Prophecy Resource Corporation and Pacific Coast Nickel Corporation announce that further to their announcements on January 18th 2011 and February 17th 2011, they have signed the definitive arrangement agreement to sell Prophecy's Wellgreen PGM Ni Cu and Lynn Lake Nickel projects to PCNC.
Pursuant to the arrangement agreement, the transaction will be implemented by way of a plan of arrangement under the Business Corporations Act (British Columbia). Prior to the arrangement, Prophecy will transfer the assets comprising the Projects, as well as USD 2 million cash, to a newly incorporated subsidiary, PCNC will then acquire 100% of the shares of Spinco in exchange for the issuance of 450,000,000 common shares in the capital of PCNC, of which 225,000,000 PCNC shares will be retained by Prophecy and 225,000,000 PCNC shares will be distributed or reserved for distribution on a pro rata basis to holders of Prophecy shares on a fully diluted basis. Prophecy may also grant up to 500,000 options prior to the effective time of the arrangement.
Upon completion of the arrangement, Prophecy and its shareholders will hold approximately 88.97% of the issued and outstanding shares of PCNC. Following the completion of the Arrangement, Prophecy will change its name to Prophecy Coal Corporation and PCNC will consolidate its share capital on a 10:1 basis and be renamed as Prophecy Platinum Corporation.
The effective date of the arrangement and the PCNC Distribution is expected to be in early May 2011. It is not possible at this time to determine a Prophecy shareholder's exact entitlement to PCNC Shares as a result of the Arrangement. As of the date of this press release, there are 189,669,994 Prophecy shares issued and outstanding and 47,650,658 Prophecy options and warrants issued and outstanding. Assuming those numbers were unchanged on the Effective Date, each Prophecy shareholder would be entitled to 0.9482 of a pre consolidation PCNC Share, and each Prophecy convertible security holders, when exercising their options or warrants, as the case may be would receive one Prophecy share and 0.9482 of a pre consolidation PCNC Share. In the event that more Prophecy shares, options or warrants are issued and outstanding on the Effective Date, the number of PCNC Shares to which a Prophecy shareholder shall be entitled to will be reduced in accordance with their pro rata holdings.
Prophecy and PCNC will each be convening a shareholders meeting to consider and approve the Arrangement and related transactions. It is expected that the shareholder meetings will occur in early May 2011. A joint management information circular containing detailed disclosure regarding the Arrangement and related transactions will be mailed to Prophecy and PCNC shareholders.
Completion of the arrangement is subject to a number of conditions, including the approvals of the shareholders of Prophecy and PCNC, the Supreme Court of British Columbia, and the TSX Venture Exchange, as well as other customary conditions.
