Sirocco and Canada Lithium combining to form strategic international
competitor in growth-oriented industrial minerals sector
TORONTO, Dec. 4, 2013 /CNW Telbec/ - Sirocco Mining Inc. ("Sirocco") (TSX:
SIM) and Canada Lithium Corp. ("Canada Lithium") (TSX: CLQ) (U.S. OTC: CLQMF)
jointly announce that their respective boards of directors have approved, and
that they have entered into, a definitive agreement (the "Arrangement
Agreement") pursuant to which they will complete a business combination by way
of a statutory Plan of Arrangement (the "Arrangement") under the Canada
Business Corporations Act. Following the completion of the Arrangement, the
current Canada Lithium shareholders will hold approximately 58% of the
combined company, while current shareholders of Sirocco will hold
Highlights of the Arrangement Include:
-- The business combination of Sirocco with its established Aguas
Blancas iodine mine in Chile and Canada Lithium with its
commissioning-stage lithium project in Quebec will create a
significant industrial minerals producer in both the iodine and
lithium markets. It is anticipated the combined company will
provide significant market and growth synergies and over-all
-- Sirocco's balance sheet and cash flow de-risk the production
ramp-up of Canada Lithium'sproject. In addition, the combined
company with its stronger balance sheet will offer greater cash
-- Anticipated ongoing growth in the automotive and electronics
sector will continue to drive demand for lithium products,
while anticipated increasing applications for X-ray media in
Asia will continue to support iodine consumption. This allows
for diversification of revenue and market risks. In the short
to medium term, there is potential for downstream, value-added
growth into lithium metal, potassium and sodium nitrates,
sodium sulphate and lithium hydroxide.
-- New and continued developments in the lithium battery sector,
specifically lithium-iodine technology, which demonstrates
higher energy levels and increased battery performance over
current lithium battery technologies, may provide the combined
company increased market opportunities as uptake of these new
battery applications increases.
-- The combination of Canada Lithium and Sirocco results in only
one of two public companies, the other being SQM of Chile,
producing both iodine and lithium.
-- Following the closing of the Arrangement, the current Sirocco
management team will be appointed as officers of the combined
company: Richard P. Clark, as Chief Executive Officer,
Alessandro Bitelli, as Chief Financial Officer, Kevin Ross, as
Chief Operating Officer and Hugh Stuart, as Vice President of
Exploration. This is the core team that contributed to the
growth of Red Back Mining's operations, which was acquired by
Kinross Gold Corporation for $9.2 billion.
-- Sirocco shareholders will receive 1.175 common shares (on a
pre-consolidated basis) in the capital of Canada Lithium for
each outstanding Sirocco common share. Pursuant to the
transaction, Canada Lithium expects to issue approximately 294
million common shares (on a pre-consolidation and non-diluted
-- The Arrangement values each Sirocco share at C$0.48
representing a premium of approximately 23% to the 20-day
volume weighted average price of the Sirocco common shares on
the Toronto Stock Exchange as of December 3, 2013.
-- The Arrangement has been approved by the board of directors of
both companies. Following the closing of the Arrangement, the
board of the combined company will be comprised of nine
individuals. Four of the nine will be Canada Lithium nominees,
with the remaining five individuals to be nominated by Sirocco.
-- In connection with the Arrangement, Canada Lithium will
consolidate its common shares on the basis of one
post-consolidation common share for each three existing Canada
Lithium common shares.
"We're delighted to be joining forces with the Sirocco team. They have an
exceptional track record in identifying growth opportunities, establishing
sound operations and building wealth for shareholders," said Canada Lithium
CEO Peter Secker.
Commenting on the transaction, Sirocco CEO Richard Clark said: "We have been
looking for growth opportunities in the industrial minerals sector and this
combination provides an excellent opportunity for geographic and product
diversification while at the same time aligning two products with potential
future complementary applications."
At a full annualized production rate, Canada Lithium would produce
approximately 20,000 tonnes of battery-grade lithium carbonate, which
represents about 12% of the world's output. The commodity, an essential
component in lithium-ion batteries, powers the vast and growing field of
consumer electronics, electric and hybrid vehicles and grid storage units.
Sirocco's iodine operation in Chile will produce approximately 1,400 tonnes of
iodine in 2013, with plans to produce 1,000 tonnes in 2014. Upon completion of
the installation of a semi-autogenous grinding (SAG) mill, annual capacity
will increase to over 2,000 tonnes per annum.
Under the Arrangement, as noted above, shareholders of Sirocco will receive
1.175 common shares (on a pre-consolidation basis) in the capital of Canada
Lithium for each outstanding Sirocco common share, representing a premium of
approximately 23% to the 20-day volume weighted average price of the Sirocco
common shares on the Toronto Stock Exchange as of December 3, 2013. The total
consideration payable pursuant to the Arrangement values Sirocco's equity at
approximately C$120 million. Pursuant to the transaction, Canada Lithium
expects to issue approximately 294 million common shares (on a
pre-consolidation and non-diluted basis).
The transaction will be carried out by way of a court-approved plan of
arrangement and will require the approval of at least 66 2/3% of the votes
cast by the securityholders of Sirocco at a special meeting of Sirocco
shareholders expected to take place in January 2014. It is expected that the
transaction will be exempt from the registration requirements of the U.S.
Securities Act of 1933, as amended. The transaction is also subject to
obtaining the approval of at least a majority of the votes cast by the
shareholders of Canada Lithium approving the issuance of the shares in
connection with the Arrangement and approval of at least 66 2/3% of the votes
cast by the shareholders of Canada Lithium approving the consolidation of the
shares of Canada Lithium on 3-for-1 basis, at a special meeting of Canada
Lithium shareholders expected to take place the same date as the Sirocco
meeting. In addition to securityholder and court approvals, the transaction is
subject to applicable regulatory approvals, including the TSX, and the
satisfaction of certain other closing conditions as is customary in
transactions of this nature.
Canada Lithium's financial advisor, Primary Capital Inc. has provided an
opinion to the Canada Lithium board of directors that the transaction is fair,
from a financial point of view, to Canada Lithium's shareholders (other than
Sirocco). The financial advisor for Sirocco, Scotia Capital Inc., has provided
an opinion to the Sirocco board of directors that the consideration to be
received by the Sirocco shareholders under the transaction is fair, from a
financial point of view, to the Sirocco shareholders. Canada Lithium's legal
counsel is Cassels Brock & Blackwell LLP and Sirocco's legal counsel is Blake,
Cassels & Graydon LLP. Kingsdale Shareholder Services Inc. has been retained
as proxy solicitors and information agent.
The Arrangement Agreement includes a commitment by each of Sirocco and Canada
Lithium not to solicit alternative transactions to the proposed Arrangement.
In certain circumstances, if a party terminates the definitive agreement to
enter into an agreement to effect a superior proposal that is different from
the Arrangement, then such party is obligated to pay to the other party as a
termination payment of C$4 million, subject to a right by each party to match
a competing superior proposal in question.
In connection with the Arrangement Agreement, Sirocco has also agreed to
provide a bridge loan of up to $10 million to Canada Lithium. The loan will be
due and payable on the earliest of the following: (a)thirty days after the
completion of a superior proposal transaction by Canada Lithium or (b)six
months following a demand notice from Sirocco. The bridge loan is subject to,
among other things, receipt of TSX approval and certain other closing
conditions. The loan may be converted, at the option of Sirocco, into common
shares of Canada Lithium at a conversion price of $0.399 per common share, at
any time after the termination of the Arrangement Agreement.
Further information regarding the transaction will be contained in an
information circular that each of Canada Lithium and Sirocco will prepare,
file and mail in due course to their respective shareholders in connection
with the special meetings of each of the Canada Lithium and Sirocco
shareholders to be held to consider the transaction. All shareholders are
urged to carefully read the information circulars once they become available
as they will contain additional important information concerning the
Details regarding these and other terms of the transaction are set out in the
Arrangement Agreement, which is available on SEDAR at www.sedar.com.
The information agent for the Arrangement is Kingsdale Shareholder Services
Inc. ("Kingsdale"). Questions and requests for assistance, including requests
for additional information may be directed to Kingsdale at 1-866-581-0510 or
by email at: email@example.com.
Sirocco Mining Inc. is a Canadian company which produces iodine from its Aguas
Blancas mine in northern Chile. In addition, Sirocco has exploration interests
in West Africa and is actively assessing other opportunities in the resource
sector. For more information regarding Sirocco, please refer to Sirocco's
public filings available at www.sedar.com and www.siroccomining.com including,
in particular, Sirocco's Management's Discussion and Analysis for the year
ended December 31, 2012 and its Annual Information Form for the year ended
December 31, 2012 and the Management's Discussion and Analysis for the
three-month and nine-month periods ended September 30, 2013.
About Canada Lithium
Canada Lithium holds a 100% interest in the Québec Lithium Project near Val
d'Or, the geographical heart of the Québec mining industry. It has completed
construction and is in the commissioning phase of an open-pit mine and on-site
processing plant with estimated capacity to produce approximately 20,000
tonnes of battery-grade lithium carbonate annually. For more information
regarding Canada Lithium, please refer to Canada Lithium's public filings
available at www.sedar.com and www.canadalithium.com including, in particular,
Canada Lithium's Management's Discussion and Analysis for the year ended
December 31, 2012 and its Annual Information Form for the year ended December
31, 2012 and the Management's Discussion and Analysis for the three-month and
nine-month periods ended September 30, 2013.
Certain information contained in this news release, including any information
relating to the proposed transaction (the "Transaction") and each issuer's
future financial or operating performance may be deemed "forward-looking".
These statements relate to future events or future performance and reflect
each issuer's expectations regarding the Transaction, and the future growth,
results of operations, business prospects and opportunities of Sirocco, Canada
Lithium and the combined company. These forward-looking statements also
reflect each issuer's current internal projections, expectations or beliefs
and are based on information currently available to Sirocco or Canada Lithium,
respectively. In some cases forward-looking information can be identified by
terminology such as "may", "will", "should", "expect", "intend", "plan",
"anticipate", "believe", "estimate", "projects", "potential", "scheduled",
"forecast", "budget" or the negative of those terms or other comparable
terminology. Assumptions upon which such forward looking information regarding
completion of the Transaction are based include that Sirocco and Canada
Lithium will be able to satisfy the conditions to the Transaction, that the
required approvals will be obtained from the shareholders and optionholders of
each issuer, as applicable, that all third party regulatory and governmental
approvals to the Transaction will be obtained and all other conditions to
completion of the Transaction will be satisfied or waived. Although Sirocco
and Canada Lithium believe that the forward-looking information contained in
this news release is based on reasonable assumptions, readers cannot be
assured that actual results will be consistent with such statements.
Accordingly, readers are cautioned against placing undue reliance on
forward-looking information. Sirocco and Canada Lithium expressly disclaim any
intention or obligation to update or revise any forward-looking information,
whether as a result of new information, events or otherwise, except in
accordance with applicable securities laws.
SOURCE Canada Lithium Corp.
Sophia Shane Sirocco Mining Inc. Tel: (604) 689-7842
Olav Svela Director, Investor Relations Canada Lithium Corp. Tel: (416)
Laurence A. Lachance, Renmark Financial Communications Inc. (416) 644-2020
The Information Agent: Kingsdale Shareholder Services Inc. 1-866-581-0510
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-0- Dec/04/2013 11:45 GMT
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