2005-12-07 17:20 ET - News Release
See News Release (C-LAG) Laurion Gold Inc
Ms. Cynthia Le Sueur-Aquin reports
LAURION GOLD INC. ANNOUNCES CORPORATE RESTRUCTURING: AGREEMENT WITH VEDRON GOLD INC. TO AMEND OPTION AGREEMENT ON DAVIDSON-TISDALE PROPERTY AND PROPOSED PRIVATE PLACEMENT
Laurion Gold Inc. has entered into a letter of intent with Vedron Gold Inc. with respect to further amending the amended and restated option agreement in Stockwatch dated Feb. 17, 2005, between Laurion and Vedron. The 2005 option agreement pertains to the Davidson-Tisdale property, which is owned by Laurion and optioned to Vedron. In the letter, Laurion and Vedron agreed to enter into a second amended and restated option agreement within the coming weeks.
The 2006 option agreement is a fundamental part of a larger corporate restructuring by Laurion which, if completed, will result in a significant reduction in the number of issued and outstanding Laurion shares, an increase in the working capital available to Laurion to conduct exploration work on its resource properties, and a more clearly defined relationship with Vedron with respect to the property. Laurion has retained the services of ZED Financial Partners, which has provided financial and advisory services to Laurion in the past, to assist with the 2005 restructuring.
The 2006 option agreement
The 2005 option agreement amends the original option agreement between Laurion and Vedron dated March 14, 2003, pertaining to the property. Pursuant to the 2005 agreement, Laurion granted to Vedron the right to earn up to a 60-per-cent interest in six of the claims comprising the property by fulfilling the expenditure and payment commitments of the original agreement (approximately $5-million) by March 14, 2008; the remaining 19 claims comprising the property to continue to be held 100 per cent by Laurion. The 2005 agreement also provides that, by paying $1,575,000 to Laurion over a three-year period, Vedron can earn up to an additional 15-per-cent interest in the Davidson-Tisdale claims over and above the 60-per-cent interest noted above. To date, Vedron has earned an 11-per-cent interest in the Davidson claims by making the expenditures and payments required under the 2005 option agreement, which to date total approximately $1.1-million.
Pursuant to the letter, Laurion and Vedron agree that the 2006 option agreement will amend the 2005 option agreement, by among other things, providing Vedron with the right to accelerate its earning of a 51-per-cent interest in the Davidson-Tisdale claims at any time prior to Dec. 31, 2005, by making the following payments and deliveries:
1. a cash payment to Laurion in the amount of $200,000;
2. issuing 600,000 Vedron shares to Laurion;
3. issuing a convertible promissory note to Laurion in the principal amount of $200,000 bearing interest at 6 per cent and due on July 31, 2006; and
4. surrendering to Laurion 15.4 million Laurion shares.
In addition, Vedron will have the option of earning an additional 9-per-cent interest in the Davidson-Tisdale claims by spending an additional $1-million in exploration expenditures on such claims by March 14, 2008.
The Vedron share transaction
To facilitate Vedron exercising the acceleration option noted above, Vedron has advised that it intends to acquire from a limited number of holders of Laurion shares a total of 12.6 million Laurion shares in exchange for common shares in the capital of Vedron.
Vedron's exercise of the acceleration option
Vedron has advised that it intends to exercise the acceleration option immediately following the completion of the Vedron share transaction, which would result in Vedron acquiring the additional 40-per-cent interest in the Davidson-Tisdale claims and holding, in total, a 51-per-cent interest in such claims. Laurion intends to cancel the 15.4 million Laurion shares to be received from Vedron, reducing the number of issued and outstanding Laurion shares to 22,921,350.
The private placement
In the event that Vedron exercises the acceleration option, Laurion proposes to complete a private placement of a maximum of six million units, each unit to consist of one Laurion share issued on a flow-through basis under the Income Tax Act (Canada) and one-half of one common share purchase warrant of Laurion, at a price of 10 cents per unit. Each whole Laurion warrant to be exercisable into one Laurion share (non-flow) upon payment of the exercise price of 15 cents per Laurion share at any time until 18 months following the closing of the Laurion offering.
It is intended that the various steps involved in the 2005 restructuring will occur on the same day and prior to the end of December. Upon the completion of the 2005 restructuring, there is expected to be approximately 29 million Laurion shares issued and outstanding and Laurion will have approximately $1.1-million in cash.
The 2005 restructuring remains subject to, among other things, Laurion and Vedron entering into a definitive 2006 option agreement and the TSX Venture Exchange approving the transaction. |
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VG: PriceChange% ChangeVolumeDay High / Low52Wk High / Low
0.295EVEN N/AN/A / N/A0.34 / 0.115 Prev CloseOpenBid / Ask (Size)52 Week Chart
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