Regulus and Southern Legacy Announce Agreement to Merge
CALGARY, ALBERTA--(Marketwired - May 20, 2014) - Regulus
Resources Inc. ("Regulus") (TSX-VENTURE:REG) and Southern Legacy
Minerals Inc. ("Southern Legacy") (TSX-VENTURE:LCY) are pleased to
announce the signing of a binding agreement dated May 19, 2014 (the
"Agreement") that provides for a merger of the two companies (the
"Merger"). The resulting company will maintain the name "Regulus
Resources Inc." and will have a strong balance sheet, a management
team with a successful track record in mineral exploration, and a
robust portfolio of projects that includes two large copper-gold
projects in Peru and Argentina along with early stage gold
prospects in Nevada and Chile.
John Black, President and Chief Executive Officer of Regulus,
commented as follows:
"We have reviewed numerous mineral projects over the past few
years and we believe that the AntaKori copper-gold project held by
Southern Legacy will provide us with an exceptionally good
opportunity to create significant shareholder value. The project is
located nearby several large-scale gold and copper-gold deposits
and has an initial NI 43-101 resource outlined of almost 300
million tonnes with attractive grades of copper and gold. We are
confident that further work will expand the current deposit to a
size that will be of interest to major mining companies. I am
excited at the prospect of working in Peru again with a management
team that will include many of my colleagues from Antares Minerals
Inc. The proposed merger with Southern Legacy will provide an even
stronger platform than we had at Antares with a Peruvian listing, a
strong Peruvian shareholder base and senior management domiciled in
Peru with excellent political, legal and social contacts".
Fernando Pickmann, Chief Executive Officer of Southern Legacy,
commented as follows:
"The proposed merger with Regulus will give our shareholders
access to capital that has been very difficult to obtain over the
past few years, along with a successful management team that has a
proven track record in exploring and developing world-class mineral
deposits. We believe that this merger provides our shareholders
with the best opportunity to realize the potential of the AntaKori
deposit along with exposure to the properties that are currently
held by Regulus".
While management of both companies are strongly supportive of
the proposed Merger, readers are cautioned that completion thereof
is subject to several conditions including execution of formal
documentation, regulatory approvals including approval of the TSX
Venture Exchange (the "TSXV"), shareholder approvals and
confirmatory diligence. No assurance can be given at this time that
the proposed Merger will be completed or that the terms of the
Merger will not change materially from those described below. The
companies expect that a definitive Arrangement Agreement in respect
of the transaction will be signed within 10 business days.
Mineral Projects of the Combined Entity
The combined entity resulting from the merger of Regulus and
Southern Legacy will have an excellent pipeline of copper-gold and
gold projects in Peru, Argentina, Chile and the USA. Three of the
four principal projects, as described in more detail below, have
early stage, 43-101 compliant resources defined as outlined in
Table 1. The primary focus of Regulus after the merger will be
Southern Legacy's AntaKori Cu-Au-Ag project in northern Peru. This
project has a preliminary 43-101 inferred resource of 294 million
tonnes grading 0.48% Cu and 0.36 g/t Au (please refer to Southern
Legacy news release of July 3, 2012). The resource is based on only
17,000 m of drilling, is only reported for the portion of the
mineralized system that is owned or controlled by Southern Legacy,
and is open for expansion in several directions.
Table 1. Summary of NI 43-101 compliant resources
Resource Category |
|
Tonnes millions |
Au (g/t) |
Cu (%) |
Ag (g/t) |
Au (M ozs) |
Cu (B lbs) |
Ag (M ozs) |
Au Eq (M ozs) |
Cu Eq (B lbs) |
Antakori Cu-Au-Ag |
|
|
|
|
|
|
|
|
|
|
Inferred |
|
294.7 |
0.36 |
0.48 |
10.16 |
3.40 |
3.1 |
93.3 |
12.81 |
5.1 |
Rio Grande Cu- Au |
|
|
|
|
|
|
|
|
|
|
Indicated |
|
55.3 |
0.36 |
0.34 |
4.38 |
0.64 |
0.4 |
7.8 |
1.81 |
0.7 |
Inferred |
|
101.1 |
0.31 |
0.30 |
4.40 |
1.00 |
0.7 |
14.4 |
2.93 |
1.2 |
Puchuldiza Au |
|
|
|
|
|
|
|
|
|
|
Inferred |
|
30.1 |
0.71 |
|
|
0.69 |
|
|
0.69 |
|
Au Equivalent and Cu Equivalent values were calculated using the
following metal prices: Au = US$1200/oz, Cu = US$3.00/lb, and Ag =
US$20/oz.
The principal projects of the new combined entity will include
the AntaKori Cu-Au-Ag project in N. Peru, the Rio Grande Cu-Au
project in northern Argentina, the Puchuldiza Au project in N.
Chile and the early stage Golden Brew Carlin-type Au project in
central Nevada. The new combined entity will also hold several
other early stage prospects in N. Argentina and Canada. Brief
descriptions of the principal projects follow and additional
information is available on the Regulus and Southern Legacy
websites (www.regulusresources.com and www.slminerals.com).
AntaKori Cu-Au-Ag
Project
Southern Legacy's AntaKori project is located 60 km north of the
city of Cajamarca in the Hualgayoc District, northern Peru. The
project is located in a world-class Au-Cu province which hosts a
number of nearby deposits.
- Immediately adjacent to the producing Tantahuatay Gold Mine
(Buenaventura-Southern Copper)
- 7 km to the NW of the Cerro Corona Gold-Copper Mine
(Goldfields)
- 35 km to the NW of the Yanacocha Gold Mine
(Newmont-Buenaventura)
- 40 km to the SE of the La Granja Porphyry Copper deposit (Rio
Tinto)
- 50 km to the NW of the Michiquillay Porphyry Copper deposit
(Anglo American)
Highlights of the AntaKori Project include the following:
- Southern Legacy owns or controls 20 mineral concessions,
totalling 289 hectares, which cover most, but not all of the
currently known AntaKori mineralized system. Further consolidation
of mineral tenure is in process.
- A total of 17,952 m of drilling has been completed in 70 drill
holes (22 RCDH and 48 DDH).
- Several of the more significant drill intercepts reported to
date include:
- SRC-07 106 m with 0.85 g/t Au and 1.42% Cu from surface
- DDH-37 202.1 m with 1.00 g/t Au and 1.89% Cu
- DDH-44 103.2 m with 1.03 g/t Au and 1.38% Cu from surface
- DDH-50 84 m with 1.11 g/t Au and 1.47% Cu
- An Independent 43-101 report has documented a large telescoped
Au-Cu porphyry system with associated, mineralized breccias,
skarns, and porphyry-style mineralization hosted in sedimentary and
intrusive rocks, and associated epithermal, high-sulphidation
mineralization in the overlying volcanic rocks.
- Zones of mineralization have been intercepted by the previous
drilling within large geophysical anomalies, thus confirming the
utility of the geophysics used in identifying future exploration
targets.
- Indication that the mineralized system is open in all
directions, and has potential for expansion through future
exploration programs.
Rio Grande Cu-Au
Project
Regulus' 100% owned Rio Grande Cu-Au(Ag-Mo) porphyry project is
located in the high Puna of NW Argentina, 450km west of the city of
Salta. The Rio Grande project is very favourably located along the
prominent NW-trending Archibarca Lineament which also controls the
location of the world-class Escondida porphyry Cu deposit
(BHP-Billiton), a short 150 km to the west-northwest in Chile. The
Rio Grande project shares many geologic similarities with the large
Bajo de Alumbrera porphyry Cu-Au deposit (Xstrata Copper) which is
located approximately 300km to the south, along a similar
west-northwest trending regional structural lineament. A total of
126 drill holes have been completed to date (71,211 m) and an
initial 43-101 compliant resource has been announced (see Table 1
for details).
Puchuldiza Au
Project
Puchuldiza is 100% owned by Southern Legacy and is located 230
km NW of Iquique in Comuna de Colchane, Tamarugal Province, Region
I, Chile. The Puchuldiza project belongs to a class of gold
deposits called "hot spring gold deposits", the most famous deposit
of this type is at McLaughlin, CA, USA, where approximately 27
million tonnes of 4.49 g/t gold (3.5 million troy ounces) were
mined. A total of 35 diamond drill holes (6,097 m) have been
completed at the Puchuldiza project and form the basis for an
initial NI 43-101 compliant, inferred resource estimate of 30 Mt @
0.71 g/t Au (using a cut-off grade of 0.5 g/t Au) for a total of
686,000 contained ounces of Au.
Golden Brew Au
Project
Regulus recently announced a joint venture with Highway 50 Gold
(HWY-TSX.V) to earn a 50% interest in the Golden Brew Project in
central Nevada, USA. The Golden Brew JV represents an opportunity
with potential for the discovery of a new Carlin style gold
district in central Nevada. Regulus expects to conduct an initial
drill program at Golden Brew this fall.
Merger Terms
The Agreement provides that the Merger will be based on an
exchange ratio of 0.565 shares of Regulus for each share of
Southern Legacy. This ratio was agreed to on arms-length basis by
the respective management teams and boards of the two companies
based primarily on the relative market capitalization of each
company.
The specific structure of the Merger has not yet been finalized
but the parties will agree on the best way to effect the Merger
having regard to all applicable corporate, tax and securities
issues, including applicable laws and regulations in Peru.
In connection with the Transaction and upon signing of this
Agreement, Regulus has agreed to provide Southern Legacy with an
unsecured line of credit in an amount to be agreed upon between
Regulus and Southern Legacy which amount may not exceed $1,000,000
(the "Loan") bearing interest at a rate of 6% per annum. The loan
will allow Southern Legacy to continue with key activities and
obligations until the Transaction is completed. The Loan will be
repayable on or before December 31, 2014. At the election of
Southern Legacy, the Loan may be repaid in: (i) cash representing
the full outstanding balance, plus accrued interest thereon; or
(ii) subject to the acceptance of the TSXV, by the issuance of such
number of Southern Legacy Shares as is equal to dividing the
outstanding Loan amount (plus accrued interest) by the 20 day
volume weighted average trading price of the Southern Legacy Shares
on the TSXV immediately prior to the date of execution of this
Agreement.
About Regulus Following the Merger
Name and Stock Exchange Listing
The parties have agreed that the resulting issuer will retain
the name of "Regulus Resources Inc.". Regulus will apply to list
the common shares issuable in connection with the Merger on the
TSXV and the Bolsa de Valores de Lima (Lima Stock Exchange) upon
completion of the Merger.
Share Capital
Based on the current share capital of Regulus and Southern
Legacy, Regulus will have approximately 135.6 million shares
outstanding at closing of the Merger. In connection with the Merger
(and subject to TSXV and shareholder approval), the parties have
agreed to consolidate the shares of the combined issuer on a 1 for
3 basis, which will result in there being approximately 45.2
million shares outstanding after giving effect to the Merger and
share consolidation.
In addition, it is expected that all of the outstanding common
share purchase options of Regulus and Southern Legacy will be
cancelled as part of the Merger.
Senior Management
The proposed executive officers of the resulting issuer will be
as follows:
Chief Executive Officer: John Black
Mr. John Black is an economic geologist with more than 30 years
of global exploration experience. He received his Master's degree
in Geology - Ore Deposits Exploration from Stanford University in
1988. Mr. Black was the founding President and CEO of Antares which
developed the Hacquira copper-gold deposit in Peru up to the
eventual sale of Antares to First Quantum Minerals Inc. in December
of 2010. Prior to his work with Antares, Mr. Black was Western
Mining Corporation's Technical Exploration Manager for porphyry
copper exploration in Chile and Peru, and Principal Geologist for
Rio Tinto, Kennecott's parent corporation, exploring for porphyry
copper deposits in northern Chile and Ecuador.
President: Fernando Pickmann
Mr. Pickmann brings a wealth of relevant experience to the
company. He has worked as a lawyer in Lima, Peru, for the last 20
years and has a longstanding involvement with the mining sector.
Mr. Pickmann worked for Centromin Peru S.A., the Peruvian
Government's mining privatization division, as a legal advisor.
Over the span of his career, Mr. Pickmann has successfully managed
the majority of the listings and financings of junior mining
companies on the Lima Stock Exchange. Mr. Pickmann is currently a
Director of two other TSX-V listed companies: AndeanGold Ltd. and
Estrella Gold Corp. and also sits on the board of PeruPetro, a
large Peruvian state-owned oil company. He is a graduate of the
University of Lima with a degree in Law and earned his LL.M. from
the Instituto de Empressa (IE Law School) in Madrid, Spain. Mr.
Pickmann is a Professor of Mining Law and Strategic Alliance at
Lima University and a partner of the Gallo Barrios Pickmann Law
Firm.
Chief Geological Officer: Dr. Kevin Heather
Dr. Kevin B. Heather was a founding member of both Antares
Minerals and Regulus Resources and directed the exploration that
led to the discovery of the high-grade Haquira East deposit and was
involved in the overall development of the Haquira Cu-Mo-Au
porphyry project in Southern Peru. Dr. Heather is an economic
geologist with more than 30 years of field experience in North and
South America. Dr. Heather received a BSc. (honours) degree in
geology from the University of British Columbia (Vancouver, Canada)
in 1982, a MSc. degree in geology from Queen's University
(Kingston, Canada) in 1985, and a PhD. degree from the University
of Keele (Keele, England) in 2001.
Chief Financial Officer: Mark Wayne
Mr. Wayne is a former lawyer and he holds a Chartered Financial
Analyst designation. He has raised money for, and has served as a
director or officer of, a number of public and private companies in
the mining, oil and gas and technology sectors. Mr. Wayne was a
co-founder and the Chief Financial Officer of Antares until its
sale in 2010.
Board of Directors
The Agreement contemplates that the Board of Directors of the
resulting issuer will initially consist of seven members, namely
John Black, Mark Wayne, John Leask and Jim McDonald, each of whom
is currently a director of Regulus, and Fernando Pickmann, Raymond
Jannas and Anthony Hawkshaw, each of whom is currently a director
of Southern Legacy. Brief bios of the non-management directors are
as follows:
John M. Leask: Director
John Leask has a Bachelor of Applied Science degree in
geological engineering from the University of British Columbia and
is a Professional Engineer. He has served as a director of Goldrock
Mines Corp. (formerly Mansfield Minerals Inc.) since June 1998. Mr.
Leask was the President and CEO of White Knight Resources Ltd.
until its takeover by U.S. Gold Corporation in 2007. Mr. Leask has
30 years of experience in the exploration and mining business at
all levels.
Jim McDonald: Director
Mr. McDonald began a 25 year career in the mining industry
working as a project geologist with Noranda Explorations Ltd. Mr.
McDonald has been a founding member in developing several
successful junior exploration companies such as White Knight
Resources, Black Bull Resources and National Gold (now Alamos Gold
Inc.). Mr. McDonald is currently the President and CEO of Kootenay
Gold Inc.
Raymond Jannas, Director
Mr. Raymond Jannas currently serves as President of Gexsa Ltda.
and Chief Executive Officer of Minera Fuego Limitada, a privately
held mining company. He has over 30 years of experience as
exploration and mining geology throughout the Americas, including
tenures as Vice President Exploration and Geology at Hochschild
Mining Plc and Regional Manager South America and Worldwide Project
Generation Manager at Gold Fields Ltd. Mr. Jannas holds a Ph D. in
Geology from Harvard University and B. Sc. in Geology by
Universidad de Chile.
Anthony Hawkshaw, Director
Anthony Hawkshaw was a Chartered Accountant for 29 years and
holds a Bachelor Degree in Business Management from the Ryerson
University in Toronto. From 2005 to 2007, Mr. Hawkshaw was the CFO
of Grove Energy Limited, a London and Toronto listed oil and gas
development company. In 2005, Mr. Hawkshaw was the CFO of Chariot
Resources Limited. Prior to Chariot, Mr. Hawkshaw was CFO of Pan
American Silver Corp. from 1995 to 2003. With more than 30 years'
experience in the mining industry in countries including Canada,
the United States, Mexico, Russia and Peru, Mr. Hawkshaw has
extensive experience in the marketing of metals in refined and
concentrate form throughout the world and in metals trading. He has
arranged numerous debt, equity and convertible debt financings with
institutional investors, commercial banks and multilateral lending
agencies. Mr. Hawkshaw is currently a director of Caza Gold and Oro
Mining and was a director and Chief Financial Officer of Rio Alto
Mining Limited.
Break Fee
Each company has agreed to pay the other company a break fee of
$750,000 if the proposed Merger is not completed because the
parties fail to recommend to their respective shareholders to vote
in favour of the Merger at a duly called meeting of shareholders,
or a party accepts a proposal to complete an alternative
transaction.
Lock-Ups
It is anticipated that each the directors and officers of each
of Regulus and Southern Legacy will execute a standard lock-up
agreement in connection with the execution of the definitive
arrangement agreement.
Advisors and Counsel
Regulus' legal counsel is Burnet, Duckworth and Palmer LLP.
Southern Legacy's legal counsel is Davis LLP. Roman Friedrich and
Associates is providing financial and advisory services to Southern
Legacy.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release. All of Regulus' exploration programs and pertinent
disclosure of a technical or scientific nature (including such
disclosures as are contained in this release) are prepared by, or
under the direct supervision of, John E. Black, Regulus' CEO, who
serves as the qualified person (QP) under the definitions of
National Instrument 43‐101.
Forward Looking Information
Certain statements regarding Regulus and Southern Legacy,
including management's assessment of future plans and operations,
may constitute forward-looking statements under applicable
securities laws and necessarily involve known and unknown risks and
uncertainties, most of which are beyond Regulus' and Southern
Legacy's control. Often, but not always, forward-looking statements
or information can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate" or "believes" or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved.
Specifically, and without limitation, all statements
included in this press release that address activities, events or
developments that either Regulus or Southern Legacy expect or
anticipate will or may occur in the future, including the proposed
merger as described herein, and management's assessment of future
plans and operations and statements with respect to the completion
of the anticipated drilling program, may constitute forward-looking
statements under applicable securities laws and necessarily involve
known and unknown risks and uncertainties, most of which are beyond
Regulus' and Southern Legacy's control. These risks may cause
actual financial and operating results, performance, levels of
activity and achievements to differ materially from those expressed
in, or implied by, such forward-looking statements. Although
Regulus and Southern Legacy believe that the expectations
represented in such forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to be
correct
Regulus and Southern Legacy do not undertake any obligation
to publicly update or revise any forward-looking statements other
than required by applicable securities law.
Regulus Resources Inc.John E. BlackPresident / CEO / Director+1
720
514-9036john.black@regulusresources.comwww.regulusresources.comSouthern
Legacy Resources Inc.Fernando PickmannPresident / CEO+011 511 208
4200info@slminerals.comwww.slminerals.com
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