NOTE: Shoreham changed its name to Guyana Frontier.


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Shoreham agrees to $2.45-million financing with Teck

2011-01-24 09:35 ET - News Release

Also News Release (C-TCK) Teck Resources Ltd

Mr. Warren Stanyer reports

SHOREHAM ENTERS INTO PRIVATE PLACEMENT AND GUYANA PROPERTIES AGREEMENT

Shoreham Resources Ltd. has entered into a binding letter agreement with Teck Resources Ltd. of Vancouver, B.C., whereby upon execution of a definitive agreement Teck has agreed to purchase seven million units of the company at a price of 35 cents per unit for total proceeds to the company of $2.45-million. Each unit consists of one common share of Shoreham and one common share purchase warrant exercisable to acquire an additional common share at an exercise price of 60 cents for a period of two years from the closing date of the placement. As part of the letter agreement, and subject to certain conditions, Shoreham will grant Teck certain rights, as described below, regarding Shoreham's exploration properties located in Guyana, South America.

"Shoreham is pleased to enter into this strategic alliance with Teck, one of Canada's iconic mining companies," said Warren Stanyer, chairman of Shoreham. "If Teck exercises all of its warrants, Shoreham would receive total proceeds from this placement of $6.65-million. We look forward to a strong working relationship with Teck in the years to come."

Shoreham and Teck will form a technical committee to provide a forum to allow Teck the opportunity to contribute to development of continuing programs on the properties, with Shoreham having final approval of all work.

Teck rights

In consideration of the placement:

Shoreham will agree to spend a minimum of 80 per cent of the proceeds of the placement on further exploration of the Marudi Mountain property;

Shoreham shall grant Teck the right to maintain its percentage shareholding in Shoreham by participating in equity issuances (at a level equal to Teck's then shareholding) for a period of two years, to be extended for a period of an additional two years (for four years total) should Teck exercise the warrants;

Shoreham shall grant Teck a right of first offer with respect to its interest in the Marudi Mountain property, and its Black Banana and Sardine Hill properties if Mulgravian Ventures Corp. does not exercise its option to earn a working interest from Shoreham;

Shoreham shall grant Teck the right to acquire 51 per cent of Shoreham's interest in one of a number of Shoreham's other Guyana properties (collectively, the B properties), on the terms set out below.
B property option

In consideration of the placement, Shoreham shall grant Teck the exclusive option to acquire 51 per cent of Shoreham's interest in one B property. Upon the exercise of the option in respect of any one of the B properties, the option will terminate and Teck will have no further rights in respect of the other B properties.

The B properties consist of the Five Star, Whana, Aunama, Masawaki, Arawini and Otomung properties. Shoreham's interest in each of the B properties is subject to existing option agreements with Mulgravian.

Teck may elect to exercise the option with respect to a particular B property up to the earlier of Dec. 31, 2014, and 90 days after the date Shoreham delivers a notice of completion of a minimum of $1.5-million expenditures on such B property, calculated from the date of execution of the letter agreement, together with all the exploration results thereof. Expenditures shall include expenditures incurred by Mulgravian on such B property.

If Teck wishes to exercise the option, it must exercise, or have exercised, all of the warrants for gross proceeds of $4.2-million to Shoreham within two years of the closing date.

If Teck elects to exercise the option with respect to a B property, it may acquire an undivided 51-per-cent interest in Shoreham's interest in such property as follows:

If the B property is under option by Shoreham to Mulgravian, and Mulgravian ceases to solely finance exploration, by Teck financing the first $3-million of required contributions of Shoreham under the joint venture with Mulgravian in respect of such B property;

If the B property is not under option to a third party, by financing the next expenditures on the property equal to 2.5 times Shoreham's actual expenditures from the date of this agreement on the B property, to a maximum of $4.25-million (being 2.5 times the $1.5-million expenditures required for the delivery of notice by Shoreham).

Upon completion of the above expenditures on the B property and delivery of notice of such to Shoreham, Teck shall have earned a 51-per-cent interest in Shoreham's interest in the property. Following the exercise of the option, Shoreham and Teck will participate in a joint venture in respect of their collective interest in the B property, which interest may be subject to the prior interest of Mulgravian, if any.

Definitive agreement

Shoreham and Teck shall negotiate in good faith toward the completion of a definitive agreement in respect of the transactions contemplated by the letter agreement, which will replace and supersede the letter agreement.

Completion of the transactions contemplated by the letter agreement is subject to, among other things, a title and legal due diligence review by Teck, the receipt of all necessary approvals of regulatory, stock exchange and securities authorities and commissions, including approval by the TSX Venture Exchange, the receipt of such consents to be obtained by Shoreham as are required under any material agreements which affect Teck's rights under the letter agreement, and there being no material adverse change in Shoreham's properties from the date of execution of the letter agreement until completion of the placement.

All securities issued in connection with the placement will be subject to a hold period under applicable securities laws expiring four months and one day from the closing of the placement.

A finder's fee of 300,000 common shares of Shoreham may be payable to Mulgravian as finder for the placement, subject to the acceptance of the TSX-V.