Jun. 23, 2011 (Newsfile Corp.) --
Vancouver, British Columbia--(June 23, 2011) - Madeira Minerals Ltd. ("Madeira")(TSXV: MDE.H) is pleased to announce that it has entered into a non binding Letter of Intent (“LOI”) dated June 8, 2011 with Mooncor Oil & Gas Corp (TSXV:MOO) (OOTC:MOOIF) and its subsidiary, Mooncor Energy Inc., (collectively “MOO”) for the acquisition by Madeira of all of MOO’s right, title and interest in two oil leases spanning 80 acres (collectively the “Leases” and each a “Lease”) and located in Lloydminster, Alberta. Madeira is a capital pool company and the transaction is intended to constitute Madeira's qualifying transaction (the "Transaction") under Policy 2.4 of the TSX Venture Exchange (the "Exchange"). The Transaction is not a non arm's length transaction and accordingly is not expected to be subject to the approval of Madeira shareholders.
MOO, is a junior oil and gas exploration and development company continued under the laws of the Province of Ontario. The common shares of MOO are listed on the Exchange. MOO’s current emphasis is on securing a joint venture partner for its proven Muskwa/Duvernay shale gas project at Hamburg, Alberta. It has also been pursuing opportunities to realize near-term value from its other assets, potentially through a spin-off into a new entity.
The Lloydminster Oil Leases
The Lloydminster asset is comprised of two leases on an 80 acre property located approximately 8 miles west of the City of Lloydminster. There are two standing oil wells on the acreage, one on each 40 acre lease. The two wells are completed in the Sparky AAA oil pool (120 API crude) and are equipped for production. The property is accessible year round.
Both the 4-28 and 3-28 wells are subject to a 4% GORR with production royalties payable to the Crown. Both wells are currently being reworked with well 4-28 having resumed production in late February 2011. The 3-28 well is anticipated to undergo a work over before September 1, 2011 in order to reactivate it.
Upon the completion of the work on the wells and recovery of the payout accounts, the interest in the wells Madeira is seeking to acquire will be a 36% Working Interest (WI) after payout (APO) of the work-over programs. Madeira will also acquire the payout account on well 4-28 which currently stands at $485,000 and will be paid to Madeira from production. The work over costs are budgeted at $65,000 per well and are to be paid out from production to the Working Interest (WI) partner conducting the service program, at which point the APO WI’s pay out to the holders. In the case of well 4-28, the $485,000 is first paid out to Madeira and then the WI revenue share comes into effect.
The two leases have a further infill drilling potential for one additional well per lease at a working interest participation to Madeira of 60%.
Terms of the Transaction
If the Transaction is completed pursuant to the terms of the LOI, Madeira will acquire the Leases by issuing an aggregate of 6,000,000 common shares of its capital stock to MOO at a deemed price per share of $0.20. The Transaction is subject to a number of conditions precedent which include completion of due diligence reviews by the parties, successful negotiation of a definitive purchase agreement, and receipt of all required regulatory and Exchange approvals.
Concurrent Financing
The Transaction is also subject to completion of a concurrent prospectus exempt private placement by Madeira of 6,000,000 common shares at $0.20 per share for aggregate gross proceeds of $1,200,000. The proceeds of the private placement will be used to satisfy the initial listing requirements of the Exchange. A finder’s fee of up to 8% of the gross proceeds raised and warrants to purchase 600,000 common shares of Madeira at $0.20 per share shall be payable in connection with the concurrent financing.
Lease Renewal and Operation
The Leases to be acquired in the Transaction are scheduled to expire on September 11, 2011 and must therefore be renewed by the Department of Energy of the Government of Alberta as a condition precedent of the Transaction. Pursuant to the LOI, MOO must seek advance approval for continuance of the Leases and an advance ruling is currently anticipated within 30 days. According to the LOI and subject to the approval of the Exchange, in the event the only one of the Leases is continued, the purchase price of the acquisition will be reduced by 50%.
MOO will further provide any waivers and assurance necessary to ensure that there are no over-riding options or farm-in arrangements attached to the Leases that could reduce Madeira’s working interest in the leases. MOO will remain the operator (licensee) of the Leases prior to Exchange approval of the Transaction. Following approval of the Transaction, MOO shall continue to act as operator at Madeira’s expense until such time as Madeira assumes operatorship.
Directors and Insiders of Resulting Issuer
As a result of the issuance of the Transaction Shares, MOO will become an insider of Madeira and certain investors may become insiders of Madeira as result of the concurrent financing.
It is expected that the board of directors and management of the Resulting Issuer will be comprised of the following individuals and an additional designee of Mooncor:
Thomas Kovacs, President, Chief Executive Officer and Director —Mr. Kovacs was awarded an MBA in Business Finance from the University of Lincolnshire and Humberside in 2000 and subsequently worked in corporate finance for Williams de Broe PLC, a UK investment bank owned by ING. From March 2005 to May 2009, Mr. Kovacs was the President and a Director of Sola Resource Corp (OOTC:SORSF) (TSXV:SL) and from May 2006 he has been a Director of Diamond Hawk Mining Corp. He has been a Director and officer of Madeira since March 2007.
Dr. Brian McBeth, Director—Dr. McBeth trained as an economist and holds a doctorate in Politics from the University of Oxford. From November 2005 until May 2008, he was the Head of Oil & Gas with VSA Capital Ltd., a company providing corporate finance and broking services to companies involved in the global natural resources and environmental sectors. From 1998 to 2002 Dr. McBeth was the Senior Oil Analyst for Cominvest, the asset management arm of Commerzbank AG. He has been a Director of Madeira since June, 2009.
Frank Rossi, Director—Mr. Rossi has been a residential real estate agent since 1978. He has been a director of Diamond Hawk Mining Corp. since 2005. From 1993 to 2000, and before its merger with Magellan Minerals Ltd. (TSXV:MNM) (OOTC:MAGNF) , Mr. Rossi was also a director of Chapleau Resources. He has been a Director of Madeira since September 2009.
Derick Sinclair, Chief Financial Officer— Mr. Sinclair has been the Chief Financial Officer at Madeira Minerals Ltd. since November 2009. Mr. Sinclair has been Chief Financial Officer of Cadan Resources Corporation (TSXV:CXD) (OOTC:CADAF) since April 2007. Mr. Sinclair has been Chief Financial Officer of Pacific Therapeutics Ltd. since September 2007 and as its Corporate Secretary since October 31, 2007. He has more than 25 years' experience in accounting and financial management. Mr. Sinclair began his accounting career in 1982 as an Auditor with KPMG Peat Marwick Thorne.
Nick, Tsimidis, Director— Mr. Tsimidis is a chartered accountant and specializes in providing strategic corporate finance advisory services in the capital markets Mr. Tsimidis started his career having spent six years with KPMG providing auditing and assurance services to a wide variety of private and public companies. Since 1993, Mr. Tsimidis has gained substantial experience as a director, officer and consultant to numerous public companies. He holds a Bachelor of Commerce from the University of Toronto.
Mr. Tsimidis has served as a Director of Mooncor Oil & Gas Corp since 2004 and as its Chief Financial Officer since October 2007. He is also the Chief Financial Officer and a director of Metals Creek Resources Corp (TSXV:MEK) (TSXV – MEK), a director of Parkside Resources Corp. (a reporting issuer whose shares do not trade on an exchange), and the President and broker of Record of Mortgage Cents Inc., a mortgage broker operating in Ontario. Since 2005, Mr. Tsimidis has also served as chief compliance officer and as a director of First Canadian Capital Markets Ltd., a firm registered in the category of exempt market dealer.
Eric Wiltzen, Director and Secretary—Mr. Wiltzen has been the President and a director of Diamond Hawk Mining Corp. since 2001. From September 1993 to October 2007, and before its merger with Magellan Minerals Ltd., Mr. Wiltzen was also the President and a director of Chapleau Resources Ltd. He has been a Director of Madeira since September, 2009.
Sponsorship
Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. Madeira intends to seek a sponsor in accordance with the requirements of Exchange Policy 2.2; however, there can be no assurance that Madeira will ultimately be able to retain a sponsor.
Trading Suspension
In accordance with Exchange policies, Madeira’s common shares are currently halted from trading and will so remain until the completion of the Qualifying Transaction or until otherwise determined by the Exchange.
Cautionary Note Regarding Forward-looking Statements
Statements in this press release regarding Madeira’s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as terms and completion of the Transaction. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.
COMPLETION OF THE QUALIFYING 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 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 A CAPITAL POOL COMPANY SHOULD BE CONSIDERED HIGHLY SPECULATIVE.
THE EXCHANGE 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 THE 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.
For further information please contact:
Thomas Kovacs
Chief Executive Officer
Phone: 604-924-8000