MELANCTHON, Ontario, Nov. 26, 2024 (GLOBE NEWSWIRE) — Transpacific Resources Inc. (“Transpacific” or the “Company”) is pleased to announce that it has entered into a claims purchase agreement (the “Purchase Agreement”) with Goldenfire Minerals Inc. (“Goldenfire”) pursuant to which the Company has agreed to acquire from Goldenfire a total of 139 contiguous mining claims located in Tannahill, Holloway and Marriott Townships in Ontario (such mining claims known as the Field of Dreams property) (the “Field of Dreams Property”) in exchange for cash consideration of $100,000 and the grant of a 2% net smelter returns royalty on the claims comprising the Field of Dreams Property (the “NSR Royalty”), such NSR Royalty being subject to the option of the Company to reduce such NSR Royalty to 1% at any time upon the payment of $1,000,000 to Goldenfire (the “Transaction”).
The Purchase Agreement contains customary representations, warranties and agreements, conditions to closing and other obligations of the parties for transactions of this nature. Closing of the Transaction is anticipated to be completed on or about January 3, 2025, or such other date as the Company and Goldenfire may agree.
Related Party Considerations
As a “reporting issuer”, the Company is subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company has determined that the Transaction constitutes a “related party transaction” under MI 61-101 as Messrs. Dillman and Renaud are each members of the board of directors of the Company (the “Board”) and the sole shareholders and members of the board of directors of Goldenfire. MI 61-101 requires that an issuer obtain approval of a majority of the disinterested shareholders as well as a formal valuation for a transaction that constitutes a related party transaction, absent an exemption from such requirements. At the time the Transaction was agreed to, neither Goldenfire nor Messrs. Dillman or Renaud owned or controlled, directly or beneficially, any securities of the Company, and no securities of the Company are being issued to Goldenfire or Messrs. Dillman or Renaud in connection with the completion of the Transaction.
Exemptions from the Formal Valuation Requirement and the Minority Approval Requirement
MI 61-101 provides an exemption from the formal valuation requirement under Section 5.5(a) of MI 61-101 and an exemption from the minority approval requirement under Section 5.7(1)(a) of MI 61-101 for a related party transaction in circumstances where at the time the transaction is agreed to, neither the “fair market value” (as such term is defined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves “interested parties” (as such term is defined under MI 61-101), exceeds 25% of the issuer’s “market capitalization” (as such term is defined under MI 61-101).
The Board, considering the advice of the Special Committee (as defined below), determined that the circumstances set out above exist in respect of the Transaction and that the exemption from the formal valuation requirement under Section 5.5(a) of MI 61-101 and the exemption from the minority approval requirement under Section 5.7(1)(a) of MI 61-101 are available to the Company and, as a result, a formal valuation and minority approval are not required in respect of the Transaction. In determining the Company’s market capitalization of $1,732,160 for purposes of MI 61-101, the Special Committee considered that the Company has no material liabilities and considered the Company’s aggregate cash and cash equivalents of approximately $961,000 and the fair market value of the Company’s existing staked claims of approximately $771,160 as an appropriate proxy to represent the fair market value of the outstanding securities of the Company. The Special Committee also considered the fair market value of the Field of Dreams Property to be acquired in connection with the Transaction and the fair market value of the consideration to be paid by the Company in connection with the Transaction in determining that, at the time the Transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Transaction, insofar as it involves interested parties, exceeded 25% of the Company’s market capitalization.
Special Committee of the Board
The Board established a special committee of independent directors on September 24, 2024, that was comprised of Frances Clay and Marty Huber (the “Special Committee”). The Special Committee met on numerous occasions to consider the Transaction and any other alternatives to the Transaction, including maintaining the status quo or if it should pursue other transactions that would enhance value to minority security holders. The Special Committee was responsible for reviewing, evaluating and negotiating the terms of the Transaction as well as considering and evaluating any other alternatives to the Transaction.
In reviewing, evaluating and negotiating the terms of the Transaction, the Special Committee considered, among other things, the location, access, geology, mineralization, previously completed exploration work and exploration potential of the Field of Dreams Property, as well as general market conditions and outlook and recent comparable acquisitions. The Special Committee considered that the Field of Dreams Property is in a top-tier mining jurisdiction and within the Archean Abitibi Greenstone Belt, and that from an access perspective the property is well situated being only approximately five kilometres south of Highway 101 and with access to a full range of mining and exploration services available from nearby mining hubs including Timmins, Kirkland Lake, Sudbury and Rouyn-Noranda. The Special Committee was of the view that although the Field of Dreams Property is in the early stages of exploration, the nature and scope of the exploration work previously completed by Goldenfire and the results of that work to date suggest that the property is underlain by geology, structures and mineralization prospective for gold and base metal deposits. Moreover, the Special Committee viewed the exploration work completed by Goldenfire to date, including the recent airborne geophysical survey, to add considerable value to the property, including in respect of having generated additional targets at the property and having added significant assessment credit to the property which is expected to allow the property to stay in good standing for several renewals. The Special Committee considered general market conditions and outlook, including the view that the sentiment in the junior mining industry has been improving recently, particularly as a result of gold prices reaching all-time highs in recent months, and the view that quality grassroots exploration properties are likely to be more difficult to come by in the coming months.
The Special Committee evaluated the consideration to be paid by the Company for the Field of Dreams Property, breaking the cash component of the consideration down into a cost-per-hectare value of approximately $32 per hectare, which based on the experience of the members of the Special Committee and based on their review of recent comparable acquisitions, the Special Committee found to be a very reasonable and fair price with comparable acquisitions reviewed typically double or triple the price on a cost-per-hectare basis. The Special Committee was of the view that the Field of Dreams Property and related cost of the acquisition became even more appealing when considering the exploration work completed to date by Goldenfire and the assessment credits on the property. The Special Committee also viewed the NSR Royalty portion of the consideration and related terms as industry standard and found them to be fair.
As a mineral exploration company, the Special Committee also considered that the Company will need to obtain additional funding in the future to continue to finance its exploration and operational activities and concluded that, given the state of the financial markets and the Company’s current mineral property interests, the Company is more likely to be better positioned to obtain additional funding if the Transaction was completed in the near-term. The Special Committee was of the view that the Transaction provides the Company with a new prospective property of merit with significant exploration potential and will allow the Company to continue to focus and expand its efforts on the mineral exploration of properties located in Northern Ontario and which the Company hopes will assist with its ability to obtain additional funding in the future.
The Special Committee considered engaging a financial advisor, but it was determined by the Special Committee that with a view to preserving financial resources and given the experience of the members of the Special Committee that such an advisor was not necessary as the Special Committee was able to adequately consider the financial merits of the Transaction on its own.
The Transaction was the result of a comprehensive arm’s length negotiation process by the members of the Special Committee with Goldenfire. The Board, based on the unanimous recommendation of the Special Committee, determined that the Transaction is fair to shareholders of the Company and that the Transaction is in the best interests of the Company, and the Purchase Agreement was approved by the Board by way of unanimous resolution at a Board meeting of the Company. There were no disagreements between the Board and the Special Committee in respect of the Transaction, nor did any of the directors have an interest in the Transaction or a materially contrary view, except as stated in this news release. No director or senior officer of the Company was aware of any prior valuation in respect of Goldenfire or the Field of Dreams Property that related to the Transaction that was made in the 24 months prior to the date hereof.
About Transpacific Resources Inc.
Transpacific is a Canadian-based mineral exploration company focused on the mineral exploration of properties in Northern Ontario, Canada.
For more information, please contact:
Dr. Jim Renaud, Director
[email protected]
519-520-0535
Forward-Looking Information
This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “does not anticipate”, or “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur”, or “be achieved”. Certain information set forth in this news release may contain forward-looking information that involves substantial known and unknown risks and uncertainties, including but not limited to, statements relating to the completion of the Transaction, including the anticipated closing date of the Transaction; the anticipated benefits of the Transaction to the Company and its shareholders; the future potential of the Company on a post-Transaction basis; the future potential of the Field of Dreams Property; the financial outlook of the Company on a post-Transaction basis; the possible impact of any potential transactions referenced herein on the Company’s shareholders; and any potential future arrangements and engagements in regards to any such potential transactions. The forward-looking information is based on reasonable assumptions and estimates of the Company at the time such statements were made and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, future events, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks associated with the completion of the Transaction, including satisfaction of all closing conditions set out in the Purchase Agreement; the exploration and development of mineral properties; future commodity prices; changes in regulatory requirements and legislation; political or economic developments; environmental and climate risks; risks relating to the relationships between the Company and the communities and other interested groups in the areas of the Company’s properties; risks relating to aboriginal rights, title and other interests; permitting timelines and risks; exploration expenditures; operational or technical difficulties in connection with exploration activities; the speculative nature of mineral exploration and development, including potential contests over title to properties, the Company’s limited operating history, future capital needs and uncertainty of additional financing, and the competitive nature of the mining industry; the need for the Company to manage its future strategic plans; global economic and financial market conditions; uninsurable risks; and changes in exploration plans and parameters as plans continue to be evaluated. Although the Company has attempted to identify important factors that could cause actual results or future events to differ materially from those contained in the forward-looking information, there may be other factors that cause results or events not to be as anticipated, estimated or intended. Although the forward-looking information contained in this news release is based on what the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results or events will be consistent with such forward-looking information, as there may be other factors that cause results or events not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligation to release publicly any revisions for updating any voluntary forward-looking information, except as required by applicable securities laws.
