Virgin Metals intends to issue up to 32,706,697 common shares for 100% of the outstanding shares of Alpaca Resources Inc. and will exchange the outstanding warrants and options of Alpaca with warrants and options of Virgin. The transaction is contingent on, among other things, the completion of certain financings concurrent with the completion of the acquisition and satisfactory due diligence of Alpaca's properties. There are no Non-Arm's Length relationship between the Company (or any of the Company's principals) and Alpaca.
Completion of the Transaction is subject to a number of conditions including, but not limited to, TSX Venture Exchange acceptance, regulatory approvals, satisfactory completion of due diligence by both the Company and Alpaca, completion of satisfactory concurrent financing of at least $1.5 million, absence of any adverse material changes, maintaining a level of liabilities acceptable to both parties, and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Target nominees of the concurrent financing have not yet been identified and further disclosure will be provided when known. There can be no assurance that the Transaction will be completed as proposed, or at all.
Courtland Hill Copper Project
The Courtland Hill Copper Project is located in the Turquoise Mining District of Southern Arizona, 120 km (75 miles) southeast of Tucson, AZ. It consists of 56 patented and 23 unpatented lode claims covering an area of 531 hectares (1,312 acres). Historic production on the property has been estimated to be in excess of 45 million lbs of copper. Today it is considered to be at an intermediate stage of development with significant potential for future mining.
In the Property area, Precambrian metaclastic rocks (Pinal Schist) are unconformably overlain by Paleozoic limestone and quartzite which is intruded by Jurassic felsic intrusive rocks. The area is structurally complex with several periods of folding, faulting and tilting. The primary economic interest of the district and the Property are carbonate replacement deposits and supergene chalcocite enrichment blankets. Mineralization occurs in two areas on the Property: (i) the North Courtland area is characterized by a near surface oxide blanket that is underlain by copper and zinc sulfide mineralization, and (ii) the South Courtland area is characterized by near-surface oxide mineralization underlain by copper, silver/zinc sulfide mineralization.
Based on the information currently available, significant continuity of near surface mineralization has been identified at both the North Courtland (790m along strike) and South Courtland (965m along strike) areas. Additional drilling and re-assaying of legacy core will be conducted to upgrade and verify the historical estimates since the historic resources are not NI 43-101 compliant. Also, drilling will test the North and South Courtland zones where they are considered to remain open for expansion in one or more directions.
Proposed Management and Directors of the Company post-Transaction
The board of directors of the Company post-Acquisition will be comprised of seven (7) directors, of which four (4) individuals will be nominated by the Company, and three (3) individuals will be nominated by Alpaca. The Company does not expect the current management to change after completing the Transaction.
Principal Shareholders of Alpaca
The principal stakeholder of Alpaca is Foundation Financial Holdings Corp. ("FFHC"), which owns and operates a Toronto-based Merchant Bank and Exempt Market Dealer, that currently owns beneficially, directly or indirectly, or exercises control or direction over approximately 14.51% of the Alpaca Shares. FFHC is controlled by Jeremy Goldman (of North York, Ontario), Yannis Banks (of Toronto, Ontario) and The Goomie Trust, a trust formed under the laws of the Province of Ontario, whom together hold a 100% interest in FFHC. Concurrently with the Transaction, Alpaca is contemplating a property refinancing, which could result in issuance of additional Alpaca shares to two of FFHC's directors for the provision of guarantees, which could increase FFHC's ownership to 19.10%. The property refinancing will have no impact on the consideration to be paid by Virgin with regards to the acquisition.
Summary of Financial Information for Alpaca
Draft financial statements for the year ending December 31, 2012 indicated that Alpaca had no revenue, net losses totaling $1,608,461, total assets of $13,779, total liabilities of $2,596,277 and a working capital deficit of $1,539,289. As a condition of closing these liabilities will be reduced to $1,570,000 at no additional cost of cash or shares to Virgin shareholders.
About Virgin Metals Inc.
Virgin Metals is a junior exploration and development company; its projects include two copper-molybdenum porphyry properties in Sonora, northern Mexico. One of these, Los Verdes, is currently the subject of a pre-feasibility study while the other, Cuatro Hermanos, is the focus of ongoing exploration efforts.
About Alpaca Resources Inc.
Alpaca Resources Inc. is a Canadian junior exploration company focused on exploration and development of mineral Properties. Alpaca's primary project is Courtland Hill Copper Project, an advanced stage exploration project located in the Turquoise Mining District of Southern Arizona.
Darren Koningen, P. Eng., is the Qualified Person responsible for the technical content of this release for Virgin Metals Inc.Virgin is not responsible for any technical information in this press release that relates to Alpaca's properties. All technical information relating to Alpaca and the Courtland Hill property has been approved by Alpaca's Qualified Person, Richard Cleath, M. Sc.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Virgin Metals Inc.
CHF Investor Relations
(416) 868-1079 x 225
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