Broome Capital Signs Letter of Intent for Proposed Qualifying Transaction
Acquiring Minahasa Gold Property
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/07/13 -- Broome
Capital Inc. (the "Company") (TSX VENTURE:BCP.P), a capital pool
company pursuant to Policy 2.4 of the TSX Venture Exchange (the
"TSX-V"), is pleased to announce that it has entered into a binding
letter of intent dated January 14, 2013 to complete a business
combination (the "Transaction") with three private Indonesian holding
companies: PT Forel Mega Mineral ("Forel"), PT Anak Indonesia Mining
("Anak") and PT For El Shadai ("El Shadai" and collectively the
"Minahasa Group") by acquiring all of the issued and outstanding
securities of the Minahasa Group from their shareholders. The three
companies in the Minahasa Group are all private companies
incorporated under the laws of Indonesia, and collectively have the
rights to acquire a 100% interest in the Minahasa Gold Project
located in Northern Sulawesi, Indonesia. Upon completion of the
Transaction, the combined entity will be listed as a Tier 2 mining
issuer on the TSX Venture Exchange, carrying on the business of the
Minahasa Group, which is the further exploration and development of
the Minahasa Gold Project and acquisition and development of further
exploration projects in Indonesia.
The Transaction will be effected by the Company issuing not greater
than 12,500,000 common shares to shareholders of the Minahasa Group,
which will result in the three companies in the Minahasa Group
becoming wholly-owned subsidiaries of the Company (the Company after
the Transaction being referred to herein as the "Resulting Issuer").
It is currently anticipated that 12,500,000 common shares will be
issued at a deemed price of $0.20 per security for an aggregate
purchase price of $2.5 million.
The Transaction is an arm's length transaction.
The Company currently has 11,400,000 common shares issued and
outstanding, as well as 840,000 Incentive Stock options and 300,000
brokers warrants to acquire common shares at $0.10 per share.
Following the completion of the Transaction (based on the outstanding
share capital of each of the Company and each company in the Minahasa
Group as of the date hereof,), and the completion of a concurre
financing of 10,000,000 shares at $0.20 per share, the issuance of
187,500 shares to Evans & Evans as a finder's fee, the issuance of
125,000 shares to Mr. In Suk Chung as a finder's fee, and the
issuance of 300,000 shares to Canaccord Genuity as a Corporate
Finance Fee approximately 34,512,000 common shares of the Resulting
Issuer would be issued and outstanding. Broome Capital shareholders
will hold common shares representing approximately 33.03% of the
outstanding common shares of the Resulting Issuer following the
completion of the Transaction and the concurrent financing on an
The proposed Transaction is subject to a number of terms and
conditions, including the entering into by the parties of a
definitive agreement with respect to the Transaction (such agreement
to include representations, warranties, conditions and covenants
typical for a transaction of this nature), the completion of
satisfactory due diligence investigations, the approval of the
directors of each of the Company and of each company in the Minahasa
Group, the completion of a financing of the Company generating
proceeds of $2 million from the sale of securities, on terms to be
determined, at a price of $0.20 per security and the approval of the
TSX-V and other applicable regulatory authorities.
The parties intend that the Resulting Issuer will be listed on the
TSX-V as a Tier 2 mining issuer following completion of the
Transaction. Trading in the common shares of the Company will remain
halted pending the satisfaction of all applicable requirements of the
TSX-V. There can be no assurance that trading in the common shares of
the Company will resume prior to the completion of the Transaction.
Further details concerning the Transaction, the Minahasa Group
(including additional financial information and technical information
respecting the Minahasa Gold Project) and other matters will be
announced if and when a definitive agreement is reached.
Information Concerning the Minahasa Group
The Minahasa Group is comprised of three companies organized and
existing under the laws of Indonesia. The Minahasa Group in turn
jointly holds 100% interest in seven (7) exploration permits in the
Minahasa region of Northern Sulawesi, Indonesia. El Shadai and Forel
each hold 2 of the permits, with the final 3 permits held by Anak.
The Minahasa Group are related companies the shareholders of which
are: Soebali Sudjie, Setiawan Sudjie, Tjiebeng Sukajali, Vigielia
Oral Christany Lumoindong, and PT. Multi Mining Utama (MMU) a private
Indonesian mining company. All of the individual vendors are resident
in Indonesia. The Minahasa Group holds an unencumbered 100% interest
in the Minahasa Gold Project.
Information Concerning the Minahasa Gold Project
The Minahasa Gold Project consists of seven exploration permits
covering 13,641 hectares, located in the Minahasa Regency of northern
Sulawesi island, Indonesia, approximately 65 km south south-west of
the regional city of Manado and 2,400 km northeast of Jakarta. The
general area is accessible by road with the permit areas variously
accessible by 4 wheel drive, and walking tracts. Most of the permits
were previously held by a subsidiary of Newmont Mining Corporation.
The geology of the Minahasa Gold project area consists of Miocene
volcanic and marine sediments and Pliocene to recent volcanic. The
project area displays vein, vein stockwork and contact-replacement
style of low sulfidation epithermal gold-silver-arsenic
mineralisation, consistent with development distal to a porphyry
Mineralised quartz veins hosted in argillised volcanic rock and
silicified limestone were first discovered in the area in 1987 by
Newmont during a first pass reconnaissance program.
The Minahasa Group has undertaken preliminary reconnaissance of the
northern part of their holdings. This has involved mapping and
Gold has been mined in the broader region and artisan mining still
occurs within the exploration area.
A National Instrument 43-101 compliant technical report has been
completed on the Minahasa Gold project, which recommends additional
exploration work and a 2nd phase drill program be completed. The
report will be filed on the SEDAR system in due course.
Selected Minahasa Group Financial Information
As of September 30, 2012, the Minahasa Group collectively had
approximately US$ 770 (approx. CDN$754) in cash and commitments of
approximately US $281,000 (approx CDN$278,000) (unaudited).
Management and Board of Directors of Resulting Issuer
Three members of the board of directors and management of the
Resulting Issuer will be nominated by the Minahasa Group, with two
members of the Company's board remaining. The members of the Board of
the Resulting Issuer will be determined and announced as the
Sponsorship and Concurrent Financing
Canaccord Genuity Corp., subject to completion of satisfactory due
diligence, has agreed to act as sponsor and financial advisor in
connection with the transaction. For acting as Sponsor, Canaccord
will receive a work fee of $35,000, plus a monthly work fee of
$20,000 per month for two months.
An agreement to sponsor should not be construed as any assurance with
respect to the merits of the transaction or the likelihood of
Pursuant to the letter of intent, it is a condition of the completion
of the Transaction that the Company complete a financing generating
up to $2 million at a price of $0.20 (the "Financing"). Canaccord has
also entered into a letter agreement to assist Broome to complete the
Financing on a best efforts basis, with $1,500,000 of the financing
to be raised through a "president's list". Under the terms of the
engagement, Canaccord will also have an over-allotment option to
place additional shares to raise up to a further $500,000. For its
services in respect to placees under the "president's list, Canaccord
will be entitled to receive a cash commission of 4% on gross proceeds
from those placees plus Brokers warrants exercisable for a period of
24 months from closing of the Qualifying Transaction to acquire that
number of common shares that is equal to 4% of the number of shares
sold to the president's list. For placees not on the "president's
list" Canaccord will receive 8% cash commission and 8% in Broker's
Canaccord will also receive 300,000 shares by way of a corporate
finance fee upon successful completion of the Financing, and a
pro-rata additional number of corporate finance fee shares if the
over allotment option is exercised.
Upon completion of the Qualifying Transaction, a finder's fee is
payable to (a) Evans & Evans, Inc., in the amount of 3% of the value
of the Transaction, which is currently estimated to be $2,500,000,
for a finder's fee of $75,000, payable 50% in cash and 50% in shares
of the Resulting Issuer at a deemed price equal to the Transaction
deemed price and to (b) Mr. In Suk Chung in the amount of 2% of the
value of the Transaction for a finder's fee of $50,000, payable 50%
in cash and 50% in shares of the Resulting Issuer at a deemed price
equal to the Transaction deemed price.
This news release contains certain "forward-looking statements"
including, for example, statements relating to the completion of the
proposed Transaction, the Resulting Issuer's anticipated share
capital. Such forward-looking statements involve risks and
uncertainties, both known and unknown. The results or events depicted
in these forward-looking statements may differ materially from actual
results or events. In addition to other factors and assumptions which
may be identified herein, assumptions have been made regarding and
are implicit in, among other things: receipt of government and third
party approvals in respect of transferring assets, the state of the
capital markets; tax issues associated with doing business
internationally, the ability of the Minahasa Group to successfully
manage the political and economic risks inherent in pursuing business
opportunities in Indonesia; and the ability of the Minahasa Group to
obtain qualified staff, equipment and services in a timely and cost
efficient manner to develop its business. Any forward-looking
statement speaks only as of the date of this news release and, except
as may be required by applicable securities laws, the Company and the
Minahasa Group disclaim any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise.
On behalf of the Board of Directors
Peter Hughes, President, Chief Executive Officer
All information contained in this press release relating to the
Minahasa Group was provided by the Minahasa Group to the Company for
inclusion herein. The Company has not independently verified such
information and shall bear no liability for any misrepresentation
Qualified Person Statement.
Mr. Stephen Godfrey, BSc(Hons)(UNE), DipEd(QU), MAIG, MAusIMM, has
reviewed the portion of the technical content of this news release as
it relates to the Minahasa Gold project.
Completion of the transaction is subject to a number of conditions,
including but not limited to, exchange acceptance and if applicable
pursuant to exchange requirements, majority of the minority
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
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 a capital pool
company should be considered highly speculative.
The TSX-V has in no way passed upon the merits of the proposed
transaction and has neither approved nor disapproved the contents of
this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
Broome Capital Inc.
President, Chief Executive Officer
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