EnerGulf Announces the Acquisition of Columbus Copper
EnerGulf Announces the Acquisition of Columbus Copper
TORONTO, ON (March 30, 2015), EnerGulf Resources Inc. (TSX-V: ENG; FSE: EKS) (“the Company”) is pleased to announce that it has entered into a binding Letter of Intent (“LOI”) with Columbus Copper Corporation (TSX-V: CCU) (“Columbus”) pursuant to which the Company has conditionally agreed to acquire all of the outstanding common shares of Columbus in exchange for 9,200,000 common shares of the Company (the “Acquisition”). If successful, the Acquisition will likely be completed as a plan of arrangement under the Business Corporations Act (British Columbia). The LOI resulted from extended Arms-Length negotiations which culminated in a fully executed LOI dated March 24, 2015. The Company will acquire all of the approximately 18,634,798 common shares of Columbus expected to be outstanding at closing of the Acquisition which would result in an exchange ratio of 0.4937. Based on the closing prices of the Company ($0.14) and Columbus ($0.05) on March 23, 2015, the deemed value of the Acquisition would be $1,288,000 and the shareholders of Columbus would receive a premium of approximately 38.2%. The Company currently has 83,397,725 common shares outstanding.
“This merger is an excellent opportunity for both companies as it provides EnerGulf with a new hydrocarbon exploration project in Albania and capitalizes on the strength of our technical team. Columbus Copper benefits by merging with a Company that can advance the exploration project which could culminate in a series of drill-ready prospects over the coming years,” commented John Elmore, President of EnerGulf. The acquisition will expand the scale of operations for the Company, strengthen financial resources available to the Company, diversity of projects to the Company, simplify and consolidate management, reduce the combined operating costs, and diversify the political risk to the Company. The Company believes the acquisition will enhance further acquisition opportunities and take advantage of exploration opportunities in the current reduced cost environment in anticipation of higher commodity prices in the future.
The Acquisition is subject to five principal conditions: (a) each of the Company and Columbus being satisfied with its respective due diligence review to be completed by April 23, 2015; (b) Columbus acquiring the Block 8 hydrocarbon license in Albania; (c) Columbus acquiring the Bulqiza-Batra chromite license in Albania; (d) Columbus obtaining the required approval of 662/3 percent of its shareholders for the Acquisition; and (e) all necessary court and regulatory approvals of the Acquisition and related agreements being obtained, including, without limitation, that of the TSX Venture Exchange.
Upon closing of the Acquisition, the Company will own 100% of Columbus and its subsidiaries. Under the terms of the LOI, the Company’s Board of Directors would be expanded from four to five directors, with Robert Giustra, Director of Columbus, appointed as the fifth director. The existing Board of Directors of the Company will remain intact. The parties have agreed to use best efforts to replace the LOI with a definitive agreement by May 7, 2015 and to complete the Acquisition no later than July 31, 2015. No finder’s fees are payable in connection with the Acquisition.
Columbus has entered into an agreement to acquire the rights to onshore hydrocarbon license Block 8 in Albania and has submitted an application for a mining license covering much of the productive Bulqiza-Batra chromite terrain in Albania. The Block 8 hydrocarbon license is located in the northern tip of Albania bordered by Montenegro and Kosovo, and is one of the largest blocks within onshore Albania (See Columbus News Release dated March 6, 2015 for a map). Block 8 includes prospective areas with materially identical tectonic position to known oil and gas fields in southern Albania. The complex geodynamic history of the Albanides provides high potential projects which can now be fully explored with new technology.
The Bulqiza-Batra mineral license is comprised of 5.77 square kilometers with two distinct project areas containing numerous chromite showings, prospects and past-producing mines. The Bulqiza-Batra mineral license surrounds and extends from the producing Bulqiza and Batra mines which have aggregate past production of approximately 20 million tonnes grading 35-42% Cr2O3. The Bulqiza-Batra mineral license includes the east and west mineralized extensions of the fold structures controlling and hosting the chromite ores and includes much of the past producing Thekna mine which is reported to host a historical resource of 330,000 tonnes grading +40% Cr2O3 and where drilling in 2011 demonstrated the potential for significant expansion.
Note on historical data:
Some portions of the historical Bulqiza and Batra mines are not included as part of the Bulqiza-Batra license.
This news release contains historical data respecting the Thekna mine. The source of this historical estimate is understood to be the Albanian Geological Survey utilizing a methodology believed to be based on the Russian sectional calculation method and reconciled against past production figures. The Albanian calculations are adjusted for production figures after reconciliation with the sectional calculation. A qualified person has not done sufficient work to classify the historical estimate as a current mineral resource or mineral reserve. The Company is not treating the historical estimate as a current mineral resource or reserve.
Columbus’ Qualified Person, David C. Cliff, BSc (Hons), MIMMM, C Eng, FGS, also Columbus’ President and CEO, has reviewed and approved the content of this news release regarding the Bulqiza-Batra license.
Readers are cautioned not to place undue reliance on these statements as they involve known and unknown risks, uncertainties and other factors that may cause a change in assumptions and the actual outcomes and estimates may be materially different from the estimated or anticipated future results, achievements or positions expressed or implied by those forward-looking statements. The Company disclaims any intentions or obligations to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
About EnerGulf see www.energulf.com
On Behalf of the Board of Directors of
ENERGULF RESOURCES INC.
“John D. Elmore”
John D. Elmore, Director & President
The Buick Group