A NORTHAIR GROUP COMPANY
SUITE #408-1199
WEST PENDER STREET
SUITE 860 -
625 HOWE STREET
VANCOUVER,
BC V6E 2R1 CANADA
VANCOUVER,
BC V6C 2T6 CANADA
TEL:
(604) 694-0005 FAX: (604) 684-9365
TEL: (604)
687-7545 FAX: (604) 689-5041
www.crestonmoly.com
www.tenajon.com
NOT
FOR DISTRIBUTION TO U.S.
NEWSWIRE SERVICES OR
FOR
DISSEMINATION IN THE UNITED STATES
PRESS RELEASE
FOR IMMEDIATE RELEASE
May 27,
2009
Creston
Moly Announces Business Combination with Tenajon Resources
Vancouver,
British Columbia Creston Moly Corp. (Creston)
(CMS: TSX-V) and Tenajon Resources
Corp. (Tenajon) (TJS: TSX-V) have entered into a Letter
Agreement to merge, by way of a plan of arrangement or other form of business
combination (the Transaction). Under the Transaction, Creston will acquire all
of the issued and outstanding shares of Tenajon in consideration for the issue
of Creston shares on the basis of 0.84 share of Creston for each share of
Tenajon. The boards of directors of Creston and Tenajon have unanimously
approved the terms of the Transaction.
Highlights of the Transaction:
(All amounts are in US$ unless otherwise stated.)
- Creation of a platform for the combined company
to become a leading molybdenum development company via organic growth and
acquisition opportunities;
- Consolidation of a large reserve and resource
base consisting of three projects in favourable geographic locations (Mexico
and Canada);
100% ownership of the Creston Molybdenum
Deposit which has a pre-tax NPV8% of US$503 million at $15/lb Moly and $1.75/lb
Cu under an owner mining scenario. Direct cash costs are estimated at $5.74/lb
of Mo equivalent under an owner mining scenario;
- 100% ownership of two Canadian development
molybdenum deposits, including the Ajax
deposit and the Moly Brook deposit, both of which possess significant
43-101 Resource estimates;
- Excellent exploration potential on all three
resource projects;
- Strengthened management team with extensive
development experience;
- Upon completion of the transaction, the combined
company will have approximately 175 million shares outstanding.
"The combination of Creston and Tenajon creates a company that has
excellent prospects for internal growth, and the scale of resource base to take
advantage of what we believe will be an eventual turn-around in the moly space,
said Colin K. Benner, Chairman of Creston.
"We are happy to present to our shareholders the opportunity to be
a part of a new, stronger, larger moly company that provides exposure to the
Creston Project, one of the best undeveloped moly projects in North
America," added Bruce McLeod,
Chief Executive Officer of Tenajon.
A presentation of the business combination is available for viewing at www.crestonmoly.com and www.tenajon.com
Board
& Management
Following completion of the Transaction, Bruce
McLeod will be appointed as President and CEO, Colin K. Benner
will continue to serve as Chairman and Wayne Johnstone
will continue serving as CFO. Upon completion of the Transaction,
Jonathan George will continue with Creston serving as an advisor to the Board.
The
Board of the Directors of Creston following completion of the Transaction will
consist of Colin K. Benner, Bruce McLeod,
Richard Godfrey, John McCleery, John
Robins and Michael Gunning.
Transaction
Creston and Tenajon anticipate that the Transaction will be carried out
by way of a statutory plan of arrangement whereby Creston will acquire all of
the issued shares of Tenajon and Tenajon will become a wholly owned subsidiary
of Creston. The Transaction would be subject to certain conditions including:
completion of due diligence reviews by each party, the approval of the Supreme
Court of BC and the affirmative vote of not less than 66 2/3% of the common
shares of Tenajon represented at a special meeting of the shareholders of
Tenajon. However, the parties may consider an alternative form of transaction,
such as an amalgamation or other form of business combination, as mutually
determined by Creston and Tenajon. There is no certainty that the Transaction
will be completed as presently contemplated, or at all.
Full details of the proposed transaction will be included in the
definitive arrangement agreement and Management Information Circular to be
prepared and filed with the regulatory authorities and mailed to Tenajon
shareholders in accordance with applicable securities laws. Under the terms of
the Transaction, each Tenajon shareholder will be entitled to 0.84 share of
Creston for each share of Tenajon. Tenajon's outstanding options and warrants
will be adjusted in accordance with their terms so that the number of Creston
shares to be received upon exercise and the exercise price of the warrants are
adjusted proportionately to reflect the exchange ratio described above. Based on
the current Tenajon shares outstanding, the Transaction will involve the
issuance of approximately 53.2 million Creston shares, which will equate to
30.4% of Creston?s post-Transaction shares outstanding.
The Transaction is expected to be completed early in the third quarter
of 2009 and is subject to certain customary conditions, including receipt of
all necessary court and shareholder approvals and dissent rights to the
Transaction shall not have been exercised prior to the effective date of the
Transaction by holders of Tenajon shares representing in the aggregate 5% or
more of outstanding Tenajon shares at such time. It is anticipated that a
special meeting of shareholders of Tenajon will be held at a time yet to be
determined to approve the Transaction.
Creston has engaged Haywood Securities Inc. as its financial advisor and
Miller Thomson LLP as its legal advisor in respect of this transaction. Tenajon
has engaged Canaccord Capital Corporation as its financial advisor and DuMoulin
Black LLP as its legal advisor in respect of this transaction.
About Creston
Creston owns
100% of the Creston Molybdenum Deposit (Creston Project) located in Sonora,
Mexico. An
independent Pre-Feasibility Study, prepared by M3 Engineering & Technology
Corporation of Tucson, Arizona
("M3"), estimated production, capital and operating cost
parameters along with project economics, and considers both owner and contract
mining scenarios.
Highlights
of Creston?s Pre-Feasibility Study and Base Case Mine Plan include:
(All amounts are in US$ unless otherwise stated.)
A pre-tax Net Present
Value (?NPV?) at an 8% discount rate of $465.3 million with contract mining and
$502.9 million with owner mining ($15/lb Mo and $1.75/lb Cu);
A pre-tax Internal Rate
of Return (?IRR?) of 28.2% with contract mining and 27.2% with owner mining;
Annual molybdenum and
copper production of approximately 20 million pounds and 12 million pounds
respectively from processing of 40k tonnes per day (ktpd) of ore;
Direct cash costs of $6.57 per lb of Mo equivalent with
contract mining and $5.74 per
lb with owner mining;
An
estimated initial capital expenditure of $511.6 million utilizing contract
mining and $576.2 million with owner mining.
The Creston Molybdenum Deposit contains the following mineral reserves
and In-pit inferred resources at a 0.037% Mo equivalent* cut-off grade:
Category
|
Tonnes
(000?s)
|
Mo
(%)
|
lbs Mo
(000?s)
|
Cu
(%)
|
lbs Cu
(000?s)
|
|
|
|
|
|
|
Proven Reserves
|
44,736
|
0.079
|
78,024
|
0.053
|
52,217
|
Probable Reserves
|
101,968
|
0.076
|
171,924
|
0.047
|
106,614
|
|
|
|
|
|
|
Proven and Probable Reserves
|
146,705
|
0.077
|
249,948
|
0.049
|
158,831
|
|
|
|
|
|
|
In-pit Inferred Resources
|
8,718
|
0.065
|
12,464
|
0.063
|
12,158
|
*Mo
equivalent: Mo% + (Cu%/7.5)
1.
The mineral
resources referred to herein have been estimated in a NI 43-101 technical
report (the MDA Report) prepared for Creston in December 2008 by Mine
Development Associates (MDA). The person responsible for the resource estimate
on behalf of MDA is Michael Gustin, P.Geo, and a Qualified Person for the
purposes of National Instrument 43-101.The MDA Report is available at www.sedar.com.
2.
Proven and
probable reserves are included in the statement of resources.
About Tenajon
Tenajon has a 100% interest in the Moly Brook Molybdenum Property,
located 2.5 km from the Hamlet of Grey River on the southern coast of Newfoundland.
Tenajon also has a 100% interest in the 1,718 hectare Ajax Molybdenum Property
located 13 km north of Alice Arm, BC.
The Moly Brook and Ajax Molybdenum Projects contain the following
mineral resources at a 0.04% Mo cut-off grade:
Project
|
Category
|
Tonnes
(000?s)
|
Mo
(%)
|
lbs Mo
(000?s)
|
Cu
(%)
|
lbs Cu
(000?s)
|
|
|
|
|
|
|
|
Moly Brook (1)
|
Indicated
|
86,781
|
0.065
|
124,600
|
0.034
|
65,800
|
|
Inferred
|
31,263
|
0.056
|
38,600
|
0.0272
|
18,800
|
|
|
|
|
|
|
|
Ajax (2)
|
Indicated
|
69,000
|
0.065
|
98,900
|
N/A
|
N/A
|
|
Inferred
|
483,120
|
0.061
|
649,800
|
N/A
|
N/A
|
1.
The Resource
estimate for the Moly Brook Molybdenum Property was completed by Kirkham
Geosystems Ltd under the direction of Garth Kirkham, an independent qualified
person as defined by National Instrument 43-101. The Moly Brook Report is
available at www.sedar.com.
2.
The Resource
estimate for the Ajax
Molybdenum Property was completed under the direction of Gary Giroux, P.Eng.,
an independent qualified person as defined by National Instrument 43-101. The Ajax
Report is available at www.sedar.com.
Moly Brook Project Highlights
2009
Resource Estimate of Moly Brook Zone includes an Indicated Resource of 86.8
million tonnes grading 0.065% Mo (124.6 million pounds Mo contained) and an
Inferred Resource of 31.2 million tonnes grading 0.056% Mo (38.6 million pounds
Mo contained) at a 0.04% cut-off grade (NI 43-101 compliant);
2009
Resource Estimate report outlines Indicated Resources of 120.0 million pounds
of molybdenum and Inferred Resources of 32.1 million pounds of molybdenum are
contained within a pit shell, which has an estimated strip ratio of 2.03:1,
including the potential for a higher grade starter pit with an estimated strip ratio
of 1.09:1 hosting Indicated Resources of 43.4 million pounds of molybdenum and
Inferred Resources of 4.3 million pounds of molybdenum;
2009
metallurgical work completed was successful in determining that in bench scale
tests rougher stage molybdenum recoveries in excess of 90% can be achieved;
In
2008, a drill program totalling 11,640 metres and a trenching program
successfully expanded the size, defined and confirmed the molybdenum
mineralization, which projects to surface and is open at strike and at depth;
The Resource estimate for the Moly Brook Molybdenum Property was
completed by Kirkham Geosystems Ltd under the direction of Garth Kirkham, an
independent qualified person as defined by National Instrument 43-101.
Ajax
Project Highlights
2008
Mineral Resource Estimate includes an indicated mineral resource of 69.0
million tonnes averaging 0.065% Mo (98.9 million pounds Mo contained) and an
inferred resource of 483.120 million tonnes grading 0.061% Mo (649.8 million
pounds Mo contained) at a 0.04% cut-off grade (NI 43-101 compliant);
One of
North America's largest undeveloped primary
molybdenum deposits - the deposit covers a surface area approximately 650m by
600m;
Infrastructure
is very good with both tidewater access and hydro electric power situated at
Kitsault 16 km to the south;
A
2,639 metre (13 hole) drill program was completed in October 2007 -- the
program targeted near surface higher grade mineralized zones within a potential
starter pit -- initial results include a 109.49 metre intercept averaging
0.126% Mo;
The Resource estimate for the Ajax Molybdenum Property was completed
under the direction of Gary Giroux, P.Eng., an independent qualified person as
defined by National Instrument 43-101.
For further information about
Creston
For further
information about Tenajon
Please
contact:
please
contact
Mr. C.K. Benner,
Chairman
Mr. Bruce
McLeod, President
604-694-0005 (TEL)
604-687-7545
(TEL)
604-684-9365
(FAX)
1-888-338-2200 (TOLL FREE)
Website: www.crestonmoly.com
604-689-5041
(FAX)
Website: www.tenajon.com