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Message: Creston Moly Announces Business Combination with Tenajon Resources
| May 27, 2009 | ||
| Creston Moly Announces Business Combination with Tenajon Resources | ||
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 27, 2009) - NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES Creston Moly Corp. ("Creston") (TSX VENTURE:CMS) and Tenajon Resources Corp. ("Tenajon") (TSX VENTURE:TJS) have entered into a Letter Agreement to merge, by way of a plan of arrangement or other form of business combination (the "Transaction"). Under the Transaction, Creston will acquire all of the issued and outstanding shares of Tenajon in consideration for the issue of Creston shares on the basis of 0.84 share of Creston for each share of Tenajon. The boards of directors of Creston and Tenajon have unanimously approved the terms of the Transaction. Highlights of the Transaction: (All amounts are in US$ unless otherwise stated.) - Creation of a platform for the combined company to become a leading molybdenum development company via organic growth and acquisition opportunities; - Consolidation of a large reserve and resource base consisting of three projects in favourable geographic locations (Mexico and Canada); - 100% ownership of the Creston Molybdenum Deposit which has a pre-tax NPV8% of US$503 million at $15/lb Moly and $1.75/lb Cu under an owner mining scenario. Direct cash costs are estimated at $5.74/lb of Mo equivalent under an owner mining scenario; - 100% ownership of two Canadian development molybdenum deposits, including the Ajax deposit and the Moly Brook deposit, both of which possess significant 43-101 Resource estimates; - Excellent exploration potential on all three resource projects; - Strengthened management team with extensive development experience; - Upon completion of the transaction, the combined company will have approximately 175 million shares outstanding. "The combination of Creston and Tenajon creates a company that has excellent prospects for internal growth, and the scale of resource base to take advantage of what we believe will be an eventual turn-around in the moly space," said Colin K. Benner, Chairman of Creston. "We are happy to present to our shareholders the opportunity to be a part of a new, stronger, larger moly company that provides exposure to the Creston Project, one of the best undeveloped moly projects in North America," added Bruce McLeod, Chief Executive Officer of Tenajon. A presentation of the business combination is available for viewing at www.crestonmoly.com and www.tenajon.com. Board & Management Following completion of the Transaction, Bruce McLeod will be appointed as President and CEO, Colin K. Benner will continue to serve as Chairman and Wayne Johnstone will continue serving as CFO. Upon completion of the Transaction, Jonathan George will continue with Creston serving as an advisor to the Board. The Board of the Directors of Creston following completion of the Transaction will consist of Colin K. Benner, Bruce McLeod, Richard Godfrey, John McCleery, John Robins and Michael Gunning. Transaction Creston and Tenajon anticipate that the Transaction will be carried out by way of a statutory plan of arrangement whereby Creston will acquire all of the issued shares of Tenajon and Tenajon will become a wholly owned subsidiary of Creston. The Transaction would be subject to certain conditions including: completion of due diligence reviews by each party, the approval of the Supreme Court of BC and the affirmative vote of not less than 66 2/3% of the common shares of Tenajon represented at a special meeting of the shareholders of Tenajon. However, the parties may consider an alternative form of transaction, such as an amalgamation or other form of business combination, as mutually determined by Creston and Tenajon. There is no certainty that the Transaction will be completed as presently contemplated, or at all. Full details of the proposed transaction will be included in the definitive arrangement agreement and Management Information Circular to be prepared and filed with the regulatory authorities and mailed to Tenajon shareholders in accordance with applicable securities laws. Under the terms of the Transaction, each Tenajon shareholder will be entitled to 0.84 share of Creston for each share of Tenajon. Tenajon's outstanding options and warrants will be adjusted in accordance with their terms so that the number of Creston shares to be received upon exercise and the exercise price of the warrants are adjusted proportionately to reflect the exchange ratio described above. Based on the current Tenajon shares outstanding, the Transaction will involve the issuance of approximately 53.2 million Creston shares, which will equate to 30.4% of Creston's post-Transaction shares outstanding. The Transaction is expected to be completed early in the third quarter of 2009 and is subject to certain customary conditions, including receipt of all necessary court and shareholder approvals and dissent rights to the Transaction shall not have been exercised prior to the effective date of the Transaction by holders of Tenajon shares representing in the aggregate 5% or more of outstanding Tenajon shares at such time. It is anticipated that a special meeting of shareholders of Tenajon will be held at a time yet to be determined to approve the Transaction. Creston has engaged Haywood Securities Inc. as its financial advisor and Miller Thomson LLP as its legal advisor in respect of this transaction. Tenajon has engaged Canaccord Capital Corporation as its financial advisor and DuMoulin Black LLP as its legal advisor in respect of this transaction. About Creston Creston owns 100% of the Creston Molybdenum Deposit (Creston Project) located in Sonora, Mexico. An independent Pre-Feasibility Study, prepared by M3 Engineering & Technology Corporation of Tucson, Arizona ("M3"), estimated production, capital and operating cost parameters along with project economics, and considers both owner and contract mining scenarios. Highlights of Creston's Pre-Feasibility Study and Base Case Mine Plan include: (All amounts are in US$ unless otherwise stated.) - A pre-tax Net Present Value ("NPV") at an 8% discount rate of $465.3 million with contract mining and $502.9 million with owner mining ($15/lb Mo and $1.75/lb Cu); - A pre-tax Internal Rate of Return ("IRR") of 28.2% with contract mining and 27.2% with owner mining; - Annual molybdenum and copper production of approximately 20 million pounds and 12 million pounds respectively from processing of 40k tonnes per day (ktpd) of ore; - Direct cash costs of $6.57 per lb of Mo equivalent with contract mining and $5.74 per lb with owner mining; - An estimated initial capital expenditure of $511.6 million utilizing contract mining and $576.2 million with owner mining. The Creston Molybdenum Deposit contains the following mineral reserves and In-pit inferred resources at a 0.037% Mo equivalent(i) cut-off grade: ---------------------------------------------------------------------------
Tonnes Mo lbs Mo Cu lbs Cu
Category (000's) (%) (000's) (%) (000's)
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Proven Reserves 44,736 0.079 78,024 0.053 52,217
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Probable Reserves 101,968 0.076 171,924 0.047 106,614
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Proven and Probable Reserves 146,705 0.077 249,948 0.049 158,831
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In-pit Inferred Resources 8,718 0.065 12,464 0.063 12,158
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(i) Mo equivalent: Mo% + (Cu%/7.5)
1. The mineral resources referred to herein have been estimated in a
NI 43-101 technical report (the "MDA Report") prepared for Creston in
December 2008 by Mine Development Associates ("MDA"). The person
responsible for the resource estimate on behalf of MDA is Michael Gustin,
P.Geo, and a Qualified Person for the purposes of National Instrument
43-101. The MDA Report is available at www.sedar.com.
2. Proven and probable reserves are included in the statement of resources.
Tenajon has a 100% interest in the Moly Brook Molybdenum Property, located 2.5 km from the Hamlet of Grey River on the southern coast of Newfoundland. Tenajon also has a 100% interest in the 1,718 hectare Ajax Molybdenum Property located 13 km north of Alice Arm, BC. The Moly Brook and Ajax Molybdenum Projects contain the following mineral resources at a 0.04% Mo cut-off grade: ---------------------------------------------------------------------------
Tonnes Mo lbs Mo Cu lbs Cu
Project Category (000's) (%) (000's) (%) (000's)
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Moly Brook (1) Indicated 86,781 0.065 124,600 0.034 65,800
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Inferred 31,263 0.056 38,600 0.0272 18,800
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Ajax (2) Indicated 69,000 0.065 98,900 N/A N/A
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Inferred 483,120 0.061 649,800 N/A N/A
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1. The Resource estimate for the Moly Brook Molybdenum Property was
completed by Kirkham Geosystems Ltd under the direction of Garth Kirkham,
an independent qualified person as defined by National Instrument 43-101.
The Moly Brook Report is available at www.sedar.com.
2. The Resource estimate for the Ajax Molybdenum Property was completed
under the direction of Gary Giroux, P.Eng., an independent qualified
person as defined by National Instrument 43-101. The Ajax Report is
available at www.sedar.com.
- 2009 Resource Estimate of Moly Brook Zone includes an Indicated Resource of 86.8 million tonnes grading 0.065% Mo (124.6 million pounds Mo contained) and an Inferred Resource of 31.2 million tonnes grading 0.056% Mo (38.6 million pounds Mo contained) at a 0.04% cut-off grade (NI 43-101 compliant); - 2009 Resource Estimate report outlines Indicated Resources of 120.0 million pounds of molybdenum and Inferred Resources of 32.1 million pounds of molybdenum are contained within a pit shell, which has an estimated strip ratio of 2.03:1, including the potential for a higher grade starter pit with an estimated strip ratio of 1.09:1 hosting Indicated Resources of 43.4 million pounds of molybdenum and Inferred Resources of 4.3 million pounds of molybdenum; - 2009 metallurgical work completed was successful in determining that in bench scale tests rougher stage molybdenum recoveries in excess of 90% can be achieved; - In 2008, a drill program totalling 11,640 metres and a trenching program successfully expanded the size, defined and confirmed the molybdenum mineralization, which projects to surface and is open at strike and at depth; The Resource estimate for the Moly Brook Molybdenum Property was completed by Kirkham Geosystems Ltd under the direction of Garth Kirkham, an independent qualified person as defined by National Instrument 43-101. Ajax Project Highlights - 2008 Mineral Resource Estimate includes an indicated mineral resource of 69.0 million tonnes averaging 0.065% Mo (98.9 million pounds Mo contained) and an inferred resource of 483.120 million tonnes grading 0.061% Mo (649.8 million pounds Mo contained) at a 0.04% cut-off grade (NI 43-101 compliant); - One of North America's largest undeveloped primary molybdenum deposits - the deposit covers a surface area approximately 650m by 600m; - Infrastructure is very good with both tidewater access and hydro electric power situated at Kitsault 16 km to the south; - A 2,639 metre (13 hole) drill program was completed in October 2007 -- the program targeted near surface higher grade mineralized zones within a potential starter pit -- initial results include a 109.49 metre intercept averaging 0.126% Mo; The Resource estimate for the Ajax Molybdenum Property was completed under the direction of Gary Giroux, P.Eng., an independent qualified person as defined by National Instrument 43-101. |
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