|
|
Eloro Resources Ltd. (TSX VENTURE:ELO - News; FRANKFURT:P2Q - News; "Eloro") and Megastar Development Corp. (TSX VENTURE:MDV - News; FRANKFURT:M5Q - News;
"Megastar") are pleased to announce the execution and delivery of,
among other documents, a binding Asset Purchase Agreement and a Voting Trust
Agreement (collectively, the "Acquisition Closing Documents") with
respect to the proposed business combination previously announced on August
30, 2010.
Eloro's acquisition (the
"Acquisition") of Megastar's Simkar Gold
Property near Val-d'Or, Quebec (the "Simkar
Property") in exchange for the issuance of 70,000,000 Eloro common shares (the "Eloro
Common Shares") has closed in escrow, subject to the occurrence of
certain conditions discussed below. The transfer of Megastar's Simkar Property in exchange for the Eloro
Common Shares will be effected on a tax-deferred
basis pursuant to section 85(1) of the Income Tax Act (Canada).
Eloro will be seeking shareholder approval
for the Acquisition at an annual and special meeting of shareholders to be
held on December 20, 2010. At the same meeting, and in connection with the
Acquisition, Eloro will also be seeking shareholder
approval for an ordinary resolution authorizing Eloro's
board of directors, at its discretion, to consolidate the Eloro
Common Shares on the basis of one new Eloro Common
Share for up to every three previously outstanding Eloro
Common Shares (the "Eloro
Consolidation"). As at the date hereof, an aggregate of 76,226,903 Eloro Common Shares are issued and outstanding. If the Eloro Consolidation is completed on a 3:1 basis,
approximately 25,408,967 Eloro Common Shares will
be issued and outstanding following completion of the Eloro
Consolidation. Any implementation of the Eloro
Consolidation will also be subject to acceptance by the TSX Venture Exchange
(the "TSXV").
The current intention of the parties is
that the Acquisition will be followed by a plan of arrangement (the
"Arrangement") whereby Megastar would distribute the Eloro Common Shares to Megastar shareholders pursuant to
a plan of arrangement under the Business Corporations Act (British Columbia).
The Arrangement will enable Megastar to distribute the Eloro
Common Shares to its shareholders in a tax-efficient manner.
Megastar will be seeking shareholder
approval for the Arrangement at a special meeting of shareholders to be held
on December 20, 2010. At the same meeting, and in connection with the
Arrangement, Megastar will also be seeking shareholder approval for a special
resolution authorizing Megastar's board of directors, at its discretion, to consolidate
Megastar's common shares (the "Megastar Common Shares") on the
basis of one new Megastar Common Share for up to every six previously
outstanding Megastar Common Shares (the "Megastar Consolidation").
As at the date hereof, an aggregate of 39,887,233 Megastar Common Shares are
issued and outstanding. If the Megastar Consolidation is completed on a 6:1
basis, approximately 6,647,872 Megastar Common Shares will be issued and
outstanding following completion of the Megastar Consolidation. Any implementation
of the Megastar Consolidation will also be subject to acceptance by the TSXV.
The Eloro
Common Shares to be distributed to shareholders of Megastar will be listed
for trading on the TSXV. The common shares of Megastar will continue to be
listed for trading on the TSXV.
In accordance with discussions between Eloro and the TSXV, the Acquisition closed in escrow
subject to the occurrence of the earlier of two conditions, namely: (i) approval of the Acquisition by Eloro's
shareholders, or (ii) completion of Megastar's Arrangement. The closing of
the Acquisition and any subsequent release of the Acquisition Closing
Documents will also be subject to the usual requirement that the parties are
in agreement that the closing conditions (the "Closing Conditions")
in the Asset Purchase Agreement have been satisfied or waived.
If Eloro's
shareholders approve the Acquisition and the parties are in agreement that
the Closing Conditions have been satisfied or waived, all prior to the
completion of the Arrangement, then from the date that the Acquisition
Closing Documents are released from escrow up to and including the closing
date of the Arrangement, the Voting Trust Agreement among Megastar, Thomas
Larsen and Eloro provides that all Eloro Common Shares held by Megastar are to be voted by
Thomas Larsen (in his capacity as President and Chief Executive Officer of Eloro) until all such Eloro
Common Shares have been distributed by Megastar.
Completion of the Acquisition and the
Arrangement is subject to receipt of all required consents and approvals,
including without limitation, shareholder approval, TSXV
acceptance and, in the case of the Arrangement, court approval.
About Eloro
Eloro is a junior exploration company focused
on discovering and developing precious metals in the Val-d'Or mining camp, as
well as quality precious and base metal resources in the James Bay region of
northern Quebec. In the James Bay region, Eloro has
11 gold-copper-silver properties (1,062 claims) covering 548 km(2) in the La Grande and Eastmain Greenstone Belts,
proximal to Goldcorp's Eleonore Gold Project. Eloro also has an option to acquire an undivided 50%
interest in the Simkar Property from Megastar. Eloro and Megastar have recently signed a letter of
intent and the Acquisition Closing Documents (which are being held in escrow
subject to the conditions noted above) to complete a business combination
pursuant to which Eloro will acquire 100% of the Simkar Property from Megastar in exchange for 70,000,000 Eloro shares, which shares are to be distributed pro rata
to Megastar's shareholders (see joint press release dated August 30, 2010).
About Megastar
Megastar is an emerging resource company
engaged in the acquisition, exploration and development of mineral properties
in Canada. Megastar owns gold and base metal properties in Quebec and British
Columbia.
Information in this news release
respecting the transactions involving Eloro and
Megastar, including but not limited to the Acquisition and the Arrangement, constitutes forward-looking information.
Statements containing forward-looking information express, as at the date of
this news release, the companies' plans, estimates, forecasts, projections,
expectations, or beliefs as to future events or results and are believed to
be reasonable based on information currently available to the companies.
Forward-looking statements and information are based on assumptions that
financing and personnel will be available when required and on reasonable
terms, and all necessary regulatory approvals, shareholder approvals and
court approval will be obtained, none of which are assured and each of which
is subject to a number of other risks and uncertainties. There can be no
assurance that forward-looking statements will prove to be accurate. Actual
results and future events could differ materially from those anticipated in
such statements. Readers should not place undue reliance on forward-looking
information.
Neither the TSXV nor its Regulation
Services Provider (as that term is defined in the policies of the TSXV)
accepts responsibility for the adequacy or accuracy of this release.
Contact:
Thomas G. Larsen
Eloro Resources Ltd.
President and CEO
(416) 868-9168
(416) 361-1333 (FAX)
www.elororesources.com |
|