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News Releases

Wed Aug 8, 2012
APM Finalizes Terms to Acquire the Donkin Coal and Other North American Assets

August 8, 2012 - Halifax, Nova Scotia - Advanced Primary Minerals Corporation (the "Corporation" or "APM") (TSXV: APD) is pleased to announce that it has entered into a definitive agreement (the "Arrangement Agreement") with Erdene Resource Development Corporation ("Erdene") (TSX: ERD) to acquire Erdene Resources Inc., a wholly owned subsidiary of Erdene, which holds all of Erdene's North American property interests, comprised primarily of Erdene's interest in the Donkin Coal Project in Cape Breton, Nova Scotia. Consideration will be the issuance of shares of APM ("APM Shares") by way of a court-approved plan of arrangement ("Arrangement").

Following the Arrangement, all of Erdene's North American property interests will be held by an amalgamated company ("Amalco"). Minority shareholders of APM, who presently hold approximately 40% of the shares of APM, will own 2.75% of the shares of the much larger Amalco. The 97.5% of the Amalco shares owned by Erdene will then be distributed to Erdene shareholders as part of the Arrangement.

A new name and the management team of Amalco will be announced in an upcoming News Release.

Board Recommendations & Management Remarks

The boards of both APM and Erdene have approved the transaction. The Arrangement is a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions ("MI 61-101") and the policies of the TSX Venture Exchange (the "TSXV Policies"). Accordingly, the board of APM struck an independent committee (the "Independent Committee") of directors to negotiate the Arrangement. The Independent Committee retained Fogler Rubinoff as its independent legal advisor and Toll Cross Securities Inc. ("Toll Cross") as its independent financial advisor. On the basis of advice received from its advisors and receipt of a formal valuation and fairness opinion from its financial advisor, the Independent Committee has determined that the Arrangement is fair to APM and in the best interest of all of APM's shareholders. Accordingly, the Special Committee recommends that the APM shareholders vote in favour of the Arrangement.

For further details regarding the Donkin Coal Project, please visit the Featured Items section of the home page of the Erdene website at

Terms of the Arrangement

The Arrangement Agreement dated August 7th, 2012 sets out the terms of the statutory plan of arrangement under section 192 of the Canada Business Corporations Act involving APM, Erdene, Erdene Resources Inc. ("ERI") and the securityholders of APM and Erdene whereby:

  • Erdene will transfer all of the issued and outstanding shares of ERI, a corporation formed under the federal laws of Canada and being the entity that owns or will own Erdene's North American property interests, to APM in exchange for an aggregate of 360,028,650 APM Shares.
  • APM and ERI will amalgamate as ("Amalco").
  • On the amalgamation of APM and ERI, each shareholder of APM (including Erdene) will receive one (1) common share of Amalco ("Amalco Share") for every 7.85 APM Shares owned by such shareholder.
  • Erdene will distribute its Amalco Shares to the shareholders of Erdene ("Erdene Shareholders") on the basis of one-half of one Amalco Share for each common share of Erdene.
  • Each option to acquire APM Shares shall be exchanged for economically equivalent options to acquire Amalco Shares ("Amalco Options"). Outstanding options to acquire shares of Erdene will be exchanged for one-half of one Amalco Option and one-half of one new option of Erdene. The aggregate exercise price of the replacement options will be economically equivalent to the Erdene options they replace, and will be allocated based on the volume weighted average trading prices of the shares of Erdene and Amalco following the closing of the Arrangement.
Following the Arrangement, Amalco will have 49,255,990 shares and 3,884,843 options outstanding.

The Arrangement will result in two strategically positioned public companies, with Amalco focused on North America (Donkin Coal Project) and Erdene focused on Mongolia minerals exploration and development.

Related Party Transaction

Erdene currently owns approximately 60% of the issued and outstanding shares of the Corporation. In addition, three of APM's five directors are also management of Erdene and/or members of the board of directors of Erdene as follows: Ken MacDonald (President and CEO of APM) is a Vice-President, the Chief Financial Officer and a director of Erdene, J.C. (Chris) Cowan is Vice-President, Asia and a director of Erdene and Philip Webster is a director of Erdene. Peter Akerley, a director of APM's wholly owned subsidiary, is President and Chief Executive Officer and a director of Erdene. The Arrangement is therefore a "related party transaction" pursuant to MI 61-101 and the TSXV Policies. Steps have been taken by the board of directors of APM to address any potential conflicts of interest, including the appointment of an additional Independent Director, Charles Pitcher, and the formation of the Independent Committee.

Pursuant to MI 61-101, if a transaction is a related party transaction, a formal valuation is required, unless exemptions from such requirements are available. By virtue of its listing on the TSX Venture Exchange, the Corporation is exempt from the valuation requirements of MI 61-101 with respect to the Arrangement. However, the Independent Committee retained its financial advisor, Toll Cross, to prepare a valuation as required under the TSXV Policies and to prepare a fairness opinion. Toll Cross has advised that, in its opinion, based on the various assumptions and limitations set out in its opinion, the issuance of 360,028,650 APM Shares is, from a financial point of view, a fair price to pay for Erdene's North American property interests and the Arrangement is fair to the APM minority shareholders. The independent Committee has concluded that the Arrangement is in the best interests of APM and all of the shareholders of APM.

Under MI 61-101 and the TSXV Policies, because it is a related party transaction, the Arrangement is required to be approved by greater than 50% of APM's shareholders (excluding Erdene and the directors and senior officers of Erdene and APM) present in person or by proxy at a meeting to be held to consider the Arrangement.

Reverse Takeover Transaction

The Corporation's current business is development, processing and sale of its primary kaolin resources in Georgia, USA; however, the continued weak kaolin market has led management to investigate alternative business opportunities available to the Corporation. APM recently announced the sale of its kaolin production assets and associated mining operation, which closed on June 29, 2012. After the closing of this sale, but before the acquisition of the Donkin asset, the Corporation holds as its primary asset, a limited amount of real estate in McDuffie County, Georgia.

The Arrangement constitutes a reverse takeover transaction under the TSXV Policies although it is expected that the Corporation will maintain its listing under the "Mining" industry segment of the TSX Venture Exchange.

Trading of the Company's common shares on the TSX Venture Exchange will remain halted until satisfactory documentation to effect a resumption of trading is filed with the TSX Venture Exchange, or the proposed transaction is terminated. The Corporation is seeking an exemption from the TSX Venture Exchange's sponsorship requirements. There is no guarantee that such exemption will be provided by the TSX Venture Exchange.

Closing Conditions

A special meeting of APM's shareholders is expected to be held in Halifax on October 11, 2012 to obtain necessary shareholder approval. Completion of the Arrangement is also subject to satisfaction of certain conditions including approvals from the TSX Venture Exchange, the Toronto Stock Exchange, the Erdene disinterested shareholders and the Nova Scotia Supreme Court. The Arrangement may be terminated if certain conditions are not met, with a termination fee payable in certain circumstances.

It is currently anticipated that the Arrangement will be completed on or before October 31, 2012.


Completion of the Arrangement is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested shareholder approval. The Arrangement cannot close until the required shareholder approval is obtained. There can be no assurance that the Arrangement will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Arrangement, any information released or received with respect to the change of business may not be accurate or complete and should not be relied upon. Trading in the securities of APM should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Arrangement and has neither approved nor disapproved the contents of this press release.

Information Regarding Amalco Post-Arrangement

As at the date hereof, there are an aggregate of 26,342,963 shares of APM issued and outstanding. It is expected that, upon completion of the Arrangement, there will be an aggregate of 49,255,990 shares and 3,884,843 options of Amalco outstanding.

Following the completion of the Arrangement, Amalco will hold all of Erdene's North American property interests, consisting primarily of its 25% interest in the Donkin Coal Project, with the remaining 75% interest held by Xstrata Coal Donkin Limited ("Xstrata"). Given Xstrata's announcement of its intent to sell its interest in the project, the Donkin Coal Project is expected to have a new ownership structure later this year, which is anticipated to bring the project to production.

For further details regarding the Donkin Coal Project, please visit the Featured Items section of the home page of the Erdene website at

It is contemplated that the board of directors of Amalco post-transaction will consist of five directors, selected by Erdene, who shall be described in the materials circulated in connection with the APM meeting of shareholders.

A copy of the Arrangement Agreement will be available under APM's profile on SEDAR at Full details of the proposed transaction will be described in detail in the notice of meeting and information circular describing the Arrangement, which will be mailed to shareholders of APM in due course.

Extension of Loan

In order to facilitate the Arrangement, Erdene agreed to further extend the due date of the secured promissory note payable by the Corporation to Erdene on August 31, 2012 ("Note") to the earlier of the closing of the Arrangement and November 30, 2012. The Note, in the principal amount of up to $550,000, entitles Erdene to an interest payment of 5.0% per annum payable at maturity and is secured by certain of the Corporation's real property located in McDuffie County, Georgia. The current balance of the Note is approximately $428,000.

- 30 -

For more information, please contact:

Ken W. MacDonald, President and CEO, Advanced Primary Minerals Corporation
Phone: (902) 466-7255


Philip S. Martin, Chairman of the Board of Advanced Primary Minerals Corporation
Phone: (416) 788-6030

For additional information visit APM's website at or contact the Company via email at

Forward Looking Statements:

This news release contains forward-looking statements and information ("forward looking statements") within the meaning of applicable securities laws relating to the proposal to complete the proposed plan of arrangement and associated transaction), including statements regarding the terms and conditions of the proposed plan of arrangement and associated transaction. Readers are cautioned to not place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the proposed plan of arrangement and associated transactions, that the ultimate terms of the proposed plan of arrangement and associated transactions will differ from those that currently are contemplated, and that the proposed plan of arrangement and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law and APM does not undertakes any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


You can view the Next News Releases item: Mon Aug 13, 2012, Morien Resources Corp. Selected as Proposed New Name and John Budreski as CEO Designate for Company to Hold North American Assets

You can view the Previous News Releases item: Mon Jul 16, 2012, APM Announces Appointment of Charles G. Pitcher to its Board of Directors

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