News
VVC to acquire 10% of Plateau Helium for $100K (U.S.)
2020-11-09 10:22 ET - News Release
Mr. Michel Lafrance reports
VVC EXPLORATION - SHARE PURCHASE AGREEMENT WITH PLATEAU HELIUM CORPORATION
VVC Exploration Corp. has signed a share purchase agreement (SPA) with Plateau Helium Corp. (PHC) and the shareholders of PHC. PHC is a Wyoming corporation focused on helium exploration and development, primarily in the Western United States. The terms of the SPA allow VVC to acquire a 10-per-cent minority interest in PHC for $100,000 (U.S.). The SPA gives VVC the right to buy the remaining 90-per-cent interest in PHC from the shareholders of PHC for 21 million shares of VVC, subject to a voluntary escrow and a number of conditions. The acquisition of the minority interest is subject to TSX Venture Exchange approval and will close as soon as approval has been obtained. The acquisition of the majority interest is subject to completion of due diligence of PHC by VVC and further TSX-V approval.
PHC's initial target project is located in Kansas and currently comprises 69 leases covering 13,760 acres known as the Syracuse helium project. The property on which the project is located hosts more than 150 potential well sites. Historically, the acreage was explored by five wells, all of which either produced or tested natural gas containing helium. Initial work planned for the project involves reworking/re-entering and returning the five existing wells to production. Produced helium and natural gas will be processed and marketed by an existing pipeline system and processing plant that services the area. PHC owns a 100-per-cent working interest in the property, subject to numerous royalties referred to herein. PHC will be entitled to approximately 52.6 per cent of the net proceeds from the first 10 wells on the property and approximately 66.69 per cent of the net proceeds from all remaining wells from the project. With the existing financing available to PHC through the limited partnership financing (see herein) and forward sales of helium, it is anticipated that further development will be financed without additional capital in the near term.
The project is subject to a 17-per-cent royalty held by three parties. PHC completed a limited partnership financing to acquire the project and commence the rework/re-entry of the five existing wells. These limited partners are entitled to a royalty of 21 per cent of the net revenue from the first 10 wells after payment of the 17-per-cent overriding royalty and deduction of the costs of production. The project and all helium projects acquired by PHC are also subject to a 15-per-cent royalty held by a company controlled by the shareholders of PHC as well as a 1-per-cent royalty held by a third party. The 15-per-cent royalty and the 1-per-cent royalty are payable on the net proceeds received by PHC after deduction of all costs of production and payment of all pre-existing royalties.
One VVC insider holds 9.5 per cent of the LP interest as a result of investing $100,000 (U.S.). Another insider of VVC holds a 16.67-per-cent interest in the 15-per-cent royalty. The transaction was unanimously approved by the disinterested directors of VVC. The transaction is not a related party transaction as defined in Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions.
Following the closing of the purchase of the minority interest, VVC will have 45 business days to complete its due diligence and elect to acquire the majority interest. Should VVC proceed with the acquisition of the majority interest, on closing, the VVC shares, the majority interest and a transfer of the Syracuse helium project will be held in escrow. The VVC shares will be released from escrow in three tranches of seven million shares each upon completion of three predetermined benchmarks.
About VVC Exploration Corp.
VVC is a Canadian exploration and mining company focused on the exploration and development of copper and gold deposits in northern Mexico, specifically the Gloria copper project located in Chihuahua. VVC has other projects in Mexico and Canada, including gold and silver prospects, Cumeral and La Tuna, in Sonora and Sinaloa, Mexico, and a grassroots gold/VMS (volcanogenic massive sulphide) prospect in the Timmins area of Northern Ontario.
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