Rockcliff Resources Inc. ("Rockcliff") (TSX VENTURE:RCR) and Tawsho Mining Inc.
(TSX VENTURE:TAW) ("Tawsho") are pleased to announce that they have entered into
a letter of intent (the "LOI") which sets out the principal terms upon which it
is proposed that the two corporations will complete a business combination (the
"Merger"). The Merger will be effected on a share for share basis such that each
nine (9) issued and outstanding securities of Rockcliff will be exchanged for
five (5) securities of Tawsho. At the conclusion of the Merger, the existing
Tawsho shareholders will hold approximately 69.72% of the outstanding shares of
the combined entity ("MergeCo") and the existing shareholders of Rockcliff will
hold approximately 30.28% of the outstanding shares of MergeCo. It is
anticipated that MergeCo will continue to be named "Tawsho Mining Inc." and will
continue to be listed on the TSX Venture Exchange ("TSXV"). Currently Rockcliff
has 22,868,903 common shares issued and outstanding and Tawsho has 29,251,849
common shares issued and outstanding. MergeCo will have 41,956,795 common shares
issued and outstanding before giving effect to the Rockcliff Financing referred
to below. As part of the Merger, Zoran Arandjelovic, Chairman of Tawsho, (as to
$300,000) and Steve Balch, President & C.E.O. of Tawsho, (as to $60,000) have
agreed to subscribe for a total of $360,000 of the Rockcliff Financing on the
terms set out below.
Reasons for the Merger
Rockcliff President and C.E.O., Ken Lapierre stated "The Board and Management of
Rockcliff unanimously support the planned merger between our two Companies. The
MergeCo will have an outstanding technical and financial team in place which
will perfectly augment an excellent property portfolio centered on its high
grade copper deposits in Manitoba and gold deposits in Quebec. MergeCo will now
have the financial capability to systematically advance these deposits so that
their true mine potential can be realized. Obviously, the market has not been
kind to juniors over the last number of years and MergeCo will be vigilant of
its finances while advancing its priority properties moving forward. We strongly
recommend to our shareholders to support this Merger as it will provide long
term survival and growth of the properties we have worked so hard at advancing."
The share exchange ratio represents a 25% premium to the closing price of
Rockcliff common shares on December 5, 2013.
Steve Balch, President and C.E.O. of Tawsho stated "Tawsho is enthusiastic about
expanding its resource focus, currently comprised of its gold resource in Quebec
and its graphite property in Newfoundland, to include the high grade copper
deposits of Rockcliff. Tawsho shareholders will benefit from the significant
enhancements made by Rockcliff management to the Rockcliff copper properties in
Manitoba. Presently, two copper deposits host approximately 150,000,000 pounds
of high grade copper in the indicated resource category and over 55,000,000
pounds in the inferred resource category with significant credits in gold, zinc
and silver. Both deposits are open in all directions and significant high grade
tonnage could be added to the present resources with additional drilling.
MergeCo will have a solid base of precious and base metal resources and access
to capital that will ensure its continued viability."
Rockcliff Financing
Rockcliff wishes to announce that it will be undertaking a non-brokered
flow-through unit private placement and a non-brokered working capital unit
private placement to raise aggregate proceeds of up to $650,000 (the "Rockcliff
Financing") to provide it with additional operating and exploration capital. The
offering announced on November 11, 2013 has been amended to provide for up to
2,500,000 flow-through units of Rockcliff at a price of $0.06 per flow-through
unit, for gross proceeds of up to $150,000, and up to 10,000,000 working capital
units of Rockcliff at a price of $0.05 per working capital unit, for gross
proceeds of up to $650,000.
Each flow-through unit (a "FT Unit") consists of one flow-through common share
of Rockcliff priced at $0.06 and one (1) non flow-through share purchase warrant
(a "Warrant"). Each Warrant entitles the holder to acquire an additional common
share at a price of $0.075 until twenty-four (24) months from the closing of the
Rockcliff Financing.
Each working capital unit (a "WC Unit") consists of one common share of
Rockcliff priced at $0.05 and one (1) share purchase warrant (a "WC Warrant").
Each WC Warrant entitles the holder to acquire an additional common share at a
price of $0.075 until twenty-four (24) months from the closing of the Rockcliff
Financing.
Rockcliff will pay finder's fees of 10% cash and issue Compensation Options
equal to 10% of the number of WC Units or FT Units placed by any eligible
finders. Each Compensation Option will entitle the finder to acquire one common
share for twenty-four (24) months from the closing of the Rockcliff Financing at
$0.05 per common share.
If the Rockcliff Financing is fully subscribed, the existing Tawsho shareholders
will hold approximately 59.82% of the outstanding shares of MergeCo and the
existing shareholders of Rockcliff, including in the investors in the Rockcliff
Financing, will hold approximately 40.18% of the outstanding shares of MergeCo.
MergeCo will then have 48,901,240 common shares issued and outstanding.
If the Rockcliff Financing is fully subscribed, Zoran Arandjelovic will hold
16.96% of Rockcliff on an undiluted basis and Steve Balch will hold 3.39% of
Rockcliff on an undiluted basis. The WC Warrants to be issued to Mr.
Arandjelovic will be restricted such that Mr. Arandjelovic will not be able to
exercise the WC Warrants if such exercise could result in Mr. Arandjelovic
holding 20% or more of the issued and outstanding capital of Rockcliff without
obtaining approval of the shareholders of Rockcliff to the change of control. If
the Merger is completed, the restriction will be removed.
Structure of the Merger
It is anticipated that the Merger will be effected by way of a three-cornered
amalgamation under the Business Corporations Act (Ontario) (the "OBCA"),
pursuant to which Rockcliff (a corporation formed under the OBCA) will
amalgamate with a newly-incorporated, wholly owned OBCA formed subsidiary of
Tawsho, to be become a wholly-owned subsidiary of Tawsho.
Under the terms of the Merger:
a. all of the common shares of Rockcliff (the "Rockcliff Shares")
outstanding will be exchanged for common shares of Tawsho (the "Tawsho
Shares") at the ratio of nine (9) Rockclifff Shares for five (5) Tawsho
Shares (the "Exchange Ratio");
b. the warrants and options of Rockcliff issued and outstanding at the date
of the Merger will be converted into warrants and options of Tawsho at
the Exchange Ratio and the exercise prices of the warrants and options
will be adjusted by a factor of 9/5;
c. Tawsho shall continue with its listing on the TSXV.
d. Tawsho shall appoint four (4) directors to MergeCo and Rockcliff shall
appoint two (2) directors to MergeCo.
e. The President and C.E.O. of Tawsho, Steven Balch, will become the
President and Chief Executive Officer of MergeCo and the President and
C.E.O. of Rockcliff, Ken Lapierre, will become the Chief Operating
Officer of MergeCo. Zoran Arandjelovic, Chairman of the Board of Tawsho,
will become the Chairman of the Board of MergeCo.
Rockcliff and Tawsho shall cooperate in structuring the Merger, which may vary
from the foregoing structure on the basis of tax, securities, corporate law and
other advice in order to ensure the most efficient and cost effective structure
for each of the parties and their respective security holders.
Completion of the Merger is subject to a number of conditions, including, but
not limited to, confirmatory due diligence, the negotiation and execution of a
definitive agreement, the receipt of all required regulatory approvals,
including the approval of the TSXV, and approval of the shareholders of
Rockcliff and Tawsho.
The Merger will be submitted to the shareholders of Rockcliff (the "Rockcliff
Shareholders") for consideration and approval by special resolution at a special
meeting to be convened by Rockcliff (the "Rockcliff Meeting"). The Merger will
be submitted to the shareholders of Tawsho (the "Tawsho Shareholders") for
consideration and approval by an ordinary resolution of the majority of the
minority shareholders of Tawsho at a special meeting to be convened by Tawsho
(the "Tawsho Meeting"). The Rockcliff Meeting and the Tawsho Meeting shall be
held as soon as possible following the completion, to the satisfaction of
Rockcliff and Tawsho, of all due diligence investigations and execution of
definitive documentation.
Each party will pay its own costs and expenses (including all legal, accounting
and financial advisory fees and expenses) in connection with the Merger,
including expenses related to the preparation, execution and delivery of the
LOI, a definitive agreement and such other required documents.
In addition, the parties have agreed that either party may terminate the Merger
as a result of such party completing an alternative transaction, including but
not limited to a merger, amalgamation, share exchange, business combination,
take-over bid, sale or other disposition of material assets, recapitalization,
reorganization, liquidation, sale or issuance of a material number of treasury
securities (except upon the due exercise of convertible securities outstanding
on the date of this news release) or rights or interests therein or thereto or
rights or options to acquire any material number of treasury securities or any
type of similar transaction involving it or any of its subsidiaries other than
with the other party to the LOI, such party enters into a letter of intent or
definitive written agreement with respect to a Superior Proposal, or if such
party is subject to a take-over bid initiated by a third party.
Rockcliff Resources Inc.
Rockcliff Resources Inc. is a Canadian resource exploration company focused on
discovery and advancement of its high-quality mineral properties at its Snow
Lake Project. Rockcliff presently controls the Snow Lake Project in Manitoba,
totalling in excess of 400 km2. The project includes two VMS high grade copper
rich National Instrument 43-101 ("NI 43-101") Resources (Rail and T-1 Copper
Deposits), one historic VMS copper deposit (Lon), the T-2 Copper Zone (Tower),
numerous untested geophysical anomalies and several additional properties with
VMS potential. Rockcliff also owns a zinc-silver rich NI 43-101 Resource
(Shihan) in Ontario.
Rockcliff's two principle assets are the high grade T-1 Copper Deposit mineral
resource at the Tower Property and the Rail Deposit at the Rail Property.
Tower Property
Mineral Resource Statement, T-1 Copper Deposit, Manitoba, by Caracle Creek
International Consulting Inc., dated December 2, 2012:
Resource Cu Zn Ag Au Contained
Category Tonnes (%) (%) (g/t) (g/t) Pounds-Cu
--------------------------------------------------------------------------
Indicated 1,084,186 3.73 1.05 17.28 0.55 88,968,303
Inferred 1,253,522 2.00 1.02 9.78 0.27 55,154,968
--------------------------------------------------------------------------
Notes:
1. CIM definitions were followed for the estimation of mineral resources.
2. Mineral resources are estimated at a Cu cut-off of 0.5%.
3. Cut-off grade was based on a copper price of US$3.63 per pound.
4. Given the tonnage, grade and orientation of the deposit, Caracle Creek
considers the T-1 Copper Deposit to be reasonably amenable to extraction
using underground mining methods.
5. Specific Gravity measurements were taken on a portion of the samples and
where actual measurements were not available an average of 3.00 was
used.
6. Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
7. The report entitled "Independent Technical Report, Tower Property, Grand
Rapids, Manitoba" dated January 20, 2013 was prepared by Zsuzsanna
Magyarosi, Julie Selway, Jason Baker and Julie Palich, independent
qualified persons under NI 43-101, for Caracle Creek International
Consulting Inc. (Caracle Creek) and is available at www.sedar.com.
Pursuant to an exploration and option agreement with Pure Nickel Inc., to earn a
70% interest in the property, Rockcliff must pay $150,000 in incremental
payments and is required to incur aggregate exploration expenditures totalling
$4,000,000.
Rockcliff has recently exercised the option to earn its 50% interest by spending
$2,000,000 on exploration expenditures and paying $90,000 to Pure Nickel Inc. A
50/50 Joint venture has now been formed. Rockcliff can now earn an additional
20% in the property by spending an additional $2,000,000 (approximately
$1,900,000 of which has been spent to date) in exploration expenditures and
paying a total of $60,000 to Pure Nickel ($30,000 has been paid to date) by
March of 2014. Once completed, Rockcliff will control a 70% interest in the
property. An underlying 2% NSR on the property is held by Xstrata Nickel, of
which half can be purchased for $1,000,000.
Rail Deposit
The report entitled "Mineral Resource Evaluation, Rail Polymetallic Sulphide
Deposit, Snow Lake, Manitoba", dated December 19, 2010 (the "Rail Deposit
Report"), was prepared by Sebastien Bernier, M. Sc., P.Geo, and Dominic
Chartier, P.Geo., qualified persons under NI 43-101, on behalf of SRK Consulting
(Canada) Inc. and is available at ww.sedar.com.
The Mineral Resource Statement prepared by SRK for the Rail Deposit is detailed
below.
The Mineral Resource Statement for the Rail Deposit is reported at a cut-off
grade of 2.0 percent copper. The statement includes metal grade for copper,
zinc, gold and silver but not lead because this metal is present at near
detection limits. The Mineral Resource Statement for the Rail Deposit is
summarized in Table i.
Table i: Mineral Resource Statement(i), Rail Polymetallic Sulphide
Deposit, Manitoba
SRK Consulting, November 4, 2010
--------------------------------------------------------------------------
Grade
Resource Quantity Cu Zn Au Ag Contained
Category (tonnes) (%) (%) (g/t) (g/t) Cu (pounds)
--------------------------------------------------------------------------
Indicated 822,000 3.04 0.90 0.66 9.25 55,090,000
Inferred - - - - - -
--------------------------------------------------------------------------
(i) Reported at a cut-off grade of 2.0 percent copper. Cut-off grade is
based on copper price of US$3.00 per pound and a metallurgical recovery of
eighty percent, without considering revenues from other metals. All figures
rounded to reflect the relative accuracy of the estimates. Mineral resources
are not mineral reserves and do not have demonstrated economic viability.
The mineral resources are reported at a cut-off grade of 2.0 per cent copper to
reflect "the reasonable prospects" for economic extraction. SRK considers the
Rail Deposit to be amenable to extraction using underground mining methods. The
Mineral Resources Statement for the Rail Deposit presented in Table i are not
mineral reserves and do not have demonstrated economic viability. There is no
certainty that all or any part of the mineral resources will be converted into
mineral reserves. The Indicated Mineral Resource for the Rail Deposit was
classified according to the CIM Definition Standards for Mineral Resources and
Mineral Reserves (December 2005) by Sebastien Bernier, P.Geo (APGO#1847), an
appropriate independent person for the purpose of NI 43-101. Mr. Bernier has
reviewed the technical content of this news release. Reference is made to the
press release dated November 4, 2010.
Rockcliff has a 100% interest in the Rail Property from Hudson Bay Exploration
and Development Company Limited (HBED), a wholly owned subsidiary of HudBay
Minerals Inc. (HBM: TSX). HBED will receive a 2% Net Smelter Return Royalty.
HBED has the right to acquire back up to a 65% interest in the Rail Property
until March 2015. Please refer to the News Release dated March 23, 2007 for
further details.
Ken Lapierre, P.Geo., President & CEO of Rockcliff Resources Inc., is a
Qualified Person under the definition of NI 43-101. Mr. Lapierre has reviewed
and approved the information in this press release relating to Rockcliff.
Tawsho Mining Inc.
Tawsho is a mining exploration company focused on the acquisition, exploration
and development of advanced stage exploration projects containing gold, base
metals and industrial minerals. Tawsho is presently developing its Cabot
Graphite Property (comprised of 102 claims covering an area of 2,550Ha of 25.5
sq.km) located on the Baie Verte Peninsula, Newfoundland and its Chevrier
Property (comprised of 557 claims, covering an area of 9,542Ha or 95.4 sq.km)
located in the Chibougamau region of Quebec.
Chevrier Gold Deposits
Tawsho's principle asset is the open pit potential of its Chevrier Gold Project
located near Chibougamau, Quebec. Met-Chem Canada Inc. ("Met-Chem") completed a
report dated April 2010 entitled "NI 43-101 Technical Report on the Mineral
Resource of the Chevrier Gold Project, Chibougamau, Quebec-Canada" which is
available on www.sedar.com.
The Chevrier Property comprises two main zones, the Chevrier Deposit and the
Chevrier South Deposit.
The Chevrier Deposit is estimated by Met-Chem to contain the following Inferred
Resource, between surface and a depth of 250m, using a cut-off grade of 1.0g/t
gold and a minimum width of 1.5m:
Resource Tonnage Average Grade Gold (oz)
-------------------------------------------------------------
Inferred 4,600,000 1.99g/t gold 295,000
Met-Chem cautioned that mineral resources have no demonstrated economic
viability. In addition, there is no certainty that all or part of the Mineral
Resources will be converted into reserves.
The Chevrier South Deposit has been tested by only 19 drill holes and as such
Met-Chem determined that insufficient reliable information was present to
estimate a mineral resource. However, Met-Chem did provide a 3D conceptual model
outlining an estimate of tonnage and grade of the "mineralized material"
potentially present at the Chevrier South Deposit as follows:
Tonnage Average Grade
---------------------------------------------
8.5-9.0 million tonnes 1.8-2.2g/t gold
Stephen Balch, P.Geo., President & CEO of Tawsho Mining Inc., is a Qualified
Person under the definition of NI 43-101 and has reviewed and approved the
technical content in this press release relating to Tawsho Mining Inc.
Forward Looking Statement:
Some of the statements contained herein may be forward-looking statements which
involve known and unknown risks and uncertainties. Without limitation,
statements regarding potential mineralization and resources, exploration
results, and future plans and objectives of the Companies are forward looking
statements that involve various risks. The following are important factors that
could cause the Companies' actual results to differ materially from those
expressed or implied by such forward looking statements: changes in the world
wide price of mineral commodities, general market conditions, risks inherent in
mineral exploration, risks associated with development, construction and mining
operations, the uncertainty of future profitability and the uncertainty of
access to additional capital. There can be no assurance that forward-looking
statements will prove to be accurate as actual results and future events may
differ materially from those anticipated in such statements. Rockcliff
undertakes no obligation to update such forward-looking statements if
circumstances or management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on such forward-looking statements.
Neither 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Rockcliff Resources Inc.
Ken Lapierre P.Geo.
President & CEO
(416) 863-9800 or (647) 678-3879
klapierre@rockcliffresources.com
Tawsho Mining Inc.
Stephen Balch, P.Geo.
President & CEO
(905) 407-9586
sbalch@tawshomining.com
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