|By Marketwired .||
|August 27, 2013 01:03 PM EDT||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/27/13 -- Terreno Resources Corp. (TSX VENTURE:TNO) ("Terreno" or the "Company") a junior mining exploration and development company listed on the TSX Venture Exchange (the "TSXV") is pleased to announce that it has entered into a memorandum of understanding (the "MOU"), with Dominican Renewables, Inc. ("DRI") with respect to a proposed acquisition by the Company (the "Acquisition") of DRI and financings for both the Company and DRI (the "Offerings" - collectively, including the Acquisition, the "Transaction"). DRI holds interests over certain lands and agreements for the production of biofuels in the Dominican Republic. The Transaction may constitute a Change of Business Transaction of the Corporation as defined in the policies of the TSXV.
The Proposed Acquisition
The MOU contemplates that, the Company will acquire all of the shares in DRI such that DRI will become a wholly-owned subsidiary of the Company. As consideration, the Company will issue to shareholders of DRI, an aggregate of 51,372,364 common shares in the capital of Terreno (2 Terreno shares for every one DRI share held), at a deemed price of $0.05 per common share, for total consideration of approximately $2.56m, without limitation. Common shares of the Company to be issued as consideration for the Acquisition, including common shares issued previously by the Company, may be subject to escrow in accordance with the policies of the TSXV.
John Icke, Chairman of Terreno, commented "We had been aware of DRI prior to our mineral exploration work in the Dominican Republic, having hired Bruce Keith (DRI's CEO) to become the CEO of Terreno. Since being in the country we have become acutely aware of the reliance and prohibitive costs of traditional fuel imports with no current local supply. DRI is uniquely positioned to address this issue in a socially responsible manner through providing a biofuel component blended with traditional fuel products. The success of this transaction brings near term cash flow potential to Terreno with the ability to scale up the operations in the future."
The Transaction allows Terreno to benefit from synergies of running its existing portfolio of mineral exploration projects in Argentina and the Dominican Republic, and running DRI, as Terreno's CEO, Bruce Keith, is also the CEO of DRI. Terreno's intention is to hold its portfolio of mineral exploration properties in Argentina and the Dominican Republic with a view to increasing activity on these projects when market conditions for junior resource exploration improve.
The completion of the Acquisition and the Offering, as such terms defined herein, are subject to the approval of the TSXV and all other necessary regulatory approvals. The completion of the Acquisition is also subject to certain other additional conditions precedent, including, but not limited to: (i) the entering into of a definitive agreement by Terreno and DRI on or before October 31, 2013 (the "Definitive Agreement"); (ii) completion of satisfactory due diligence by each of Terreno and DRI; (iii) the approval of the Acquisition by the TSXV; (iv) approval of each of Terreno's and DRI's respective board of directors; (v) completion of the Offering; (vi) the absence of any material change or change in a material fact which might reasonably be expected to have a material adverse effect on the financial and operational conditions or the assets of each of the parties to the Definitive Agreement; and (viii) certain other conditions typical in a transaction of this nature.
The Transaction may constitute a Change of Business, as defined in the Policies of the TSXV. In addition, as the proposed Transaction is not at arm's length (Mr. Bruce Keith is the CEO of both Terreno and DRI) it may require disinterested shareholder approval.
Further disclosure concerning the Transaction will be provided to shareholders in an Information Circular or in a Filing Statement which may be required by the TSXV and if a Filing Statement is required, it will be prepared and filed in accordance with Policy 5.2 of the TSXV on SEDAR at www.sedar.com no less than 7 business days prior to the closing of the proposed Transaction. A press release will be issued once the Filing Statement has been filed, if and as required pursuant to TSXV policies. Financial information concerning DRI will be made available in a subsequent news release.
About Dominican Renewables
DRI is a private company headquartered in Santo Domingo, Dominican Republic, where, since its Dominican Republic incorporation in 2008, it has been developing a fully integrated biofuel operation. DRI has secured agreements for over 12,000 hectares of farmable land and has made material progress with several off-take arrangements and refinery equipment suppliers to enable it to supply renewable fuels to both large commercial and local enterprises. DRI anticipates initial production in early 2014 with a phased ramp-up to full production planned for 2015, which, pending additional funding, can generate up to 10 million gallons of biodiesel per annum initially, and with an additional 18,000 hectares in the process of being secured, the total capacity is expected to reach over 20 million gallons per year.
DRI's objective is to be a socially responsible producer of biofuels, and the primary alternative for a clean fuel source in the Dominican Republic.
DRI is expected to control its feedstock supply through a well-established out-grower model with local farmers and own and operate its own processing and refining equipment. The Dominican Republic has no local fuel sources and currently imports almost 400 million gallons of diesel per year. With a growing population and industry and several very large industrial consumers coming on line, demand is expected to continue to grow.
To date, approximately $4.2 million has been invested into the DRI.
The shares of DRI are held by Mr. Bruce Keith (40%), Mr. David Luther (12%), and the Dominican Institute for Integral Development ("IDDI") (28%) with small interests held by private investors.
Board of Directors
The Company's current board and management will remain upon completion of the Transaction with the exception of Sheldon Inwentash, Hein Poulus and Philip Williams, who will all resign on completion of the Transaction. In addition, the Company intends on making the following additions to the Board of Directors:
Mr. David Luther, Founder and Director of IDDI
Mr. Luther is presently domiciled in the Dominican Republic where he has worked closely with DRI in building its strategic land position and business model. He, together with IDDI, owns approximately 40% of DRI. IDDI is a major development organization in the Dominican Republic involved all sectors of development. IDDI has a reputation for working closely with the private sector implementing the largest collaborative projects in corporate social investment in Dominican history. Mr. Luther has been a consultant to the World Bank, OAS, UNDP and a number of other national and international organizations and sits on the Boards of eleven non-profit organizations in the Dominican Republic, the US and Haiti, having been co-founder and President of a number of them. He is also the founder of eight businesses in the Dominican Republic with activities in the construction, bio-fuels, crafts, consulting and financial services, has been named to various Presidential Commissions, represents civil society on several government commissions and is a newspaper columnist.
Mr. Stephen Keith, President and CEO, Search Minerals Inc.
Mr. Keith has spent many years in the mining and resource business as both a banker and as an operator/manager of various enterprises. Mr. Keith was most recently a founder and the President and Chief Executive Officer of Rio Verde Minerals Development Corp. (TSX: RVD), a company he took from concept to listing onto the TSX, with over $30 million completed in equity financings. Mr. Keith led Rio Verde until its acquisition by B&A Fertilizers Limited on March 13, 2013. He is on the Board of Directors of Aura Minerals Inc. Mr. Keith has previously held the titles of Vice President, Corporate Development at Plutonic Power Corporation; Director, Investment Banking at Thomas Wiesel Partners; Vice President, Investment Banking at Westwind Partners Mining Group; and Manager, Technical Services with Knight Piesold Consulting. He holds a BSc, Applied Science (Queen's University), an International MBA (York University, Schulich School of Business) and a PEng (Ontario and British Columbia).
Ms. Kathrin Ohle, Director, Tangerine Tango Environmental Attributes Services Inc. ("Tangerine Tango")
Building on 20 years of experience in investing and lending in the corporate world and the closing of debt and (quasi) equity transactions of over $5.5 billion with corporate clients of various sizes and industries, Ms Ohle has been assisting her renewable energy and clean technology clients in fundraising (equity & debt) and business development since 2009.
Kathrin is a senior partner at Tangerine Tango, the financial advisory firm presently providing financial advisory services to DRI. She also runs her own financial advisory firm called twig energy inc. Prior to founding twig energy inc. in 2009, she was a strategic investor with Emera Inc., a financial investor with the Business Development Bank of Canada, and a corporate lender with TD Securities as well as Deutsche Bank.
Upon completion of the transaction, the Company's current CEO, Bruce Keith, will continue to manage the Company, its existing assets and the new DRI assets. Mr. Bruce Keith is presently the CEO of DRI and its principle shareholder, owning approximately 40%.
The MOU also contemplates that Terreno will complete a non-brokered or brokered private placement (the "Offering") of not less than 10,000,000 units at a price of $0.05 per unit (the "Units"). Each Unit will be comprised of one common share and one half of one common share purchase warrant. Each whole warrant shall entitle the holder thereof to purchase an additional common share of Terreno at a price of $0.10 per share for a period of 36 months from closing. Insiders of Terreno are expected to participate in the Offering and it is anticipated that the Offering shall close concurrently with the Acquisition.
The proceeds from the Offering will be used for furthering the development of DRI's biofuel project, including the purchasing of key processing equipment and for general working capital requirements. Additional amounts will be allocated for costs required to complete the Acquisition and for unallocated working capital. There may be circumstances where, for sound business reasons, a reallocation of funds may be necessary in order for the Company to achieve its business objectives. All Units will be subject to a hold period expiring four months and one day after closing of the Transaction.
DRI also intends on completing a private placement to raise gross proceeds of up to $250,000. Further details of DRI's financing will be made available once known.
Sponsorship of the Transaction may be required by the TSXV. The Company is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that the Company will ultimately obtain this exemption. The Company intends to include any additional information regarding sponsorship in a subsequent press release.
Reinstatement to Trading
The common shares of the Corporation will remain halted until the requirements for reinstatement in the TSXV policies are met or the Transaction is terminated.
About Terreno Resources
Terreno, meaning "of the earth" in Spanish, represents the Company's focus on resource opportunity development in South and Central America. In the Dominican Republic, Terreno has the option to acquire the El Carrizal Concession and option agreements on two exploration projects in Argentina; Poposa (formerly referred to as Amarillo) in San Juan, and Socompa in Salta. Terreno's projects boast significant alteration systems and have the potential for copper, gold and silver mineralization. For more information, please visit www.terrenoresources.com.
Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in a management information circular or filing statement which may be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; use of funds; and the business and operations of the Company after the proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Terreno Resources Corp.
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