West High Yield Clarifies Agreement to Sell Mining Assets
West High Yield Clarifies Agreement to Sell Mining Assets
CALGARY, Alberta, Nov. 03, 2017 -- On October 5, 2017, West High Yield (W.H.Y.) Resources Ltd. (the "Company")
(TSXV:WHY) announced that it had signed a definitive arm's length purchase and sale agreement (the "Agreement") to sell
100% of its right, title and interest in its Record Ridge South, Midnight and O.K. mineral properties (the "Assets") to Gryphon
Enterprises, LLC (the "Purchaser"), a limited liability company based in Maryland, USA, for a purchase price of US$750
million in cash. The Agreement provides that the Assets will be transferred by the Company to its wholly-owned subsidiary,
and at closing all of the shares of the subsidiary will be transferred by the Company to the Purchaser. The Agreement is
available for review under the Company's profile on SEDAR at www.sedar.com.
This press release provides further details concerning the transaction contemplated by the Agreement.
Take-or-Pay Agreements
As stated in the Company's October 5, 2017 press release, the proposed transaction is subject to a number of conditions,
including the Company having entered into before the closing of the transaction investment grade take-or-pay agreements in
the form and on terms and conditions acceptable to the Purchaser, acting reasonably. Investors are cautioned that none of
the terms of the take-or-pay agreements have been determined or agreed to by the Company and the Purchaser, including
terms relating to product volumes, quality metrics, dates, dollar values, pricing requirements or purchaser credit requirements.
In addition, the Company and the Purchaser have not yet determined how the resulting contractual obligations and future
commitments with respect to any take-or-pay agreements will be settled between the Company and Purchaser, or how any
liabilities will be settled if the Assets fail to produce sufficient quantities and grade of materials in the time required to satisfy
any commitments under any take-or-pay agreements that may be negotiated, which may result in the possibility of ongoing
liability to the Company. To date, no take-or-pay agreements in a form acceptable to the Purchaser have been negotiated. If
such agreements are not negotiated, the transaction contemplated in the Agreement will not proceed.
The Purchaser Has Not Obtained Financing
The Purchaser is a private limited liability company, formed under the laws of Oklahoma, U.S.A., for the purpose of acquiring
the Assets. Stephen D. Cummins presently controls the Purchaser and serves as Managing Member of the Purchaser. Mr.
Cummins has over 33 years of business experience and is known to principals of the Company.
Mr. Cummins has engaged a company (the "Arranger") for the purposes of completing the proposed transaction, as well as
development of the mining and processing operations moving forward. In connection with the transaction, the Arranger
executed a non-binding financing proposal letter, which financing would be used to satisfy the entire purchase price to be paid
by the Purchaser under the Agreement and subsequent engineering, procurement, and construction of improvements of the
Assets.
The Arranger analyzes and sources funding, but does not itself finance transactions, and is not a major bank/investment firm,
or registered vehicle and has no firm commitments or arrangements to fund the transaction. The Purchaser has not obtained a
commitment to finance the acquisition of the Assets from the Arranger or from any other source. There is substantial risk that
the Purchaser may not be able to obtain financing necessary to complete the proposed transaction. The Purchaser does not
have the financial resources to complete the proposed transaction contemplated in the Agreement without third party funding.
If any of the Arranger's and/or lender's conditions to financing cannot be satisfied, or if the financing cannot be otherwise
obtained, the proposed transaction may not be completed in accordance with the terms of the Agreement, or at all.
As the Purchaser was formed for the purpose of acquiring the Assets, except for any deposit that may be paid by the
Purchaser, the Company will have no practical recourse against the Purchaser in the event that the conditions in the
Agreement are satisfied by the Company and the Purchaser is unable to complete the proposed transaction.
Other Conditions
The Agreement remains subject to all shareholder, securities and regulatory approvals and acceptances (as required) and all
third party consents (as required) including, without limitation, the approval of the TSX Venture Exchange.
The closing of the purchase and sale of the Assets is expected to occur on or before the date that is 90 days from the date
that the last of the financing conditions is completed to the Arranger's satisfaction. The Company has the right to terminate
the Agreement if closing does not occur on or before March 31, 2018.
Pursuant to Article 2.2.3 of the Agreement, the Purchaser is required to deliver a non-refundable deposit of US$500,000 on or
before November 4, 2017. The Company has the right to terminate the Agreement if the deposit is not paid on or by November
4, 2017. As of issuing this press release, the Company has not received the deposit.
As a result of the significant conditions and contingencies described above, there can be no assurances whatsoever that the
transaction contemplated in the Agreement will be completed on the terms contemplated in the Agreement or at all. If the
transaction contemplated by the Agreement is not completed, the Company intends to continue its ongoing efforts to secure
Mining and Rock Quarry Permits. If the transaction is completed, it is expected that the Company will distribute the vast
majority of the proceeds from the purchase and sale to the Company's shareholders, while at the same time exploring other
business opportunities.
Other Matters
In Article 7.7 of the Agreement, "Baker & McKenzie LLP", is referred to as “Purchaser’s Counsel”. The Purchaser advised the
Company that Baker McKenzie LLP was identified in the Agreement in error, that it has not engaged Baker McKenzie LLP as
legal counsel for the transaction and that Baker McKenzie LLP has no relationship with the Purchaser. The Purchaser has
received advice in connection with the proposed transaction from Thomas J. Kenan, who is based in Houston, Texas.
While the Company believes based on testing done to date that the Assets contain a significant supply of magnesium, the
statement made by the President and Chief Executive Officer of the Company on October 5, 2017 that "if you calculate the
three sections of land, there is about 3,000 years of supply of magnesium can be extracted from the property" should not be
relied upon.
No finder’s fee is payable in connection with the proposed transaction.
Trading in the Company’s shares was halted on October 6, 2017. After trading was halted, the Company has responded to
regulatory inquiries concerning the proposed transaction and the Company. The Company intends to cooperate in connection
with such inquiries.
The Company is in discussions regarding when its shares will resume trading.
About West High Yield
West High Yield is a publicly traded junior mining exploration company focused on the acquisition, exploration and
development of mineral resource properties in Canada with a primary objective to locate and develop economic gold, nickel and
magnesium properties.
For further information please contact:
Frank Marasco
President and Chief Executive Officer West High Yield (W.H.Y.) Resources Ltd.
Telephone: (403) 660-3488
Facsimile: (403) 206-7159
Email: [email protected]
Dwayne Vinck
Chief Financial Officer
West High Yield (W.H.Y.) Resources Ltd. Telephone: (403) 257-2637
Facsimile: (403) 206-7159
Email: [email protected]
Reader Advisory
This is high risk transaction. The completion of the transaction is subject to a number of conditions, including but not limited
to, TSX Venture Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at
all.
The TSX Venture Exchange Inc. has in no way passed on the merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
Investors are cautioned that, except as disclosed in the information circular to be prepared in connection with the Company's
annual and special meeting or as otherwise disclosed in the Agreement, any information released or received with respect to
the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company
should be considered highly speculative.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will",
"project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or
statements. More particularly and without limitation, this press release contains forward looking statements and information
concerning the satisfaction of the conditions to obtain the financing necessary to complete the proposed transaction, the
satisfaction of other conditions related to the transaction (including receipt of TSX Venture Exchange approval), the
anticipated closing date of the transaction, the Company's anticipated plans whether or not the transaction is completed and
the resumption of trading in the Company's shares. The forward-looking statements and information are based on certain key
expectations and assumptions made by the Company. Although the Company believes that the expectations and assumptions
on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on
the forward looking statements and information because the Company can give no assurance that they will prove to be
correct.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and
are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the
results to differ materially from those expressed in the forward-looking information include, but are not limited to: general
economic conditions in Canada and globally; industry conditions, including governmental regulation; failure to obtain industry
partner and other third party consents and approvals, if and when required; the failure of the Purchaser to obtain the necessary
financing to complete the transaction; the availability of capital on acceptable terms; the need to obtain required approvals
from regulatory authorities; stock market volatility; competition for, among other things, skilled personnel and supplies;
changes in tax laws; and the other factors. Readers are cautioned that this list of risk factors should not be construed as
exhaustive.
Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof,
and to not use such forward-looking information for anything other than its intended purpose. The Company undertakes no
obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or
otherwise, except as required by applicable law.
The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the
contents of this press release. 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 press
release.