Apr. 5, 2011 (Filing Services Canada) -- Saccharum Energy Corp. (SHM - TSX Venture), ("Saccharum" or "the Corporation") announced today that the Letter of Intent with Marifil Mines Ltd. (MFM: TSX-V) ("Marifil") and Marifil's Argentine subsidiary Oxbow Holdings Corp. ("Oxbow") dated December 15, 2010 has been amended by agreement of the parties. The Letter of Intent originally outlined the terms for the purchase by Saccharum of an interest in and the undertaking of an exploration program on the K-2 Potash property in Neuquen Province, Argentina. This amended agreement now includes terms of a proposed joint venture between Marifil and Saccharum whereby Saccharum can earn up to a 70% interest in Marifil's additional K-3 and K-4 potash properties.
Saccharum has agreed to pay $50,000 for an exclusive 30 day extension of the due diligence period to check title and arrange financing. If Sacchaarum elects to proceed, then $25,000 of this payment shall apply to purchase of the Oxbow shares as described below.
Under the revised K-2 agreement, Saccharum has agreed to purchase all of the shares of Oxbow for a total price of US$366,481. The Corporation has further agreed that Oxbow shareholders can accept either cash or Saccharum shares at a deemed price of C$0.50 per Saccharum share. Marifil then agrees to restructure its underlying agreement with Oxbow whereby Saccharum can earn up to a 70% interest in the K-2 property. Marifil shall retain a 1.5% Net Smelter Royalty. The Corporation shall have the right to purchase Marifil's royalty for US$15,000,000.
In addition, Marifil has agreed that Saccharum can acquire up to a 70% interest in its K-3, and K-4 properties also located in the Neuquin Basin in Argentina. Saccharum will pay Marifil US$500,000 in cash plus 2,000,000 Saccharum common shares over three years for each of the three properties for a total payment to Marifil of $1,500,000 and 6,000,000 shares. The first year's payment to Marifil will be US$450,000 in cash and 3, 000,000 shares upon Saccharum's completion of financing.
Saccharum will spend US$4,500,000 in work over the next four years on each of the properties as follows: US$300,000 during Year 1, $1,350,000 during Year 2, $1,350,000 during Year 3, and US$1,500,000 during Year 4. Work obligation and payment terms shall be identical for the K-2 and K-4 properties.
Under the terms of the amended agreement, Saccharum is no longer required to affect a restructuring of its Board of Directors.
In addition, to insure that the Corporation meets its minimum cash closing obligations as of April 30, subject to regulatory approval certain members of management intend to complete a short-term loan or another acceptable form of financing of the Corporation to effect the closing and to provide initial funding to commence initial exploration activities. Application will be made to approve a loan of a minimum of $1,000,000.00 and a maximum of $ 3,500,000.00 which will be utilized by Saccharum as bridge financing until a previously announced private placement financing is completed. The loan will have a term of no more than six months, will include interest rate set at no more than 10%, and may include a feature to convert all or a portion of the total monies loaned into common shares at a price of $.50 per share. Finally, the Corporation will make application to regulatory approval for the issuance of up to 100,000 common shares as a finder's fee to an arm's-length third party in connection with the completion of this transaction.
On the announcement of these developments, Johannes Kingma, President of Saccharum, commented as follows: "We are extremely pleased with the new developments in our relationship with Marifil. The addition of the K-3 and K-4 properties to our exploration holdings significantly increases the viability of this project, and have been added after a great deal of discussion and negotiation with our Marifil partners. Early data we have reviewed with respect to these lands suggests there is great justification for conducting a detailed potash exploration program, as previous drilling shows intercepts have penetrated a known potash complex. As a major shareholder I am personally fully committed to financing the early drilling on the property and ensuring the Saccharum's contractual obligation to Marifil is satisfied, as this will create the best possible scenario for all the existing and future shareholders."
This agreement remains subject to approval by the Boards of Directors of Saccharum, Marifil, Oxbow and the TSX.
General Disclaimer
Saccharum and its management have taken all reasonable care in producing and publishing information contained in this news release, and will endeavor to do so on a periodic basis. Material in this news release may still contain technical or other inaccuracies, omissions, or typographical errors, for which Saccharum assumes no responsibility. Nor does Saccharum warrant or make any representations regarding the use, validity, accuracy, completeness or reliability of any claims, statements or information on this site. Under no circumstances, including, but not limited to, negligence, shall Saccharum be liable for any direct, indirect, special, incidental, consequential, or other damages, including but not limited to, loss of programs, loss of data, loss of use of computer of other systems, or loss of profits, whether or not advised of the possibility of damage, arising from your use, or inability to use, the material from this news release. The information is not a substitute for independent professional advice before making any investment decisions. Furthermore, you may not modify or reproduce in any form, electronic or otherwise, any information on this site, except for personal use unless you have obtained our express written permission.
Forward-Looking Statements
This news release may contain forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.
Neither the 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.
For further information regarding Saccharum Energy Corp., please refer to the Company's filings available on SEDAR (Http://www.sedar.com)or the following contacts:
Johannes Kingma, President (403) 612-5655
David Pinkman, VP/ CFO (403) 863-6034
To view this press release as a web page, click onto the link below:
www.usetdas.com/PR/saccharum05042011.htm
Source: Saccharum Energy Corp. (TSX-V)
Maximum News Dissemination by Filing Services Canada Inc. http://www.usetdas.com