Cloncurry Metals Limited (CLU) (Cloncurry Metals, or the Company) announced today that it has made an offer to the existing owners of Global Resources Corporation Pty Ltd (GRC) and, subject to acceptance of that offer, intends to acquire GRC. GRC has as its main asset an option to acquire a 100% interest in the El Rodeo Project, located in the State of Michoacan, southwestern Mexico, close the border with the Guerrero State. The property is approximately 60km northwesterly from Ciudad Altamirano, Guerrero, or 30km west of Huetamo, Michoacan. It is approximately 220km west-south-west of Mexico City. The contiguous claim block covers 3,084 hectares or 30.84 km2.
GRC is the major shareholder of Cloncurry Metals with a holding of 15,603,360 shares representing 26.7% of the Company. Approximately 15 million of these shares remain subject to ASX related escrow agreements and will be released on 9 October 2009. GRC was responsible for the establishment of Cloncurry Metals and has been supporting the Company’s efforts to seek out additional development opportunities. Following an extensive review of other potential opportunities, the Company has decided the El Rodeo Project is the most attractive and cost effective opportunity, and will allow GRC to more actively support Cloncurry going forward.
Minas GRC S.A. de C.V. (‘Minas GRC’), the wholly owned Mexican subsidiary of GRC has an exclusive 6-year option to purchase a 100% interest in the El Rodeo Property from the vendors, Recursos Cruz del Sur S.A del C.V. – a private company based in the United States of America. GRC has, through Minas GRC, held the option on the Rodeo Property since September 2007.
Cloncurry Metals has offered to acquire GRC for a total consideration of 39,188,574 CLU shares, which includes effectively replacing the existing holding of GRC plus 23,585,214 new shares issued as fully paid on the basis of each CLU share being valued at $0.085 (8.5 cents). Ignoring the existing shares held, the consideration of 23.6 million new shares represents the remaining net tangible assets of GRC at cost as at 31 July 2009, being an amount of $2.005 million, and includes approx. $2.04 million invested in the El Rodeo Project to 31 July by GRC. An offer to the current owners of GRC has been made on these terms, subject to finalisation of the transaction documents and the approval of shareholders.
Given that a number of the current owners of GRC are associated with Cloncurry Metals and are therefore related parties of the Company, the proposed transaction will be subject to shareholder approval. Cloncurry Metals intends to seek such approval as soon as possible, so as to allow commencement of the next phase of planned exploration before the exploration season concludes. In preparation for the shareholder approval process Cloncurry Metals has already received an Independent Technical Report on the Rodeo Property4and commissioned an Independent Expert’s Report on the fairness and reasonableness of the transaction (yet to be completed). A copy of these reports will be provided to shareholders with the Notice of Meeting in due course.
The option held by Minas GRC is for a six year period commencing 15 September 2007; the exercise price of the option is US$3 million (plus applicable taxes) and the option requires an ongoing royalty commitment of 2 – 3% (level depends on mechanism elected by Minas GRC) Net Smelter Return on all minerals produced in the Rodeo Project area.
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