Didnt help the share price much.....
Mr. Fraser Buchan of Angus Mining reports
ANGUS MINING TO ACQUIRE A MAJORITY STAKE IN NEVADA PRECIOUS METALS EXPLORATION COMPANY, SILVER REEF RESOURCES
Angus Mining (Namibia) Inc. and Elgin Mining Inc. have entered into a definitive agreement, pursuant to which Angus will acquire Elgin's 68-per-cent interest in the undiluted share capital of Silver Reef Resources Ltd., a privately held company incorporated under the laws of British Columbia, through the purchase of 20.5 million units of Silver Reef. In consideration, Angus will pay Elgin $1-million in cash and issue $1.5-million in equity, or 4,411,764 Angus common shares based on five-day-trailing, volume-weighted average price of 34 cents per share. The Silver Reef units to be acquired by Angus each consist of one common share of Silver Reef and one warrant, 18 million warrants are exercisable for 15 cents per Silver Reef share and 2.5 million warrants are exercisable for 25 cents. The transaction is expected to close in July, 2011, and is subject to, among other things, approval by the TSX Venture Exchange, and the company obtaining the equity or debt financing necessary to satisfy the cash consideration of the acquisition and the completion of satisfactory due diligence.
Silver Reef is a privately held precious metals exploration company with operations based in central Nevada, United States. Silver Reef has the option to earn a 100-per-cent interest in eight properties covering in excess of 14,000 acres, which include several small past-producing open pit mines, shafts with underground workings and other indications of economic mineralization. All of the optioned properties have been drilled historically, and Silver Reef is in the process of compiling drilling data and completing NI 43-101 technical reports on four of the largest claim packages.
Two of the projects, Reveille and Freiburg, supported small-scale, high-grade silver production as recently as the early 1980s; however, were shut down as the result of declining commodity prices. Geotech Ltd. has completed airborne geophysical studies of both projects, which Silver Reef has used to prioritize targets for a phase 1 drilling campaign scheduled to begin in third quarter 2011. Management of both Silver Reef and Angus Mining believe that there is great potential at Reveille and Freiburg, and target to bring these projects to development and production rapidly following the definition of mineral resources, if any are defined.
In order to earn a 100-per-cent interest in Reveille, Silver Reef must make cash payments of up to $1.25-million and incur $7.5-million in mining work expenditures by Aug. 15, 2013, and issue up to five million shares upon the occurrence of certain events. The property will also be subject to certain royalties. With respect to Freiburg and other claims, Silver Reef may earn 100 per cent by spending a total of $5-million and making certain additional cash payments and subject to certain royalties. Silver Reef has spent approximately $1-million to date in the earn-in process.
The geology of each project is similar; intrusive rocks having intruded overlying sediments, primarily dolomites and quartzites, with mineralizing solutions depositing silver, gold, and, to a lesser extent, lead and zinc, as stockwork veins, breccias and replacement deposits. At surface, much of the mineralization is oxidized, transcending into deeper sulphide mineralization as evidenced by historical workings.
Silver Reef is managed by a team of professional geologists including George Nicholson, a private consultant with extensive experience in intrusive-related orebodies, and Gary Deschutter, a former senior geologist with Falconbridge and, more recently, Anglo American.
Silver Reef is currently financed through the first stage of drilling at Reveille and Frieburg.
Fraser Buchan, Angus Mining chief executive officer, commented: "The Silver Reef acquisition represents an important step forward in Angus Mining's plans to deliver resource growth in the precious metals sector, and ultimately production. Silver Reef is earning into a portfolio of projects that have the potential to generate high-grade, high-quality resources, in a sector that we believe will outperform. When combined with the Ondundu gold project in Namibia, the company will have a diversified portfolio of projects, and solid prospects for increasing shareholder value."
Brian Morales, Elgin Mining chief financial officer, commented: "This transaction is consistent with Elgin's strategy to focus on more advanced-stage projects, specifically the recently announced agreement to acquire the Lupin gold mine and Ulu gold deposit as well as the Oro Cruz and La Bufa projects. The transaction provides Elgin with an immediate return on its investment in Silver Reef and cash which will be used to advance the aforementioned projects. At the same time Elgin will be able to participate in the potential of the Ondundu gold project and we believe that in the capable hands of Angus, a company focused earlier stage projects, that Silver Reef can be advanced and value can be created."
Pursuant to the early warning requirements of National Instrument 62-103, Elgin is required to report certain information with respect to its holdings of securities of Angus. Upon completion of the transaction, Elgin will hold a total of 4,411,764 Angus common shares representing 12.4 per cent of the outstanding capital of Angus on an undiluted basis (note: disclosure regarding the percentage of outstanding Angus common shares held by Elgin is based on information provided by Angus). The securities will be acquired by Elgin for investment purposes. Elgin will evaluate its investment in Angus from time to time and may, based on such evaluation of market conditions and other circumstances, increase or decrease shareholdings in Angus as circumstances require. For further information and to obtain a copy of the early warning report filed under applicable Canadian provincial securities legislation in connection with the transactions hereunder, please go to the Angus profile on the SEDAR website or contact Elgin.
Robert Buchan is a director and the chairman of both Angus and Elgin. Mr. Buchan also holds 2.58 million Angus common shares and 2.58 million Angus warrants and directly and indirectly owns 3,228,098 common shares of Elgin. The transaction is considered as being a non-arm's-length transaction subject to the requirements of the TSX Venture Exchange. The transaction has been approved by the independent directors of Angus and Elgin.
We seek Safe Harbor.