Burnstone Ventures and Abacus Mining Enter Into an Agreement to Merge the Companies
31 July 2014 - 11:10PM
Marketwired Canada
Burnstone Ventures Inc. (TSX VENTURE:BVE) ("Burnstone") is pleased to announce
that it has entered into a binding letter agreement (the "Letter Agreement")
with Abacus Mining & Exploration Corporation ("Abacus"), to be followed by a
definitive Arrangement Agreement, whereby Abacus will acquire all of the issued
and outstanding securities of Burnstone by way of a statutory court-approved
plan of arrangement (the "Arrangement"). The Arrangement provides for an
exchange of 0.43 Abacus shares (each whole share, an "Abacus Share") for each
common share of Burnstone (a "Burnstone Share"). A total of approximately 23
million Abacus Shares are expected to be issued in connection with the
Arrangement. The transaction is subject to a number of closing conditions,
including approval by the shareholders of each of Burnstone and Abacus, Court
approval of the Arrangement, as well as approvals by all applicable governmental
and regulatory authorities.
Upon closing of the Arrangement, Burnstone will become a wholly-owned subsidiary
of Abacus. Burnstone's main asset is the Tomichi copper moly porphyry project
located in the Colorado Mineral Belt in Gunnison County, south-central Colorado,
in which it has an option to earn a 100% interest (the "Tomichi Project"). The
Tomichi Project has an initial Inferred Resource Estimate of 2.5 billion lbs
Copper, 552 million lbs Molybdenum, 30 million oz Silver, 320,000 oz Gold and
124,362 kg Rhenium, or 5.6 billion lbs Copper Equivalent (see NI 43-101
technical report "Technical and Resource Estimate for the Tomichi
Copper-Molybdenum Project, Gunnison County, Colorado" on Burnstone's Sedar
filings July 10, 2013).
To facilitate the Arrangement, Abacus has signed a Loan and Security Agreement
for a term loan facility of CAD $3 million to be drawn from the funds held in
Abacus' escrow account under the provisions of the 2010 Joint Venture Agreement.
Doug Fulcher, President and CEO of Burnstone, stated: "We are extremely pleased
with the arrangement with Abacus to join the two companies together as it
provides $3 million in new capital that otherwise would be very difficult to
secure that will in part be used to advance the Tomichi project. The arrangement
will enhance shareholder value through the resulting company having a 100% owned
large scale copper/moly porphyry project to advance in Colorado, USA, while the
Ajax copper/gold deposit in which the resulting company will maintain a 20%
interest, is being developed in Kamloops, B.C."
Michael McInnis, Abacus' Chairman, President & CEO stated: "The new agreement
achieves a dual purpose that is particularly advantageous for Abacus
shareholders. It enables Abacus to borrow funds from the escrow account on
favourable terms that would otherwise not be allowable under the terms of the
original Joint Venture Agreement, and provides the Company with near term growth
opportunity by expanding our mineral asset interests with a highly prospective
large copper/moly porphyry deposit in Colorado. We intend to create significant
value by making use of this funding to continue with the advancement of the
Tomichi project while maintaining our 20% interest in the Ajax project."
Burnstone also reports that it has reached settlement agreements with certain
creditors to issue approximately 9,500,000 Burnstone Shares in payment for
services rendered to Burnstone by several parties over the past 24 months, at a
deemed price of $0.05 per Burnstone Share (the "Debt Settlement"). All such
transactions are subject to regulatory approval and all Burnstone Shares issued
in connection with the Debt Settlement will be subject to a 4 month hold period.
Mr. James Chapman, P.Geo, is the Qualified Person responsible for the design of
the program, and all exploration work on the Tomichi Project will be done under
his supervision. Mr. Chapman has read and approved the technical content of this
news release.
Terms of the Arrangement
Under the terms of the Arrangement:
-- Burnstone shareholders will receive 0.43 of an Abacus Share for each one
Burnstone Share.
-- All outstanding Burnstone share purchase warrants will be assumed by
Abacus and adjusted based on the 0.43 exchange ratio.
-- Burnstone has agreed to complete the Debt Settlement with certain of its
creditors for Burnstone Shares, which will be exchanged for Abacus
Shares under the Arrangement.
-- A total of approximately 23 million Abacus Shares are expected to be
issued in connection with the Arrangement, representing approximately
10% of the outstanding Abacus Shares on completion of the Arrangement.
-- On closing of the Arrangement, Gordon Keevil, a current director of
Burnstone, will be appointed to the board of Abacus.
-- Each of the directors and officers of Burnstone will execute lock up
agreements agreeing to vote any Burnstone Shares they hold in favour of
the Arrangement.
The Arrangement is subject to a number of closing conditions including, but not
limited to, a confirmatory due diligence review of Burnstone and its assets by
Abacus to be completed on or before August 14th, approval by the shareholders of
each of Abacus and Burnstone, receipt of all court and regulatory approvals,
including that of the Ontario Superior Court and the TSX Venture Exchange,
completion of the Debt Settlement, and all outstanding Burnstone stock options
being cancelled.
Abacus and Burnstone have agreed to enter into a definitive arrangement
agreement (the "Arrangement Agreement") incorporating the terms of the Letter
Agreement and other terms and conditions customary for transactions of this
nature, on or before August 22nd.
Additional Information Regarding the Arrangement
The terms of the Arrangement will be described in further detail in the
management information circular of Burnstone to be filed with the regulatory
authorities and mailed to the Burnstone shareholders. A copy of the Burnstone
information circular and other materials related to the Arrangement will be
available for review as they become available at www.sedar.com under Burnstone'
profile.
Abacus/Burnstone Loan
Abacus and Burnstone have entered into a loan and security agreement pursuant to
which Abacus advanced CAD$250,000 to Burnstone (the "Burnstone Loan"). The
Burnstone Loan is secured by a first priority security interest over the Tomichi
Project. Interest on the Burnstone Loan accrues at 8% per annum. The Burnstone
Loan proceeds are to be used by Burnstone in relation to the Tomichi Project.
Joint Venture Loan
To facilitate the Arrangement, Abacus also signed a loan and security agreement
for a term loan facility of CAD$3 million drawn from the approximate CAD$16
million of funds held in Abacus' escrow account under the provisions of the 2010
Joint Venture Agreement with respect to the Ajax project. The loan has been
fully drawn, bears interest at the rate of 8% per annum and is collateralized by
CAD$3,360,000 of Abacus' escrowed funds.
As a condition of the loan, Abacus has agreed to continue to contribute its 20%
share of the 2014 and 2015 programs and budget towards development of the Ajax
project, which will be funded from the balance of the escrowed funds as and when
cash calls are made.
About Tomichi
Burnstone has an option to earn a 100% interest in the Tomichi Project. The
Tomichi Project is located within the Colorado Mineral Belt and was initially
worked on in the 1950's by Climax Molybdenum Co. and more recently, in the
1980's by Molycorp Inc. No work was carried out between the 1982 drill program
and the 2012 Burnstone program.
The NI 43-101 resource estimate was completed by Geosim Services Inc. and the
full Technical report is available on Sedar. The following table shows the
tonnages and grades for the Tomichi Project at a range of Copper Equivalent
cutoff grades (COG%). All of the 2012 drilling was carried out within the area
of the 0.50%CuEq resource.
TOMICHI INFERRED MINERAL RESOURCE - TONNES & GRADE
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CuEq
Tonnes Cu Mo Au Ag Re (%)
COG % CuEQ 000's (%) (%) (g/t) (g/t) (g/t) (ii)
----------------------------------------------------------------------------
0.10 698,503 0.171 0.037 0.015 1.38 0.185 0.38
0.20 622,429 0.182 0.040 0.016 1.50 0.200 0.41
0.30 506,513 0.197 0.044 0.018 1.69 0.221 0.45
0.40 334,320 0.216 0.048 0.019 1.93 0.249 0.50
0.50 132,279 0.237 0.058 0.020 2.30 0.294 0.57
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(ii)CuEQ =%Cu +%Mo x 5 + g/t Au x 0.681 + g/t Ag (i) 0.012
Rhenium values have not been used in the cutoff grade or Cu Equivalent
calculations
About Abacus
Abacus is a mineral exploration and mine development company with a 20% interest
in the feasibility stage Ajax copper-gold project located at the historic
Ajax-Afton site southwest of Kamloops, B.C. Through a joint venture between
Abacus Mining & Exploration Corporation and KGHM Polska Miedz S.A. through KGHM
Ajax, the Ajax Project is a proposed open-pit mine with an approximate 20-year
mine life expected to yield approximately 109 million pounds of copper and
99,000 ounces of gold annually. (see Report titled "Ajax Copper/Gold Project --
Kamloops, British Columbia Feasibility Study Technical Report" by Wardrop (a
Tetra Tech Company) dated January 6, 2012 ("FS")).
On Behalf of the Board of Directors:
"Doug Fulcher"
Douglas Fulcher - President
Forward-Looking Statements
This document may contain "forward-looking information" within the meaning of
Canadian securities legislation and "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking statements"). These forward-looking statements
are made as of the date of this release.
All statements in this release, other than statements of historical facts, that
address events or developments that Burnstone expects to occur, are
forward-looking statements. Such forward-looking statements include, but are not
limited to, statements with respect to the timing and implementation of the
Arrangement, the integration of Abacus and Burnstone following the Arrangement,
estimation of mineral resources, and the success of mining and development
operations.
Although Burnstone believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results may differ materially from
those in the forward-looking statements. Assumptions upon which such
forward-looking statements are based include that Abacus and Burnstone will be
able to satisfy the conditions in the Letter Agreement and Arrangement
Agreement, that the required approvals will be obtained from the shareholders of
each of Abacus and Burnstone, that all third party, court, regulatory and
governmental approvals to the Arrangement will be obtained, and that all other
conditions to completion of the Arrangement will be satisfied or waived. Many of
these assumptions are based on factors and events that are not within the
control of Abacus or Burnstone and there is no assurance they will prove to be
correct.
In certain cases, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is expected", "budget",
"potential", "scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Burnstone to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include, among others,
market prices; exploration and development successes; continued availability of
capital and financing; and general economic, market or business conditions.
Please see our public filings on SEDAR at www.sedar.com. Although Burnstone has
attempted to identify important factors that could cause actual actions, events
or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results not
to be as anticipated, estimated or intended. Burnstone provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Investors are cautioned that any such statements are not guarantees of future
performance and actual results or developments may differ materially from those
projected in the forward-looking statements. Forward-looking statements are
based on the beliefs, estimates and opinions of Burnstone's management on the
date the statements are made. Except as required by applicable securities laws,
Burnstone undertakes no obligation to update these forward-looking statements in
the event that management's beliefs, estimates or opinions, or other factors,
should change. Accordingly, readers should not place undue reliance on
forward-looking statements.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Burnstone Ventures Inc.
604 681 7733
www.burnstoneventures.com
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