Orex and Astral Announce Merger by Way of Plan of Arrangement
October 15 2012 - 10:44AM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED
STATES
Orex Minerals Inc. (TSX VENTURE:REX) ("Orex") and Astral Mining Corporation (TSX
VENTURE:AA) ("Astral") announce that they have agreed to merge and form a
combined gold and silver exploration and development company, which will focus
on the advanced-stage Barsele Gold Project in Sweden, the Coneto Silver-Gold
project, and the Los Crestones Gold-Silver-Copper Project in Mexico.
The transaction (the "Transaction") will be completed by way of a plan of
arrangement, or other business combination, in which Orex will acquire all of
the issued and outstanding common shares of Astral. Each Astral shareholder will
receive one common share of Orex for every twelve common shares of Astral held.
All outstanding Astral options and warrants will be exchanged for options and
warrants of Orex in an amount and at exercise prices adjusted in accordance with
the same exchange ratio.
Merged Entity Highlights
-- Orex's key asset is the advanced-stage Barsele Gold Project located near
Storuman, Vasterbottens Lan, approximately 600 km north of Stockholm,
Sweden. Barsele has a NI 43-101 Compliant Resource Estimate (using 0.6
g/t Au cut-off) that has defined: 382,000 oz Au Indicated @ 1.2 g/t Au
(9.97 million tonnes grading 1.19 g/t Au) and 648,000 oz Au Inferred @
1.0 g/t Au (21.04 million tonnes grading 0.96 g/t Au). (Feb. 28, 2011)
-- Orex's Coneto Silver-Gold Project is adjacent to the village of Coneto
de Comonfort, centrally positioned within the "Mexican Silver Trend",
approximately 100 km north of the city of Durango, Mexico. Orex has
signed an Association Agreement with Fresnillo PLC to explore the Coneto
property with joint management of the presently ongoing Phase-II Diamond
Drill program. Fresnillo PLC is Orex's second largest shareholder.
-- Astral's key assets are the Los Crestones Project in western Mexico, and
the Jumping Josephine Project in southeastern British Columbia.
-- The Los Crestones Project is an early stage gold-silver-copper
property located in the gold-silver belt of the Sierra Madre
Occidental of Sinaloa State, western Mexico. The property totals
4,168 ha and is located approximately 110km from the state capital
of Culiacan. The property hosts numerous mineralized showings and
small scale workings and is prospective for vein and breccia-hosted
low sulphidation epithermal gold and silver. Best drill results to
date included 5 m averaging 39 g/t Au, 93 g/t Ag and 2.13% Cu.
-- The Jumping Josephine Project is a prospective exploration property
with the potential to host an economic gold deposit and warrants
further advanced exploration work. It is a large contiguous claim
holding which covers 35,735 ha in the West Kootenay region of
Southeastern British Columbia. The area is within a mining district
boasting historical production in excess of 9 Moz of high-grade
gold. The property is well-located close to existing infrastructure
and approximately 40km north of Teck-Cominco's smelting operations
in Trail. Drilling to date has identified a NI 43-101 Compliant
Resource Estimate (using 0.5g/t Au cut-off) that has defined: 34,000
oz Au Indicated (363,000 tonnes grading 2.95 g/t Au) and 30,000 oz
Au Inferred (448,000 tonnes grading 2.08 g/t Au) (June 24, 2011).
Astral has a 60% joint venture interest in the Project.
Gary Cope, President & CEO of Orex, comments that: "We're pleased to have
reached an agreement regarding Orex's acquisition of Astral, which will provide
us with a new gold-silver project in Mexico that we are very interested in
exploring. While Los Crestones is an early stage project, our technical team is
encouraged by results received to date, and we hope that our considerable
exploration expertise in Mexico will help to advance the project. We have the
manpower to conduct exploration at Los Crestones. Our partner Fresnillo PLC is
the operator of, and currently conducting a drill program on the Coneto project.
We also intend to complete some limited follow-up exploration on Astral's
British Columbia projects in the near term so as to better understand them."
Astral's CEO, Manfred Kurschner, states: "Astral's early stage gold and silver
projects in Mexico and British Columbia are receiving little attention and
funding in the current market conditions. Orex makes an excellent match for
Astral, with a strong management and technical team. This merger will provide
Astral shareholders the opportunity to participate in a larger, well-capitalized
company with a combined portfolio of quality precious metals exploration
projects. Orex's management team has an established track record of advancing
discoveries - the same team is responsible for the identification of Orko Silver
Corp's La Preciosa Deposit in Durango, Mexico."
Terms of Transaction
The Transaction will be effected by a plan of arrangement under the Business
Corporations Act (British Columbia). Subject to fulfillment of closing
conditions, Orex will acquire from the shareholders of Astral 100% of the
outstanding common shares of Astral in exchange for common shares of Orex and
Astral will, as a result, become a wholly owned subsidiary of Orex. Each Astral
shareholder will receive one common share of Orex for every twelve common shares
of Astral held. All outstanding Astral options and warrants will be exchanged
for options and warrants of Orex in an amount and at exercise prices adjusted in
accordance with the same exchange ratio. On issuance of the Orex options and
warrants, the Astral options and warrants will be cancelled.
If the Transaction is completed, Orex will have approximately 46,615,762 common
shares issued and outstanding, of which current Orex shareholders will own
approximately 95.6% and former Astral shareholders will own approximately 4.4%.
After completion of the Transaction, Orex's executive officers and board of
directors will be unchanged. Orex's management team consists of:
Gary Cope, President, CEO and Director
Mr. Cope has more than 33 years' experience as a mining executive. He is also
President and CEO of Orko Silver Corp.
Art Freeze, P.Geo., Director
Mr. Freeze is a consulting geologist to Goldcorp Inc. with extensive experience
in mining development and evaluating projects for both senior and junior
resource companies. He has held consulting and management positions with major
and junior companies, including Cominco Ltd., Echo Bay Mines Ltd. and Pan
American Silver Corp.
George Cavey, P.Geo., Director
Mr. Cavey has over 35 years experience as a consulting geologist, through which
he has supervised exploration projects throughout North, South and Central
America and West Africa. He is the past President of the Canadian Council of
Professional Geoscientists, has won numerous awards, and currently serves on the
Canadian Securities Administrators Mining Technical Advisory and Monitoring
Committee as a representative of small mining companies. Mr. Cavey is also VP,
Exploration for Orex and a Director of Orko Silver Corp.
Ben Whiting, M.Sc., P.Geo., Chief Geologist
Mr. Whiting has over 33 years experience in international exploration and mining
and is a Past Adjunct Professor at Queen's University. Mr. Whiting is also the
Chief Geologist of Orko Silver Corp.
Subject to closing of the Transaction, certain creditors of Astral have agreed
to reduce the amount of debt owed by Astral to such creditors and to accept
common shares of Orex in settlement of the debt. This debt will be converted
into that number of shares of Orex based on a conversion price equal to the
volume weighted average closing price of Orex's common shares as traded on the
TSX Venture Exchange (the "Exchange") for the five trading days before the
closing of the Transaction (the "VWAP") on the terms and conditions contained in
such debt settlement agreements.
Subject to closing of the Transaction, certain holders of convertible notes of
Astral have agreed to accept common shares of Orex in settlement of their notes.
The principal and unpaid interest outstanding under the convertible notes will
be converted into Orex shares based on a conversion price equal to the VWAP.
Upon issuance of the Orex shares to these noteholders, their notes and the
general security agreements granted by Astral to secure their notes will be
cancelled and discharged. One of the note holders is a company wholly owned by
Manfred Kurschner, CEO and a director of Astral. Nick DeMare, a director of the
Company, is 100% owner of one company and 50% owner of another company that
holds convertible notes.
Secured Loan by Orex
Orex has advanced to Astral the sum of $100,000 by way of a secured loan. Of
these funds, $55,000 has been advanced to fulfill Astral's obligation to make a
staged payment to the Mexican owners of the Los Crestones Property pursuant to
the option agreement dated January 11, 2011 between Astral and the property
owners. The balance of the funds will be used to pay certain creditors of Astral
who have agreed to reduce the amount of debt owed provided that Astral pays the
debt in cash within the time prescribed by the terms and conditions of the debt
settlement agreements. The loan advances from Orex may be increased by the
agreement of Orex and Astral to fund working capital and to ensure that Astral
pays required ongoing expenses and liabilities. Astral has executed a formal
loan agreement, promissory note, and priority agreements in favour of Orex. The
initial loan advance and any future loan advance by Orex to Astral has been, and
will be, secured by a general security agreement that creates a security
interest in all Astral's assets and property in priority to the security
interests of the convertible note holders of Astral.
In the event either: (a) the Transaction does not proceed for any reason, other
than material breach or default by Orex under one or more of the formal
agreements signed or to be signed by the parties, including the formal plan of
arrangement agreement (together, the "Formal Agreements") which has not been
cured after the time to cure has expired; or (b) there is an event of material
breach or default by Astral under one or more of the Formal Agreements, which
has not been cured after the time to cure has expired, the loan advances will
become due and payable within six months of the date that the Transaction is
terminated, or the last date to cure any such uncured breach or default by
Astral, whichever is applicable. The loan advances will bear interest from the
date of default or termination at a rate of 6% per annum.
Closing Conditions
Completion of the Transaction is conditional upon, among other conditions:
1. Shareholders of Orex and Astral having approved the Transaction at joint
meetings expected to be held in January, 2013;
2. Completion of legal and financial due diligence by each of the parties;
3. Execution of a formal plan of arrangement agreement;
4. A fairness opinion to support the exchange ratio of Astral securities for
Orex securities in the Transaction, if required;
5. Receipt of all necessary regulatory approvals, including approval of the TSX
Venture Exchange; and
6. The absence of a material adverse change in the business, financial
condition, assets or operations with respect to each party.
No assurance can be given at this time that the Transaction will be completed,
that the conditions to closing will be satisfied, or that the terms of the
Transaction will not change materially from those described in this news
release.
Orex and Astral will be seeking lock-up agreements to vote their shares in
favour of the Transaction from the directors and officers of Orex and Astral,
and significant shareholders of Astral. The Transaction is expected to close on
or before February 28, 2013.
Art Freeze, P.Geo, a director of Orex, is a Qualified Person as defined in NI
43-101 and takes responsibility for Orex's technical disclosure contained within
this news release. Dale Brittliffe, P.Geo, consultant to Astral, is a Qualified
Person as defined in NI 43-101 and takes responsibility for Astral's technical
disclosure contained within this news release.
About Orex Minerals Inc.
Orex Minerals Inc. (TSX VENTURE:REX) is a Canadian-based junior exploration
company with two very distinctive precious metals plays in its portfolio:
Barsele Gold Project (Sweden) and Coneto Silver-Gold Project (Durango, Mexico).
Please refer to www.orexminerals.com for additional information.
About Astral Mining Corp.
Astral Mining Corporation (TSX VENTURE:AA) is a Canadian company engaged in the
exploration and development of precious metal properties in the Americas. By
focusing on exploration in mining-friendly districts, the Company minimizes the
political and social risks encountered in many other parts of the world. Please
refer to www.astralmining.com for additional information.
ON BEHALF OF THE BOARDS
Mr. Gary Cope Mr. Manfred Kurschner
President & CEO President & CEO
Orex Minerals Inc. Astral Mining Corporation
For further information on Astral, please contact Manfred Kurschner, President &
CEO, at (604) 569-0800, or via email info@astralmining.com (this e-mail address
is being protected from spambots - you need JavaScript enabled to view it), or
visit www.astralmining.com.
For further information on Orex, please contact Gary Cope, President & CEO, at
(604) 684-4691, or via email info@orexminerals.com, or visit
www.orexminerals.com.
Cautionary Note to US Investors: This news release may contain information about
adjacent properties on which we have no right to explore or mine. We advise U.S.
investors that the SEC's mining guidelines strictly prohibit information of this
type in documents filed with the SEC. U.S. investors are cautioned that mineral
deposits on adjacent properties are not indicative of mineral deposits on our
properties.
Forward-Looking Information
This news release contains "forward-looking statements" including but not
limited to statements with respect to Orex and Astral's plans, the estimation of
mineral reserves and the success of exploration activities. Forward-looking
statements, while based on management's best estimates and assumptions, are
subject to risks and uncertainties that may cause actual results to be
materially different from those expressed or implied by such forward-looking
statements, including but not limited to: risks related to the successful
integration of acquisitions; risks related to international operations; risks
related to general economic conditions and credit availability, actual results
of current exploration activities, fluctuations in foreign currency exchange
rates, possible variations in ore reserves or grade; failure of plant, equipment
or processes to operate as anticipated; accidents, labour disputes, title
disputes, claims and limitations on insurance coverage and other risks of the
mining industry; changes in national and local government regulation of mining
operations, tax rules and regulations; and political and economic developments
in countries in which Orex and Astral operate. Although Orex and Astral have
attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking statements, there may
be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
Orex (TSX VENTURE:REX) Shares outstanding 44,562,479
Astral (TSX VENTURE:AA) Shares outstanding 24,935,554
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