Cancana Announces Binding Term Sheet on Financing With The Sentient
Group and Acquisition of Rio Madeira
TORONTO, ONTARIO--(Marketwired - Dec 20, 2013) - Cancana
Resources Corp. (TSX-VENTURE:CNY) (the "Company" or "Cancana")
announces today the execution of a binding term sheet, (the
"Agreement"), with Ferrometals BV, ("Ferrometals"), in connection
with the acquisition of Rio Madeira Comercio Importacao E
Exportacao De Minerios, ("Rio Madeira"), and proposed financings of
up to an aggregate of C$6.25 million in Cancana.
Pursuant to the terms of the Agreement, The Sentient Group
("Sentient"), indirectly through Ferrometals (a special purpose
vehicle established by Sentient), will provide funding to
Ferrometals to acquire all of the issued and outstanding shares of
Rio Madeira from the existing shareholders of Rio Madeira. This is
pursuant to a transaction scheduled to close on or before December
20, 2013 for aggregate consideration of US$11.5 million (US$10
million in cash and US$1.5 million by way of assumption of debt),
(the "Rio Acquisition").
Subject to the terms of the Agreement, (which include customary
due diligence, shareholder and regulatory approval, and the
negotiation and execution of definitive agreements), Sentient will
provide funding to Ferrometals to enable Ferrometals to invest an
aggregate of C$5.95 million in Cancana, (the "Financings"), (as
described below), to facilitate Cancana investing the proceeds from
the Financings to subscribe for shares of Rio Madeira (the "Cancana
Rio Acquisition"). In addition, Cancana will transfer all of the
shares which it holds in its subsidiary, M.L.B. de Nogueira
Mineração ("MLB") to Rio Madeira in exchange for shares in Rio
Madeira, (the "MLB Transfer"). Both the Cancana Rio Acquisition and
the MLB Transfer will subject to regulatory and shareholder
approval and if approved will result in Cancana holding 50% of the
issued and outstanding shares of Rio Madeira, (collectively, the
Financings, the Cancana Rio Acquisition and the MLB Transfer shall
be referred to as the "Transactions").
The terms of the Financings consist of the following:
- Ferrometals will purchase 8,500,000 units, (each a "Unit"), of
Cancana at a price of C$0.20 per Unit, each Unit shall consist of
one common share,(a "Common Share"), in the capital of Cancana and
one Common Share purchase Warrant, (a "Warrant"), for aggregate
gross proceeds of C$1.7 million. Each Warrant shall be exercisable
into a Common Share at a price of C$0.25 per Common Share and shall
be exercisable for a period of 2 years from the date of issuance.
Concurrently with the closing of the Debenture Financing, (as
defined below), Ferrometals shall purchase 2,500,000 Units of the
8,500,000 units for aggregate gross proceeds of C$500,000, (the
"Interim Financing"), in order to provide Cancana with interim
working capital to fund its existing mining operations in Brazil
and for general working capital purposes; and
- Ferrometals will purchase a secured convertible note, (the
"Convertible Note"), to be issued by Cancana for a purchase price
of C$4.15 million (approximately C$4.25). The Convertible Note will
have a term of 3 years and bear interest at a rate of 8% per annum,
which interest shall be capitalized for the first 2 years. The
principal and any capitalized interest shall be convertible, in
whole or in part, into Common Shares at a price of C$.20 per Common
Share at the option of Ferrometals.
As a result of the Financings, Ferrometals will be become a new
"Control Person" as such term is defined under the rules of the TSX
Venture Exchange and therefore, the closing of the Financings,
(excluding the Interim Financing), shall be subject to regulatory
approval and the approval of the shareholders of Cancana at a
meeting to be held within 120 days from the date of this
announcement.
Upon the successful closing of the Financings, Ferrometals will
have the right to nominate one (1) individual to the Board of
Directors of Cancana provided that Ferrometals owns at least 5% of
the issued Common Shares, (on an "as-converted basis"). In the
event that Ferrometals owns at least 30% of the issued Common
Shares, (on an "as-converted basis"), Ferrometals will have the
right to nominate two individuals to the Board of Directors of
Cancana.
Subsequent to obtaining all requisite approvals for and the
closing of the Transactions, Rio Madeira will operate as a 50/50
joint venture between Cancana and Ferrometals pursuant to the terms
of a joint venture and operating agreement to be negotiated and
executed by the parties.
In order to continue to fund its existing operations in Brazil,
Cancana is proposing to close a non-brokered private placement of
convertible debentures, (the "Debentures"), for aggregate gross
proceeds of up to C$300,000 (the "Debenture Financing"). The
Debentures shall have identical terms to the Convertible Note and
the Debenture Financing being provided by Ferrometals, the
anticipated to close on or before January 30, 2014.
In connection with the Financings and the Debenture Financing,
the Company may pay to certain eligible finders (the "Finders") a
cash fee of up to 6% of the gross proceeds raised through each
Finder from the sale of Units and up to 4% of the gross proceeds
raised through each Finder from the sale of the Convertible Notes
and the Debentures. Cancana will also issue finder's warrants to
the Finder(s) for up to that number of Common Shares equal to 6% of
the Units issued in the Financings, with such finder's warrants
exercisable at a price of $0.20 per Common Share for a period of
two years from the date of issuance.
Rio Madeira, is a producing Manganese mine that has been in
operation for the past 8 years. Rio Madeira produces lump ore of
varying sizes and is located adjacent to, and mainly contiguous
with, Cancana's Manganese claims and operations. Rio Madeira holds
title to 15 mineral claims that total approximately 62,000 hectares
in size.
Andrew Male, President & CEO of Cancana, commented: "I am
very pleased for our shareholders that our discussions with
Sentient, a leading global resource investor, has resulted in the
culmination of this transformational transaction for Cancana and
the acquisition of Rio Madeira. Cancana has been exploring a number
of structures to facilitate the acquisition and financing of Rio
Madeira over the past 9 months in the face challenging market
conditions, and we believe this series of related transactions not
only provides the necessary financing to close acquisition of Rio
Madeira but also aligns Cancana with a leading partner in the
global resource industry to accelerate the commercialization of its
mineral assets in Brazil."
Cancana Resources Corp. is an exploration stage company with
assets in Brazil and Canada. The Company has transitioned into
trial mining and is poised to continue to expand seeking projects
that increase its resource base and provide for near term
production and revenue. All available resource reports and
information on the Company's properties are located on the Company
website: www.cancanacorp.com.
Issued on behalf of the Board of Directors of Cancana Resources
Corp.
Andrew Male, CEO and Director
This press release contains forward-looking information
under Canadian securities legislation. forward-looking information
includes, but is not limited to, statements with respect to
completion of the Financings, the development potential and
timetable of the Rio Madeira project and Cancana's other assets in
Brazil and Canada; Cancana's ability to raise additional funds
necessary; the future price of manganese, the estimation of mineral
reserves and mineral resources; conclusions of economic evaluation;
the realization of mineral reserve estimates; the timing and amount
of estimated future production, development and exploration; costs
of future activities; capital and operating expenditures; success
of exploration activities; mining or processing issues; currency
exchange rates; government regulation of mining operations; and
environmental risks. Generally, forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"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". Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Cancana to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to those
risks described in the annual information form of Cancana and in
its public documents filed on SEDAR from time to time. Although
management of Cancana has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. Cancana does not undertake to update any
forward-looking statements, except in accordance with applicable
securities laws.
Cancana Resources Corp.+1 403 269
2065cancana.ir@cancanacorp.comwww.cancanacorp.com
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