11:07:35 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Blackhawk Resource Corp (2)
Symbol BLR
Shares Issued 22,179,706
Close 2013-04-01 C$ 0.14
Market Cap C$ 3,105,159
Recent Sedar Documents

Blackhawk Resource to merge with Global Royalty

2013-04-24 12:24 ET - News Release

Mr. Dave Antony reports

BLACKHAWK ANNOUNCES AGREEMENT WITH GLOBAL ROYALTY CORP.

On April 3, 2013, Blackhawk Resource Corp. entered into an interim agreement as to the terms of a proposed business combination with Global Royalty Corp., a private British Columbia resource royalty corporation. The transaction will proceed subject to additional customary closing conditions including, but not limited to, negotiation and execution of a definitive agreement, receipt of all required board of director, shareholder and regulatory approvals, and the completion of a concurrent financing of in an amount to be determined in consultation with the company and GRC's financial advisers.

Blackhawk is listed on the TSX Venture Exchange and is currently engaged in the oil and gas business. Upon completion of the transaction, the corporation will continue the business of GRC, as described as follows.

About Global Royalty Corp.

GRC's business focus is on the acquisition of commodity-based royalties. Commodity-based royalties generate revenues based upon receiving a fixed percentage of total production output. This business model of investing in revenue-based income streams significantly reduces risks associated with mine operating and capital costs, while offering exposure to exploration upside at no additional cost. GRC's royalty assets currently consist of two precious metals net smelter return (NSR) royalties, both of which are in production, as follows.

Magistral/El Gallo net smelter return royalty

GRC owns a sliding-scale net smelter return royalty on gold or gold equivalent recovered from certain concessions on the El Gallo project (owned by McEwen Mining Inc.) located in Mexico. The royalty is calculated at a rate of 1 per cent of net smelter returns on the initial 30,000 ounces of gold-equivalent production, at a rate of 3.5 per cent of net smelter returns on the next 350,000 ounces of gold equivalent production and, thereafter, at a rate of 1 per cent of net smelter returns on gold-equivalent production recovered from the area, in perpetuity. Additional details concerning the Magistral/El Gallo project can be found on the McEwen Mining website and on SEDAR.

Zaruma Portovelo net smelter return royalty

GRC owns a 1.5-per-cent net smelter return royalty covering the Zaruma gold project (owned by Dynasty Metals & Mining Inc.) in Ecuador. The net smelter return royalty is payable on 39 of 46 total concessions comprising the Zaruma gold project on all ores, minerals, metals or other products mined and sold. Additional details concerning the Zaruma gold project can be found on the Dynasty Metals & Mining website and on SEDAR.

The transaction

Pursuant to the transaction, Blackhawk shall undertake a consolidation of its share capital prior to closing whereby Blackhawk shareholders will receive one new Blackhawk share for every 4.436 Blackhawk shares currently held. This will result in the issuance of five million new shares to Blackhawk shareholders on a posttransaction basis. All currently issued and outstanding dilutive securities of Blackhawk shall be consolidated on the same basis. GRC shareholders will exchange their shares of GRC for approximately 30,433,596 new shares of Blackhawk, subject to adjustment based on any shares issued for cash by GRC prior to the closing of the transaction. Dilutive securities of GRC will be exchanged for new dilutive securities of Blackhawk using the same exchange ratio as applicable to the GRC common shares. On a postclosing basis, this will result in 3.42 million warrants exercisable at 73 U.S. cents until Dec. 22, 2015, and 31,635 warrants exercisable at $1.02 until April 15, 2014. The exercise prices for GRC warrants are subject to adjustment based on the issue price of any additional shares issued for cash by GRC prior to closing of the transaction. In addition, at closing of the transaction, $1.15-million principal amount of GRC convertible debentures currently outstanding shall mature, at which time debentureholders may convert into new shares at a conversion price of $1.02 or be redeemed for cash.

Financing

It is contemplated that Blackhawk will, concurrent with the closing of the transaction, complete a financing of not less than $5-million. Specific terms and details of the proposed financing will be announced in due course. Currently, Blackhawk has approximately $4-million in net working capital. Blackhawk still maintains a number of operated and non-operated properties in central Alberta with average net production of 50 barrels equivalent of oil per day. Blackhawk is currently determining its options with respect to its non-core assets in connection with the transaction.

Name change

Upon closing of the transaction, and subject to required shareholder and regulatory approvals, the corporation currently intends to change its name to Global Royalty Corp. or such other name as may be determined by the directors.

Management and directors

Following the closing of the transaction, management of Blackhawk will comprise Mark D. Kucher, MBA, president and chief executive officer, and Jeff Howlett, BSc, chief financial officer. The board of directors is contemplated to comprise Mr. Kucher, David Antony and three additional independent directors to be appointed. Background information for each of Mr. Kucher, Mr. Antony and Mr. Howlett are set out as follows.

Mark D. Kucher, president, chief executive officer and director

Mr. Kucher has over 25 years experience in the mining finance industry, and is the former chairman and chief executive officer of Battle Mountain Gold Exploration Inc., which was acquired by Royal Gold in 2007. Mr. Kucher formerly worked in corporate finance with Burns Fry Ltd., Alfred Bunting & Co. and Sprott Securities Inc. Mr. Kucher has extensive and successful public company experience, including senior positions with Princeton Mining and Aurex Resources. Mr. Kucher is the principal shareholder and founder of GRC. Mr. Kucher has an MBA from the University of Western Ontario.

Dave Antony, CA, proposed director

Mr. Antony is the current president and chief executive officer of Blackhawk, and is a chartered accountant with over 17 years experience of public company management, structuring, and mergers and acquisitions. Mr. Antony is an expert on matters of audit, compliance and corporate governance, and is currently a director of Southern Pacific Resources Corp., Paramax Resources, Ltd., Iron Tank Resources Ltd. and North Sea Energy Inc.

Jeff Howlett, chief financial officer

Mr. Howlett has a 25-year history in the mineral resource industry, with experience in research, mergers and acquisitions, investment banking, and strategic planning. Initially, Mr. Howlett spent several years with Burns Fry as an analyst in the corporate finance department. He subsequently founded Howlett Research Corp., a research and consulting firm providing a wide range of research services, strategic and business planning services, and other consulting assignments, with a primary emphasis in the mineral resource sector. Mr. Howlett has a BSc (economics) from the University of Pennsylvania.

Significant shareholders

The controlling shareholder and director of GRC is Mr. Kucher (shares held directly and indirectly).

Sponsorship

Sponsorship of the transaction may be required by the TSX-V unless exempt in accordance with TSX-V policies. The corporation is currently reviewing the requirements for sponsorship and may apply for exemption from sponsorship requirements. There is no assurance Blackhawk will ultimately obtain exemption from sponsorship.

Trading halt

Trading in the corporation's common shares on the TSX-V is halted and will remain halted until the documentation required by the TSX-V has been reviewed and accepted by the TSX-V.

Fairness opinion

In connection with the transaction, Blackhawk currently intends to obtain a fairness opinion with respect to the consideration to be paid for the GRC shares and dilutive securities.

Finder's fee

The corporation has agreed to pay a finder's fee to an arm's-length party in connection with the transaction in cash and/or securities up to the maximum permitted under TSX-V policies.

Arm's-length transaction

The proposed transaction is an arm's-length transaction.

This is an initial press release. A further press release will be issued in due course to provide, among other things, selected financial information regarding GRC and technical information regarding the material properties of GRC.

We seek Safe Harbor.

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