Jan 12 2011
Strategic Metals Ltd. (TSX VENTURE:SMD) ("Strategic" or the "Company") announces that its board of directors has unanimously approved a proposal to undertake a spin-out transaction to segregate some of its assets into a separate company.
Under the terms of the proposed transaction, Strategic will transfer its Silver Range and Mint projects and approximately $17 million in cash to Silver Range Resources Ltd., a wholly-owned subsidiary ("Silver Range") in return for Silver Range shares and warrants, the majority of which will then be distributed to Strategic shareholders by way of a plan of arrangement. Strategic will retain all of its other assets, including property and royalty interests, remaining working capital, and shares it holds in other publicly-traded companies. The closing of this transaction requires that Silver Range obtain conditional approval for the listing of its common shares and share purchase warrants on the TSX Venture Exchange.
Spin-out of Silver Range Resources Ltd.
The transaction is intended to increase value for Strategic shareholders by creating a new precious metal focused company that will advance bulk tonnage, porphyry targets at the silver-enriched Silver Range project and the gold-rich Mint project, both located in the Yukon Territory. Strategic shareholders will be asked to vote on the proposal at a special meeting of its shareholders, expected to be convened in April 2011. The proposal to be presented to shareholders would result in each Strategic shareholder receiving, on the effective date of the transaction, one Silver Range common share and one-half of a transferable Silver Range share purchase warrant for each three shares of Strategic held. Each whole Silver Range warrant will entitle the holder to purchase one additional Silver Range share at a price of $0.85 for a period of eighteen months from listing. Upon completion of the transaction, Strategic will retain approximately 19% of the shares and warrants of Silver Range. Adequate advance notice of the effective date of the transaction will be provided in due course.
W. Douglas Eaton, the President and CEO of Strategic stated, "The management and Board of Directors of Strategic believe that the proposed spin-out is an excellent opportunity for shareholders to maximize the value of their Strategic holdings, which is not being reflected in the current share price."
Management of Silver Range
Silver Range management will include W. Douglas Eaton as the President and CEO, Bruce A. Youngman as Chairman, Glenn R. Yeadon as Secretary, and Larry B. Donaldson as CFO. Messrs. Eaton, Youngman and Yeadon will all be directors of Silver Range. The names of additional directors and management of Silver Range are expected to be announced in the near future. The current board and management of Strategic will be unchanged.
Conditions Precedent
The proposed transaction, which is subject to shareholder approval and regulatory acceptance, including the acceptance for filing by the TSX Venture Exchange and the Supreme Court of British Columbia, is expected to be implemented through a plan of arrangement under the Business Corporations Act (British Columbia). Subject to the final approval of the Board of Strategic in the fixing of the date for the special meeting of its shareholders, Strategic shareholders will receive a Management Information Circular with further details of the proposed spin-out transaction.
Project Summaries
Silver Range Project:
The Silver Range Project is a bulk-tonnage silver-zinc-lead-copper project situated in the Faro District of south-central Yukon. Initial widely spaced drilling at the Keg Zone in 2010 intersected broad intervals of porphyry-style, disseminated and stockwork mineralization in all four holes. This drilling partially tested a 550 metre strike length, while geochemical and geophysical anomalies associated with the Keg Zone indicate a target area about four kilometres long and several hundred metres wide. Five more large-scale zones of silver-zinc-lead-copper mineralization have been identified on the project, which has been expanded to cover more than 700 square kilometres. A comprehensive exploration program is planned for the Silver Range Project in 2011, with five diamond drills already reserved. During the 1970's and 1980's, the Faro District was the site of the largest open-pit lead-zinc-silver mining operation in Canada, and the area still has excellent but now under-utilized infrastructure.
Mint Project:
The Mint Property hosts newly discovered alkaline-type porphyry gold, copper and molybdenum mineralization that is associated with a young, very high level hornblende-biotite granodiorite stock. This discovery is situated within a belt of porphyry deposits that extends along the length of the Wrangellia geological terrane from Vancouver Island to Alaska. The property comprises 250 claims located 25 km south of the Alaska Highway in southwestern Yukon. Soil samples collected during summer 2010 outlined a 400 by 1200 m area of strongly to very strongly anomalous gold values (100 to 3400 ppb), which are accompanied by high copper and molybdenum values. Preliminary results from an airborne geophysical survey show potassic and magnetic highs that are approximately coincident with the soil anomaly.
Source: http://www.strategicmetalsltd.com/