Rocmec Enters into a Memorandum of Understanding providing for Financing and a Reverse Takeover
Vaudreuil-Dorion (Québec), May 23, 2013– Rocmec Mining Inc. (the “Corporation” or “Rocmec”) (TSX-V Symbol: RMI), is pleased to announce that it has entered into a Memorandum of Understanding (the “MOU”) with 8431469 Canada Inc. ( “Nippon Dragon Resources”), an arm’s length party to the Corporation.
Nippon Dragon Resources is a newly-incorporated company wholly owned by Mr. Yong Nam Kim, the Chief Executive Officer of ES Plus, an East-Asian information technology business. Mr. Kim incorporated Nippon Dragon Resources as a vehicle through which to acquire promising Canadian mining projects, to which he intends to bring an environmentally-minded approach that relies on the latest technology.
The MOU contemplates a series of transactions detailed below. This press release is intended to provide certain information relating to such contemplated transactions, some of which may be further subject to changes based on the intent of the parties or regulatory requirements. Rocmec undertakes and intends to update the information provided for herein if any such changes were to occur.
Private Placement of $300,000
Pursuant to the MOU, Nippon Dragon Resources has firstly agreed to subscribe for 6,000,000 units of Rocmec at a price of $0.05 per unit (the “Units”) under a non-brokered private placement for total gross proceeds to Rocmec of $300,000 (the “Private Placement”). Each Unit will consist of one common share in the capital of the Corporation (a "Common Share") and one common share purchase warrant of the Corporation (a “Warrant”). Each Warrant will entitle the holder thereof to purchase one additional common share in the capital of the Corporation at a price of $0.10 per common share for a period of 24 months from the closing of the Private Placement.
Upon closing of the Private Placement, Nippon Dragon Resources will hold, directly or indirectly, 11.1% of the issued and outstanding common shares of the Corporation on a non-diluted basis and will therefore become a new insider of the Corporation, as that term is defined in applicable securities laws. Considering that the creation of a new insider is subject to the prior approval of the TSX Venture Exchange (the “Exchange”), Rocmec intends to close the Private Placement so that Nippon Dragon Resources’ ownership interest following the Private Placement will represent 9.99% of the Corporation’s issued and outstanding common shares, with the balance of Nippon Dragon Resources’ Units and the proceeds from the issuance of such Units to be held in escrow pending Exchange approval. Furthermore, until Exchange approval is obtained by the Corporation, the Warrants will not be exercisable by Nippon Dragon Resources if the latter’s ownership interest following such exercise of Warrants would represent over 9.99% of the Corporation’s issued and outstanding common shares,
The Private Placement is subject to receipt of all necessary regulatory approvals, including the approval of the Exchange. All securities issued in connection with the Private Placement will be subject to a statutory hold period of four months and one day from the date of issuance in accordance with applicable securities legislation.
The closing of the Private Placement is expected to occur on or about May 24, 2013. The Corporation intends to use the net proceeds of the Private Placement for general corporate purposes and working capital. A further press release will be issued by Rocmec on the closing date of the Private Placement.
The Private Placement is not conditional upon the completion of the Transaction (as defined below).
Collateral of $1,600,000
Pursuant to the MOU, Nippon Dragon Resources further agreed to place $1,600,000 (the “Collateral”) in trust with a third party on behalf of Rocmec as a collateral for the US$31,500,000 financing previously announced by Rocmec by way of press release on April 9, 2013 (the “Loan”). Pursuant to the Loan, Rocmec must provide the lender with a down payment of an amount equal to 5% of the aggregate amount of the Loan, being US$1,575,000, prior to the closing of the Loan. The Collateral will therefore enable Rocmec to satisfy such prior condition of the Loan and thereafter proceed with the closing of the Loan, once negotiations surrounding the Loan are completed and a formal loan agreement has been executed among the Corporation and the lender. Further information regarding the Loan and its terms and conditions will be provided by the Corporation by way of press release once such information is available.
The Corporation expects that the Collateral will be placed in trust by Nippon Dragon Resources on behalf of Rocmec on the closing date of the Private Placement.
Nippon Dragon Resources also agreed under the MOU to sell certain of its mining assets, which will include certain rights in mining properties, to Rocmec, and Rocmec has agreed to acquire such assets in consideration for a certain amount of common shares of Rocmec to be issued to Nippon Dragon Resources (the “Transaction”). Following the Transaction, Nippon Dragon Resources will hold more than 50% of the issued and outstanding common shares of Rocmec and as such, the Transaction will constitute a reverse takeover under Exchange policies.
Upon completion of the Transaction, Rocmec will change its corporate name to Nippon Dragon Resources and will relocate its head and registered offices to Brossard, Québec. Rocmec’s current management will be responsible for the mining operations of the new entity. More particularly, André Savard will resign as President and Chief Executive Officer of the Corporation and will thereafter be appointed as Vice-President, Mining Development, Donald Brisebois will remain Vice-President, Production and Technology and Jean-Yves Therien will remain Vice-President, Business Development of the Corporation. Nippon Dragon Resources will appoint the new President and Chief Executive Officer (Mr. Hugo G. Delrue), a Chief Operating Officer (Mr. Kunjak Song) and a new Chairman of the Board (Mr. Yong Nam Kim, the owner of Nippon Dragon Resources) of the Corporation following the Transaction. As for the board of directors of the Corporation, it will be composed of 11 members. Donald Brisebois, Paul Girard and André Savard, currently directors of the Corporation, will remain directors of the Corporation following the Transaction, and in addition to such three members, Rocmec will have the right appoint one additional member of the board, which will be Jean-Yves Therien. Nippon Dragon Resources will have the right to appoint the remaining seven members of the board, which will be Yong Nam Kim, Hugo G. Delrue, Kunjak Song, Serge Lebel, Yasuhiro Nonaka, Hideaki Sasaki and Gilles Séguin.
Completion of the Transaction is subject to the execution of definitive agreements, approval of the Exchange, approval by the disinterested shareholders of the Corporation and other conditions customary for a transaction of this nature, including satisfactory completion of customary due diligence by Nippon Dragon Resources. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Further information relating to the terms and conditions of the Transaction, including the assets to be sold by Nippon Dragon Resources to Rocmec as well as the amount of common shares of Rocmec to be issued to Nippon Dragon Resources, the structure of the Corporation following the Transaction and information relating to Nippon Dragon Resources, will be provided by the Corporation by way of press release as soon as such information is available.
Rocmec is active in the exploration and the development of gold resources in Québec and Peru. The Corporation holds a gold property with resources recognised in accordance with NI43-101, a modular treatment plant and also an exclusive license for the thermal fragmentation mining method for exploiting narrow-vein ore deposits.
The company’s growth strategy is based on:
• The development of its gold deposits with the objective of producing revenue from its operations;
• Increasing the value of its mining assets by prioritizing the exploration targets; and
• The commercialisation and employment of its thermal fragmentation technology.
For additional information:
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Rocmec should be considered highly speculative.