E.G. Capital Inc. ("EG" or the "Corporation") (TSX VENTURE:EGC.H) today
announced details concerning its proposed reactivation transaction involving a
business combination with Thanda Resources Inc. ("Thanda"). Thanda is a private
company that was formed to participate in diamond exploration and development in
Nunavut.
EG has entered into a letter agreement with Thanda and the principal
shareholders of Thanda dated June 11, 2010 (the "Letter Agreement"), pursuant to
which EG and Thanda intend to complete a business combination (the
"Transaction") by way of an amalgamation to form a new company ("Amalco").
Pursuant to the terms of the Transaction: (i) the current holders of the common
shares of Thanda (the "Thanda Common Shares") will receive one (1) common share
in the capital of Amalco (the "Amalco Common Shares") with a deemed value of
$0.10 per share for each Thanda Common Share owned; and (ii) each two (2) issued
and outstanding common shares of EG will be exchanged for one (1) Amalco Common
Share. The Transaction, when completed, will constitute the reactivation
transaction of the Corporation pursuant to policy 2.6 of TSX Venture Exchange
Inc. (the "TSX Venture") Corporate Finance Manual.
The Transaction is subject to the policies of TSX Venture relating to
reactivation transactions of NEX companies, as well as shareholder approval of
EG as prescribed by Policy 5.2 of TSX Venture. Upon completion of the
Transaction, EG will be a company focused on diamond exploration in Nunavut.
About Thanda and the Thanda Properties
Pursuant to an agreement dated October 5, 2009 (the "Ferguson Lake Property
Agreement") between Thanda and Starfield Resources Inc. ("Starfield"), a public
mining company listed on the Toronto Stock Exchange, Thanda has the right to
earn up to a 100% participating interest in and to certain diamond rights
applicable to the Ferguson Lake property, subject to a royalty interest
described below. The Ferguson Lake Property Agreement gives Thanda the right to
earn an initial 50% participating interest in a joint venture that will focus on
the exploration and development of diamond potential at the Ferguson Lake
property by incurring cumulative exploration expenses of $6.5 million over a
three year period. After the initial $6.5 million is invested by Thanda, it may
choose to commence a prefeasibility study. Upon completion of a prefeasibility
study, Starfield may choose to either retain a 30% participating interest in the
project by paying its pro-rata share of the costs of the prefeasibility study
and future development, or convert to a 3% gross revenue royalty. In the latter
case, Thanda will have earned a 100% participating interest in the diamond
rights to the Ferguson Lake property.
The Ferguson Lake property is located in the Kivillaq region of Nunavut and lies
240 kilometers west of Rankin Inlet, 160 kilometers south-southwest of Baker
Lake and 765 kilometers north of Thompson, Manitoba (the "Ferguson Lake
Property"). The Ferguson Lake Property was initially discovered by Canadian
Nickel Company Ltd. (now Inco Ltd.) in 1950 and was held in its mineral
inventory for over 40 years. Exploration in 1953 defined a major copper-nickel
resource, but did not recognize the palladium, platinum and cobalt resources. In
1987, the Homestake Mineral Development Company explored the property for those
three metals and found significant quantities. In 1998, the Ferguson Lake
Property was acquired by Starfield, which confirmed the presence of those metals
and continued to explore and define the resource. During the 2005 and 2006 field
exploration program 1100 widely spaced till samples were taken and kept in
storage. As part of the 2008 exploration program, these samples were sieved and
processed at SGS Mineral Services Lakefield. A diamond was found in a till
sample as well as significant amount of kimberlite indicator minerals and
diamond indicator garnet grains in nearby samples. These samples were all taken
from an area located near the centre of Starfield's claim block and are
demonstrate significant exploration potential for diamonds.
43-101 Report
A technical report has been prepared in respect of the Ferguson Lake Property by
ACA Howe International Limited dated May 20, 2010 in compliance with National
Instrument 43-101 (the "ACA Howe Report"). The ACA Howe Report has been filed
with TSX Venture for their review.
Financial Information of Thanda
Based on the audited financial statements of Thanda for the financial year ended
December 31, 2009, Thanda had no revenue, exploration expenses of $1,005,514 and
incurred a net loss of $1,005,514. In addition, as at December 31, 2009, Thanda
had total assets of $47,215 and current liabilities of $1,030,936 and
shareholders' deficit of $1,030,936.
Thanda Corporate History and Structure
Thanda was incorporated under the Business Corporations Act (Ontario) on August
24, 2009. The registered office and head office of Thanda are both located at 37
Edgehill Road, Toronto, Ontario M9A 4N1.
Thanda is being reorganized to have between 30,324,851 and 33,707,204 (subject
to TSX Venture approval) common shares (the "Thanda Common Shares") issued and
outstanding, and no stock options, warrants, anti-dilution or other rights to
purchase Thanda Common Shares issued or outstanding. Of the outstanding shares
of Thanda, an aggregate of 22,000,000 Thanda Common Shares were issued at a
price of $0.05 per share upon conversion of shareholder loans and the balance
will be issued for nominal consideration.
The principal shareholders of Thanda are Sheila Ogilvie-Harris and Dr. Matthew
Field who own or control, directly or indirectly, 90% and 10% of the outstanding
Thanda Common Shares, respectively.
Summary of the Proposed Reactivation Transaction
EG has entered into the arm's length Letter Agreement, pursuant to which EG and
Thanda have agreed to complete the Transaction.
Pursuant to the Letter Agreement, the parties have agreed to use their
"commercially reasonable efforts" to cause a private placement of Thanda Common
Shares to be issued on a "flow-through" basis under the Income Tax Act (Canada)
at a price to be determined in the context of the market for gross proceeds of a
minimum of $1,400,000 (the "Minimum Thanda Private Placement") and a maximum of
$3,700,000, as well as Thanda Common Shares at a price to be determined in the
context of the market (the "Offering Price") for gross proceeds of up to
$400,000 (collectively, the "Thanda Private Placement").
Thanda has engaged Pope & Company Limited to act as agent (the "Agents") of
Thanda on a "commercially reasonable efforts" basis for the Thanda Private
Placement and in connection therewith the Agents will be paid a cash commission
of 8%. The Agents will also be granted agent's options (the "Thanda Agent's
Options") to purchase up to 8% of the number of Thanda Common Shares sold under
the Thanda Private Placement, with each Thanda Agent's Option entitling the
holder to purchase one Thanda Common Share at the Offering Price for a period of
24 months from the closing of the Thanda Private Placement.
Thanda intends to use the gross proceeds of the Thanda Private Placement for an
extensive fixed wing geophysical aerial survey, reconnaissance prospecting, a
till sampling programme, and analysis of the results to provide high interest
drilling targets in the area, as well as for general corporate purposes.
After completion of the Transaction, the Board of Directors of Amalco will
consist of five (5) directors, including four (4) nominees of Thanda, namely
Sheila Ogilvie-Harris, Dr. Matthew Field, Donald Page and Fernao Ferreira, as
well as one nominee of EG, Bradley D. Griffiths, provided the TSX Venture does
not object to such nominations and such persons are eligible to act as directors
pursuant to the requirements of the Business Corporations Act (Ontario). After
the closing of the Transaction, the officers of Almaco will be appointed by the
Board of Directors of Amalco and will include Sheila Ogilvie-Harris as Chief
Executive Officer and Corporate Secretary, Dr. Matthew Field as Vice-President,
Exploration and Donald J. Page as Chief Financial Officer.
Sheila Ogilvie-Harris has over thirty years of diverse managerial experience in
both the healthcare and business sectors. She has been responsible for
assembling teams, managing staff, developing policy manuals and preparing
budgets. She graduated from the University of Liverpool in the United Kingdom
with a degree in Modern Languages and undertook a graduate nursing programme at
St George's Hospital, London, United Kingdom where she earned the qualifications
of State Registered Nurse and Diploma of Intensive Therapy Unit Nursing. Since
April 1980, she has been President of Enterprise Management Services, a billing
and typing agency for physicians and medical research paper translations which
she still runs. A film location rental agency was added to the business in May
1998. In August 2009 she co-founded Thanda. Mrs. Ogilvie-Harris is currently the
President, Chief Executive Officer and a director of Thanda. She is also a
member of the Board of Out of Peru Exclusive Imports UK. which she has helped to
develop and promote since July 2009.
Dr. Matthew Field was the Chief Geologist with De Beers, the world's largest
diamond producer, from January 1999 to December 2002 and has extensive
experience in target selection, exploration support project evaluation and
production geology in both open cast (Orapa and Letlhakane Mines) and
underground (Finsch, Kimberley and Koffiefontein) mines. From November 1994 to
April 1997, he was Project Geologist at the Orapa Mine and he helped expand the
resource beyond the declared mineral reserve. His Canadian experience includes
being brought in as a consultant from De Beers to assist De Beers Canada: (i) in
April 1993 to evaluate the Fort a la Corne kimberlites in Saskatchewan; (ii) in
March 2000 to evaluate the resources at the Victor mine in Northern Ontario; and
(iii) in June 2002 to conduct the due diligence on the Snap Lake kimberlite. In
his most recent appointment with De Beers from January 2003 to April 2008 as
Group Research Geologist with De Beers Group Services U.K. Limited, Dr. Field
was chosen to conduct research on speeding resource delivery from discovery to
mine production. The Victor, Snap Lake and Gahcho Kue projects featured
prominently in this research. After leaving De Beers in 2008 Dr Field
established Diakim Consulting Limited. Dr Field has provided consulting
geological services to both major companies, De Beers and BHP-Billiton as well
to junior diamond companies such as GEM Diamonds and Namakwa Diamonds, most
recently consulting in January 2010 at BHP Biliton's Ekati mine in the Northwest
Territories. Dr Field is a co-founder of Thanda and is currently a Director and
Vice-President, Exploration of Thanda. Dr. Field has a Bachelor of Science
Degree in Geology (Honours) and a Master of Science Degree from Rhodes
University in South Africa, and a Ph.D. from the University of Bristol in the
United Kingdom.
Donald J. Page, C.A., the Chief Financial Officer of Thanda is a senior
financial executive who for over 30 years has provided tactical senior
management, with an emphasis on the Chief Financial Officer position, and
corporate governance advice to entrepreneurial companies. Mr. Page has
participated on the boards of directors of several public companies, including
technology companies, research and development companies, and mining companies
He was a Director of St Genevieve Resources Ltd a public company traded on the
CNQ and of Ascendant Copper Corporation a public company listed on the TSX. Mr.
Page was Executive Vice-President, Corporate Finance for Groome Capital.com Inc.
a Mr. Page was Executive Vice-President, Corporate Finance for Groome
Capital.com Inc. a boutique investment dealer specializing in assisting
entrepreneurial companies to raise financing from July 1997 to August 2001 He
was also Vice-President, Corporate Finance of Desjardins Securities through its
expansion phase into Ontario from August 2001 to January 2002. Mr. Page worked
for Ernst & Young (formerly Clarkson Gordon) for 10 years where he also provided
Chief Financial Officer and tax advice to its clients. From February 2002 to the
present Mr. Page, through his own consulting company Glister Limited, has
provided financial and corporate governance experience to entrepreneurial
companies.
Fernao Ferreira is a retired reinsurance executive with 40 years experience in
all aspects of company management, financial activities and contract
negotiations. Since 1979 Mr. Ferreira has been a founding Director of
International Technology Recruiting Limited, a private company which provides
specialists within the technology and data processing fields to clients such as
IBM and London Life. From 1980 until his retirement in 1995, Mr. Ferreira was a
director of privately owned insurance companies in Toronto which were
subsequently taken over by. Since 1995, Mr Ferreira has been a Director of
Win-Eldrich Mines Limited. a public mining company listed on TSX Venture that is
currently producing molybendum from its wholly-owned Ashdown project in Nevada.
Bradley Griffiths, a current Director of EG and a proposed Director after
completion of the Transaction, received his Chartered Accounting designation in
1982 after articling at Peat, Marwick, Mitchell. In 1984 he joined the Canadian
Imperial Bank of Commerce as head of the Mergers and Acquisitions group where he
was promoted to the position of Vice-President. In January 1989, Mr. Griffiths
joined Gordon Capital Corporation ("Gordon Capital") as a Director and
Vice-President where he elevated to the position of Head of Corporate Finance
and a member of the Executive Committee. In March 1995, Mr. Griffiths founded
the brokerage firm Griffiths McBurney and served as its Chairman and Chief
Executive Officer until May 1999. Soon thereafter Mr. Griffiths joined Canaccord
Capital Corporation ("Canaccord") as Co-Chairman and Head of Capital Markets,
and in November 2002 he was honoured as Person of the Year by the Yves Landry
Foundation. On January 1, 2003, Mr. Griffiths joined Toronto-based McFarlane
Gordon (now "MGI Securities"), acting as Managing Director of Capital Markets
where he served until 2008. Mr. Griffiths is now the founder and Chief Executive
Officer of Griffiths Energy and Resources Inc., an energy and merchant banking
firm.
The completion of the Transaction is subject to the approval of TSX Venture and
all other necessary regulatory approval. The completion of the Transaction is
also subject to additional conditions precedent, including shareholder approval
of EG and Thanda, the completion of the Minimum Thanda Private Placement,
satisfactory completion of due diligence reviews by the parties, board of
directors approval of EG and Thanda, the entering into of a formal agreement,
the entering into of employment and non-competition agreements with certain
senior officers of Thanda, and certain other usual conditions.
The Transaction will be an arm's length transaction as none of the directors,
officers or insiders of EG own any interest in Thanda.
EG also announces it has reserved a price of $0.10 per share for the grant of
stock options to acquire up to 10% of the number of issued and outstanding
Amalco Common Shares (the "Stock Options") in the event the Transaction and the
Thanda Private Placement are completed. The grant of the Stock Options is
subject to regulatory approval. The Stock Options will be granted to directors,
officers, employees and consultants of Amalco, as determined by the Board of
Directors of Amalco following the completion of the Transaction.
The Corporation has made an application to TSX Venture for a waiver from
Sponsorship, but there is no assurance that such a waiver will be granted.
Trading of the Common Shares will not resume until TSX Venture has reviewed the
National Instrument 43-101 report regarding the Thanda Properties and all other
documents required by TSX Venture have been filed. EG will issue a further news
release when TSX Venture has received the necessary documentation and trading of
the Common Shares is to resume.
As indicated above, completion of the Transaction is subject to a number of
conditions, including but not limited to, TSX Venture acceptance and shareholder
approval. 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 Information Circular of
the Corporation to be 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
the Corporation should be considered highly speculative.
Except for historical information contained herein, this news release contains
forward-looking statements that involve risks and uncertainties. Actual results
may differ materially. Neither Thanda nor EG will update these forward-looking
statements to reflect events or circumstances after the date hereof. More
detailed information about potential factors that could affect financial results
is included in the documents filed from time to time with the Canadian
securities regulatory authorities by EG and Thanda.
The securities of EG being offered have not been, nor will be, registered under
the United States Securities Act of 1933, as amended, and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons absent U.S. registration or an applicable exemption from U.S.
registration requirements. This release does not constitute an offer for sale of
securities in the United States.
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