Mercury Capital Limited (TSX VENTURE:MLC.P) ("Mercury Capital") is pleased to
announce the execution of an agreement (the "Agreement"), on June 30, 2011, with
Canada Coal Inc. ("Canada Coal") in respect to a proposed business combination
to be effected by way of amalgamation (the "Amalgamation") of the parties. It is
anticipated that the issuer resulting from the Amalgamation (the "Resulting
Issuer") will be known as "Canada Coal Inc." or such other similar name, subject
to TSX Venture Exchange approval (the "Exchange").
ABOUT CANADA COAL INC.
Canada Coal is a junior exploration and development company incorporated on
August 26, 2010 under the laws of the Business Corporations Act (Ontario). The
principal business activity of the Company is the acquisition, exploration and
development of coal properties in Nunavut.
Canada Coal's mineral interests are held through two wholly-owned subsidiaries,
namely (i) Canadian Sovereign Coal Corp. ("CSC"), a British Columbia company and
(ii) 5200 Nunavut Ltd. ("5200"), a Nunavut company. In aggregate, CSC and 5200
hold 2,439,438 acres consisting of 74 coal licenses and/or coal license
applications located on Ellesmere Island and Axel Hieberg Island in Nunavut.
Canada Coal has raised, to date, $4,300,000 through the sale of common shares.
Canada Coal currently has approximately $3,600,000 in cash on hand with no debt.
Canada Coal currently has 31,500,000 common shares issued and outstanding and
24,400,000 warrants and stock options outstanding. It has 52 registered
shareholders. The largest shareholder of Canada Coal is AlphaNorth Offshore Inc.
which holds 3,187,500 common shares (10.12%). The next largest shareholder is
Marksman Geological Ltd. which holds 3,000,000 common shares (9.52%).
On or prior to the closing of the transactions contemplated herein, Canada Coal
intends to complete a minimum $20 million and maximum $30 million private
placement of its securities (the "Proposed Financing"). In this regard, Canada
Coal has executed an engagement letter dated June 9, 2011 with Casimir Capital
Ltd. ("Casimir") whereby Casimir has agreed to act as lead agent on behalf of a
syndicate of agents to complete the Proposed Financing.
Pursuant to the Proposed Financing, Canada Coal will issue units ("Units") at a
subscription price of $0.80 per Unit, consisting of one common share and
one-half of one transferrable common share purchase warrant (each whole warrant,
a "Warrant"). Each Warrant will be exercisable for one common share of Canada
Coal at an exercise price of $1.10 for a period of 36 months from closing of the
Proposed Financing. The Proposed Financing is subject to a 15% over allotment
option in favour of the placement agents exercisable within 30 days of closing
of the Proposed Financing. The terms of the Proposed Financing may change in
accordance with market conditions and the further agreement of Mercury Capital.
ABOUT THE TRANSACTION
On June 30, 2011, Mercury Capital and Canada Coal signed the Agreement pursuant
to which they have agreed to proceed with an amalgamation which is expected to
constitute a "Qualifying Transaction" for Mercury Capital as defined in Policy
2.4 of the Exchange's Corporate Finance Manual. The transaction is subject to
shareholder approval from both companies as well as Exchange approval. Upon
completion of the Amalgamation, the Resulting Issuer (as defined in Exchange
Policy 2.4) will be considered a Tier 1 mining issuer (as defined in Exchange
Policy 2.1).
The Qualifying Transaction will be completed by way of business combination
agreement entered into between Mercury Capital and Canada Coal (the "Combination
Agreement"). Under the Combination Agreement, holders of common shares and other
securities (options and warrants) of Canada Coal and of Mercury Capital will
each receive common shares and other securities (options and warrants) of the
Resulting Issuer on a one-for-one basis. Accordingly, the existing 259,975 stock
options of Mercury Capital will be exchanged for 259,975 options of the
Resulting Issuer with an exercise price of $0.20 per share, 244,975 existing
warrants of Mercury Capital will be exchanged for 244,975 warrants of the
Resulting Issuer with an exercise price of $0.20 per share. A total of 1,300,000
existing stock options of Canada Coal will be exchanged for 1,300,000 options of
the Resulting Issuer with an exercise price of $0.20 per share; 1,600,000 broker
warrants of Canada Coal will be exchanged for 1,600,000 broker warrants of the
Resulting Issuer with an exercise price of $0.20 per share and 21,500,000
warrants of Canada Coal will be exchanged for 21,500,000 warrants of the
Resulting Issuer with an exercise price of $0.30 per share.
After completion of the Amalgamation and assuming the completion of the minimum
Proposed Financing (on the terms described above), an aggregate of 59.8 million
common shares of the Resulting Issuer will be issued and outstanding or 97.3
million common shares on a fully-diluted basis, assuming exercise of all stock
options and warrants. The shareholders of Mercury Capital will own 3,349,750
common shares or 5.6% of the issued and outstanding common shares of the
Resulting Issuer while the shareholders of Canada Coal will own 31.5 million
common shares or 52.6% of the issued and outstanding common shares of the
Resulting Issuer.
After completion of the Amalgamation and assuming the completion of the maximum
Proposed Financing (on the terms described above) an aggregate of 72.35 million
common shares of the Resulting Issuer will be issued and outstanding or 116.004
million common shares on a fully-diluted basis, assuming exercise of all stock
options and warrants. The shareholders of Mercury Capital will own 3,349,750
million common shares or 4.63% of the issued and outstanding common shares of
the Resulting Issuer while the pre-amalgamation shareholders of Canada Coal will
own 31.5 million common shares or 43.54% of the issued and outstanding common
shares of the Resulting Issuer.
The Amalgamation constitutes an arm's length transaction according to the
policies of the Exchange.
CONDITIONS PRECEDENT TO CLOSING THE TRANSACTION
The parties' obligations to complete the Amalgamation and related transactions
are subject to the satisfaction of the usual conditions precedent including,
among others:
-- all necessary approvals to enable the Amalgamation to be carried out
have been obtained from the Exchange, the shareholders of Mercury
Capital and Canada Coal, and all other regulatory authorities and third
parties having jurisdiction;
-- the parties being satisfied with the results of their due diligence
reviews; and
-- the resignation of the existing officers and directors of Mercury
Capital in favour of nominees of Canada Coal.
SPONSORING BROKER
As of the date hereof, no sponsoring broker has been engaged in connection with
the proposed Transaction.
MANAGEMENT AND DIRECTORS
Upon completion of the transactions described, the Resulting Issuer's board of
directors will be: R. Stuart (Tookie) Angus, Chairman and Director, R. Bruce
Duncan, President & Chief Executive Officer and Director; Senator Michael
MacDonald, Director; Senator Dennis Patterson, Director; Braam Jonker, Director;
David Danziger, Director; Olga Nikitovic, Chief Financial Officer and Thomas A
Fenton, Secretary and Director. Such individuals currently hold such positions
within Canada Coal as of the date hereof.
The background of each of the proposed directors and senior officers of the
Resulting Issuer are as follows:
R. Stuart (Tookie) Angus, Chairman of the Board
Mr. Angus is an independent business advisor to the mining industry. He was
formerly Head of the Global Mining Group for Fasken Martineau. For the past 30
years, Mr. Angus has focused on structuring and financing significant
international exploration, development and mining ventures. More recently, he
was Managing Director of Mergers & Acquisitions for Endeavour Financial. Mr.
Angus is the former Chairman of the Board of BC Sugar Refinery Limited, he was a
Director of First Quantum Minerals until June 2005, a Director of Canico
Resources Corporation until it's takeover by CVRD, a Director of Bema Gold until
it's takeover by Kinross Gold, a Director of Ventana Gold until it's takeover by
AUX Canada Acquisition and a Director of Plutonic Power until its merger with
Magma Energy. He is presently Chairman of Nevsun Resources Ltd. and a Director
of SouthGobi Resources.
R. Bruce Duncan, President & Chief Executive Officer and Director
Mr. Duncan is the founder of Canada Coal and has over thirty years' experience
in the capital market and brokerage industry, including eight years with Gordon
Capital Corporation. Mr. Duncan is currently the President of West Oak Capital
Partners Inc. which provides strategic advisory services, including identifying
and qualifying merger and acquisition candidates and advising in public
transactions. Mr. Duncan's client base has included financial services,
aviation, mining, oil and gas, logistics, and retail industries. Mr. Duncan
currently sits on the boards of several private companies and is the President
and CEO of Bolero Resources Corp. (TSX VENTURE:BRU), the CEO of Prosperity
Goldfields Corp. (TSX VENTURE:PPG) and a Director of Evolving Gold Corp.
(TSX:EVG). Mr. Duncan has extensive experience advising on corporate takeovers,
both friendly and hostile, either by designing and executing effective
approaches to acquiring assets or by implementing defensive strategies.
Senator Michael MacDonald, Director
Senator MacDonald is a Nova Scotia businessman and long-time Conservative
activist. Mr. MacDonald has held a number of jobs on Parliament Hill in Ottawa,
including with Progressive Conservative Research office, as Executive Assistant
to the Honorable Stewart McInnes and to the Honorable Tom McMillan. He also
worked for the Progressive Conservative government in Nova Scotia as Assistant
to the Honorable Gerald Sheehy, Minister of Health, and as Executive Assistant
to Premier John Buchanan. Until his appointment to the Senate, Mr. MacDonald was
the Vice-President of the Conservative Party of Canada, and the party's National
Councilor for Nova Scotia. He also has supported various organizations to
preserve and promote Nova Scotia heritage and the Gaelic language.
Senator Dennis Patterson, Director
Senator Patterson is a former Premier of the Northwest Territories who first
came to Frobisher Bay on Baffin Island in 1975. Over a sixteen year career in
the Northwest Territories Legislative Assembly, including twelve years as a
cabinet minister serving in eight different portfolios, he played a key role in
the settlement of the Nunavut Land Claim Agreement and was a leader in the
twenty year campaign which led to the establishment of the Nunavut territory in
1999. Prior to entering politics, Mr. Patterson practised law as the founding
Director of the first legal aid clinic in the north. After serving as an MLA,
since 1995 Mr. Patterson has been a management consultant and a Trustee and
Chair of the Investment Committee of Northern Property Real Estate Investment
Trust. He was appointed as Senator for Nunavut by Prime Minister Stephen Harper
in 2009 and serves on the Aboriginal Affairs and Fisheries and Oceans Committees
of the Senate.
Braam Jonker, Director
Mr. Jonker is a Chartered Accountant (South Africa, England and Wales) and holds
a Masters Degree in South African and International Tax from the Rand Afrikaans
University. Mr. Jonker has over 17 years of extensive accounting and corporate
finance experience mostly in the mining industry. He has worked as a consultant
to the mining sector in Africa, spent time with Mwana Africa Plc, and with the
corporate finance departments at Anglo American Corporation and
PricewaterhouseCoopers. Most recently, Mr. Jonker was the Chief Financial
Officer at Western Coal Corp. until its acquisition by Walter Energy Inc. Mr.
Jonker is also a member of the Boards of Directors of Eastcoal Inc. (TSX
VENTURE:ECX) and Mandalay Resources Corporation (TSX:MND) where he is also the
Interim Chairman of the Board.
David Danziger, CA, Director
David Danziger is currently a senior partner at MSCM LLP, Chartered Accountants,
a full service audit and accounting firm located in Toronto. His practice
involves the audit of public companies listed on all stock exchanges in North
America. Mr. Danziger has over 25 years experience in audit, accounting and
management consulting and over 10 years specific in the mineral resource sector.
He is currently a Director for Cadillac Ventures Inc. (TSXV), Eurotin Inc.
(TSXV), Carpathian Gold Inc. (TSX) and Renforth Resources Inc. (CNSX). He is
also the President and CEO of Renforth Resources Inc. Mr. Danziger graduated
with a BComm. from the University of Toronto and also holds a CA designation.
Thomas A. Fenton, LLB, Secretary & Director
Mr. Fenton is a partner of the Toronto based law firm, Aird & Berlis LLP. Mr.
Fenton's practice encompasses corporate finance and merger and acquisitions. He
is director and/or officer of several public and private companies. Mr. Fenton
was called to the bar in 1988 having obtained his LLB degree from the University
of Western Ontario in 1986.
Olga Nikitovic, CA, Chief Financial Officer
Ms. Nikitovic is a chartered accountant and management consultant with over 25
years of work experience. Ms. Nikitovic worked at PricewaterhouseCoopers for
nine years in both the audit and management consulting departments. While
consulting, Ms. Nikitovic specialized in re-engineering and cost management.
After leaving PricewaterhouseCoopers, Ms. Nikitovic held senior management
positions with two of Canada's largest retailers. At present, Ms. Nikitovic is
the Chief Financial Officer for a number of publically traded mining companies,
namely: Bolero Resources Corp. and Prosperity Goldfields Corp.
ABOUT CANADA COAL INC.
Canada Coal was incorporated in August, 2010 and its corporate offices are
located in Toronto, Ontario. Canada Coal has not conducted any business other
than to acquire coal based mineral licenses and related applications (through
its wholly-owned subsidiaries, CSC and 5200) located in Nunavut.
The following is a summary of Canada Coal unaudited financial information
prepared by Canada Coal's management for the period from inception (August 26,
2010) to June 30, 2011:
- Total Assets $4,300,000
- Total Liabilities $18,000
- Total Revenue $ nil
- Net Loss (before taxes) $266,000
The information provided in this Press Release regarding Canada Coal and the
proposed management of the Resulting Issuer has been provided by Canada Coal and
has not been independently verified by Mercury Capital.
ABOUT MERCURY CAPITAL LIMITED
Mercury Capital is a "capital pool company" within the meaning of the policies
of the Exchange. Mercury Capital was incorporated on July 22, 2010 and was
listed on the Exchange on February 2, 2011. Mercury Capital does not have any
operations, and has no assets other than cash. Mercury Capital's business is to
identify and evaluate businesses and assets with a view to completing a
Qualifying Transaction under the policies of the Exchange.
READER ADVISORY
Trading in the shares of Mercury Capital will remain halted until receipt by the
Exchange of satisfactory documentation.
This press release contains forward-looking statements with respect to the
Amalgamation and matters concerning the business, operations, strategy, and
financial performance of Canada Coal and Mercury Capital. These statements
generally can be identified by use of forward looking word such as "may",
"will", "expect", "estimate", "anticipate", "intends", "believe" or "continue"
or the negative thereof or similar variations. The completion of the
Amalgamation and the future business, operations and performance of Canada Coal
discussed herein could differ materially from those expressed or implied by such
statements. Such forward-looking statements are qualified in their entirety by
the inherent risks and uncertainties surrounding future expectations, including
that the transaction contemplated herein is completed. Forward-looking
statements are based on a number of assumptions which may prove to be incorrect,
including, but not limited to: the ability of Mercury Capital and Canada Coal to
obtain necessary shareholder approval to complete the Amalgamation or to satisfy
the requirements of the Exchange with respect to the Amalgamation. The
cautionary statements qualify all forward-looking statements attributable to
Mercury Capital and Canada Coal and persons acting on their behalves. Unless
otherwise stated, all forward looking statements speak only as of the date of
this press release and Mercury Capital and Canada Coal have no obligation to
update such statements except as required by law.
Completion of the transaction is subject to a number of conditions, including
but not limited to, Exchange acceptance. 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 or filing statement prepared in connection with the transaction, any
information released or received with respect to the transaction may not be
accurate or complete and should not be relied upon. Trading in the securities of
a capital pool company should be considered highly speculative.
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