Portage Minerals Inc. ("Portage") today announced it has entered a non-binding letter of intent ("LOI") for the acquisition of Portage by Tri-Star Resources PLC ("Tri-Star"), a listed issuer on the AIM market of the London Stock Exchange under the symbol TSTR.
It is proposed that, subject to the completion of due diligence and formal documentation, Tri-Star Canada Inc. ("Tri-Star Canada"), a wholly-owned subsidiary of Tri-Star, will acquire the entire issued share capital of Portage ("Acquisition").
In consideration for the Acquisition, Tri-Star has provisionally agreed to issue 1,086 million Ordinary Shares to the current shareholders of Portage, which have a value of CDN$5.2 million based on the share price as at the close of business on 1 May 2013 and the current exchange rate.
Pursuant to the terms of the LOI, Tri-Star has agreed to pay an exclusivity fee of CDN$50,000 immediately, and from 1 June 2013 to make monthly exclusivity payments of CDN$25,000 to Portage. A further payment of CDN$85,000, which will be satisfied by the issue of 14 million Ordinary TSTR Shares to Portage, will be made to Portage upon completion of the Acquisition.
On completion of the Acquisition, the Company will take on the liabilities of Portage which are expected to include short term liabilities of CDN$400,000 and long-term liabilities of CDN$660,000. Tri-Star intends to satisfy CDN$100,000 of the short-term liabilities through the issue of 20 million Ordinary TSTR Shares.
Portage has granted Tri-Star an exclusivity period to 30 June 2013 to complete its due diligence and to enter into a binding agreement in respect of the Acquisition.
Portage has agreed to pay Tri-Star compensation of CDN$500,000 if it completes an equivalent transaction to the Acquisition with another party.
Completion of the Acquisition is conditional upon directors of both companies obtaining all necessary authorities from shareholders, and approval by the CNSX and relevant regulatory bodies.
Commenting on today's announcement, Ken Hight, President Portage Minerals Inc. stated:
"The proposed transaction is a significant development for Portage shareholders. Subject to completion of the transaction, our shareholders will become shareholders in a larger company with a clear strategy to become an integrated antimony producer, and we look forward to working with the Tri-Star management team to complete this transaction. Portage has significant undeveloped antimony resources at the Bald Hill project in New Brunswick, Canada. The recent Bald Hill discovery made by Portage staff, is one of the largest undeveloped antimony projects in North America. Canada is expected to be an important source of feedstock, alongside Turkey, to the Tri-Star Roaster Project.
Tri-Star notes recent press articles concerning the threat of closure for certain polluting smelters in China's Hunan province, its key antimony producing region. This highlights the importance of having an environmentally compliant processing facility using modern technology as has been developed by Tri-Star. Furthermore, Tri-Star is investigating other high value sulphide concentrates that its roasting technology could prove suitable for handling."