Further to its March 4, 2013 news release, Selwyn Resources Ltd. (SWN.TSX V) announces that, in connection with the agreement to sell its remaining 50% interest in the Selwyn Project, the second $5 million deposit has been released from escrow and has been received by the Company.
Under the terms of the transaction, Selwyn has agreed to sell its interest in the Selwyn Project to its joint venture partner, Chihong Canada Mining Ltd. for a total purchase price of $50 million. Selwyn has now received a total of $10 million as a deposit toward the purchase price. The remaining $40 million will be paid to Selwyn at the closing of the Transaction.
The completion of the Transaction is subject to the satisfaction of certain conditions, including the following:
- the approval of the Transaction by at least 66 2/3% of the votes cast by Selwyn shareholders at the annual general and special meeting of shareholders to be held on April 22, 2013;
- approval of the board of directors of Yunnan Chihong Zinc & Germanium Co., Ltd. (parent company of Chihong Canada) and certain Chinese governmental approvals;
- holders of no more than 10% of the issued and outstanding Selwyn common shares having exercised dissent rights in respect of the Transaction; and
- the fulfillment or waiver of certain customary closing conditions set out in the purchase agreement for the Transaction.
The TSX Venture Exchange has conditionally approved the Transaction, subject to Selwyn shareholder approval. Based on the expected timeline for receipt of relevant approvals, the Company and Chihong Canada expect the Transaction to close no later than early June 2013. If the Transaction does not close, the deposits must be refunded to Chihong Canada, except where the failure to close the Transaction is the result of the failure of Chihong Canada to (i) comply with the terms of the purchase agreement, or (ii) obtain its necessary parent and Chinese governmental approvals for the Transaction. The refund of the deposits, if necessary and if not promptly paid in cash, will be carried out by Chihong Canada converting the outstanding deposit amount into a corresponding increase in its interest in the Selwyn Project joint venture. If the entire $10 million of deposit funds are converted, Chihong Canada’s interest in the joint venture would increase to 60%, and Selwyn’s interest would decrease to 40%.
The net proceeds from the Transaction, after repayment of the Company’s outstanding debt, will be used toward restarting the Company’s ScoZinc Mine and for general corporate purposes. The restart of the ScoZinc Mine is an important near term strategic objective in advancing Selwyn to becoming a producing company.
Meeting materials for the Company’s annual general and special meeting of shareholders to be held on April 22, 2013 were mailed to shareholders of the Company in late March. Chihong Canada has entered into support and voting agreements with certain significant shareholders of Selwyn who hold, in aggregate, approximately 42% of Selwyn’s outstanding common shares.
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