Hansa Resources (HRL-V) Proposed Acquisition of La Higuera IOCG Property in Chile by Way of Reverse Takeover
July 14, '21 - NR
Hansa Resources Ltd. has entered into a letter agreement dated July 8, 2021, with each of Tribeca Resources Ltd. (TRL), Tribeca Resources Chile SpA (TRC), Bluerock Resources SpA, P&C Gow Investments Pty. Ltd. and Thomas Schmidt, which sets out the principal terms upon which the company will acquire all of the issued and outstanding securities of TRL, which, immediately prior to closing of the transaction, will control, indirectly, the prospective La Higuera iron-oxide-copper-gold (IOCG) project, located in the Coquimbo region, Chile.
The transaction will constitute an arm's-length transaction, as such term is defined in the policies of the TSX Venture Exchange. Hansa, after giving effect to the completion of the transaction, is referred to in this press release as the resulting issuer. On closing of the transaction, it is anticipated that the resulting issuer will change its name to Tribeca Resources Corp.
Highlights:
Experienced and industry-respected ex-Xstrata/Glencore team with high insider ownership posttransaction;
Fully financed, drill-ready, copper-dominant La Higuera IOCG property, located in the Coquimbo region of Chile;
Further district consolidation potential around La Higuera IOCG property, with advanced pipeline of additional projects being pursued in the broader Chilean IOCG belt;
TRL to raise $2-million (U.S.) in concurrent financing prior to closing the transaction;
Consolidation of the Hansa shares on a 1:5 basis;
Transaction expected to close in October, 2021.
"In Tribeca Resources, we believe we have uncovered the right combination of a strong team with high-potential copper exploration assets in Chile, the world's largest copper producer," said Robert G. Atkinson, chairman of Hansa. "Upon completion of the proposed transaction, Hansa shareholders will be aligned with, and stand to share in, the successes of TRL's experienced team of former Xstrata/Glencore executives, as they drill their cornerstone asset and continue to execute their resource discovery and growth strategy in the Chilean Coastal IOCG belt."
Dr. Paul Gow, CEO-elect (chief executive officer) of Hansa, stated: "Tribeca brings extensive South American copper expertise, with the principals having worked for many years with some of the world's largest copper producers and explorers in the region. It has taken a number of years to consolidate the La Higuera district, and we now look forward to working towards a significant copper-cobalt-gold discovery in the heart of one of the world's most significant IOCG belts. La Higuera is an historic mining centre with lesser modern exploration. Nevertheless, the district has already demonstrated very thick mineralized drill intersections across a large area, with numerous coincident magnetic/IP [induced polarization]/chargeability drill targets, with several under interpreted thin gravel cover (fewer than 30 metres in thickness), remaining to be immediately drill tested."
Transaction summary
The common shares of Hansa are listed for trading on the TSX-V under the stock symbol HRL. Prior to the completion of the transaction, the company anticipates completing a consolidation of its issued and outstanding share capital on the basis of five Hansa shares for every one currently outstanding Hansa share.
Prior to or concurrent with closing, it is a condition to closing, among other things, that TRL complete a private placement financing for gross proceeds of $2-million (U.S.). Additional details regarding the terms of the TRL financing, including the issue price per TRL share and the number of TRL shares to be issued, will be announced in a subsequent press release of the company.
It is anticipated that Hansa will acquire TRL through the issuance of an aggregate of 37.2 million shares, on a postconsolidation basis, to shareholders of TRL, including holders of shares issued pursuant to the TRL financing. The transaction is expected to constitute a reverse takeover, as such term is defined in the policies of the TSX-V. Upon closing, it is anticipated that the former shareholders of TRL will own approximately 72.68 per cent of the shares of the resulting issuer.
From and upon the completion of the transaction, the resulting issuer will carry on the mineral exploration business conducted by TRL and its subsidiaries, with a focus on the La Higuera IOCG property, located in the Coquimbo region of Chile. Hansa and TRL anticipate that, on closing, the resulting issuer will meet the TSX-V's initial listing requirements for a Tier 2 mining issuer. Exploration plans for the La Higuera IOCG property will be updated upon completion of the transaction.
The letter agreement was negotiated at arm's length, and the terms and conditions outlined in the letter agreement are binding on the parties. The letter agreement is expected to be superseded by a definitive agreement to be negotiated between Hansa and the RTO acquirors.
About Tribeca Resources Ltd.
TRL was incorporated under the laws of British Columbia for the purposes of completing the reorganization (as defined herein) and completing the transaction. Upon completion of the reorganization, TRL's sole property will be the La Higuera IOCG property, located in the Coquimbo region, Chile, and its principal business focus will be the exploration and development of the copper-dominant mineral prospects.
La Higuera IOCG property
The La Higuera IOCG property consists of 40 mining licences and two exploration licences for 4,074 hectares, located in the Coquimbo region of northern Chile, 40 kilometres north of the city of La Serena. A total of 2,827 hectares are owned 100 per cent by TRL, with the remainder subject to two separate purchase option agreements.
The La Higuera IOCG property is located toward the southern end of the Chilean Coastal iron-oxide-copper-gold belt, one of the four major IOCG belts globally and a host to exploration by numerous junior-to-mid-tier copper explorers, developers and miners. Chile is the world's largest copper producer, having produced 5.7 million metric tonnes of copper in 2020.
The property is hosted within Jurassic-to-Cretaceous-age intrusive and volcanic rocks that form part of the Coastal Cordillera. The property is located within, and adjacent to, the Atacama fault system, a long-lived system of faults that extends for approximately 1,000 kilometres in northern Chile and is associated with the major copper-gold deposits of the Coastal IOCG belt. Prominent examples of these deposits include the Candelaria, Mantos Blancos, Dominga and Santo Domingo deposits. As well as copper and gold, the development plans for the Dominga and Santo Domingo deposits also include the production of iron plus/minus cobalt.
The broader La Higuera district has a rich history of small-scale 19th century mining, with high-grade copper and gold ores mined from underground workings and either smelted locally or exported to smelters abroad. The historical La Higuera mining centre, which is surrounded by the properties, continues to support sporadic, small-scale, open-pit mining.
Modern exploration efforts on the property were completed between 2000 and 2013 by Latin American Copper (LAC), Peregrine Minerals and Azul Ventures. Two key IOCG systems were discovered on the property through 6,823 m of drilling when: (i) LAC targeted downdip and strike extensions to near-surface mineralization at the Chirsposo prospect and intersected 82 metres at 0.35 per cent copper and 19.2 per cent iron from 64 m (CAB0006) under shallow gravel cover in 2000; and (ii) Peregrine intersected 285 metres at 0.4 per cent Cu, 0.08 gram per tonne gold and 23.5 per cent Fe from 100 m (LH-RC-07) within a 12-hole program at the Gaby prospect in 2005. Limited diamond drilling was further undertaken by Peregrine in 2008 at the Chirsposo prospect and several regional targets, confirming the geometry of mineralization at Chirsposo when intersecting 54 m at 0.38 per cent Cu, 0.09 g/t Au and 14.8 per cent Fe from 122 m, 300 m along strike from hole CAB0006.
Both the Chirsposo and Gaby targets, as well as much of the surrounding licences, were covered with ground magnetic surveying (at 50 m to 100 m line spacings) and 100 m pole-dipole induced polarization surveying at 400 m line spacings by Peregrine and Azul, providing additional coincident magnetic/IP/chargeability drill targets, with several under interpreted thin gravel cover (fewer than 30 m thickness).
Mineralization from the Chirsposo and Gaby targets appears broadly similar and comprises a pyrite-chalcopyrite assemblage with associated quartz-magnetite-epidote alteration, overprinting intense amphibole-albite-magnetite-pyrite alteration. Mineralization may be present as veins, either disseminated or, more rarely, within thin breccia zones.
In 2006, Peregrine completed a short program of metallurgical testwork on two iron-rich (between 40 per cent to 48 per cent Fe) composites of drill core from the Gaby target to investigate the potential to recover copper, gold, iron and cobalt. The copper head grades of the composites were 0.75 per cent Cu and 0.1 per cent Cu. The work indicated copper and gold recoveries of 85 per cent and 65 per cent, respectively, at a K80 of 139 millimetres, with recoveries improving to 90 per cent and 75 per cent, respectively, at a K80 of 87 mm. Magnetic separation testwork on the rougher copper tailing at the fine grind produced a concentrate grading 69.4 per cent iron. In addition, a pyrite concentrate was floated from the rougher copper tailing, which had a cobalt content of 0.4 per cent with a 50-per-cent recovery.
The La Higuera IOCG property is considered by TRL to be prospective for the discovery and development of copper-gold (plus/minus iron plus/minus cobalt) deposits of the IOCG style.
Property ownership
Ownership of the property was consolidated by TRL from 2017 to 2020 through two outright acquisitions for 100-per-cent ownership and two 100-per-cent purchase option agreements, as follows:
Caballo Blanco -- Bluerock acquired 100-per-cent ownership of the Caballo Blanco licences from a private Chilean entity in 2015 for a payment of $43,750 (U.S.) and a 1-per-cent net smelter return royalty. TRL acquired a majority interest in Bluerock in 2017.
Gaby-Totito -- Bluerock entered into a five-year purchase option for 100 per cent of the Gaby-Totito licences in 2019 for consideration of $100,000 (U.S.) (upfront payment), staged exploration levy payments (5 per cent of exploration expenditures during the option period up to a cumulative total of $500,000 (U.S.)) and a $2-million (U.S.) payment to exercise the option.
Don Baucha -- Bluerock entered into a three-year purchase option for 100 per cent of the Don Baucha licences in 2019 for consideration of $225,000 (U.S.) over three years, $30,000 of which has already been paid.
Benja and Blanco -- Bluerock acquired 100-per-cent ownership of the Benja and Blanco licences from a TSX-V-listed entity in 2020 for a 1-per-cent net smelter return royalty.
The only outstanding acquisition payments on the property are a $195,000 (U.S.) payment to exercise the Don Baucha option (required by February, 2022) and a $2-million (U.S.) payment to exercise the Gaby-Totito option (required by March, 2024).
Financial information about TRL
Additional financial information about TRL, including its assets, liabilities and net profit/loss, is anticipated to be provided in a subsequent press release of the company.
Definitive agreement
Hansa and the RTO acquirors intend to effect the transaction pursuant to a definitive agreement, whereby Hansa will acquire all of the issued and outstanding securities of TRL in consideration for the issuance to the former shareholders of TRL of 37.2 million shares on a postconsolidation basis. Pursuant to the transaction, TRL will become a wholly owned subsidiary of Hansa. Hansa and TRL have agreed to co-operate with each other in structuring the transaction in an efficient manner, and the final transaction structure may differ from that presented above following the receipt of final tax, securities, corporate law and other advice.
The closing of the transaction is subject to a number of conditions, including, but not limited to: (i) execution of the definitive agreement; (ii) receipt of requisite shareholder approvals of TRL and Hansa, as necessary; (iii) entering into all escrow arrangements required by the TSX-V; (iv) receipt of all requisite regulatory approvals relating to the transaction, including, but without limitation to, the TSX-V; (v) completion of mutually satisfactory due diligence reviews; (vi) completion of the TRL financing; (vii) completion of an internal corporate reorganization by TRL in a manner satisfactory to Hansa (acting reasonably); (viii) TRL will have delivered to Hansa a current title opinion in respect of the property in form and substance satisfactory to Hansa (acting reasonably); (ix) TRL will have completed a current technical report prepared in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, and the requirements of the TSX-V in respect of the property; (x) preparation of TRL's financial statements in such form and covering such periods as required for the purposes of the required disclosure by Hansa; (xi) TRL having working capital of at least $1.75-million (U.S.) (including the net proceeds of the TRL financing) and Hansa having working capital of at least $500,000, in each case immediately prior to closing; (xii) completion of the consolidation by Hansa; and (xiii) no material adverse changes having occurred with respect to either Hansa or TRL.
The resulting issuer
The resulting issuer will continue conducting the business of TRL, with a focus on mineral exploration activities on the La Higuera IOCG property.
Directors, management and insiders
Upon completion of the transaction, it is expected that the management of the resulting issuer will consist of Dr. Gow as the chief executive officer and Mr. Schmidt as president, with further appointments to be made. It is anticipated that the board of directors of the resulting issuer will initially consist of Mr. Atkinson, Dr. Gow and Mr. Schmidt, as well as a nominee of Hansa and a nominee of TRL. The remaining current directors and officers of Hansa will resign upon closing of the transaction.
The individuals named herein are expected to be directors or senior officers of the resulting issuer.
Dr. Paul Gow -- chief executive officer and director
Dr. Paul Gow, co-founder of Tribeca Resources, is an industry-renowned geologist and manager whose career has spanned academia, mineral exploration, project evaluation and feasibility studies. He has global expertise with iron-oxide-copper-gold deposits, having led exploration and development programs in many of the world's major iron-oxide-copper-gold provinces. These include the Gawler craton, the Carajas district and the Mount Isa-Cloncurry belt. Dr. Gow was formerly the general manager of Xstrata's/Glencore's Frieda River copper-gold project and the director of Brazil exploration at Xstrata Copper, based in Belo Horizonte/Carajas. For the past 18 months, he has been acting group leader, total deposit knowledge, at the Sustainable Minerals Institute of the University of Queensland, Australia.
Thomas Schmidt -- president and director
Thomas Schmidt, a co-founder of Tribeca Resources, is an M&A (mergers and acquisitions) and finance professional with wide-ranging experience executing copper transactions across Latin America, including with Xstrata's/Glencore's Latin American copper business based in Santiago. Mr. Schmidt originally joined Xstrata in London in 2003 as a member of the corporate development team (from JP Morgan, where he was an investment banking associate). Prior to co-founding TRL, he gained investing experience during a spell with Barclays Natural Resource Investments in Doha, Qatar. Formerly, he was general manager of finance at Xstrata/Glencore, where he was responsible for the Collahuasi and Antamina joint ventures in Chile and Peru, respectively.
Robert G. Atkinson -- director
Mr. Atkinson currently serves as a director of Hansa, and he has served as a director and audit committee member of the company since 1999. He is the former president and chief executive officer of Loewen Ondaatje McCutcheon & Co. Ltd., a Canadian investment dealer, and a co-founder of Artemis Gold Inc. He has served as a director of several other public companies, including as vice-chairman of Atlantic Gold until its sale in 2019. Mr. Atkinson holds a bachelor of commerce degree from the University of British Columbia.
Transaction negotiated at arm's length
The transaction will constitute an arm's-length transaction (as such term is defined in the policies of the TSX-V). No person who is a non-arm's-length party of the company has any direct or indirect beneficial interest in TRL or its assets (including the La Higuera IOCG property) prior to giving effect to the transaction, and no such person is an insider of TRL. Similarly, there is no known relationship between or among any persons who are non-arm's-length parties to the company and any persons who are non-arm's-length parties to TRL.
Sponsorship
The TSX-V has discretion to require sponsorship in connection with certain significant transactions where the TSX-V considers sponsorship necessary or advisable. In the event the TSX-V determines that sponsorship is required in connection with the transaction, the company intends to make an application to the TSX-V for a waiver from sponsorship requirements. There is no assurance that, if applied for, a waiver will be granted.
Not seeking shareholder approval
The transaction is not a related party transaction (as defined in the policies of the TSX-V), and the company believes that no circumstances exist that may compromise the independence of Hansa or its directors and senior officers with respect to the transaction, no aspect of the transaction requires the approval of shareholders of Hansa under applicable corporation and securities legislation, and Hansa is without active operations. As such, subject to the consent of the TSX-V, Hansa does not anticipate seeking shareholder approval to complete the transaction.
Trading halt
The Hansa shares are currently halted from trading, and the trading of Hansa shares is expected to remain halted pending completion of the transaction.
Finder's fee
Subject to the approval of the TSX-V, upon closing of the transaction, Hansa will issue a total of 300,000 postconsolidation Hansa shares to an arm's-length party as a finder's fee in connection with the transaction. Other than the foregoing, no other finder's fee or commission is payable in connection with the transaction.
Further information
Hansa will provide further details in respect of the transaction by way of a press release to be disseminated at a later date.
All information contained in this press release with respect to Hansa and TRL was supplied by the parties, respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.
All scientific and technical information in this press release has been prepared or approved by Dr. Paul Gow, a member of the Australian Institute of Geoscientists and a qualified person for the purposes of NI 43-101. Dr. Gow has not verified any of the information regarding any of the properties or projects referred to herein, other than the La Higuera IOCG property. Mineralization on any other properties referred to herein is not necessarily indicative of mineralization on the La Higuera IOCG property.
The data disclosed in this news release related to drilling results are historical in nature. TRL has not undertaken any independent investigation of the sampling, nor has it independently analyzed the results of the historical exploration work in order to verify the results. TRL considers these historical drill results relevant, as the resulting issuer will use these data as guides to plan future exploration programs. The resulting issuer's future exploration work is anticipated to include verification of the data through drilling.
The mineral resources for the Dominga deposit, located outside of the La Higuera IOCG property, are unclassified historical resources that do not comply with CIM (Canadian Institute of Mining, Metallurgy and Petroleum) definition standards on mineral resources and mineral reserves, as required by NI 43-101, and have no comparable resource classification. The historical estimate was reported by Veloso et al. (2017) in Mineralium Deposita. The key assumptions used to prepare the historical estimate are unknown. The reliability of the historical estimate is considered reasonable, but a qualified person has not done sufficient work to classify the historical estimate as a current mineral resource, and the company is not treating the historical estimate as a current mineral resource.
About Hansa Resources Ltd.
Hansa Resources is a Canadian mineral exploration company engaged in the acquisition, exploration and development of base metal/precious metal properties. Hansa Resources is committed to building shareholder value through minimizing risk and maximizing potential value of the company's projects, utilizing Hansa's highly experienced, flexible and successful board of directors/management.
The completion of the transaction is subject to a number of conditions, including, but not limited to, TSX-V acceptance and, if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Hansa should be considered highly speculative.
ON BEHALF OF THE BOARD,
“Robert G.Atkinson”
Robert G.Atkinson, Director
For further information, please contact:
Hansa Resources Limited
Nick Demare, Chief Financial Officer and Corporate Secretary
Phone: (604) 685-9316 |
