TORONTO, May 28, 2015 /CNW/ - Midlands Minerals
Corporation (MEX: TSX-V) ("Midlands") and
Alder Resources Ltd. (ALR: TSX-V) ("Alder")
are pleased to announce that they have entered into a definitive
agreement (the "Agreement"), whereby Midlands will acquire
all of the outstanding shares of Alder pursuant to a statutory plan
of arrangement under the Business Corporations Act
(Ontario) (the
"Arrangement"). The Arrangement provides that Midlands
will be acquiring each outstanding Alder common share in exchange
for 1.81 common shares of Midlands (on a pre-consolidation
basis). Based on the 45 day volume weighted average price
("VWAP") of Midlands' common shares on the TSX Venture Exchange
(the "TSXV") ending on May 26,
2015, the exchange ratio represents a premium of
approximately 31.6% to the 45 day VWAP price of the Alder common
shares. The total consideration to Alder shareholders is
approximately C$1.3 million, based on
Alder's current issued and outstanding shares (inclusive of certain
debt settlement shares as more particularly described below) based
on the 45 day VWAP price of Midlands shares.
Don Dudek,
President and CEO of Alder stated: "Alder's merger with Midlands is
the best outcome for Shareholders that has been possible in the
current market. As you are aware, Alder has been working hard to
advance the Rosita Property on the ground, with metallurgical
studies, discovery of new prospects and collection of technical
study data, while searching for a funding mechanism in order to
complete the project earn-in, which in the context of the current
market has been difficult. In management's opinion, the
potential of the property has only been enhanced by this work over
the past 3.5 years. Now with Midlands as part of our combined
company, we will be able to not only complete the project earn-in
but will be able to advance the technical studies for the
processing of the stockpiles and pending funding, test the obvious,
surface-enriched copper-gold-silver targets that have been
identified. I look forward to working with the Midlands' team and
will continue to be a strong advocate for building shareholder
value. "
Craig Pearman,
President and CEO of Midlands, stated: "In line with our strategy
to acquire a stand-out project, Midlands is pleased to be able to
offer its shareholders exposure to the near-term development and
exploration potential at Rosita. This project and the
geological potential of the region, has been on our shortlist for
two years. I'm especially pleased that the combined company
retains the strengths, continuity and project knowledge of the
Rosita geological team as this will facilitate immediate operations
to secure the earn-in by October
2015. Rosita represents a significantly derisked
mining opportunity for near-term cash flow in a challenging market
environment. Further, it has outstanding exploration
potential to expand the resource base and enjoys community support
in a pro-mining jurisdiction".
None of the securities to be issued pursuant to
the Arrangement have been or will be registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities
Act"), or any state securities laws, and any Midlands shares
issued pursuant to the Arrangement are anticipated to be issued in
reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. This
press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities.
In accordance with the terms of the outstanding
warrants to acquire Alder shares (each, an "Alder Warrant"),
each holder of an Alder Warrant outstanding immediately prior to
the effective time of the Arrangement will receive on subsequent
exercise of such holder's Alder Warrant, in accordance with its
terms, for the same aggregate consideration payable for such
warrant, 1.81 Midlands shares (on a pre-consolidation basis).
In addition, in accordance with the terms of the
outstanding options to acquire Alder shares (each, an "Alder
Option"), each holder of an Alder Option outstanding
immediately prior to the effective time of the Arrangement will
receive on subsequent exercise of such holder's Alder Options, in
accordance with its terms, for the same aggregate consideration
payable for such option, 1.81 Midlands shares (on a
pre-consolidation basis). All Alder Options will remain in good
standing until their expiry.
As part of the Arrangement, it is contemplated
that Alder will issue an additional 5,484,564 common shares in
order to settle certain debts before completion of the
Arrangement. Midlands has also agreed, subject to receipt of
requisite regulatory approvals, including the approval of the TSXV,
to purchase from Alder a C$100,000
unsecured non-convertible debenture (the "Debenture")
bearing interest at a rate of 10% per annum. All interest is
to be calculated and paid quarterly in arrears on the last business
day of the quarter, with the first payment to commence on
September 30, 2015. The
Debenture will mature on the earlier of: (i) May 28, 2016; and (ii) the date of completion of
the Arrangement. Alder has agreed to use the proceeds
from the sale of the Debenture to cover immediate operating
costs. A condition to completion of the Arrangement is the
advance of funds by Midlands to Alder under the Debenture.
Another condition to completion of the
Arrangement is that change of control payments owing to management
of Alder that become due and owing be settled by way of cash after
completion.
Midlands has agreed, as a condition to
completion of the Arrangement to ask shareholders to increase the
board of directors from five to seven and to appoint two new
directors who are nominees of Alder to fill the ensuing vacancy. It
is also anticipated that one existing director of Midlands will
resign and will be replaced by a nominee of Alder. After completion
of the Arrangement, the board of directors of Midlands will be
comprised of seven directors, being four nominees of Midlands and
three nominees of Alder. Midlands has also agreed, as a condition
to completion of the Arrangement to ask shareholders to approve an
anticipated name change and a consolidation of its common shares on
the basis of one post-consolidation common share for each 10
pre-consolidation shares held. The shareholders' meeting of
Midlands is scheduled for July 9,
2015.
Benefits to Alder Shareholders:
- Based on May 26, 2015 45 day VWAP
prices, Midlands shares offered for each Alder share represents
consideration of C$0.0181 per share,
representing a 31.6% premium that Alder management and directors
believe is fair to its shareholders in the context of the current
market environment; and
- Alder shareholders will be able to participate in the
completion of the option agreement for the Rosita Property, which
would provide a stable base from which to build value.
- Midlands has the desire, resources and technical expertise to
advance Alder's Rosita project in Nicaragua.
The Arrangement is subject to the approval of at
least two-thirds of the votes cast by Alder shareholders at an
annual and special meeting of Alder shareholders, which is expected
to be held in July 2015 (and the
shareholders' meeting of Midlands is also expected to be held in
July 2015) and, if applicable under
Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions, the approval of a majority of the
minority shareholders by reason of collateral benefits received by
management as a result of their change of control payments.
Prior to executing the Arrangement Agreement,
the board of directors of Alder obtained a fairness opinion from
Glanville & Associates Ltd. and Bruce McKnight Minerals Advisor
Services. The fairness opinion will be included in the management
information circular to be mailed to shareholders of Alder.
Completion of the Arrangement is subject to
customary conditions, including:
- Approval by a minimum of 66 2/3% of the votes cast by Alder
shareholders represented in person or by proxy at the annual and
special meeting of shareholders as well as approval by a majority
vote that will exclude the votes of certain related parties of the
company as required by Multilateral Instrument 61-101 -
Protection of Minority Shareholders in Special Transactions,
the details of which will be contained in the information circular
to be provided to shareholders of Alder in connection with the
annual and special meeting;
- Approval/acceptance of the TSXV of the Transaction;
- Alder shareholders holding collectively not more than 7.5% of
the outstanding common shares of Alder having exercised their
dissent rights.
In the event that the Arrangement is not
completed under certain circumstances, either Midlands or Alder may
become obliged to pay the other party a termination fee of
C$100,000. In addition, the
Arrangement Agreement includes non-solicitation and superior
proposal provisions.
Full details of the transaction will be included
in the management information circular of Alder to be mailed to
Alder shareholders in due course.
A copy of the Arrangement Agreement will be
filed under each of Midlands' and Alder's profiles on SEDAR at
www.sedar.com.
Voting Support and Board Approval
Prior to entering into the Arrangement
Agreement, Midlands entered into support and voting agreements with
the management and certain members of the board of directors of
Alder (together, the "Locked-Up Shareholders"), collectively
holding approximately 10.43% of the issued and outstanding Alder
Shares, whereby the Locked-Up Shareholders have agreed to vote
their Alder Shares in favour of the Arrangement at the annual and
special meeting of Alder shareholders. The directors of Alder who
are entitled to vote have unanimously approved the Arrangement and
will unanimously recommend that Alder shareholders vote in favour
of the Arrangement. Each director and senior officer of Alder has
indicated that they intend to vote in favour of the
Arrangement.
The Midlands board of directors has unanimously
approved the transaction.
The issuance of the Midlands Shares, including
those issuable on exercise of the Alder Warrants and the Alder
Options on a post-closing basis and the proposed share
consolidation of Midlands are each subject to approval by the
TSXV.
About Alder Resources Ltd.
Alder is a resource company focused on the
development of gold and base metal projects throughout the
Americas. Alder's current high priority Cu-Au-Ag
skarn/supergene/porphyry target is the Rosita project in
Nicaragua located 275 kilometres
northeast of Managua. Alder has
current Inferred mineral stock pile resources of 7.95 million
tonnes grading 0.62% Cu, 0.46 g/t Au and 9.21 g/t Ag with numerous
zones that have near term potential to add to and enhance these
resources. See the technical report entitled "Rosita Cu-Au-Ag
Project, RAAN, Nicaragua, NI
43-101 Technical Report on Mineral Resource Estimate of Rosita
Stockpiles" effective as of May 8,
2012, which is available under Alder's profile at
www.sedar.com. In August 2011, Alder
entered into an option agreement to acquire a 65% interest in the
Rosita D concession from Calibre Mining Corp. by issuing 1,000,000
shares and incurring expenditures of $4,000,000 over four years. To date Alder has
incurred approximately $3.5 million
of the $4.0 million obligation and
has until October 2015 to incur the
remaining project expenditures and issue the remaining shares. For
additional information, please visit Alder's website at
www.alderresources.ca and follow Alder on Facebook, LinkedIn and
Twitter: @AlderResources. Qualified Person Don Dudek, P. Geo.,
Alder's President and CEO and a qualified person as defined by NI
43-101, has reviewed and approved the scientific and technical
content of this news release.
About Midlands Minerals Corporation
Midlands is a Canadian resource company with
common shares that trade on the TSX Venture Exchange under the
symbol "MEX". Additional information on Midlands can be viewed
under Midland's profile at www.sedar.com or on Midlands' website:
www.midlandsminerals.com.
This news release includes certain
forward-looking statements or information under applicable
Canadian, U.S. and other securities laws. All statements other than
statements of historical fact included in this release, including,
without limitation, statements regarding the completion of the
Arrangement, the receipt of regulatory approvals, the future plans,
objectives or expectations of Alder or Midlands are forward-looking
statements that involve various risks and uncertainties. There can
be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual results to differ materially from the plans of Alder or
Midlands or expectations include risks relating to the fluctuating
gold prices, possibility of equipment breakdowns and delays,
exploration cost overruns, availability of capital and financing,
general economic, market or business conditions, regulatory
changes, timeliness of government or regulatory approvals and other
risks detailed herein and from time to time in the filings made by
Midlands or Alder with securities regulators. Midlands and Alder
expressly disclaim any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise except as otherwise
required by applicable securities legislation. Neither the TSX
Venture Exchange, its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange, nor the OTCQX
accepts responsibility for the adequacy or accuracy of this
release.
Cautionary Note to U.S. Investors Regarding
Mineral Reporting
The parties prepare their disclosure in
accordance with the requirements of the securities laws in
effect in Canada, which differ
from the requirements of United
States securities laws. Terms relating to mineral
resources in this press are defined in accordance with Canadian
National Instrument 43-101 — Standards of Disclosure for
Mineral Projects ("NI 43-101") and the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") — CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended, which standards differ significantly from
the discoures permitted by the United States Securities and
Exchange Commission requirements and terminology set forth in SEC
Industry Guide 7. Accordingly, information contained in this
press release and the public filings of the parties containing
descriptions of mineral deposits may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the
United States federal securities laws and the rules and
regulations thereunder.
SOURCE Midlands Minerals Corporation
