Toronto, Ontario / ACCESSWIRE / April 8, 2014 /
Noble Mineral Exploration Inc. (the
"Company", "Noble" or "NOB") (TSX-V:NOB, FRANKFURT:NB7, OTC.PK:NLPXF)
today provided an update regarding recent developments
relating to its proposed sale of the surface rights (including the
timber rights) to Block A of its Project 81 property (the
"Property") and
its recent annual and special meeting of shareholders, which
commenced on March 26, 2014 and was adjourned to April 4,
2014. At the adjourned meeting of shareholders on
April 4, 2014, no business was conducted other than the adjournment
of that meeting to Thursday,
April 17, 2014 at 10:00 a.m.
at Suite 720, 40 University Ave, Toronto,
Ontario.
At the April 17, 2014
adjourned meeting, shareholders will be asked to consider and, if
deemed advisable, pass a special resolution (the
"Transaction
Resolution") approving the sale of the Property. In
connection with the adjourned meeting on April 17, 2014, Noble has
prepared and is mailing a notice and addendum to information
circular (the "Addendum") supplementing the
Company's information circular dated February 24, 2014 (the
"Information
Circular"). The Addendum will also be posted under the
Company's profile at www.sedar.com.
Voting conditions for the adjourned meeting of shareholders
on April 17, 2014 remain those described in the Information
Circular (which has been mailed to shareholders and posted
at www.sedar.com), except that
the deadline for voting at
the April 17, 2014 adjourned meeting will be 10:00 a.m. on
Wednesday, April 16, 2014. The Company will not
distribute a new Form of Proxy or Voting Instruction Form for the
April 17, 2014 adjourned meeting.
The Property has an area of
approximately 145,000 acres, or 58,000 hectares, and is located in
the Timmins area of northern Ontario. Pursuant to a restated
agreement of purchase and sale dated as of January 28, 2014 (the
"Restated PSA")
entered into by the Company and Resource Land Holdings, LLC (the
"Purchaser"),
as amended by agreement dated as of March 28, 2014 (the
"PSA
Amendment"), the Purchaser has agreed to buy the
surface rights and timber rights to the Property, including any
sand, gravel (including hard rock aggregate), peat, gas or oil
located on or under the Property, as well as a 5% net profits
interest in the mineral rights on the Property which can be
repurchased by the Company at a cost of $800,000 per 1%
interest.
The purchase price to be paid
by the Purchaser in this transaction is $6,800,000, and the Company
will also be granted a 50% net royalty on revenue generated from
any carbon credit business relating to the Property. The principal
terms and conditions of the purchase and sale transaction under the
Restated PSA, as amended by the PSA Amendment (the
"Sale
Transaction"), are more particularly set out in the
Information Circular in the section entitled "Approval of Agreement
of Purchase and Sale", as supplemented by the Addendum.
REASONS FOR THE ADJOURNMENT
On March 26, 2014, the meeting
of shareholders was adjourned prior to a shareholder vote being
taken with respect to the Sale Transaction because a
number of issues had to be resolved in order for the Company to
complete that transaction. The most significant issue
arises from the fact that the proceeds of the proposed sale are not
sufficient for the Company to pay off all of the debt that is
secured by mortgages registered over the Property, being Block A of
Project 81. The total principal amount owed by the Company to all
secured creditors is $7,000,435. A condition of the Sale
Transaction is the discharge of those mortgages over the surface
rights of the Property.
The proceeds of the sale of
the surface of the Property are sufficient to pay off the principal
and interest owing to the holders of the first and second ranking
secured debt, namely Franco-Nevada Corporation and Bridging Credit
Fund LP. However, those proceeds are not sufficient to pay off the
debt owed to a third ranking group of secured creditors so that
title to the surface and timber rights to the Property are no
longer subject to those mortgages upon transfer. That
third ranking group of secured creditors is currently comprised
of H. Vance White, the Company's President and CEO,
his sisters, the professional
corporations through which the partners of Ormston List Frawley LLP
practice law, William F. White, Gale R. White and
Kreative Ventures Limited ("Kreative Ventures").
William F. White is the Chairman and a shareholder of IBK Capital
Corp. ("IBK"),
a financial advisor to the Company generally and specifically with
respect to the Sale Transaction.
Certain of the third ranking
secured creditors, namely H. Vance White, the Company's President
and CEO, his sisters and the professional corporations through
which the partners of Ormston List Frawley LLP practice law
(collectively the "Consenting Lenders"), have agreed
that the mortgages registered over the surface and timber rights to
the Property as security for their loans can be discharged without
any payment of principal being made towards their loans. Denis
Frawley is a partner of Ormston List Frawley LLP, the Company's
legal counsel, and Secretary of the Company. Until otherwise agreed
to by the Consenting Lenders, those loans will continue to be
secured by a mortgage over the mineral rights of the Property, and
interest will continue to be payable on those loans until maturity
on October 22, 2016 and December 21, 2016. The total principal
amount of the secured loans from the Consenting Lenders is
$221,000, and the monthly interest on those loans is approximately
$2,200.
As disclosed in its press
release of April 3, 2014, the Company has signed a
debt repayment agreement with the third ranking lenders who are not
Consenting Lenders (the "Repayment Agreement") setting out
the conditions under which they will authorize the discharge of
mortgages required for the Company to then conclude the Sale
Transaction. The Repayment Agreement requires cash payments to be
made at the completion of the Sale Transaction to repay certain of
the loans held by those third ranking lenders who are not
Consenting Lenders, and a transfer of Company assets to repay the
balance of those loans. The details of the Repayment Agreement, as
they relate to the Sale Transaction, are disclosed in this news
release under "Repayment Agreement".
Restated Agreement of Purchase
and Sale
Under the Restated PSA, the closing
of the Sale Transaction was to occur on March 31, 2014. In order to
extend this closing deadline, the Company has signed the PSA
Amendment with the Purchaser, which extends the closing deadline
for completion of the Sale Transaction and also incorporates
changes to the Restated PSA required by the Purchaser in order for
them to agree to that extension. The following is a summary
description of the material terms of the PSA Amendment, a copy of
which will be filed under the Company's profile at
www.sedar.com.
Under the Restated PSA, if the
Company terminated the Restated PSA prior to closing, it would have
been required to pay the Purchaser a termination fee of not less
than twice the Purchaser's documented out-of-pocket expenses in
connection with the transaction, up to a maximum of $200,000 (the
"Termination
Fee"). The PSA Amendment clarifies that this
Termination Fee will be payable if the Company terminates the Sale
Transaction because the shareholders do not approve it, and also
increases the maximum amount of the Termination Fee to
$300,000.
Under the Restated PSA, prior to
closing the Sale Transaction the Company could not continue to
solicit inquiries or proposals for alternatives to the Sale
Transaction but could respond to inquiries received from parties
who were contacted for a potential transaction prior the execution
of the Restated PSA by the Company and the Purchaser. In addition,
the Restated PSA provided that during the period prior to closing
and, if the Sale Transaction did not close, for six months
thereafter, if the Company received an alternative proposal for the
surface and timber rights of the Property that it was prepared to
accept, the Purchaser had a right to match that proposal and
otherwise receive a payment of 5% of the consideration received by
the Company under that alternative transaction. Pursuant to the PSA
Amendment, the Company is precluded from soliciting or responding
to enquiries for alternative proposals to the Sale Transaction.
Also, if the Sale Transaction does not close, for six months
thereafter the Purchaser will have the right to match any other
offer presented for the surface and timber rights of the Property
and to be paid 10% of the consideration the Company receives in an
alternative transaction that the Purchaser elected not to
match.
Repayment Agreement
The total principal amount of
the debt owed by the third ranking lenders who are party to the
Repayment Agreement is $2,279,453. This is comprised of $1,493,258
owed to Kreative Ventures, $220,000 owed to Gale R. White and
$566,195 owed beneficially to William F. White. These parties
collectively own 9.3% of the issued and outstanding shares of the
Company.
There is no family
relationship between William F. White and H. Vance White, the
President and CEO of the Company.
As a
condition to agreeing to the mortgage discharges required by Noble
for it to conclude the Sale Transaction, the lenders who are party
to the Repayment Agreement have requested a prepayment of some of
the principal of their third ranking secured loans and an agreement
by the Company to repay the balance of the principal amount of
those loans by transferring to them ownership of Block B of Project
81 (surface and mineral rights) and the 50% net royalty (the
"Carbon
Royalty") to be received by Noble
in the Sale Transaction on revenue generated from any carbon credit
business relating to the Property. Noble will have the right to repurchase Block B of Project
81 and/or the Carbon Royalty for a period of 12 months, for a
purchase price equal to the respective values assigned to those
assets upon their transfer, plus
an administrative fee of 1% per month.
Pursuant
to the Repayment Agreement signed on April 2-3, 2014 (a copy of
which will be filed under the Company's profile at www.sedar.com),
the Company has agreed to make the requested payment and asset
transfers to the third ranking secured lenders who are party to
that agreement in order to secure the required mortgage discharges
over the assets to be sold to the Purchaser. The Repayment
Agreement includes a proviso that the agreement is subject to
compliance with the rules and policies of the TSX Venture Exchange
and to approval of the TSX Venture Exchange, as well as compliance
with applicable securities and corporate laws and regulations. In
that agreement, each of the counterparties has confirmed to the
Company that it is not a "related party" as that term is defined
under Multilateral Instrument
61-101. The Company is therefore
proceeding to complete the Sale Transaction and make the payments
under the Repayment Agreement on the basis that they are not
"related party transactions" as that term is defined under
Multilateral
Instrument 61-101.
The
Repayment Agreement provides that, upon receiving the proceeds of
the Sale Transaction, the Company will pay all interest owing to
the third ranking secured lenders who are party to that agreement,
and also repay the principal amount of the loans owed by Noble to
William F. White (for a cash payment of $566,195 in repayment in
full of the principal owing) and Gale R. White (for a cash payment
of $220,000 in repayment in full of the principal
owing).
The
Repayment Agreement also provides that the principal amount of the
third ranking secured loan owed to Kreative Ventures would be
repaid through the transfer of Block B of the Company's Project 81
(at a value of $1,250,000) and of the Carbon Royalty (at a
value of $243,258), with the result that the principal amount of
the loan owing to Kreative Ventures (for a principal amount of
$1,493,258) would be repaid in full. The Repayment Agreement also
provides that, after those property and asset transfers, the
Company will have the right to
repurchase Block B of Project 81 and/or the Carbon Royalty for a
period of 12 months, for a purchase price equal to the respective
values assigned to those assets upon their transfer to Kreative
Ventures (i.e. $1,250,000 for Block B of Project 81 and $243,258 for
the Carbon Royalty) plus a 1% per month administration fee.
This repurchase right will allow the
Company to seek a higher price for these assets during that
one-year period and thereby realize most of the benefit from a sale
of Block B of Project 81 or the Carbon Royalty if such a higher
price is found during that period of time.
The
Company's transfer to Kreative Ventures of Block B of Project 81
and of the Carbon Royalty will not be submitted to the shareholders
for approval at the re-convened meeting of shareholders of Noble on
April 17, 2014. That transfer is subject to the approval of the TSX
Venture Exchange, and the Company intends to apply for that
approval after the mailing of the Addendum to shareholders. If the
TSX Venture Exchange or securities or corporate laws require
shareholder approval, or even disinterested shareholder approval,
for the transfer of Block B of Project 81 or of the Carbon Royalty
in repayment of the secured debt owing to Kreative Ventures, the
Company will convene a separate, subsequent meeting of shareholders
to request that approval.
As a
result of agreeing to the Repayment Agreement, the proposed use of
proceeds from the Sale Transaction provided in the Information
Circular is no longer accurate. The following is an updated
description of the Company's proposed use
of proceeds from the Sale Transaction, taking into account the cash
payments required to the third ranking lenders who are party to the
Repayment Agreement.
------------------------------------------------------------------------------------------------------------------------------
|Sale Transaction price |$6,800,000 |
|----------------------------------------------------------------------------------------------------------------------------|
|Payment to Resolute FP Canada Inc. for discharge of timber-related right of first refusal from Blocks A and B*|($1,000,000) |
|----------------------------------------------------------------------------------------------------------------------------|
|Principal ($1,000,000) and interest to Bridging Credit Fund LP |(~$1,012,000)|
|under secured bridge loan made to the Company in November of | |
|2013 | |
|----------------------------------------------------------------------------------------------------------------------------|
|Principal ($3,500,000) and interest to Franco-Nevada Corporation under secured loans |(~$3,635,000)|
|----------------------------------------------------------------------------------------------------------------------------|
|Interest payment tolenders who are party to the Repayment Agreement |(~$40,000) |
|----------------------------------------------------------------------------------------------------------------------------|
|Principal repayment to William F. White and Gale R. White |($786,195) |
|----------------------------------------------------------------------------------------------------------------------------|
|Estimated legal fees and other expenses for the Sale Transaction and transaction fee to IBK |(~$550,000) |
|----------------------------------------------------------------------------------------------------------------------------|
|Deficit |(~$223,195) |
------------------------------------------------------------------------------------------------------------------------------
*Resolute FP
Canada Inc. has signed an agreement (as extended) with the Company
pursuant to which the timber-related right of first refusal that is
registered against Block A and Block B of Project 81 would be
terminated for a payment of $1,000,000. That agreement expires on
May 15, 2014.
As
financial advisor to the Company for the Sale Transaction, the
Company has agreed to pay IBK a 5% transaction fee. This
transaction fee is in addition to the payment of a $120,000 work
fee paid to IBK Capital Corp. for its time and effort on behalf of
the Company since November 2011, including its assistance with
marketing, negotiating and ultimately concluding the Sale
Transaction. The payment of a transaction fee to IBK and the
completion of the Sale Transaction remain subject to the approval
of the TSX Venture Exchange.
In considering the Sale
Transaction, the proposed repayment of secured debt to
Franco-Nevada Corporation and Bridging Credit Fund L.P. and the
proposed repayments to William F. White and Gale R. White under the
Repayment Agreement, shareholders should consider that upon
completion of those transactions, the total principal and interest
of secured debt to have been repaid and discharged by the Company
through the Sale Transaction will be $5,473,195. Upon completion of
the transfer to Kreative Ventures of Block B of Project 81 and of
the Carbon Royalty, that total would rise to $6,969,453. As a
result, after the Sale Transaction and the repayment to Kreative
Ventures are completed, the Company's only remaining secured debt
would be the total principal amount of $221,000 owed to the
Consenting Lenders, which would continue
to be secured by a mortgage over the mineral rights of Block A of
Project 81 and to bear interest at 12%
per annum.
This will have been accomplished in
a manner whereby the Company would retain the mineral rights to
Block A of Project 81, which was the Company's primary interest in
purchasing Project 81.
In considering the Sale
Transaction, Noble encourages its shareholders to also consider the
following maturity dates and other information with respect to
Noble's secured debt.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lender |Principal Amount|Maturity Date |Accelerated Maturity/Event of Default |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|Franco-Nevada Corporation|$3,500,000 |October 6, 2014 |Among other things, upon the Company failing to pay the principal or interest due on any other secured indebtedness. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|Bridging Credit Fund LP |$1,000,000 |October 6, 2014 |Among other things, upon the Restated PSA, as amended, being terminated and the Company failing to pursue a replacement for |
| | | |the Sale Transaction within 30 days and an agreement for a replacement for the Sale Transaction being signed within 60 days. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|Third Ranking |$1,500,000 |October 22, 2016 |Among other things, upon the Company defaulting under a material contract and the maturity of indebtedness therefore being accelerated.|
|Secured |$521,000 |December 21, 2016| |
|Lenders |$475,453) |July 11, 2017 | |
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
This summary is not complete
and provides only those details that management considers most
relevant to shareholders when they consider the Sale Transaction.
Shareholders are encouraged to review the copies of the
corresponding loan agreements and convertible debentures, which are
filed under the Company's profile at www.sedar.com.
This summary demonstrates that
if the Company does not complete the Sale Transaction and therefore
repay the debt owed to Bridging Credit Fund LP and Franco-Nevada
Corporation, unless an agreement for an alternative to the Sale
Transaction can be entered into within a short period of time, all
secured lenders could realize on Project 81, which is the principal
security for those loans, as well as other assets of the Company.
In such a scenario, there can be no assurance that the Company
would then retain any of its assets.
The contemplated sale and
disposition of the Company's senior and ranking debt obligations
will allow the Company to clean up its balance sheet leaving it
virtually debt free. After having done so, Noble can then turn its
attention to seeking partners to enter into joint venture
agreements to further advance the exploration of the mineral
potential of Block A of Project 81, as well as the Company's other
properties.
Update on
Financial Condition
Noble also advises
shareholders that steps have recently been taken to
significant reduce costs, with the result that its cash
expenses for salaries, office rent, and general and administrative
matters should be reduced by approximately 50-60%.
The Company currently has
cash, securities and receivables of approximately
$380,000.
About Noble
Mineral Exploration Inc.:
Noble Mineral Exploration Inc. is a
Canadian based junior exploration company holding in excess of
72,000 hectares of property in the Timmins, Iroquois Falls and
Smooth Rock Falls areas of Northern Ontario. The Company also holds
a portfolio of diversified exploration projects at various stages
of exploration Gold in the Wawa area of Northern Ontario, and
Uranium in Northern Saskatchewan.
More detailed information is
available on the website at www.noblemineralexploration.com
Cautionary
Statement:
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. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved the information contained herein.
The
foregoing information may contain forward-looking statements
relating to the future performance of Noble Mineral Exploration
Inc. Forward-looking statements, specifically those concerning
future performance, are subject to certain risks and uncertainties,
and actual results may differ materially from the Company's plans
and expectations. These plans, expectations, risks and
uncertainties are detailed herein and from time to
time in the filings made by the Company with the TSX Venture
Exchange and securities regulators. Noble Mineral Exploration Inc.
does not assume any obligation to update or revise its
forward-looking statements, whether as a result of new information,
future events or otherwise.
Contacts:
H. Vance White, President
Phone: 416-214-2250
Fax: 416-367-1954
Email:
info@noblemineralexploration.com
Investor Relations
Phone: 416-214-2250
Email: ir@noblemineralexploration.com
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