VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 6, 2012) - High North Resources Ltd. ("HNR") (TSX VENTURE:HN.P), a capital pool company, is pleased to announce that it has entered into an agreement dated December 22, 2011 (the "Agreement"), whereby, subject to regulatory approval and subject to other conditions, HNR will purchase a minimum of 90% of the issued and outstanding shares of Mt. Cameron Minerals Inc. ("MCM") (the "Proposed Transaction").
MCM, a privately owned company at arm's length to HNR, is incorporated under the laws of Nova Scotia and is widely held by 45 shareholders (the "MCM Shareholders"). Since 2004, MCM has been primarily engaged in the exploration and development (including diamond drilling, prospecting, mapping, sampling and trenching) of the Boisdale Hills (as defined below) graphite property. The bulk of the work conducted by MCM occurred in 2004, 2008, 2009 and 2010.
Under the terms of the Agreement, HNR proposes to acquire a minimum of 90% and up to 100% of the issued and outstanding shares of MCM (the "MCM Shares") for the issuance of up to 15,683,750 fully paid common shares of HNR (the "HNR Shares") to the MCM Shareholders (being approximately 1.75 shares per MCM Share) should 100% of the shares of MCM be tendered by the MCM Shareholders. A non-refundable deposit of $25,000 was paid upon execution of the Agreement.
MCM holds 100% of the Boisdale Hills Graphite Project ("Boisdale Hills") located 25 kilometers from Sydney, Nova Scotia. Boisdale Hills is comprised of four licenses containing a total of 92 claims covering an area of 14.2 square kilometers. The project is well located in all respects with respect to infrastructure and labour. The property is accessible by a paved local road, has available power nearby, and a new port is being developed on Sydney's harbour with an associated industrial park. There is a trained labour pool available in the Sydney area which has an industrial background having had a steel mill and a long coal mining history.
The mineralization identified on the property is flake graphite in marbles of the George River formation. The mineralized marbles have been identified along a strike length of approximately 9.5 kilometers with zones up to 300 metres wide and interpreted to be up to 300 metres deep. MCM has carried out prospecting, drilling and geophysics on the property; all of which indicate an extensive mineralized zone. Preliminary mineral processing studies have been carried out by Dr. Ian Flint formerly Director of the Minerals Engineering Center at Dalhousie University in Halifax
The Company is completing an NI 43-101 Geological Report in connection with the Proposed Transaction.
Closing of the Proposed Transaction (the "Closing") is conditional upon TSX Venture Exchange ("Exchange") approval and additional conditions as follows:
| 1. | The settlement (the "Debt Settlement"), concurrently with Closing, of $120,000 of outstanding debt of MCM in exchange for common shares of MCM at
.40 of debt principal per share; |
| 2. | The issuance, concurrently with Closing, of 1,000,000 share purchase warrants or options of HNR (the "HNR Warrants") which will be exchanged for 1,000,000 MCM share purchase options currently outstanding, the HNR Warrants to be exercisable for a period of five (5) years at an exercise price of
.40 per common share; |
| 3. | The completion of a private placement of HNR securities for gross proceeds of $5,000,000, the terms of which have not yet been negotiated; |
| 4. | Confirmation that MCM does not, after closing of the Debt Settlement, have more than $120,000 in outstanding debts upon Closing; |
| 5. | The delivery of due diligence and other documentation to HNR relating to MCM such as audited financial statements, completed corporate records and proof of title to the assets of MCM. |
The HNR Shares will be subject to those escrow restrictions agreed to in the Agreement together with any applicable Exchange or regulatory hold periods or resale restrictions.
At this time, the MCM Shareholders have not signed the Agreement. Only MCM has executed it on MCM's behalf. Any Agreement will depend on the signatures of MCM Shareholders holding at least 90% of the issued and outstanding shares of MCM.
In conjunction with the Proposed Transaction, the Company intends to complete a private placement financing (the "Private Placement") of up to 7,000,000 flow-through units (each flow-through unit to be sold at
.60 and each unit comprised of one common share and one-half of one share purchase warrant exercisable for a period of 2 years at an exercise price of
.80 per share) and up to 2,000,000 non-flow through units (each non-flow through unit to be sold at
.40 and each unit comprised of one non-flow through common share and one half of one non-flow through share purchase warrant exercisable for a period of 2 years at an exercise price of
.60 per share) for total proceeds of a minimum of at least $5,000,000 and a maximum total of 9,000,000 shares. The terms of the Private Placement and the number of flow-through and non-flow-through units may be subject to amendment dependent on market conditions.
There will be finder's fees payable on this financing, the terms of which will be announced once finalized.
The Proposed Transaction is intended to serve as the Qualifying Transaction for HNR under the policies of the Exchange.
On completion of the Proposed Transaction, the Resulting Issuer will become a mining issuer pursuant to the policies of the Exchange under the proposed name Canada Graphite Corp.
The Proposed Transaction and the name change to Canada Graphite Corp. are both subject to shareholder approval to be obtained at a meeting of HNR's shareholders.
The Agreement calls for the appointment, concurrently with Closing, of two persons to the Board of Directors of HNR, such persons to be nominated by MCM.
HNR is not retaining a sponsor on the Proposed Transaction.
This news release describes some of the basic terms of the Proposed Transaction and provides some information to HNR's shareholders as to the Boisdale Hills property. The news release does not contain all of the information required by the Exchange to be disclosed regarding the Proposed Transaction. A further news release containing complete disclosure will be issued prior to HNR's securities resuming trading.
The technical content of this news release has been reviewed by Bert MacNabb, P. Geo., a Qualified Person as that term is defined in NI 43-101.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Proposed 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.
The TSX Venture Exchange Inc. has in no way passed on the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.
ON BEHALF OF THE BOARD OF HIGH NORTH RESOURCES LTD.,
Kyle Stevenson, President & CEO
Forward Looking Statements. Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding HNR's proposed qualifying transaction. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits HNR will obtain from them.
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.