Mineral Hill Industries Ltd. (“MHI” or “Company”) wishes to announce that it has reached an agreement with certain shareholders of CPS Energy Resources Plc. (“CPS”) an energy resource company incorporated under the Laws of England and Wales and having its registered office at 106 Mount Street, London, UK, W1K 2TW to acquire their interest representing 45% of CPS (the “Acquisition”). CPS entered into an option agreement with an experienced local operator (“Operator”) to jointly develop the contract area covered by OPL 236 (the “Project”), under which CPS will acquire an 80.75% participating interest in the Production Sharing Contract for OPL 236 (“PSC”) with the Operator, subject to receipt of corporate and regulatory approvals, including Ministerial consent after which full asset transfer shall take place. An independent report (NI 51–101 compliant) completed by LR Senergy Limited, Brettenham House, Lancaster Place, London (“Senergy”) in January 2015 (“Report-1501”) indicates a potential value in the order of US$120 million to US$ 240 Million.
The Company has executed a Share Purchase Agreement (“SPA”) with twelve (12) independent shareholders (“Shareholder-SPA”) representing 45% of the outstanding shares of CPS (“Shares-CPS”), as contemplated under the terms of the “HOT” or “LOI” announced on December 10, 2015.
Upon receiving Regulatory Approval (“Approval-Date-SPA”) and the closing of a private placement (the “MHI-PP#1”), with its provisions described below, the transaction contemplated under the SPA will be as follows:
(a) upon Regulatory Approval, the Shareholders-SPA will initiate and complete MHI-PP#1 and raise between $500,000 and $2,000,000 (“PP#1 Closing”) via private placement units at an anticipated price per Unit of $0.13, each unit consists of one common share plus a three year warrant at $0.20, $0.30 and $ 0.40 respectively on an annual basis over a three year exercise period. The final share price will be determined by the closing price of the shares on the day the shares resume trading less five (5%) percent. The proceeds will be used for general operating expenses and to further the Company’s interest in the Project. None of the arms-length PP#1 participants will become a control person.
There will be a finder’s fee payable by the Company. If the Shareholders-SPA fail to complete MHI-PP#1, the transaction does not proceed and the SPA is cancelled if not mutually amended;
(b) upon Regulatory Approval of the Acquisition, MHI will issue 2.25 million convertible preferred shares (“Pref-A”) to the Shareholders-SPA, in proportion to their respective Shares-CPS, at a par value of C$1.00 per Pref-A share, based on an initial deemed value $5.0 million for the entire Project.
The Pref-A shares will have no voting rights and will be convertible into common shares of MHI on a “One-for-One” basis at any time subsequent to their issuance. The common shares resulting from the conversion of the Pref-A share may be escrowed and released from escrow pursuant to conditions of the escrow agreement requirements of the Stock Exchange.
(c) subsequent to the Approval-Date-SPA, the Company will change its name to MHI Mass-Energy Ltd., the Shareholders-SPA will nominate one sixth of MHI’s board members and will obtain a full NI 51-101 report as an update of the previous Report-1501 by Senergy, or a person or firm acceptable to the Regulatory Authorities (the “51-101upd”) and will at the same time complete an Assignment Agreement (“OAA”) with the Operator, who is well established to operate and manage the field. The Company is in discussion with the remaining shareholders of CPS to conclude a Joint Venture Agreement (“JV-CPS”) with respect to the Project (OPL 236) on a 45%/55% basis with CPS or extend an offer to acquire the balance of 55% to the remaining shareholders of CPS under conditions similar to the Shareholders-SPA agreement.
(d) the 51-101upd report will reflect current economic conditions of the Project and if it confirms the minimum value of the field of the previous Report-1501 to be $120 million, and MHI concurs with the 51-101upd report, MHI will issue a further number of non-voting, convertible preferred shares (“Pref-B”) at a par value of C$1.05 per Pref-B share to the Shareholders-SPA in proportion to their CPS shareholdings referred to in the SPA, in order to complete the Acquisition. The number of Pref-B shares to be issued will be based on a 33% discount of the C$120 million value contemplated in the previous Report-1501.
The Pref-B shares will be non-voting and will only be convertible into common shares of MHI on a “One-for-One” if the Shareholders-SPA’s collective conversion of the Pref-B shares does not trigger an RTO under the Rules of the TSXV and upon prior approval of the TSXV. Such number of MHI common shares issued to the Shareholders-SPA resulting from the conversion of the Pref-A, will be prorated to their respective holdings of Pref-B shares and those common shares may also be escrowed and released pursuant to conditions of an escrow agreement required by the Stock Exchange. After the issuance of the Pref-B shares to the Shareholders-SPA and the Joint venture with CPS is executed, the Shareholders-SPA will have the right to nominate a total of two members to MHI’s Board of Directors consisting of six; and
(e) in the event that Shareholders-SPA fail to secure the minimum funding referred to above or the OAA with the Operator is not entered into, for whatever reason, within two months of the Approval-Date-SPA, MHI will have the right to cancel all arrangements with the Shareholders-SPS and request the return of all shares and the resignation of the board members nominated by the Shareholders.
By obtaining the updated NI 51-101 report and the PSC, the Parties reflected in the SPA its increase value by issuing additional Pref-B shares to the Shareholders-SPA and, subsect to Regulatory Approval, the Parties agreed to also reflect the added value as a consideration to each MHI shareholder of record on the Approval-Date-SPA (“Recorded Shareholder-MHI”), except where they were also Shareholders-SPA, by issuing Warrants to purchase Shares-MHI with a restricted holding period of two years and an exercise price equal to the exercise price of the Warrants being attached to the next private placement subsequent to Approval-Date-SPA. The number of Warrants issued to the Recorded Shareholder-MHI will be the quotient of 33% of the computed value of the recorded MHI shares at the Approval-Date-SPA.
The Company is also pleased to announce that it has acquired a subsidiary “Global Environomic Systems Corp. (“GSC”) from an affiliated company that had changed its business direction. GSC is incorporated under the laws of British Columbia, Canada and has certain rights to a patented waste-to-energy Conversion Technology. GSC will have new board members and its Enviro-X technology will facilitate the Company’s objective to emerge as an energy company for sustainable investment opportunities and demonstrate its environmental, social governance concerns with a patented technology converting bio-mass to energy via a toxic emissions free process. MHI expects the that GSC will be able to secure senior financing for it its first Enviro-X plant in September 2016 in order to start production in the first half of 2017.
The Company seeks Safe Harbor
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 release.
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