CHAMPION MINERALS INC. (TSX:CHM)(OTCQX:CPMNF)(FRANKFURT:P02)
("Champion") announces the completion of the acquisition by
Champion of Fancamp's 17.5% joint venture interest in the Fermont
Properties in the Fermont iron ore district in north-eastern
Quebec, which was not already owned by Champion effective May 17,
2012, following release from escrow today. The acquisition was paid
for by Champion issuing 14,000,000 common shares and 7,000,000
non-transferable warrants to Fancamp. Each warrant entitles Fancamp
to purchase one common share of Champion at a price of $3.00 per
share at any time between two and a half and three years after the
date of issue, subject to acceleration in certain circumstances.
The shares and warrants of Champion are subject to a four-month
regulatory hold period and to a six-year voluntary restriction on
transfer, subject to the consent of Champion. With the acquisition
of those shares and together with shares currently held, Fancamp
holds 12.59% of the shares of Champion on a non-diluted basis.
As a result of the acquisition, Champion now owns a 100%
interest in the Fermont Properties and Champion and Fancamp
terminated their joint venture relating to the Fermont Properties.
However, Champion continues to retain its right of refusal over
Fancamp's interest in the Lamellee Property and Fancamp continues
to retain its 50% interest in the 3% royalty on the iron production
from the Fermont Properties.
In connection with the acquisition, Fancamp has obtained from
Champion a permanent and irrevocable waiver of Champion's right to
buy-down one-third of Fancamp's 50% interest in the 3% royalty,
which represents a 0.5% royalty interest. For this waiver, Fancamp
paid $2.0 million to Champion. As a result, Champion retains its
right to buy-down the royalty, from a third party, from 3% to
2.5%.
In connection with the waiver, Champion invested $2,000,000 in
Fancamp by acquiring 8,000,000 common shares of Fancamp from
treasury at a price of $0.25 per share.
Champion also invested $3,000,000 in Fancamp by acquiring
10,000,000 units of Fancamp at a price of $0.30 per unit. Each unit
consists of one common share of Fancamp and one non-transferable
warrant to purchase one common share of Fancamp at a price of $0.60
at any time between two and a half and three years after the date
hereof, subject to acceleration in certain circumstances. As a
result of regulatory requirements, Champion has agreed not to
exercise warrants where the shares issuable upon exercise would
result in a change of control of Fancamp unless approved by the
disinterested shareholders of Fancamp. The shares and warrants of
Fancamp are subject to a four-month regulatory hold period and to a
six-year voluntary restriction on transfer, subject to the consent
of Fancamp. With the acquisition of those shares and the other
shares referred to above, Champion holds 16.46% of the shares of
Fancamp on a non-diluted basis.
As a result of Champion and Fancamp acquiring securities in the
other, Champion and Fancamp have entered into a reciprocal rights
agreement governing certain investor rights and obligations as
between them.
Champion and Fancamp will each be restricted from transferring
securities of the other for a period of six years, after which time
transfers will be permitted subject to certain restrictions.
Champion and Fancamp will each be restricted from voting in certain
circumstances, including not voting against the election of any
nominee to the Board of Directors proposed by the other or against
any resolutions supported by the Board of Directors of the other,
subject to certain exceptions.
Champion and Fancamp will each be entitled to nominate two
persons to the Board of Directors of the other so long as Champion
holds at least 12,000,000 shares of Fancamp and Fancamp holds at
least 10,000,000 shares of Champion.
Effective today, Mr. Paul Ankcorn, one of the nominees of
Champion, has been appointed to the Board of Directors of Fancamp,
and Mr. Jean Lafleur, one of the nominees of Fancamp, has been
appointed to the Board of Directors of Champion. With that
appointment, Mr. Ankcorn has resigned from the Board of Directors
of Champion but joins its Advisory Board. The remaining nominees of
Champion and Fancamp will be nominated for election to the Board of
Directors of the other at their respective next annual meetings of
shareholders.
The boards of directors of Fancamp and Champion have each
unanimously determined that the proposed transaction is fair and in
the best interest of their respective companies. Raymond James Ltd,
financial advisor to Fancamp and its board of directors, for this
transaction has provided an opinion to the effect that the
consideration offered to Fancamp shareholders is fair, from a
financial point of view, to Fancamp shareholders. Primary Capital
Inc. acted as financial advisor to Champion and its board of
directors for these transactions.
For past services rendered, Fancamp has issued 250,000 common
shares at a price of $0.30 per share to Raymond James Ltd. as part
of its compensation. The shares are subject to a four-month
regulatory hold period.
Early Warning
Champion has acquired the Fancamp common shares and warrants in
these transactions for investment and has no present intention of
acquiring additional securities of Fancamp. Depending upon its
evaluation of the business, prospects and financial condition of
Fancamp, the market for Fancamp's securities, general economic and
tax conditions and other factors, Champion may acquire more or sell
some or all of its securities of Fancamp, subject to the
limitations on transfer and exercise set forth above. Following
these transactions, Champion holds 18,000,000 common shares of
Fancamp, representing approximately 16.46% of the issued and
outstanding common shares of Fancamp as well as warrants
exercisable into 10,000,000 common shares of Fancamp, which, if
exercised, would represent approximately 8.38% of the issued and
outstanding common shares of Fancamp. Further details regarding the
early warning report may be obtained from the Early Warning Report
filed in respect of these transactions under Fancamp's profile on
www.sedar.com.
About Champion Minerals Inc.
Champion Minerals is an iron ore exploration and development
company with offices in Montreal and Toronto, and is focused on
developing its significant iron ore resources in the provinces of
Quebec and Newfoundland and Labrador. The Company's projects
include: the Fermont Projects in Quebec; and the Attikamagen Iron
Property in Quebec and Labrador. Champion's Fermont Projects,
including the flagship Fire Lake North Project, are located in
Canada's major iron ore producing district, in close proximity to
three producing mines. Champion's team and advisory board includes
mining and exploration professionals with substantial iron ore
expertise to effectively advance the Fire Lake North Project into
production.
Please visit Champion's website at www.championminerals.com. For
further information about Champion, please contact Thomas G.
Larsen, President and CEO, and Jorge Estepa, Vice-President, at
(416) 866-2200, or at the head office at 20 Adelaide Street East,
Suite 301, Toronto, Ontario.
The statements made in this news release that are not historical
facts are "forward-looking statements" and readers are cautioned
that any such statements are not guarantees of future performance,
and that actual developments or results, may vary materially from
those in these "forward-looking" statements.
This news release includes certain information that may
constitute "forward-looking information" under applicable Canadian
securities legislation. Forward-looking information includes, but
is not limited to, statements about the acquisition, private
placement, royalty waiver and Champion's intentions with respect to
the Fancamp common shares and warrants. Forward-looking information
is necessarily based upon a number of estimates and assumptions
that, while considered reasonable, are subject to known and unknown
risks, uncertainties, and other factors which may cause the actual
results and future events to differ materially from those expressed
or implied by such forward-looking information, including the risks
identified in the companies' annual information forms, management
discussion and analysis and other securities regulatory filings by
the companies on SEDAR (including under the heading "Risk Factors"
therein). There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such forward-looking
information. Accordingly, readers should not place undue reliance
on forward-looking information. All forward-looking information
contained in this press release is given as of the date hereof and
is based upon the opinions and estimates of management of the
companies and information available to management as at the date
hereof. Each of the companies disclaims any intention or obligation
to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.
This press release has been prepared by Champion Minerals Inc.
and no regulatory authority has approved or disapproved the
information contained herein.
Contacts: Champion Minerals Inc. Thomas G. Larsen President and
CEO (416) 866-2200 Champion Minerals Inc. Jorge Estepa
Vice-President (416) 866-2200 www.championminerals.com