copper equivalent (see National Instrument 43-101 technical report, "Technical and Resource Estimate for the Tomichi Copper-Molybdenum Project, Gunnison County, Colorado," on Burnstone's SEDAR filings July 10, 2013). Other details on the Tomichi project are available on Burnstone's website.

Additional information regarding the arrangement

The terms of the arrangement will be described in further detail in the management information circular of Abacus to be filed with the regulatory authorities and mailed to the Abacus shareholders. A copy of the Abacus information circular and other materials related to the arrangement will be available for review as they become available at SEDAR under Abacus's profile.

Abacus/Burnstone loan

Abacus and Burnstone have entered into a loan and security agreement pursuant to which Abacus advanced $250,000 to Burnstone. The Burnstone loan is secured by a first-priority security interest over the Tomichi project. Interest on the Burnstone loan accrues at 8 per cent per year. The Burnstone loan proceeds are to be used by Burnstone in relation to the Tomichi project.

Joint venture loan

To facilitate the arrangement, Abacus also signed a loan and security agreement for a term loan facility of $3-million drawn from the approximate $16-million of funds held in Abacus's escrow account under the provisions of the 2010 joint venture agreement with respect to the Ajax copper-gold project near Kamloops, B.C. The loan has been fully drawn, bears interest at the rate of 8 per cent per year and is collateralized by $3.36-million of Abacus's escrowed funds.

As a condition of the loan, Abacus has agreed to continue to contribute its 20-per-cent share of the 2014 and 2015 programs and budget toward development of the Ajax copper-gold project near Kamloops, B.C., which will be financed from the balance of the escrowed funds as and when cash calls are made.

Michael McInnis, Abacus's chairman, president and chief executive officer, stated: "The new agreement achieves a dual purpose that is particularly advantageous for Abacus shareholders. It enables Abacus to borrow funds from the escrow account on favourable terms that would otherwise not be allowable under the terms of the original joint venture agreement, and provides the company with near-term growth opportunity by expanding our mineral asset interests with a highly prospective large copper/molybdenum porphyry deposit in Colorado. We intend to create significant value by making use of this funding to continue with the advancement of the Tomichi project while maintaining our 20-per-cent interest in the Ajax project."

We seek Safe Harbor.

© 2024 Canjex Publishing Ltd. All rights reserved.