Mr. Michael Bester reports
PCI-1 CAPITAL CORP. TO ACQUIRE CURIS RESOURCES LTD.
PCI-1 Capital Corp. has entered into a letter agreement, effective April 29, 2010, with Curis Resources Ltd., to purchase all of the issued and outstanding common shares of Curis.
The acquisition, if completed, will constitute the corporation's qualifying transaction under exchange Policy 2.4. Curis is at arm's length to the corporation and, as such, the acquisition will not be subject to the corporation receiving the approval of its shareholders therefor.
Curis
The following is based upon information provided by Curis.
Curis was incorporated pursuant to the Business Corporations Act (British Columbia) on Aug. 14, 2007. Hunter Dickinson Inc., a private corporation of British Columbia, is a controlling shareholder of Curis.
Curis is a mineral exploration company based in Vancouver, B.C., whose primary focus is the wholly owned Florence copper project consisting of approximately 1,342 acres located approximately 2.5 miles northwest of the town of Florence, in Pinal county, Arizona. Based on previous work and a recently updated property report on the Florence project, management of Curis believes that the Florence project has potential to become an in-situ copper recovery operation.
Financial disclosure
Selected financial statement information on the financial condition and results of operations for Curis is presented in the following tables. Such information is derived from the audited financial statements of Curis for the financial year ended March 31, 2009, and the unaudited interim period for the nine months ended Dec. 31, 2009, which have been prepared in accordance with international financial reporting standards. The information provided herein is subject to the disclosure in such financial statements, which the reader should closely review when the corporation files the filing statement with respect to the acquisition on SEDAR.
STATEMENT OF FINANCIAL POSITION
(in U.S. dollars)
As at Dec. 31, As at March 31,
2009 2009
Assets
Mineral property interests $ 8,596,073 $ -
Investments 1 1
Amounts receivable and other assets 83,397 53,216
Due from related parties 100,000 -
Cash and cash equivalents 1,339,362 6,267,127
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Total assets $10,118,833 $ 6,320,344
=========== ===========
Liabilities
Promissory note 4,608,384 -
Amounts payable and other liabilities 66,845 285
Due to related party 198,527 60,071
----------- -----------
Total liabilities $ 4,873,756 $ 60,356
Equity
Share capital 5,693,013 7,179,084
Reserves (409,872) (515,285)
Accumulated deficit (38,064) (403,811)
----------- -----------
Total equity $ 5,245,077 $ 6,259,988
----------- -----------
Total equity and liabilities $10,118,833 $ 6,320,344
=========== ===========
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
For the nine For the year
months ended ended March 31,
Dec. 31, 2009 2009
Expenses
Exploration $ 318,130 $ 217,525
Administration 361,720 301,974
--------- ---------
Net (loss) before the following (679,850) (519,499)
Interest income 37,569 118,831
Foreign exchange gain 924,440 102,540
Income taxes - -
--------- ---------
Income (loss) for the period 282,159 (298,128)
--------- ---------
Unrealized (loss) on available-for-sale
marketable securities - (515,285)
--------- ---------
Total comprehensive income (loss) $ 282,159 $(813,413)
========= =========
Proposed acquisition
The corporation will acquire all of the issued and outstanding common shares of Curis in exchange for the issuance of 32,600,001 common shares in the capital of the corporation to the holders of common shares of Curis on a pro rata basis.
Upon the completion of the acquisition, Curis will become a subsidiary of the corporation and the corporation will carry on its business through Curis.
It is expected that the directors of Curis will enter into a voting support agreement to approve the resolutions required to implement the acquisition at a meeting of the Curis shareholders.
Subject to the prior consent of the exchange and applicable securities laws, concurrently with the acquisition, the directors and the controlling shareholders (as such term is defined in the corporate finance manual of the exchange) of the corporation will sell a portion of the common shares held by them to certain of the incoming principals of the resulting issuer and other parties designated by Curis.
Proposed private placement
The parties intend that Curis will complete, concurrently with the closing of the acquisition, a private placement of common shares to raise total gross proceeds in the minimum amount of $28-million and the maximum amount of $45-million on terms to be determined in the context of the market. The private placement shall consist of a brokered portion and a concurrent non-brokered portion of up to $10-million, with such non-brokered portion to be completed on the same terms as the brokered portion.
Curis has engaged a syndicate of investment dealers led by Haywood Securities Inc. and Wellington West Capital Markets Inc., and including Dahlman Rose & Co. and Salman Partners Inc. as agents for the brokered portion of the private placement, and customary compensation will be paid to the agents for their agency services.
The proceeds of this private placement will be used to finance the acquisition and development costs for the Florence project, environmental bonding, and for working capital and general corporate purposes.
Exemption from sponsorship
Subject to the acceptance of the exchange, the corporation intends to rely on the exemption from sponsorship in exchange Policy 2.2, Section 3.4(a)(i)(C).
Securities issued on closing
On the closing of the acquisition and the private placement, the corporation expects to be classified as a Tier 1 issuer and will have approximately 35,435,001 issued and outstanding common shares, not including the common shares of Curis to be issued in connection with the private placement which will be exchanged for common shares as part of the acquisition. In addition, in connection with its acquisition of the Florence project, Curis is required to issue to the underlying vendor that number of common shares in its capital which is equal to 10 per cent of the issued and outstanding shares of the resulting issuer following completion of the qualifying transaction and the private placement. In addition, the corporation has granted stock options to the current directors and officers to acquire a total of 200,000 common shares, each exercisable to acquire one common share, at an exercise price of 25 cents. The corporation also has outstanding a total of 95,000 agents' options, which were granted in connection with its initial public offering, each exercisable to acquire one common share, at an exercise price of 25 cents. The corporation may also grant stock options to the employees and principals of the resulting issuer subsequent to the closing of the acquisition.
Conditions of closing
The closing of the acquisition will be subject to at least the following conditions precedent:
- The execution of a definitive agreement between the corporation and
Curis with respect to the acquisition, the
entering into of which shall be conditional upon:
- The completion of due diligence to the satisfaction of each of the
corporation and Curis;
- The approval of the directors of each of the corporation and Curis;
- The receipt of all regulatory, corporate and third party approvals,
including the conditional approval of the exchange, and compliance with
all applicable regulatory requirements and conditions necessary to
complete the acquisition;
- The approval of the acquisition by the requisite majority of the votes
cast by the shareholders of Curis at a properly constituted meeting of
the shareholders of Curis;
- The maintenance of the corporation's listing on the exchange;
- The resignation at the closing of the acquisition of the current
directors of the corporation and the appointment of the nominees of
Curis;
- The representations and warranties of the corporation and Curis as set
out in the definitive agreement being true and correct at the time of
closing of the acquisition with the same force and effect as if made at
and as of such time;
- The absence of any material adverse effect on the financial and
operational condition or the assets of the corporation and Curis;
- The completion by Curis of the private placement.
Directors, officers and other insiders
On completion of the acquisition, the directors, senior officers and insiders of the resulting issuer are anticipated to be as follows.
Robert A. Dickinson, director and chairman, is an economic geologist who has been actively involved in mineral exploration and mine development for over 40 years. He is chairman of Hunter Dickinson Inc., as well as a director and member of the management team of a number of the public companies associated with Hunter Dickinson. He is also president and director of United Mineral Services Ltd., a private resource company. He also serves as a director of the B.C. Mining Museum and a trustee of the B.C. mineral resources education program.
Michael McPhie, director, president and chief executive officer, is a senior mining executive with more than 20 years of operational and project development experience. Prior to joining Curis, Mr. McPhie was managing director, natural resources group, with Heenan Blaikie Global Advisors Corp. and before that executive vice-president of Exeter Resource Corp. Prior to this, Mr. McPhie was president and chief executive officer of the Mining Association of B.C. and before that served as a senior policy director with Natural Resources Canada. Mr. McPhie is currently first vice-chair of the board of governors of the B.C. Institute of Technology, a director of the Association for Mineral Exploration B.C. and co-chair of the B.C. Museum of Mining.
Russell E. Hallbauer, PEng, director, is a registered professional engineer with the Association of Professional Engineers of British Columbia and he has been a member of the Canadian Institute of Mining and Metallurgy since 1975, and is a director and former chairman of the Mining Association of B.C. Mr. Hallbauer is president, chief executive officer and a director of Taseko Mines Ltd., the owner of the Gibraltar Mine located near Williams Lake, British Columbia. He is also a director of Hunter Dickinson.
Rene Carrier, director, is a past vice-president of Pacific International Securities Inc. where he worked for 10 years until 1991. Since that time he has been president of Euro-American Capital Corp., a private company which specializes in restructuring, administration and raising venture capital funds for junior mining companies.
James Kerr, director, is a chartered accountant with extensive experience in public practice and is actively involved with the audit committee of mining and energy companies, providing advice on accounting and compliance issues based on a risk management approach.
Bernard Tan, chief financial officer, is a chartered accountant and an MBA graduate (finance) from McGill University. He has over 10 years of progressive business experience in the area of financial reporting and has worked with various medium and large Canadian and U.S. public corporations in the areas of accounting, corporate finance and regulatory reporting. Prior to joining Hunter Dickinson in 2005, he worked as an audit manager at KPMG LLP specializing in the technology area. Mr. Tan is also the chief financial officer for Hunter Dickinson, where he manages accounting, regulatory and securities compliance, reporting, treasury and taxation for the group.
Xenia Kritsos, corporate secretary, is an internationally qualified business lawyer experienced in providing advice in the mining infrastructure, technology and other sectors. Areas of expertise include mergers and acquisitions, corporate finance, securities law, competition law and foreign investment. Ms. Kritsos is also legal counsel for Hunter Dickinson.
Michael Bester, Frank Davis, Richard Elder and Brandon Gordon, the current directors and officers of the corporation, will resign their positions concurrently with the completion of the acquisition.
After completion of the acquisition, it is anticipated that the resulting issuer will increase the number of directors thereof to eight and appoint the three additional directors as follows.
Robert W. Schafer, director, is a certified professional geologist with advanced degrees in geology and mineral economics who has worked internationally with major and junior mining companies, including Kinross Gold Corp., BHP World Minerals and Billiton. Mr. Shafer is also executive vice-president, corporate development, for Hunter Dickinson.
Gordon Fretwell, director, holds a bachelor of commerce degree and graduated from the University of British Columbia in 1979 with his bachelor of law degree. Formerly a partner in a large Vancouver law firm, Mr. Fretwell has, since 1991, been a self-employed solicitor (Gordon J. Fretwell Law Corp.) in Vancouver practicing primarily in the areas of corporate and securities law.
David Copeland, director, is a geological engineer who graduated in economic geology from the University of British Columbia. With over 30 years of experience, Mr. Copeland has undertaken assignments in a variety of capacities in mine exploration, discovery and development throughout the South Pacific, Africa, South America and North America. His principal occupation is president and director of CEC Engineering Ltd., a consulting engineering firm that directs and co-ordinates advanced technical programs for exploration on behalf of companies for which Hunter Dickinson provides services. He is also a director of Hunter Dickinson.
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