ExploreCo owns a 100% interest in the Great Northern and Viking Projects in Newfoundland and Labrador and the Cape Spencer Project in New Brunswick

Anaconda Mining Inc--Magna Terra to Acquire Portfolio of Advance

Magna Terra Project Locations. Photo: courtesy of CNW Group/Anaconda Mining Inc.

Magna Terra Minerals Inc. (the “Company” or “Magna Terra”) (TSX-V: MTT) (SSE: MTTCL) and Anaconda Mining Inc. (“Anaconda”) (TSX: ANX) (OTCQX: ANXGF) (together the “Parties”) are pleased to announce that they have entered into a definitive Share Purchase Agreement (the “SPA”) dated October 14, 2019, whereby Magna Terra proposes to acquire all of the issued and outstanding common shares of Anaconda’s wholly-owned subsidiary, 2647102 Ontario Inc. (“ExploreCo”)(the “Acquisition”). ExploreCo owns a 100% interest in the Great Northern and Viking Projects in Newfoundland and Labrador and the Cape Spencer Project in New Brunswick.

“We are very pleased to have the opportunity to position ourselves through the acquisition of ExploreCo in the established mining jurisdictions of Newfoundland and Labrador and New Brunswick. The Appalachian geological region has numerous multi-million ounce gold deposits with about 30% of them situated in Atlantic Canada. Recent development and exploration success has brought renewed interest in the region, and the acquisition of this significant project portfolio with multiple drill ready targets will allow us to rapidly generate value. We will also continue to look at all opportunities to advance and extract value from our extensive project portfolio in Santa Cruz, Argentina.”
~ Lew Lawrick, President and CEO of Magna Terra

“In 2018, Anaconda created a wholly-owned subsidiary to house these advanced stage, highly-prospective, Atlantic Canadian exploration projects, with the aim of developing strategic alternatives to realize value from them. We have established these gold projects in areas with sizeable land packages that provide the platform to build significant district-scale mineral resources in Atlantic Canada in the long term. We have continued to create value at these projects with low expenditures and are well positioned to realize future value for our shareholders through this transaction with Magna Terra, while remaining focused on our core assets at Goldboro, Nova Scotia and the Tilt Cove and Point Rousse Projects on the Baie Verte Peninsula, Newfoundland.”

~ Kevin Bullock, President and CEO of Anaconda

Details of the Acquisition

Under the SPA, Magna Terra will acquire ExploreCo by issuing to Anaconda an aggregate number of common shares of the Company equal to 100% of the outstanding Magna Terra common shares on the closing date of the Acquisition, following the completion of a share consolidation (described below) on an undiluted basis and before the Magna Terra financing (also described below). The Acquisition constitutes a “Reverse Take-Over” and “Non-Arms’ Length” transaction within the meaning of the policies of the TSX Venture Exchange (the “Exchange”) as (i) Anaconda will become a control person of Magna Terra following the closing of the Acquisition and (ii) Mr. Lew Lawrick and Mr. Michael Byron, respectively President & Chief Executive Officer and Directors of the Company, are also Directors of Anaconda. Further, following the closing of the Acquisition and Financing, the management and board of directors of Magna Terra will remain unchanged.

The Acquisition is therefore subject to Magna Terra obtaining the approval of its disinterested shareholders at a special meeting to be called to that effect on a date to be determined. In connection with the special meeting, a detailed management proxy circular in the form prescribed by the policies of the Exchange and applicable securities regulations will be sent to all the shareholders of Magna Terra.

The closing of the Acquisition is scheduled to take place on or before December 31, 2019 and is subject to numerous conditions customary to this type of transaction, including notably, regulatory approval, and Magna Terra shareholder approval. The closing of the Acquisition is also subject to the following conditions: (i) the execution of an investor rights agreement between Magna Terra and Anaconda (see below for details); (ii) Magna Terra Shareholders’ approval at the special meeting of a share consolidation on the basis of one (1) new share of Magna Terra for every seven (7) common shares of Magna Terra presently issued and outstanding; and (iii) Completion by Magna Terra of a financing for minimum gross proceeds of $1.5 million (the “Financing”) to be completed on a post-consolidation basis (terms of the Offering to be disclosed at a future date).

No finder’s fees will be paid by either Party in connection with the Acquisition. The Acquisition was approved by the independent directors of both Magna Terra and Anaconda.

Following the completion of the Acquisition, but prior to completion of the Financing, it is anticipated that Anaconda will hold approximately 50% of the issued and outstanding shares of Magna Terra, on a post-consolidation basis. In connection with the the Acquisition, the Parties will enter into an investor rights agreement (the “Investor Rights Agreement”) pursuant to which Anaconda will have certain rights, including:

  • the right to participate in any future equity financings undertaken by Magna Terra in order to allow Anaconda to maintain its then percentage ownership interest in Magna Terra; such participation right will not apply to any issuance of securities (a) pursuant to Magna Terra’s existing stock option plan and other incentive plans as may be approved by its shareholders from time to time, or to management, directors and employees of the Corporation for compensatory purposes; or (b) upon the exercise or conversion of any convertible or exchangeable securities outstanding on the date the Investor Rights Agreement was entered into; or (c) in connection with or pursuant to any merger, business combination, exchange offer, take-over bid, arrangement, asset purchase transaction or other acquisition of assets or shares of a third party, provided, however, that Anaconda will be permitted to exercise its participation right in connection with the issuance of any shares or other securities of Magna Terra that may be delivered pursuant to the terms of any option agreement, earn-in agreement or similar agreement that Magna Terra or any of its subsidiaries may be party to that does not exist as of the date the Investor Rights Agreement was entered into;

  • the right to appoint two (2) directors on the Board of Directors of Magna Terra as long as Anaconda’s ownership interest is above 20%, and one (1) director if Anaconda’s ownership interest falls below 20%, it being agreed that such designated directors would be Mr. Lew Lawrick and Mr. Michael Byron for as long as such persons remained Directors of Anaconda.

All the above rights shall automatically terminate and be of no further force or effect at the later of (i) June 30, 2021, and (ii) Anaconda ceasing to beneficially own more than 10% of the issued and outstanding common shares of Magna Terra (on an undiluted basis).

The Investor Rights Agreement also provides that Anaconda will be subject, until June 30, 2021, to a standstill obligation pursuant to which, among other things, it will not without the prior authorization of the board of directors of Magna Terra, purchase, offer or agree to purchase or negotiate to purchase any securities or assets of Magna Terra other than in connection with acquisitions carried out by Anaconda or its affiliates where such securities, when added together with the securities held by Anaconda, its affiliates and any other person acting jointly or in concert would cause Anaconda’s ownership percentage to exceed 35%. The Investor Rights Agreement further provides that Anaconda will vote or cause to be voted, all common shares of Magna Terra beneficially held or controlled by Anaconda, at all shareholder meetings of Magna Terra to be held until June 30, 2021, in favour of each matter recommended by the board of director of Magna Terra for approval by its shareholders at each such meeting.

Source: Company Press Release