CADAN RESOURCES CORPORATION ("CXD")
BULLETIN TYPE: Property-Asset or Share Disposition Agreement
BULLETIN DATE: November 9, 2011
TSX Venture Tier 2 Company
TSX Venture Exchange Inc. has accepted for filing documentation in connection with a binding Heads of Agreement among Cadan Resources Corporation ("Cadan"), Mining Group Limited ("MGL"), Philco Holdings Inc. and Philco Mining Corp. ("PMC") dated November 4, 2011 (the "Agreement"). Under the Agreement MGL may acquire an 80% interest in the Comval copper-gold project ("Comval Project") located in the Compostella Valley, Philippines. Cadan will retain a 20% interest which is free and carried until the MGL has incurred a minimum of AUD$48 million of expenditures on the Comval Project. MGL may acquire an 80% interest in PMC which holds exploration permits EP1 and EP2, comprising the Comval Project, as well as assume the right to receive certain inter-corporate amounts owing by PMC to Cadan, for the following consideration:
1. paying AUD$1,000,000 to Cadan to be advanced to Cadan as a secured loan (the "Loan"). Upon MGL obtaining shareholder approval for the transaction and completing its due diligence reviews, the loan will be deemed repaid in full by crediting the loan amount towards the purchase price. In the event that the transaction with MGL does not proceed, the loan is repayable in 12 months plus accrued interest at the rate of LIBOR plus 2%. Cadan has granted MGL security over the shares of PMC and EP2 as security for the Loan;
2. at closing, MGL will pay to Cadan a further AUD$2,000,000 and issue of 2,600,000 fully paid ordinary shares of MGL;
3. when (and if) MGL's share price trades at or above AUD$1 for 30 consecutive days, MGL will issue to Cadan a further 2,600,000 shares; and
4. subject to certain conditions being met within 24 months of closing of the transaction (which period may be extended by up to a further 24 months) MGL will pay a further AUD$1,000,000 to Cadan.
Upon closing of the transaction with MGL, Cadan will retain a 20% free carried equity interest in PMC, which cannot be diluted until MGL has expended AUD$48 million in exploration and development costs on the Comval Project. Thereafter Cadan and MGL will be required to contribute to further costs in proportion to their interest or be diluted. The Binding Heads of Agreement provides that the parties will agree on an adjustment formula in the relative ownership of PMC in the event of a shortfall in the exploration and development costs. Closing of the transaction is subject to MGL obtaining shareholder and regulatory approval of the transaction.
In addition to the above, on closing MGL will be granted an option to acquire an 80% interest in the Batoto Gold/ Silver project held by Cadan on the following terms:
1. MGL must exercise the option within 9 months of closing; and
2. if MGL exercises the option to acquire an 80% interest in the Batoto Gold/ Silver project, it must pay to Cadan: $3,000,000; and issue a further 5,200,000 shares to Cadan.
Upon exercise of the option by MGL, Cadan will retain a 20% free carried interest in the Batoto Gold/Silver project which cannot be diluted until MGL has expended AUD$30 million in exploration and development costs on the project. Thereafter Cadan and MGL will be required to contribute to further costs in proportion to their interest or be diluted. The agreement in respect of the option will include provisions for adjustment in the relative ownership of PMC in the event of a shortfall in the exploration and development costs.
For further information please see the Company's news release of November 7, 2011 which is available under the Company's profile on SEDAR.
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