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Maudore Announces a Series of Significant Transactions, including: Proposed Business Combination with Eagle Hill; Agreement to Acquire 25% Interest in Windfall Lake Project from Noront; and Arrangements to Secure Debt Financing

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MONTREAL, Dec. 5, 2012 /CNW Telbec/ - Dr. Howard Carr, CEO of Maudore Minerals Ltd.  ("Maudore" or the "Company") (MAO: TSX-Venture; MAOMF: US OTC; M6L: Frankfurt Exchange), today announced the following:

  • Maudore has made a formal non-binding proposal to Eagle Hill Exploration Corporation ("Eagle Hill"), 75 percent owner of the Windfall Lake Project, for a business combination between Maudore and Eagle Hill;
  • Maudore has entered into an agreement with Noront Resources Ltd. ("Noront") to acquire its 25 percent interest in the Windfall Lake Project (the "Noront Transaction"); and
  • Maudore has signed a term sheet for a $35 million debt financing with a private equity firm and has received commitments from other parties for $3.25 million in bridge debt financing.

Dr. Howard Carr, President and CEO of Maudore, stated: "These proposed transactions would collectively transform Maudore into a well-funded exploration and development company with 100 percent ownership in two projects containing significant gold resources in one of the world's most prolific gold mining regions.  These proposed transactions are a testament to our commitment to grow the company and enhance shareholder value".

Proposal to Merge with Eagle Hill
In a non-binding proposal letter dated December 4, 2012 addressed to Eagle Hill, Maudore is proposing to merge with Eagle Hill on a basis whereby each outstanding common share of Eagle Hill would be exchanged for 0.0773 common shares of Maudore, which would become the merged company ("MergeCo"). On this basis, the current shareholders of Eagle Hill would own approximately 33.7 percent of MergeCo and the current shareholders of Maudore would own approximately 66.3 percent of MergeCo. The outstanding common share purchase warrants of Eagle Hill would become exercisable for common shares of MergeCo, based on the above exchange ratio.

Maudore's proposal values each Eagle Hill common share at $0.17, based on the closing price of Maudore's common shares on the TSX Venture Exchange on December 4, 2012.  On this basis, Maudore's proposal would provide shareholders of Eagle Hill with a 42% percent premium to the closing price of Eagle Hill's common shares on the TSX Venture Exchange as at that date.

Maudore believes that its proposal is extremely attractive to Eagle Hill shareholders for the following reasons:

  • Eagle Hill shareholders will receive a substantial premium for their shares and continue to participate in the potential upside of the Windfall Lake Project which, upon completion of the Noront Transaction, will be 100 percent owned by MergeCo;
  • Eagle Hill shareholders will have access to a high grade open-pittable deposit at Comtois, containing an Indicated Resource of 544,000 ounces with a grade of 2.0 grams per tonne gold and an Inferred Resource of 428,000 ounces with a grade of 2.7 grams per tonne gold;
  • MergeCo would have greater scale and financial strength;
  • MergeCo would have better trading liquidity and enhanced access to capital markets, which would help advance the two projects more rapidly;
  • Participation in pro-forma Measured and Indicated mineral resources of 1.1 million ounces of gold with a grade of 3.3 grams per tonne and Inferred mineral resources of 2.1 million ounces of gold with a grade of 5.9 grams per tonne;
  • MergeCo would maintain a Quebec-based mining focus with 100 percent interests in two high-quality and near-term development projects in Quebec;
  • The Comtois and Windfall Lake Projects are similar in size and style and are in close proximity to each other, providing potentially significant synergies in technical applications, infrastructure and financing;
  • The proximity of the two projects would also allow mineralized material, from both projects, to be processed at one central processing facility. As a result, shareholders would benefit from significant savings in capital expenditures and operating expenses;
  • Shareholders would gain additional excellent exploration potential from both projects for future expansion of mineral resources;
  • Eagle Hill shareholders would participate in the potential re-rating resulting from the increased size, synergies, liquidity, research analyst coverage and market visibility of MergeCo; and
  • Participation in any further consolidation of the industry in which MergeCo expects to be a major player.

Upon completion of the proposed transaction, MergeCo would continue to have an attractive capital structure with approximately 40.7 million common shares issued and outstanding, and options and warrants outstanding to acquire an additional 8.1 million common shares.

Agreement to Acquire 25 Percent Interest in the Windfall Lake Project
Dr. Carr stated: "The Noront Transaction is a key milestone in consolidating Windfall Lake and, together with the Comtois Project, is expected to deliver substantial capital and operational savings."

Maudore has signed a purchase and sale agreement with Noront (the "Noront Agreement") to acquire Noront's 25 percent interest in the Windfall Lake Project.

Maudore has agreed to pay Noront a sum of $10 million in cash plus three million warrants which entitle Noront to purchase common shares of Maudore on a one-to-one basis, such warrants having an exercise price of $2.20 per common share of Maudore (being the closing price of common shares of Maudore on December 4, 2012) and expiring at 5:00 PM (Toronto time) on December 4, 2013. Maudore will, subject to certain conditions, pay to Noront an additional amount in the event that Maudore acquires, directly or indirectly, Eagle Hill's 75 percent interest in the Windfall Lake Property by way of merger or other acquisition of all issued and outstanding common shares of Eagle Hill (the "75 Percent Interest") equal to the difference (if any) between (i) one third of the purchase price paid by Maudore for the 75 Percent Interest and (ii) $10 million. Consideration for the additional payment will be Maudore common shares.

Pursuant to the Noront agreement and subject to certain conditions, Maudore has the right to direct Noront to enforce its rights under the option agreement dated July 20, 2009 between Noront and Eagle Hill (the "Option Agreement") including its right to repurchase the 75 Percent Interest from Eagle Hill and transfer the 75 Percent Interest to Maudore, provided that (i) Noront agrees that the repurchase should be exercised; (ii) Maudore shall pay to Noront up to $6,000,000 at the time of completion of the repurchase; and (iii) no other consideration shall be paid by Maudore to Noront in connection with the repurchase and the transfer of the 75 Percent Interest to Maudore.

The Noront Agreement is subject to certain conditions.  In particular, Maudore's obligation to purchase Noront's 25 percent interest in the Windfall Lake Project is subject to its acquisition of the 75 Percent Interest, or Noront obtaining the consent of Eagle Hill pursuant to the Option Agreement for the transfer of Noront's 25 percent interest and any required regulatory approvals, including that of the TSX Venture Exchange.

Term Sheet for $35 Million Debt Facility
Dr. Carr stated: "This proposed financing is expected to provide Maudore with adequate funds and support to pursue our strategy of consolidation and of planning the development of the Comtois and Windfall Lake Projects for early production."

Maudore has entered into a non-binding, indicative term sheet (the "Term Sheet") with a private equity group for a senior secured term loan facility (the "Debt Facility") of up to $35 million in order to; advance the Noront Transaction, fund the business combination with Eagle Hill, the purchase of other assets and general corporate purposes.  The Debt Facility will have a term of three years and will not have a fixed amortization schedule.

Entering into the Debt Facility remains subject to a number of conditions including the completion of final due diligence and negotiation and execution of definitive documentation.

$3.25 Million Term Loan Financing
The Company has entered into commitment letters, for a term loan of a total of $3.25 million (the "Term Loan") intended to be outstanding during an interim period until the Debt Facility has been completed. The Term Loan will mature on December 31, 2014, unless repaid earlier in accordance with the terms and conditions of the Term Loan.  Entering into the Term Loan remains subject to execution of definitive documentation.

The lenders include certain Maudore shareholders and management, including: City Securities Limited, a corporation owned by Mr. Seager Rex Harbour, an insider and shareholder of Maudore with control or direction of more than 10% of the total issued and outstanding common shares; and an entity associated by Mr. Kevin Tomlinson, the non-executive Chairman of Maudore.  On the basis that these lenders are related parties of Maudore, the Term Loan is a "related party transaction" within the meaning of Multilateral Instrument 61-101 ("MI 61-101") which is incorporated into TSX-V Policy 5.9.  In its consideration and approval of the Term Loan, the board of directors of Maudore determined that the transactions are exempt from the formal valuation and minority approval requirements on the basis that the fair market value of the Term Loan, when drawn in full, will not exceed 25% of the market capitalization of Maudore, in accordance with Sections 5.5 and 5.7 of MI 61-101.  The Term Loan was approved by the disinterested directors of Maudore.

Dr. Carr summarized by saying, "These transactions demonstrate our commitment to aggressively pursue opportunities to enhance shareholder value. We look forward to working with Eagle Hill and its shareholders in developing our projects, and in seeking new opportunities to build our foundation in Quebec's Abitibi Greenstone Belt."

The transactions described in this press release are subject to any required approvals including approvals of the TSX Venture Exchange.

PLEASE NOTE: Maudore is hosting a one-hour conference call (Conference ID: 78270147) about the proposed merger on Wednesday, December 5, 2012 - 10 a.m.-11 a.m. E.S.T.

Shareholders and interested parties may call:

  • US & Canada toll free number : 1-888-231-8191
  • France:  0-800-917-449
  • Germany: 0-800-183-0171
  • Switzerland: 0-800-835-354
  • United Kingdom: 08-00-051-7107

Qualified Persons
Kevin R. Kivi, P.Geo., of KIVI Geoscience Inc., who is Maudore's Chief Consulting Geologist, approves the technical content of this press release. 

About Maudore Minerals Ltd.
Maudore Minerals Ltd. ("Maudore") is a Canadian-based gold exploration Company controlling around 96,000ha (960 sq. km or 370 sq. miles) of claims dominated by gold-prospective Abitibi Greenstone belt in northwestern Quebec.  Maudore owns 100% of the Comtois Gold Project defined by a continually expanding resource, solid grades and excellent metallurgical attributes. Infrastructure is excellent:

  • Highway
  • North America's lowest cost power
  • Abundant water
  • Mining-oriented local community and workforce.

Quebec is consistently ranked among the best locations worldwide for mineral exploration and development.

Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking statements. All statements that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. These statements are inherently uncertain and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, financial related risks, unstable gold and metal prices, operational risks including those related to title, operational hazards, unexpected geological situations, unfavourable mining conditions, changing regulations and governmental policies, failure to obtain required permits and approval from government authorities, failure to obtain any required approvals of the TSX Venture Exchange, failure to obtain any required shareholder approvals, failure to obtain required financing, failure to complete any of the transactions described herein, dependence on key personnel and environmental risks. It is recommended not to place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur. The Company does not assume any obligation to update any forward-looking statements contained in this release, except as required by applicable law.

The TSX Venture Exchange has not reviewed this release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Maudore Minerals Ltd.



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