EDMONTON, Feb. 6 /CNW/ - Solid Resources Ltd. ("Solid" or the "Company") announced today that it has obtained approval from the TSX Venture Exchange to enter into a Consulting Agreement with RDF Capital Management Inc. ("RDF Capital") under which RDF Capital will provide corporate and financial advisory services to the Company. The Consulting Agreement has a three (3) month term and is subject to renewal upon the mutual agreement of the parties.
Pursuant to the terms of the Consulting Agreement, RDF Capital is to receive 7% of the transaction value of any financing transaction which it arranges (and 1.5% of the value of any financing transaction otherwise arranged during its engagement) and 4.5% of the transaction value of any M&A transaction which it arranges (and 1.5% of the value of any M&A transaction otherwise arranged during its engagement). In addition to the foregoing, RDF Capital is to receive common share purchase warrants: (a) equal to 7% of the number of common shares issued in an equity financing transaction, (b) with an aggregate subscription price equal to 7% of the proceeds in a debt financing transaction, and (c) with an aggregate subscription price equal to 4.5% of the proceeds in a M&A transaction. RDF Capital is only entitled to be compensated with respect to non-related party transactions.
Entering into the Consulting Agreement constitutes a related party transaction within the meaning of applicable securities laws, as RDF Capital is a company controlled by R. Derek Frost who is currently a director of Solid. An independent committee of the Board was struck to negotiate the terms of the Consulting Agreement, which was approved by the Board subject to the approval of the TSX Venture Exchange.
The Board of Directors has determined to specifically commission RDF Capital as agent, on a non-exclusive basis, to perform general corporate financial advisory services as the Company may reasonably request and as appropriate in the circumstances, including for the principal purpose of identifying, contacting and negotiating with potential sources of financing and/or other strategic third parties.
The Board has determined to retain RDF Capital for this purpose primarily for the following reasons:
a) the protracted period of the stock halt on the Exchange has created
significant obstacles for the Company in its endeavors to complete
any financing. The Company requires financing to fund the Company's
expenditures on its mineral properties. As disclosed by the Company
in its press release dated October 10, 2007, the Company has
received notice from Lara Explorations Inc. that it has purported to
terminate the option agreement the Company has in respect of its
mining property in Peru. The Board believes that the potential loss
of this property is due directly to the inability of the Company to
adequately fund its operations, primarily as a result of the lengthy
stock halt.
b) RDF Capital is a registered Limited Market Dealer in Ontario and
given that it is a company controlled by a director of the Company,
it is in a unique position to:
(i) understand the current status of the Company and the
regulatory matters it has addressed, including the effort the
Company has gone to address Exchange concerns; and
(ii) understand and communicate the current state of exploration of
the Company's properties and the necessary steps to move the
exploration process forward;
c) RDF Capital has agreed to perform the services contemplated in the
Agreement solely on the basis of a success fee as compensation;
d) the Board has unanimously determined, acting in good faith, that the
Company is in financial difficulty and the successful performance by
RDF Capital of the services contemplated in the Consulting Agreement
will improve the financial position of the Company; and
e) the Consulting Agreement is on terms that are reasonable in the
circumstances and are on commercially reasonable terms that are not
less advantageous to the Company than if a similar agreement were
entered into with a person or company dealing at arms length with
the Company.
Given the above, the Board believes that RDF Capital is uniquely positioned to provide the corporate finance and financial advisory services that it requires. Further, the Board is of the opinion that the Company's regulatory difficulties over the past year will make it difficult to retain an arm's length service provider on reasonable terms, if at all.
Issue of Stock Options
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Solid announces that it has approved the granting of stock options to acquire an aggregate of 900,000 Common Shares of Solid (approximately 5.78% of the total issued and outstanding shares of Solid) at an exercise price of $.24 per share and have an expiry date of five years from date of issue. Of those options 700,000 have been granted to independent directors and 200,000 have been granted to employees of the Company.
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Certain statements contained in this press release, including statements which are related to exploration activity and future prospects and profitability and which may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances and/or achievements of Solid to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market conditions and prices of tantalum, lithium, tin, silver and other metals and related products and services; competition; political and economic conditions in countries in which Solid does business; changes in laws and regulations, including environmental regulations, to which Solid is subject, and other factors which are described in further detail in Solid's filings with the Canadian Securities Regulators.
The TSX Venture Exchange has not reviewed or approved this press release,
and the Exchange does not accept responsibility for the adequacy or the
accuracy of this release.