Midnight Sun Signs Binding Letter of Intent and Term Sheet to Acquire Remaining 40% of Zambian Licences
Midnight Sun Mining - Corporate Office
#1125 - 595 Howe Street, Vancouver, BC Canada V6C 2T5
Tel: +1 (604) 351-8850 Fax: +1 (778) 379-1434
Email: [email protected]
MIDNIGHT SUN SIGNS BINDING LETTER OF INTENT AND TERM SHEET TO
ACQUIRE REMAINING 40% OF ZAMBIAN LICENCES
Vancouver, British Columbia, February 20, 2018 – Midnight Sun Mining Corp. (the
“Company”, “MMA” or “Midnight Sun ”) (TSX-V: MMA) is pleased to announce that it has
signed a binding letter of intent and term sheet (the “Binding Letter and Term Sheet ”) with
Kam Chuen Resource Holdings Inc. (“Kam Chuen”), its joint venture partner in Zambian High
Light Mining Investment Limited (“ ZHLMIL”), to acquire the remaining 40% interest in
ZHLMIL (the “Purchased Shares”).
Midnight Sun Agrees to Acquire Kam Chuen’s Outstanding 40% Ownership in the Licences
Midnight Sun previously satisfied its obligations under the Option Agreement with Kam
Chuen, originally announced on November 2 9, 2013, pursuant to which it acquired a 60%
interest in the Solwezi Group of Exploration Licences (the “ Licences”) from Kam Chuen, as
shown in Illustration 1.0 – The Solwezi Group of Licences.
On February 18, 2018, Midnight Sun and Kam Chuen signed a Binding Letter of Intent and
Term Sheet for the Company to acquire the remaining 40% interest in ZHLMIL for aggregate
consideration of CA $30 million in cash payable over time , as illustrated below in Table 1.0
below (the “Acquisition”). The Acquisition will give Midnight Sun 100% equity ownership of
ZHLMIL, which holds the Licences , and K am Chuen will maintain a 2% net smelter returns
royalty covering the Licenses.
The Company’s President and Chief Executive Officer, Brett Richards stated: “The acquisition
of the remaining 40% of Zambian High Light Mining Investment Limited represents
tremendous value and future optionality for Midnight Sun shareholders. With Midnight Sun
now controlling 100% of the Licenc es, it will be able to efficiently drive and execute on its
work program s in 2018 and 2019 by controlling all aspects of the exploration project.
Assuming positive results in our forthcoming program s, I feel that the deferred payment
structure provides Midnight Sun with adequate time to complete a large portion of our
exploration work , whereby the increase in value will more than substantiate the current
valuation of the payment structure. By owning 100% of the Licences, it also makes potential
new partnerships and joint ventures much more attractive to third parties.”
Midnight Sun Mining - Corporate Office
#1125 - 595 Howe Street, Vancouver, BC Canada V6C 2T5
Tel: +1 (604) 351-8850 Fax: +1 (778) 379-1434
Email: [email protected]
Table 1.0 – Deferred Consideration Payments
Completion of the Acquisition is subject to a number of customary closing conditions ,
including, but not limited to, the Purchased Shares not being subject to any encumbrances
or transfer restrictions ; TSX Venture Exchange conditional approval of the Acquisition ; no
material adverse change to ZHLMIL; and that any other required Zambian corporate or
securities law approvals shall have been obtained.
As security for the deferred consideration payments, a portion of the Purchased Shares will
be placed in escrow by MMA with an escrow agent on closing of the Acqu isition and will be
held as security in favour of Kam Chuen. A proportionate amount of the Purchased Shares
will be released to MMA as the deferred p ayments are satisfied. In the event of a payment
default by MMA, the escrowed Purchased Shares will represent the sole and absolute
recourse of Kam Chuen. As part of the definitive documents for the Acquisition, MMA and
Kam Chuen will enter into a shareholder and governance agreement for ZHLMIL in the event
of any reacquisition of the Purchased Shares by Kam Chuen following any default by MMA.
Entities affiliated with Kam Chuen hold 9,437,500 common shares of the Company
(representing approximately 12.32% of the outstanding shares), and as such, the Acquisition
constitutes a “related party transaction” under Multilateral Instrument 61 -101 – Protection
of Security Holders in Special Transactions (“MI 61 -101”). Accordingly, the Company is
required to obtain “minority approval” (as such term is defined in MI 61 -101) of the
Acquisition at a special meeting of shareholders of MMA. Additional details regarding the
date of the special meeting of shareholders of the Company to approve the Acquisition will
be provided to shareholders in due course.
Date of Deferred
Consideration Payment(s) Payment(s) Amount
June 30, 2018 CAD$1,000,000
December 31, 2018 CAD$1,000,000
June 30, 2019 CAD$2,000,000
December 31, 2019 CAD$3,000,000
December 31, 2020 CAD$8,000,000
December 31, 2021 CAD$15,000,000
Total over 4 Years CAD$30,000,000
Midnight Sun Mining - Corporate Office
#1125 - 595 Howe Street, Vancouver, BC Canada V6C 2T5
Tel: +1 (604) 351-8850 Fax: +1 (778) 379-1434
Email: [email protected]
The Solwezi Group of Exploration Licences
The Licences consist of two individual exploration licences , 21509-HQ-LEL (formerly 14039-
HQ-LPL) and 12124-HQ-LEL, covering over 506 km2 of surface area. The Licences are located
in the N orthern province of Zambia, adjacent to Africa's largest copper producer, the
Kansanshi Mining Complex, on the prolific Zambia-Congo Copper Belt.
Illustration 1.0 – Solwezi Group of Licences
Please also refer to the C ompany’s previous news releases as well as the Company ’s
presentation on its website at: www.midnightsunmining.com.
Midnight Sun Mining - Corporate Office
#1125 - 595 Howe Street, Vancouver, BC Canada V6C 2T5
Tel: +1 (604) 351-8850 Fax: +1 (778) 379-1434
Email: [email protected]
ON BEHALF OF THE BOARD OF MIDNIGHT SUN MINING CORP.
Brett A. Richards – President and Chief Executive Officer
For Further Information Contact:
Brett A. Richards Al Fabbro
President and Chief Executive Officer Lead Director
Tel: +1 905 449 1500 Tel: +1 604 351 8850
NEITHER THE 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 NEW RELEASE.
This news release includes certain statements that may be deemed as “forward-looking statements” within the
meaning of applicable Canadian securities laws . All statements in this release, other than statements of
historical facts, are forward -looking statements , including, without limitation, statements pertaining to
completion of the Acquisition and any approvals required in connection with the Acquisition . Although the
Company believes the expectations expressed in such forward -looking statement s are based on reasonable
assumptions, such statements are not guarantees of future performance and actual results or developments
may differ materially from those in forward -looking statements. Factors that could cause actual results to
differ materially from those in the forward -looking statements include: changes in market conditions,
unsuccessful exploration results, changes in the price of commodities (particularly copper, cobalt, gold and
nickel), unanticipated changes in key management personnel an d general social, economic or geo -political
conditions. Mining exploration and development is an inherently risky business. Accordingly the actual events
may differ materially from those projected in the forward -looking statements. This list is not exhaustive of the
factors that may affect any of the Company’s forward -looking statements. These and other factors should be
considered carefully and readers should not place undue reliance on the Company’s forward -looking
statements. The Company does not un dertake to update any forward –looking statement that may be from
time to time by the Company or on its behalf, except in accordance with applicable securities laws.