Flinders Resources To Acquire Big North Graphite
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.
Vancouver, Canada – Flinders Resources Limited (“Flinders”) (TSXV: FDR) and Big North Graphite Corp.(“Big North”) (TSXV: NRT) jointly announce that they have entered into a binding letter agreement (the “Letter Agreement”) August 29, 2014, under which Flinders will acquire all of the issued and outstanding common shares of Big North by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”). Upon completion of the Arrangement, Big North will become a wholly-owned subsidiary of Flinders.
Under the terms of the Arrangement Big North shareholders will receive one Flinders common share (a “Flinders Share”) for each nine Big North common shares (the “Big North Shares”) resulting in the issuance of approximately 9 million Flinders Shares in exchange for 81 million Big North Shares.
Blair Way President and CEO of Flinders stated “I am very pleased to announce this acquisition, as it represents the culmination of an extensive search for an asset that can provide Flinders with the next step in our strategy to build a leading global graphite producer. Our successful restart of the Woxna project in Sweden demonstrates Flinders’ expertise which will now be directed towards the restart of the Big North El Tejon project. El Tejon has the capacity to be a long term supplier of high quality flake graphite to the expanding North American market, and provide a sustainable alternative to the current Chinese supply.”
Spiro Kletas, President and CEO of Big North, stated: “We are pleased to be joining forces with Flinders and see this business combination as a great opportunity for our shareholders to realize value in the combined assets of Flinders and Big North. We welcome the expertise and experience that the Board and Management of Flinders bring to the partnership. They have proven that they can bring a graphite mine to production and have already “won the race” to graphite production with the Woxna project in Sweden. Importantly, for all stakeholders, consolidating the assets of the two companies will allow us to accelerate the re-start of El Tejon, adding growth, diversification and future potential for the TSX-V’s first flake graphite producer. The Board and Management of the two companies share similar strategies and as such, we believe this combination will be a great fit and mutually beneficial.”
Terms of the Arrangement
Pursuant to the Letter Agreement:
- Big North shareholders will receive one Flinders Share for each nine Big North Shares held.
All outstanding Big North options and warrants will be exchanged or assumed by Flinders and adjusted in accordance with the same exchange ratio. - It is a condition to closing of the Arrangement that all outstanding convertible debentures of Big North (the “Debentures”) be converted into Big North Shares or redeemed in accordance with their terms and no Debentures remain outstanding as at the closing of the Arrangement.
- Each of Flinders and Big North will undertake a due diligence investigation of the other which must be completed on or before October 6, 2014.
- Flinders and Big North have agreed to negotiate in good faith and enter into a definitive arrangement agreement relating to the Arrangement (the “Definitive Agreement”) incorporating the terms of the Letter Agreement together with additional representations, warranties, covenants, conditions and agreements as are standard for a transaction of this nature on or before October 17, 2014, or such later date as the parties mutually agree.
- The obligation of Flinders and Big North to enter into the Definitive Agreement is subject to each party being satisfied, in its sole discretion, with its due diligence investigation of the other.
Concurrently with the execution of the Definitive Agreement, each director and officer of Big North will enter into a support agreement with Flinders pursuant to which such director or officer will agree, among other things, to vote any Big North Shares which such director or officer holds or exercises control or direction over in favour of the Arrangement. - Big North will pay Flinders a break fee in the amount of $500,000 should Big North terminate the Letter Agreement in certain circumstances.
- Big North has agreed that it will not solicit or initiate any discussions concerning any other acquisition proposals.
On completion of the Arrangement, Big North shareholders will gain access to Flinders’ graphite portfolio, including the Woxna Graphite Mine which is in operation and Flinders shareholders will gain access to Big North’s select graphite assets in Mexico and Canada. It is contemplated that the current management team of Flinders will manage Big North after completion of the Arrangement.
The Arrangement will be subject to standard closing conditions for a transaction of this nature including, without limitation, receipt of all required shareholder, court and regulatory approvals.
The Arrangement may be terminated by either party if closing has not occurred by December 31, 2014, or such later date as the parties mutually agree.
Big North will hold a shareholder meeting to consider and approve the Arrangement no later than December 15, 2014. The terms of the Arrangement will be described in further detail in the Management Information Circular of Big North to be filed with regulatory authorities and mailed to Big North shareholders in accordance with applicable securities laws.
Big North security holders and other interested parties are advised to read the materials relating to the proposed Arrangement that will be filed by Big North with securities regulatory authorities in Canada when they become available. Anyone may obtain copies of these documents when available free of charge at the Canadian Securities Administrators’ website at www.sedar.com.
This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell the shares or a solicitation of a proxy.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
About Flinders Resources Limited.
Flinders is a resource company that owns 100% of the Woxna Graphite Mine, a unique and strategic European graphite project in central Sweden which has recently restarted production.
About Big North Graphite Corp.
Big North is a company focused on the restarting of the El Tejon flake graphite project in Mexico. The El Tejon flake graphite project lies within the Oaxaca Terrane of the Sierra Madre del Sur Province of southern Mexico. The project consists of one concession totaling 500 hectares. The mine and mill were built in 1980 by the Government of Mexico with a total estimated investment in excess of $30M. The plant started operations in 1981 and in 1989 was expanded to twin process line with a rated production capacity of 3500 — 7000 t/y of high quality flake graphite. In 1989, the project was sold to private interests and operated until 2002, when low graphite prices forced the closure of the mine. Since then, the El Tejon Project has been held on care and maintenance, and is ready to be brought back to production.
For more information regarding Flinders, contact:
Blair Way +1 604 685 9316
info@flindersresources.com
For more information regarding Big North, contact:
Spiro Kletas, President & CEO +1 604 723 0710
Email: spiro.kletas@gmail.com