TORONTO, Sept. 3, 2013 /CNW/ - Prima Fluorspar Corp.
(TSX-V:PF) ("Prima" or the "Company") is pleased to announce
that on August 30, 2013 it entered
into a non-binding letter of intent with three funds managed by
affiliates of New York-based
Firebird Management LLC ("Firebird"), to negotiate the
purchase of holding companies through which Firebird controls it
99.8% ownership stake in Berkh Uul JSC (Mongolian Stock Exchange:
BEU; Bloomberg code: BEU MO; "Berkh
Uul"), which owns the high grade, large resource Delgerkhan
fluorspar mine ("Delgerkhan") in the Khentii Province of
Mongolia. The transaction, which
will be at arm's length, assuming that final terms are agreed to by
both parties, the execution of binding agreements, and that all
conditions precedent to closing are met, would result in Firebird
acquiring a controlling stake in Prima, which would emerge as a
significant fluorspar company with a diversified portfolio of
fluorspar assets. The transaction will be considered a reverse
takeover (RTO) of Prima by Firebird, and will result in Prima's
stock being halted from trading until TSX Venture Exchange
conditions have been met.
Transaction Highlights
- Historic high grade fluorspar asset with an indicated resource
of 6.6 million tonnes @ 33.7% CaF2 and an inferred
resource of 3 million tonnes @ 33.7% CaF2;
- China, Berkh Uul's target
market is expected to be a net importer of fluorspar which will
support attractive long term fluorspar market fundamentals;
- Prima's 100%-owned Liard Fluorspar Property ("Liard") a
development property in British Columbia,
Canada provides geographic diversification while maintaining
pure-play fluorspar exposure; and
- Experienced management team and strong industry partnerships
set to drive rapid process execution.
The transaction will be subject to various
conditions, including but not limited to:
- Indicative valuations being performed on each of the Berkh Uul
project and Prima, and Prima to issue shares for the Berkh Uul
fluorspar assets; the terms and agreements of each are to be
negotiated;
- Prima required to raise a minimum of $6,000,000 in financing for the Berkh Uul
project;
- Prima shareholders to approve transaction before closing;
and,
- TSX-V Exchange approval.
President and CEO of Prima, Robert Bick commented, "As a result of a
disciplined sourcing approach, we identified the Berkh Uul as an
ideal acquisition target. This transaction provides the potential
for Prima to become a near-term producer. The consolidation of the
Delgerkhan mine in Mongolia with
our Liard Fluorspar Property in Canada will position Prima as a potential
global fluorspar producer and supplier."
Firebird Management LLC
Berkh Uul is super-majority owned by affiliates
of Firebird Management LLC, a New
York-based, SEC-registered private American company that
manages four private funds dedicated to investment in equities of
publicly traded companies operating in Russia and early stage Eastern European
countries, as well as two global portfolio equity funds and two
funds dedicated to local Mongolian securities.
The net cumulative return for the Firebird Fund
since inception in 1994 is 4,543% and a net cumulative return since
inception in 1996 of 2,357% for the Firebird New Russia Fund.
Berkh Uul JSC
Berkh Uul is a Mongolian-based fluorspar
resource company established in 1954 with six mining licenses in
jurisdictions displaying a significant presence of fluorspar. The
most prolific is the Delgerkhan mine which was actively mined from
the early 1980's to 2008. A technical report resource estimation
prepared by Micromine Proprietary Limited ("Micromine") completed
in August 2012, which stated that it
was prepared in compliance with NI 43-101, reported an indicated
resource of 6.6 million tonnes @ 33.7% CaF2 and an
inferred resource of 3 million tonnes @ 33.7% CaF2.
Berkh Uul has been listed on the Mongolian Stock
Exchange ("MSE") since 2006 under the symbol BEU. Firebird acquired
a controlling stake in Berkh Uul in 2011.
Reopening the Delgerkhan Mine
The Delgerkhan mine is currently being prepared
to reopen with initial production expected in 2014 with annual
production targeted at approximately 120,000 tonnes. Relative to
other fluorspar assets, and based on historical data, Delgerkhan
has the potential to be one of the highest grade producing
fluorspar mines in the world. Upon completion of this
acquisition Prima is positioned to be a significant fluorspar
producer. In addition to reopening the Delgerkhan Mine, Prima will
continue to advance development of its flagship Canadian asset, the
Liard Fluorspar Property.
Historical Data Regarding the Delgerkhan
Fluorspar Mine: The Micromine technical report is very recent
and no additional work has been done on the Berkh Uul properties
since the completion of the report. We therefore consider that the
report is very reliable and very relevant. However, as the report
was not prepared for Prima, it is required under NI 43-101 to be
updated and until then, we are not treating the historical estimate
as current mineral resources or mineral reserves.
Non-Brokered Private Placement for Liard
Fluorspar Project
Prima has arranged a non-brokered private
placement financing of up to 10,000,000 Units (the "Units") of the
Company at a price of $0.10 per Unit
for gross proceeds of $1,000,000.
Each Unit will consist of one common share and one common share
purchase warrant ("Warrant"). Each Warrant will be exercisable into
one common share at $0.15 for a
period of 24 months from closing.
The Company also announces a private placement
financing of up to 8,333,333 flow-through units (the "FT Units") of
the Company at a price of $0.12 per
FT Unit for gross proceeds of $1,000,000. Each FT Unit will consist of one
flow-through common share and one half non flow-through common
share purchase warrant. Each whole warrant, (a "Warrant") will be
exercisable into one common share at $0.18 for a period of 12 months from closing.
Proceeds from the private placements will be
used to conduct exploration on the Company's Liard Fluorspar
property and for general working capital.
The private placements remain subject to the
final acceptance of the TSX Venture Exchange (the "TSXv"). Finder's
fees may be payable in accordance with the policies of the TSXv.
The securities issued will be subject to a four-month hold
period.
In conjunction with the proposed transaction,
Prima has agreed to the issuance of 200,000 stock options to a
metallurgist and mining engineer that has been engaged to assist in
the completion of due diligence on the Delgerkhan property.
The stock options have an exercise price of $0.10, vest on December
20, 2013 and expire on August 20,
2018.
About Fluorspar
Fluorspar is the commercial name for fluorite
(CaF2). It is an industrial material that is primarily
used in the production of hydrofluoric acid, fluorocarbons,
(aerosols, refrigerants etc.), fluoropolymers (Teflon), aluminum
smelting, steel production, and the refinement of petroleum,
uranium and concrete.
The worldwide market for fluorspar is estimated
at $2.4 billion. China is currently the global leader in
fluorspar production and consumption. However, China has been steadily decreasing its exports
of fluorspar leaving the global supply constrained. Europe and the US Department of Defence have
designated fluorspar as a strategic commodity due to projected long
term supply shortfalls, which have created an attractive
opportunity for new entrants in the industry to fill the
deficit.
Highlights about Prima's Liard Fluorspar
Property
Liard has the potential to become a major
supplier of Fluorspar to the USA
and Canada, both strategic markets
for Fluorspar with limited access to supply. There are currently no
commercial fluorspar producers in Canada or the United
States. Furthermore, there are no other fluorspar companies
with near term cash flow in Canada
or United States.
- 3.2 million tonnes at an average grade of 32% fluorspar;
Mineralization at surface, quarry mining potential;
- 30 km strike length;
- Metallurgical Testing: 97% CaF2;
- 22,500 ha (55,000 acres), 100%-owned claims; and
- Easy access, on the Alaska
Highway in British Columbia
Historical Data Regarding the Liard Fluorspar
Property
Prima Fluorspar Corp. has not undertaken an
independent verification to classify the historic resource estimate
quoted from a Mineral Potential Compilation Report for the BC
Department of Economic Development, written by Wright Engineers
Limited and H.N. Halvorson Consultants Ltd., in January 17, 1975 as a current mineral resource.
Neither has Prima independently verified the results of the
previous exploration work. Therefore, the historical mineral
resource should not be relied upon, but the issuer believes the
information to be relevant and reasonably reliable. An unknown
quantity of the 3.2 million tonnes is on mineral claims outside of
the current Liard Fluorspar Property. However, based on the
information available, the majority of the estimate is based on the
deposits located on Prima's Liard Fluorspar Property. The key
assumptions, parameters and methods of the resource estimate are
unknown at this time. New deposit definition drilling is needed to
develop a current resource estimate on the property. Prima believes
that these historical mineral resources provide a conceptual
indication of the potential of the property and are relevant to
ongoing exploration.
About Prima
Prima is positioned to become a major global
fluorspar producer and supplier through development and acquisition
of leading fluorspar assets. With the completion of the Berkh Uul
acquisition Prima will be the only publically traded Fluorspar
company in Canada or United States with near term cash flow
potential.
Jacob Securities Inc. is acting as financial
advisor to Prima on the transaction and Clark Wilson LLP is acting
as legal counsel to Prima.
Jacob Securities Inc. subject to completion of
satisfactory due diligence, has agreed to act as sponsor to Prima
in connection with the transaction. An agreement to sponsor should
not be construed as any assurance with respect to the merits of the
transaction or the likelihood of completion.
Completion of the transaction is subject to a
number of conditions, including Exchange acceptance and Shareholder
approval. The transaction cannot close until the required
Shareholder approval is obtained. There can be no assurance that
the transaction will be completed as proposed or at all. Investors
are cautioned that, except as disclosed in the Management
Information Circular to be prepared in connection with the
transaction, any information released or received with respect to
the RTO may not be accurate or complete and should not be relied
upon. Trading in the securities of Prima Resources Corp. should be
considered highly speculative.
The TSX Venture Exchange has in no way passed
upon the merits of the proposed transaction and has neither
approved nor disapproved the contents of this press release.
Neil McCallum,
P.Geo., is the qualified person who approved the technical
disclosure in this news release.
For more information about Prima please visit:
http://primafluorspar.com/ Please feel free to contact me at any
time rbick@primafluorspar.com or at 604-681-1568. I look forward to
hearing from you.
ON BEHALF OF THE BOARD
PRIMA RESOURCES CORP.
"Robert Bick"
Robert Bick
President and CEO
Disclaimer for Forward-Looking Statements
Statements in this news release that are not
historical facts are forward-looking statements that are subject to
risks and uncertainties. Words such as "expects", "intends",
"plans", "may", "could", "should", "anticipates", "likely",
"believes" and words of similar import also identify
forward-looking statements. Forward-looking statements in
this news release include statements about the possible acquisition
of the Berkh Uul assets, the closing of two private placements,
that Prima can become a major fluorspar producer and supplier.
Actual results may differ materially from those currently
anticipated due to a number of factors beyond the Company's
control. These risks and uncertainties include, among other
things, that we may not be able to agree on terms with Firebird,
that we may not be able to obtain regulatory or shareholder
approval, that we may not be able to raise funds required, that
conditions to closing may not be fulfilled, that the Delgerkhan
Mine may not reopen because of regulatory or financing or other
obstacles, the market price for fluorspar may make the resources
uneconomic, and other risks associated with being a mineral
exploration and development company. These forward-looking
statements are made as of the date of this news release and, except
as required by applicable laws, the Company assumes no obligation
to update these forward-looking statements, or to update the
reasons why actual results differed from those projected in the
forward-looking statements
SOURCE Prima Fluorspar Corp