Palladon Ventures Ltd. ("Palladon" or the "Company") (TSX VENTURE:
PLL) announces the following update from Dale Gilbert, CEO of CML
Holdings Inc.
CML Holdings Shareholder Update
Dear Shareholder,
I am pleased to provide an update concerning our investment from
Tangshan Jidong Products and Materials Trading Group Co., Ltd
("Tangshan") and an update on the construction of our concentrate
facility.
Tangshan Update
On February 28, 2011, as previously announced, CML Holdings
("CML") closed the sale of $2mm of stock to Tangshan (the "Initial
Sale"). The Initial Sale contemplated that CML would conclude a
second stock sale of $18mm to Tangshan by March 31, 2011 (the
"Second Sale"). The Second Sale required a Stock Purchase Agreement
between CML and Tangshan as well as integrating Tangshan into the
existing Shareholders Agreement between and among the original
shareholders of CML. For a number of external factors, the
necessary documents were not agreed to and the second round of
financing did not occur as planned on March 31, 2011.
I am pleased to announce that on May 27th CML and Tangshan
signed a Stock Purchase Agreement for the sale of stock to Tangshan
in the amount of $18mm. In addition, Tangshan and the shareholders
of CML have agreed to terms including Tangshan in the Shareholders
Agreement. Pursuant to the Stock Purchase Agreement, Tangshan will
purchase $18mm of stock in CML subject to final government approval
in China, which shall take no more than 45 days from the date of
the signed Stock Purchase Agreement. Upon the closing of the Second
Sale, combined with the stock purchased in the Initial Sale,
Tangshan will own 10% of CML. In addition, the CML Board will be
expanded from its current four members to five. Tangshan will
nominate one member of the Board with the remaining four nominees
unchanged.
The pro forma share ownership is listed below:
As of Second
------------------------
5/27/11 Sale Pro Forma % age
------------------------------------------------
Luxor Capital and
affiliates 2,039,082 2,039,082 69.4%
Palladon Ventures Ltd 566,580 566,580 19.3%
Management + vendors (1) 39,333 39,333 1.3%
Tangshan 37,786 256,102 293,888 10.0%
------------------------------------------------
Total 2,682,781 256,102 2,938,883 100.0%
1. Excludes 19,667 restricted shares issued to management subject to
certain vesting schedules.
In addition to the investment, Tangshan will continue to offtake
one boat per month of run-of-mine ore from CML, and will offtake
just under one-third of our expected concentrate production upon
final construction of the concentrate facility. We are excited to
conclude our agreements with Tangshan and welcome them to the CML
team.
Concentrator Update
Construction continues to progress rapidly and on schedule.
Building erection is nearing completion. Concrete crews have
completed the main support matt for the mills, comprising 100 tons
of steel and over 2000cy of concrete. Crews will continue with the
pedestals for the mills and the remaining concrete work over the
coming months. The electrical contractor was selected and began the
main power feed to the plant, temporary power for construction, and
lighting. All major equipment for the mill has been identified and
purchased, with the first mechanical installations scheduled to
commence in June.
Otherwise, it is business as usual at CML. Run-of-mine
operations continue smoothly, with a monthly average of
approximately 166,000 dry metric tonnes shipped in April and May.
On the corporate front, our focus remains closing the second
tranche of the Credit Suisse loan which we hope to close by the end
of June. At that time I expect to provide a full financial and
operating update and an outlook for 2012.
Thank you for your continued support.
Dale
Dale Gilbert, CEO CML Holdings Inc.
John Cutler, CEO of Palladon, commented: "This update clearly
documents that CML continues to make good progress toward their
stated goals. The investment by Tangshan gives CML added
flexibility and provides a new basis for valuing Palladon's stake
in CML. Based on the Tangshan investment in CML, Palladon's revised
19.3% interest in CML is valued at approximately C$38.9 million, or
C$1.42 per outstanding Palladon share."
Further information about CML, included updates with pictures
showing construction activity on the concentrator plant, can be
found at www.cmlmetals.com. Palladon now has a link on its website
to the CML website.
About Palladon Ventures Ltd.
Palladon owns a significant minority interest in CML, which is
focused on advancing the Iron Mountain project, an iron ore mine
located west of Cedar City, Utah.
Disclaimer for Forward-Looking Information:
Certain statements in this release are forward-looking
statements, which reflect the expectations of management.
Forward-looking statements consist of statements that are not
purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Such
statements are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially
from those contained in the statements. No assurance can be given
that any of the events anticipated by the forward-looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them. These forward-looking statements
reflect management's current views and are based on certain
expectations, estimates and assumptions which may prove to be
incorrect. A number of risks and uncertainties could cause our
actual results to differ materially from those expressed or implied
by the forward-looking statements, including: (1) a downturn in
general economic conditions in North America and internationally,
(2) the inherent uncertainties and speculative nature associated
with mineral exploration and production, (3) a decreased demand for
minerals, (4) any number of events or causes which may delay or
cease exploration and development of the Company's property
interests, such as environmental liabilities, weather, mechanical
failures, safety concerns and labor problems; (5) the risk that the
Company does not execute its business plan, (6) inability to retain
key employees, (7) inability to finance operations and growth, and
(8) other factors beyond the Company's control. These
forward-looking statements are made as of the date of this news
release and, except as required by law, 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 statement.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Palladon Ventures Ltd. John W. Cutler Chief Executive
Officer 801.521.5252 604.681.4760 (FAX) info@palladonventures.com
www.palladonventures.com
Palladon Ventures Ltd. (TSXV:PLL)
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