LAMELEE ANNOUNCES THE CONCLUSIONS OF ITS STRATEGIC REVIEW Re Mr. Hubert Vallee reports
LAMELEE ANNOUNCES THE CONCLUSIONS OF ITS STRATEGIC REVIEW
The board of directors of Lamelee Iron Ore Ltd. has completed its strategic review in light of prevailing conditions in the seaborne iron ore and capital markets. It is seeking shareholder approval for the implementation of the conclusions of the review at the next shareholder meeting scheduled to be held on March 22, 2016.
The surge in iron ore supply from Australia and Brazil and slowing demand in China caused seaborne iron prices to plummet in 2015. Forecasts for 2016 project a continued erosion of iron ore prices. Financial markets react to this situation by significantly curtailing the availability of funds for the development of new mines. Reviewing the situation, the actions of the major iron miners to defend market share and industry forecasts with respect to the evolution of global steel and iron ore markets, the Board concluded that it is most likely that iron ore prices will remain depressed and access to capital markets closed for a period longer than Lamelee can withstand.
Given these circumstances, the Board concluded that the course of action which is described below is the one that offers existing shareholders the best chances to save and better their investment. In a nutshell, the objective is to maximize the value of Lamelee's listing by performing a merger, amalgamation or business combination with a private mining exploration or junior mining company seeking to acquire a TSX Venture listed corporation.
To facilitate the achievement of this objective, the following course of action needs to be completed:
A share consolidation to reduce the current number of shares outstanding;
In order to increase the chances of the Company to attract parties to reorganize with it, it is deemed necessary to undertake a share consolidation in order to reduce the number of issued and outstanding common shares in the capital of Lamelee (the "Lameleee Shares") to a level more appropriate for a new venture.
Lamelee is therefore seeking approval from the shareholders to amend the articles of Lamelee to consolidate the Lamelee Shares on the basis of a ratio to be determined by the Board but not to exceed one (1) new Lamelee Share for every twenty (20) existing Lamelee Shares.
The principal effect of the share consolidation will be that the number of Lamelee Shares issued and outstanding will be reduced from 90,838,977 Lamelee Shares to a minimum of 4,541,948 Lamelee Shares (or 4,608,659 Lamelee Shares if the Debts (as defined hereinafter) are converted into Lamelee Shares).
The potential return of the claims on the Lamelee property acquired from Fancamp Exploration Ltd. ("Fancamp") on September 16th, 2013, ("the Claims"), which is a non-arm's length party and, at the sole discretion of Fancamp Exploration Ltd, the return for cancellation all of the Lamelee Shares it owns.
The potential return of the Claims may be required if Lamelee is unable to make the advance royalty payment on June 30, 2016 since, in such a case, Lamelee would be in default and will have the contractual obligation to return the Claims to Fancamp on the due date. Fancamp has informed Lamelee that in order to support Lamelee's management initiatives to restructure the company, Fancamp may decide to voluntarily return all of its Lamelee Shares for cancellation, even if the operations of Lamelee continue afterwards. Such reduction in the number of issued and outstanding Lamelee Shares will make Lamelee more attractive for potential partners who seek a public company structure for their own project and would be more fair for the remaining shareholders.
Should Fancamp, on its own initiative after the share consolidation, voluntarily return all its Lamelee Shares for cancellation, then the approximate number of outstanding Lamelee Shares will be a minimum of 2,391,948 Lamelee Shares (or 2,458,659 Lamelee Shares if the Debts (as defined hereinafter) are converted into Lamelee Shares.
The approval of the Stock Option Plan in order to satisfy regulatory requirements.
Although the Board has no plan to award Stock Options under the current circumstances, the maintenance of the Stock Option Plan in accordance with the TSXV rules is considered important in the eventuality that Lamelee merged or was acquired by a private company. The award of options to the team appointed to manage the restructured operations is an essential incentive tool that must be maintained.
The issuance of Lamelee Shares to pay for the debts incurred by Lamelee towards three service providers which are associated with insiders of Lamelee (the "Debts"). The Debts are in the amount of $66,710.39 and at a conversion rate of $0.05, the corporation would issue 1,334,207 Lamelee Shares to the service providers; this will not result in a new control person.
A change in name from "Lamelee Iron ore Ltd. / Lamelee Minerais de fer Ltee" to "Corporation miniere Lamelee / Lamelee Mining Corporation" (or to such other name as may be chosen by the directors of the Corporation and acceptable to regulators) to eliminate the reference to iron ore.
Should the Board not succeed in completing on acceptable terms the restructuring transaction mentioned above, it would then be necessary to effect a voluntary dissolution and delist from the TSX Venture Exchange.