Ridgemont to acquire Evolving Gold asset as QT

2009-09-11 11:08 ET - News Release

See News Release (C-RDG) Ridgemont Capital Corp

Mr. Thomas Doyle of Ridgemont reports

RIDGEMONT CAPITAL CORP. ANNOUNCES QUALIFYING TRANSACTION

Ridgemont Capital Corp. has entered into a non-binding letter of intent (LOI) dated Sept. 10, 2009, with Evolving Gold Corp., whereby Ridgemont can acquire up to 70 per cent of Evolving's 100-per-cent interest in the Kiyuk gold property in southern Nunavut, Canada. The transaction is intended to be Ridgemont's qualifying transaction, as that term is defined in TSX Venture Exchange Policy 2.4, concerning capital pool companies. To date, Ridgemont has been a capital pool company with the business of indentifying a qualifying transaction.

The transaction will be carried out by parties dealing at arm's length to one another and therefore will not be a non-arm's-length qualifying transaction, as such term is defined in exchange Policy 2.4. Ridgemont does not expect that approval of its shareholders will be required for the transaction.

Upon completion of the transaction, Ridgemont expects that it will be classified as a mining issuer under the policies of the exchange, and will be engaged in the exploration and development of prospective gold properties, including the project.

Terms of the transaction

Under the terms of the LOI, Ridgemont has agreed to acquire from Evolving up to 70 per cent of Evolving's right, title and interest in the project, as further described in the following paragraphs. As consideration for the transaction, Ridgemont is required to:

1. Assume Evolving's obligation to make a cumulative series of cash payments totalling $350,000 to the underlying vendor of the project (inclusive of $50,000 previously paid by Evolving to the underlying vendor);
2. Issue to Evolving 250,000 common shares of Ridgemont upon the execution of a definitive agreement in respect of the transaction, plus 250,000 common shares on each of the next five anniversaries of the date of the definitive agreement, for a total of 1.5 million common shares of Ridgemont;
3. Spend $5-million (the first earn-in amount) prior to the third anniversary of the date of the definitive agreement, with a minimum expenditure of $1-million per year (inclusive of expenditures carried forward from previous years as applicable), to earn 50 per cent of Evolving's interest in the project;
4. Spend an additional $5-million prior to the fifth anniversary of the date of the definitive agreement to earn an additional 20 per cent of Evolving's interest in the project;
5. Reimburse Evolving for all exploration expenditures incurred prior to the date of the definitive agreement, which reimbursement will be counted toward the first earn-in amount.

In addition, Evolving is required to maintain its obligation to issue 250,000 common shares of Evolving to the underlying vendor of the project over five years.

Ridgemont, in consultation with Evolving, will be responsible for establishing the exploration program and budget for the project, and Evolving will be responsible for managing the conduct of the exploration program. At any time after the completion of the first year of the exploration program, Ridgemont may assume management of the exploration program by providing at least 90 days written notice of such intent to Evolving.

For the first year of exploration work, Ridgemont will pay to Evolving an amount equal to 7 per cent of the first $2-million of expenditures, plus 5 per cent of any expenditures above $2-million, as payment for Evolving's management of the exploration program during such period.

The transaction is subject to a 2.0-per-cent net smelter return royalty (NSR), which was previously granted to the underlying vendor of the project. Ridgemont and Evolving may, on mutual agreement, buy out the NSR for $4-million (U.S.), with the amount of each of their contributions to such payment to be determined on a prorated basis.

For so long as the definitive agreement is effective and Evolving is in compliance with its obligations thereunder, Evolving will have the right to participate in any future financings by Ridgemont for up to 9 per cent of such future financings, excluding any financings that are completed in connection with the closing of the transaction.

In conjunction with the completion of the transaction, a finder's fee will be payable to Axemen Resource Capital in accordance with the policies of the exchange.

Conditions of closing

Completion of the transaction will be subject to certain conditions, including:

1. Evolving delivering to Ridgemont a report that is compliant with the terms and provisions of National Instrument 43-101, standards of disclosure for mineral projects within Canada, recommending that a work program of at least $500,000 be undertaken on the project;
2. Ridgemont and Evolving obtaining the consent of any parties from which consent to the consummation of the transaction is required, including the exchange and other applicable regulatory authorities, and the shareholders of Ridgemont, if required;
3. Ridgemont and Evolving entering into the definitive agreement within the later of:
   • Thirty days of the date of execution of the LOI;
   • Fifteen days after the delivery of the report;
4. Ridgemont completing a financing for gross proceeds of at least $2-million at or prior to the closing of the transaction;
5. Ridgemont appointing Dr. Quinton Hennigh, who is a qualified person, as such term is defined in NI 43-101, to the board of directors of Ridgemont at the closing of the transaction.

Private Placement

Concurrent with the closing of the transaction, Ridgemont plans to complete a private placement of a minimum of $2-million and a maximum of $3-million by way of the sale of up to:

1. Twelve million units at 15 cents per unit, each unit consisting of one share and one share purchase warrant, with each share purchase warrant entitling the holder to purchase an additional share at 50 cents per share for two years;
2. Six million flow-through units at 20 cents per unit, each flow-through unit consisting of one flow-through share and one-half of one flow-through share purchase warrant, with each full flow-through share purchase warrant entitling the holder to purchase an additional flow-through share at 50 cents per share for two years.

A finder's fee will be payable on a portion of the private placement.

Sponsorship

Ridgemont will be relying on an exemption from the sponsorship requirements set out in exchange Policy 2.2.

The project

The project is situated in southwestern Nunavut. Its centre lies at approximately 60 degrees 2,445 minutes north and 100 degrees 2,000 minutes west, and it covers a total of approximately 700 square kilometres. The project comprises an extensive series of gold showings hosted by sedimentary rocks belonging to the Hurwitz and Kiyuk groups.

The first known gold exploration in the area was conducted by Comaplex Minerals in the early 1990s. Newmont Mining Corp. commenced exploration in the area in 2006. Exploration included an airborne magnetic survey and induced polarization (IP) surveys to identify areas believed to have sulphides associated with mineralization. In the spring of 2008, Newmont drilled 12 holes. Based on the results of the drill program, Newmont increased its landholdings to approximately 200 square kilometres. Due to cuts in exploration budgets, Newmont decided to cease further exploration in early 2009. Evolving optioned the project in July, 2009. Evolving is presently conducting fieldwork including additional sampling, mapping, resampling of Newmont core, and IP surveys. Evolving is anticipating that it will spend $250,000 on the IP surveys that it is currently conducting. Evolving has spent approximately $164,000 on the project to date, which expenditures have come from Evolving's working capital.

Changes of officers and directors

Concurrent with the execution of the LOI, Fred Leigh has been appointed to the board of directors of Ridgemont. Mr. Leigh has been involved in the junior resource sector for more than 25 years and has played a significant role as a founder, director or investor in many public companies. He is also the founder and president of Siwash Holdings Ltd., a privately held company that, for over 17 years, has invested in early stage opportunities in the resource sector. Siwash was an early investor in companies including Wheaton River Minerals, Hathor Exploration and Blue Pearl Mining. Upon completion of the transaction, Mr. Leigh will be appointed president and chief executive officer of Ridgemont.

Upon completion of the transaction, Dr. Hennigh, PhD, PGeo, will be appointed to the board of directors of Ridgemont. Dr. Hennigh is the president, chief geologist and a director of Evolving. Prior to joining Evolving, Dr. Hennigh served as senior research geologist with Newmont. He has worked throughout North America, as well as in Europe, Australia, Asia and South America with Newmont, Newcrest Mining and Homestake Mining. He has spent years developing regional concepts for the exploration of buried gold deposits, particularly in Nevada.

Ridgemont is negotiating additional appointments to its board and management team to be effective on the closing of the transaction. On the closing of the transaction, the current directors and officers intend to resign and transfer up to seven million founders' shares to incoming officers, directors and promoters.

Name change

On completion of the transaction, Ridgemont intends to change its name to Ridgemont Gold Corp.

Completion of the transaction is subject to a number of conditions including, but not limited to, exchange acceptance and, if applicable pursuant to exchange requirements, 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.

We seek Safe Harbor.