Birchpoint Announces Proposed Qualifying Transaction
Birchpoint Capital Inc. (the “Company” or “Birchpoint”), a capital pool company, is pleased to announce that it has entered into a letter of intent dated effective May 12, 2006 (the “Agreement”) for the arm’s length acquisition of Hot Rock Uranium Corp. (“Hot Rock”). Hot Rock is a private company based in British Columbia and incorporated under the Business Corporations Act (British Columbia) on April 6, 2006.
Trading of the common shares of Birchpoint has been halted at Birchpoint’s request and will remain halted until, at the earliest, Birchpoint has confirmed that Hot Rock has spent $100,000 on a qualifying property and has prepared and delivered an independent geological report in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
The acquisition will take the form of a share exchange whereby Birchpoint will acquire all of the issued and outstanding securities of Hot Rock in consideration for the issuance of 6,400,000 common shares of Birchpoint at a deemed price of $0.27 per common share and the issuance by Birchpoint of 550,000 common share purchase warrants exercisable at $0.30 per common share until May 15, 2007.
As a condition of the Agreement, the outstanding capital of Hot Rock will consist of no more than 6,400,000 common shares and no more than 550,000 common share purchase warrants in order to complete its initial capitalization. As at the effective date of the Agreement, there was a sole shareholder of Hot Rock pending the completion of its capitalization.
The acquisition, once completed, is intended to constitute Birchpoint’s qualifying transaction pursuant to Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the “Qualifying Transaction”). The Agreement contemplates an arm’s length acquisition. The Qualifying Transaction and related matters will not be submitted to the shareholders of Birchpoint for approval.
The closing of the Qualifying Transaction is subject to a number of terms and conditions including:
(a) Hot Rock has agreements to acquire certain properties in Newfoundland and Nunavut but does not yet hold those properties in its name. Hot Rock must acquire the interests in those properties free and clear of any claims or encumbrances other than a 2% NSR, (50% of which can be purchased by Hot Rock for $1,000,000) on certain properties in Newfoundland. Birchpoint understands that Hot Rock has no other material assets or liabilities;
(b) Birchpoint must be satisfied in its sole discretion, with its due diligence review of Hot Rock, including the title, nature and value of Hot Rock’s properties and assets and the nature and extent of Hot Rock’s financial position, liabilities and obligations;
(c) All of the common shares and warrants of Hot Rock must be transferred from the beneficial owners thereof to Birchpoint free and clear of any encumbrances, adverse claims, rights or interests;
(d) Hot Rock must have spent at least $100,000 on its properties;
(e) Hot Rock must have prepared and delivered an independent geological report in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects;
(f) The acquisition must receive any third party consents and approvals by all regulatory bodies having jurisdiction in connection therewith including, the TSX Venture Exchange; and
(g) A definitive share exchange agreement in respect to the Qualifying Transaction must be entered into on or before June 10, 2006.
Hot Rock has entered into agreements to acquire two uranium exploration properties (the “Properties”). It is a condition precedent of the Agreement that Hot Rock completes the acquisition of the Properties. The Lost Pond property is located 20 kilometres east of the Town of Stephenville in Newfoundland and consists of 12 mineral licenses totalling 1157 claims. It measures approximately 30 kilometres long by 13 kilometres wide. Hot Rock has collected grab samples from an area measuring approximately 300 square meters using a scintillometer. A detailed airborne radiometric, electromagnetic and magnetic survey is scheduled to begin within the next two weeks.
The Sandbeach Lake property is located in Nunavut approximately 350 kilometres northwest of Churchill, Manitoba. The property consists of five claims. To Hot Rock’s knowledge there has been no previous drilling in the area. Hot Rock is planning a first phase prospecting program scheduled to start in late June followed by a possible radiometric airborne survey.
An independent geological report of the Properties prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects will be completed in conjunction with the Qualifying Transaction. Upon its receipt, Birchpoint intends to issue a press release announcing the results of the geological report. As part of the Agreement, the shareholders of Hot Rock are entitled to nominate one person and the existing board of directors are entitled to nominate three persons to the board of the directors of the resulting issuer of the Qualifying Transaction until the next annual general meeting of shareholders. On behalf of the shareholders of Hot Rock, Stephen Stares will be appointed as a director. Daniel Whittaker, Denis Ryan and Brian MacEachen will remain directors. Brian MacEachen, who is currently a director of Birchpoint, will replace Daniel Whittaker as its Chief Financial Officer. Wayne Reid plans to join the management team of the resulting issuer as the Vice President of Exploration. The following individuals will be insiders of the resulting issuer of the acquisition: Daniel Whittaker – President, Chief Executive Officer and a Director Mr. Daniel Whittaker was the Chief Financial Officer, Vice President, Secretary and a director of Jilbey Gold Exploration Ltd., a Canadian mining company from March 2003 to September 1, 2005 when Jilbey merged with a wholly owned subsidiary of High River Gold Mines Ltd. In addition, he was the Chief Financial Officer and Secretary of Carpathian Gold Inc., a Canadian mining company, from September 2005 to April 30, 2006. Prior to joining Jilbey in 1995, Mr. Whittaker held the position of Assistant Vice President of Manulife Financial in the investment department. He holds a Bachelor of Arts (Economics) Degree and a Masters of Business Administration from the Richard Ivey School of Business at the University of Western Ontario. He has held the Chartered Financial Analyst designation from the CFA Institute since 1995. Mr. Whittaker resides in Halifax, Nova Scotia. Brian MacEachen – Chief Financial Officer and a Director Mr. Brian MacEachen is a Vice-President and the Chief Financial Officer of Linear Gold Corp., which is a mining company. Mr. MacEachen is a Chartered Accountant with over 16 years of financial management experience, working primarily with public companies. Prior to joining Linear Gold Corp., he served as the Chief Financial Officer of Salter Street Films (a film production company), after accumulating more than 10 years of mining industry experience, serving as Treasurers of Aur Resources Inc. and Franco- Nevada Mining Corporation Limited. Mr. MacEachen graduated with a Bachelor of Business Administration from St. Francis Xavier University. Mr. MacEachen resides in Halifax, Nova Scotia. Denis Ryan – Director Mr. Denis Ryan has been a partner with Morrison Williams Investment Management Ltd., an investment firm, since January 2000. Prior thereto, Mr. Ryan was the Vice President, Marketing for Altamira Management Ltd., from 1991 to December 1999. Prior thereto, Mr. Ryan was the Vice President of BGH Investment Management Limited, an investment firm, from 1990 to 1992. Mr. Ryan obtained a Bachelor of Arts degree from Memorial University in Newfoundland in 1981 and took the Canadian Securities Course in 1983. In addition, Mr. Ryan received an honorary degree, a Doctor of Letters, from St. Mary’s University in Halifax, Nova Scotia. Mr. Ryan resides in Halifax, Nova Scotia. Stephen Stares – Director Mr. Stephen Stares is the President and a director of Benton Resources Corp. and has 15 years experience in mineral exploration. He spent five years prospecting for Noranda on such projects as the Hemlo and Eagle River gold deposits and the Geco and Mattabi base metal camps. Mr. Stares then began managing the operations of Stares Contracting Corp., a mineral exploration services company based in Thunder Bay, Ontario. Stares Contracting has a client base that includes both major and junior mining companies. Mr. Stares has been involved with discovering several mineral occurrences in Canada that have been the subject of exploration programs. Mr. Stares resides in Thunder Bay, Ontario. Wayne Reid – Vice President of Exploration Mr. Wayne Reid has held the Exploration Manager position for St. Andrew Goldfields Ltd. since 2002 and has over twenty-five years of exploration and mining geology experience in a variety of Canadian geological terrains. His experience includes two years of uranium exploration in Saskatchewan and Newfoundland. Mr. Reid has a Bachelor of Science in Geology from Memorial University in Newfoundland. Mr. Reid lives in Schumacher, Ontario. The resultant issuer of the acquisition will be a mining exploration company. Birchpoint intends to complete a non-brokered private placement in conjunction with the Qualifying Transaction, which is not a condition to closing the Qualifying Transaction and is subject to the approval of the TSX Venture Exchange. The financing will consist of up to a maximum of 3,000,000 common shares priced at $0.27 per common share for aggregate gross proceeds of up to $810,000. Birchpoint intends to use the proceeds to execute a work program for the Properties. The current officers and directors of Birchpoint may subscribe under the private placement. There are currently 6,250,000 common shares of Birchpoint outstanding. After the completion of the Qualifying Transaction and the aforementioned financing, there are expected to be 15,650,000 common shares of Birchpoint outstanding (excluding the exercise of any options and warrants). Birchpoint intends to grant options to certain officers and directors of the resulting issuer of the Qualifying Transaction under its Stock Option Plan at an exercise price of $0.27 per common share expiring five years from the date of the grant. For further information, contact Mr. Daniel Whittaker, President, Chief Executive Officer and Chief Financial Officer of Birchpoint at: Telephone: (902) 482-5214 Fax: (902) 492-0197 Birchpoint intends to apply for an exemption from the sponsorship requirements of the TSX Venture Exchange in connection with the Qualifying Transaction. Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, the transfer of the Properties to Hot Rock, further due diligence, and Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Birchpoint should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release. (Not for dissemination in the United States of America)