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OMT Inc (2)
Symbol C : OMT
Shares Issued 18,213,566
Close 2012-04-18 C$ 0.30
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OMT to acquire New York Zinc, Balmat mine

2012-05-01 17:07 ET - News Release

Mr. Scott Ackerman reports

OMT AND NEW YORK ZINC ANNOUNCE A PROPOSED BUSINESS COMBINATION INVOLVING THE ACQUISITION OF THE FULLY PERMITTED BALMAT ZINC MINE IN NEW YORK STATE, AND A CONCURRENT C$12 MILLION OFFERING OF SUBSCRIPTION RECEIPTS

On April 22, 2012, OMT Inc. and New York Zinc Ltd. entered into a letter of intent pursuant to which, OMT has agreed to acquire all of the issued and outstanding securities of New York Zinc, an arm's-length party, by way of a three-cornered amalgamation. New York Zinc is a privately held mining company, incorporated under the laws of Ontario. New York Zinc currently has one common share outstanding. Pursuant to the terms of the business combination each common share of New York Zinc, including the shares to be issued in the offering referred to below, will be exchanged for OMT shares on a one-for-one basis.

In connection with the business combination, New York Zinc has agreed to acquire 100 per cent of the Balmat zinc mine from HudBay Minerals Inc. on the terms and conditions set forth in a letter agreement with HudBay dated April 12, 2012. The total consideration payable to HudBay pursuant to the proposed transaction is $14-million payable as follows: (i) $4-million upon the closing of the proposed transaction; (ii) $5-million upon a positive decision to take the Balmat mine into commercial production or when the first 10,000 tonnes of ore are mined from the Balmat mine; and (iii) $5-million upon the recommencement of commercial production from the Balmat mine. The closing of the proposed transaction is subject to a number of conditions, including completion and execution of a definitive agreement and receipt of all required regulatory and shareholder approvals.

HudBay owns the Balmat mine through its indirect wholly owned subsidiary St. Lawrence Zinc LLC. The proposed transaction contemplates the acquisition by New York Zinc of all of the outstanding shares of Balmat Holding Corporation, a subsidiary of St. Lawrence Zinc LLC. The Balmat mine includes a 3,200-foot-deep shaft, underground development to three ore zones and extensive mining equipment, a 5,000-ton-per-day concentrator, and approximately 52,000 acres of exploration land in St. Lawrence county, New York. Upon completion of the business combination, the Balmat mine will be subject to a 2-per-cent net smelter return royalty on the proceeds of any commercial production. The Balmat mine and concentrator were placed on care and maintenance on Aug. 22, 2008, due to, among other factors, lower prices for zinc metal at that time. A geological report in accordance with National Instrument 43-101 is currently being prepared in respect of the Balmat mine for filing with the TSX Venture Exchange.

Upon closing of the proposed transaction and the business combination, OMT intends to change its name to Wildcat Zinc Corp. and will reconstitute its board and add several senior and experienced mining individuals with executive, corporate and board experience. Mike Hoffman will join as chairman and chief executive officer, and David Gower, Bruce Humphrey, Stephan Theron, Tayfun Eldem and Aaron Wolfe will be added as directors. In addition, OMT has recruited a number of highly skilled and experienced senior management professionals with exploration, engineering, development and operating expertise in the zinc and other base metal spaces, including: Deborah Battiston, as chief financial officer; Michael Michaud, as vice-president, exploration; and Aaron Wolfe, as vice-president, corporate development.

Mike Hoffman, president and chief executive officer of New York Zinc, stated that: "The Balmat mine represents a rare opportunity for investors to own a fully permitted near-term zinc producer in a mining-friendly district with a full geological and operating team in place. The proposed board of directors and management team for Wildcat Zinc has significant experience developing and operating zinc and other base metal mines, and expects to actively grow Wildcat Zinc into an emerging zinc producer. Our goal is to use the acquisition of the Balmat Zinc property as a springboard to acquire further advanced zinc assets."

Mike Hoffman, PEng, chairman and CEO

Mr. Hoffman has over 30 years of mine management experience, including mine operations, engineering, corporate development and projects. Mr. Hoffman has held senior executive positions with Yamana Gold Inc., Desert Sun Mining Corp., Goldcorp Inc., and Crocodile Gold. Mr. Hoffman also currently serves as a director of Castillian Resources Inc., Aberdeen International Inc., Azul Ventures Inc., Trevali Resources Inc. and Largo Resources Inc.

David Gower, PGeo, director

Mr. Gower has been the chairman of Castillian Resources Corp. since January, 2010, and is currently the president of Brazil Potash Corp. Mr. Gower has extensive experience in base metal exploration from his time at Falconbridge Limited and Noranda Inc. (now Xstrata) in various capacities including general manager of global nickel and PGM (platinum group metals) exploration, and a member of the senior operating team for the nickel business. He currently serves as a director of Alamos Gold, Apogee Minerals, Regiment Zinc and Forbes Coal.

Bruce Humphrey, PEng, director

Mr. Humphrey is a mining engineer with over 35 years experience with several major companies including Inco, Cominco and Noranda. He recently served as chairman of Consolidated Thompson Iron Mines Ltd. Mr. Humphrey also served as the president and chief executive officer of Desert Sun Mining Corp. from October, 2004, to April, 2006, where he contributed to the successful development of the Jacobina mine in Brazil. From May, 1998, to May, 2004, Mr. Humphrey served as senior vice-president and chief operating officer at Goldcorp Inc. during the redevelopment of its high-grade Red Lake mine. He currently serves on the board of directors of Sulliden Gold, Avion Gold Corp., Alderon Iron Ore Corp. and Black Iron Ore Corp. He is a member of the Professional Engineers of Ontario.

Tayfun Eldem, PEng, director

Mr. Eldem is currently the president and CEO of Alderon Iron Ore Corp., and previously worked for the Iron Ore Company of Canada, a Rio Tinto subsidiary, for more than 20 years, including three years as a director on the joint venture board. During this period, Mr. Eldem held several senior roles including vice-president, expansion projects and engineering, and vice-president, operations and engineering. Most recently Mr. Eldem was accountable for the development and delivery of a nearly $2.0-billion program of green and brown fields expansion projects. Prior to his projects' role, Mr. Eldem was responsible for all of IOC's operations including the mine, process plants, rail and port facilities. Mr. Eldem led a team of about 2,000 to deliver two consecutive years of record annual material movement at the mine and record ore processing through the concentrator.

Stephan Theron, BComm, CGA, director

Mr. Theron currently is president and CEO of Forbes Coal. Mr. Theron has over 10 years of extensive management, project finance and equity analysis experience in the mining, energy and infrastructure sectors. Previous capital and project experience includes Weir PLC and Amec PLC. Former sector head, materials and energy, with a specific focus on South African coal market. Mr. Theron is a CGA and has a bachelor of commerce from the University of Johannesburg.

Aaron Wolfe, HBA, director and vice-president, corporate development

Mr. Wolfe is a corporate finance and advisory professional with experience in advising, structuring and financing junior resource, technology and renewable energy companies. He works as a corporate and business development consultant to several publicly traded companies in the resource industries. Previously, from 2006 to 2009, Mr. Wolfe was an investment banker with Macquarie Capital Markets Canada Ltd., the Canadian division of a global investment bank, and its predecessor Orion Securities Inc. From 2003 to 2006, Mr. Wolfe was an associate consultant with an international management and human resources consulting firm, Mercer (Canada) Ltd. Mr. Wolfe holds an honours business administration degree from the Richard Ivey School of Business at the University of Western Ontario.

Michael Michaud, vice-president, exploration

Mr. Michaud brings over 25 years experience in mineral deposit exploration, and his skills provide a strong connection between exploration and mining phases of project development. He most recently held the position of vice-president of exploration for St. Andrew Goldfields Ltd. Prior to this, he was president and CEO of two junior mining and exploration companies, J-Pacific Gold Inc., and China Diamond Corp. Mr. Michaud also previously held executive positions with SRK Consulting Inc. and North American Palladium Inc. Mr. Michaud holds an honours earth sciences degree from the University of Waterloo, and a master of science degree from Lakehead University.

Deborah Battiston, chief financial officer

Ms. Battiston has over 20 years of accounting and financial management experience, and is currently acting as chief financial officer for a number of Canadian public companies in the mining sector. Ms. Battiston has broad international experience having dealt with companies in over 14 countries and having lived in Japan for several years. She has obtained a BA in economics from the University of Guelph and is a certified general accountant.

The business combination will constitute a change of business for OMT under the policies of the TSX Venture Exchange. Closing of the business combination is expected in the second quarter of 2012, and is subject to a number of conditions including closing of the proposed transaction, receipt of all required shareholder, regulatory and third party consents, including TSX-V approval, satisfaction of other customary closing conditions, and the completion of the offering. The business combination cannot close until the required approvals are obtained. There can be no assurance that the business combination will be completed as proposed or at all. OMT will be applying for an exemption from the sponsorship requirement as set forth in TSX-V Policy 2.2 in connection with the business combination.

It is anticipated that a concurrent financing will be conducted in connection with the business combination. Macquarie Capital Markets Canada Ltd. has been engaged by New York Zinc to act as financial adviser in the acquisition of the Balmat mine and to act as lead agent to raise $12-million through a private placement issuance of subscription receipts of New York Zinc. Each subscription receipt will be convertible into one unit of New York Zinc, consisting of one common share and one-half of one share purchase warrant, immediately prior to closing of the business combination. The proceeds of the offering will be held in escrow pending satisfaction or waiver of each of the conditions precedent to the business combination. Further details of the financing will be provided once finalized.

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