Champion Minerals increases Fancamp holdings to 16.46%
Ticker Symbol: C:CHM

Champion Minerals increases Fancamp holdings to 16.46%

Champion Minerals Inc (C:CHM)
Shares Issued 105,214,205
Last Close 5/18/2012 $0.94
Friday May 18 2012 - News Release

Mr. Thomas G. Larsen reports

CHAMPION ANNOUNCES EARLY WARNING REPORT ON ITS FANCAMP HOLDINGS

Champion Minerals Inc. has completed the acquisition of Fancamp Exploration Ltd.'s 17.5-per-cent joint venture interest in the Fermont properties in the Fermont iron ore district in northeastern Quebec, which were not already owned by Champion, effective May 17, 2012, following release from escrow today. The acquisition was paid for by Champion issuing 14,000,000 common shares and 7,000,000 non-transferable warrants to Fancamp. Each warrant entitles Fancamp to purchase one common share of Champion at a price of $3.00 per share at any time between two and a half and three years after the date of issue, subject to acceleration in certain circumstances. The shares and warrants of Champion are subject to a four-month regulatory hold period and to a six-year voluntary restriction on transfer, subject to the consent of Champion. With the acquisition of those shares and together with shares currently held, Fancamp holds 12.59% of the shares of Champion on a non-diluted basis.

As a result of the acquisition, Champion now owns a 100% interest in the Fermont Properties and Champion and Fancamp terminated their joint venture relating to the Fermont Properties. However, Champion continues to retain its right of refusal over Fancamp's interest in the Lamellee Property and Fancamp continues to retain its 50% interest in the 3% royalty on the iron production from the Fermont Properties.

In connection with the acquisition, Fancamp has obtained from Champion a permanent and irrevocable waiver of Champion's right to buy-down one-third of Fancamp's 50% interest in the 3% royalty, which represents a 0.5% royalty interest. For this waiver, Fancamp paid $2.0 million to Champion. As a result, Champion retains its right to buy-down the royalty, from a third party, from 3% to 2.5%.

In connection with the waiver, Champion invested $2,000,000 in Fancamp by acquiring 8,000,000 common shares of Fancamp from treasury at a price of $0.25 per share.

Champion also invested $3,000,000 in Fancamp by acquiring 10,000,000 units of Fancamp at a price of $0.30 per unit. Each unit consists of one common share of Fancamp and one non-transferable warrant to purchase one common share of Fancamp at a price of $0.60 at any time between two and a half and three years after the date hereof, subject to acceleration in certain circumstances. As a result of regulatory requirements, Champion has agreed not to exercise warrants where the shares issuable upon exercise would result in a change of control of Fancamp unless approved by the disinterested shareholders of Fancamp. The shares and warrants of Fancamp are subject to a four-month regulatory hold period and to a six-year voluntary restriction on transfer, subject to the consent of Fancamp. With the acquisition of those shares and the other shares referred to above, Champion holds 16.46% of the shares of Fancamp on a non-diluted basis.

As a result of Champion and Fancamp acquiring securities in the other, Champion and Fancamp have entered into a reciprocal rights agreement governing certain investor rights and obligations as between them.

Champion and Fancamp will each be restricted from transferring securities of the other for a period of six years, after which time transfers will be permitted subject to certain restrictions. Champion and Fancamp will each be restricted from voting in certain circumstances, including not voting against the election of any nominee to the Board of Directors proposed by the other or against any resolutions supported by the Board of Directors of the other, subject to certain exceptions.

Champion and Fancamp will each be entitled to nominate two persons to the Board of Directors of the other so long as Champion holds at least 12,000,000 shares of Fancamp and Fancamp holds at least 10,000,000 shares of Champion.

Effective today, Mr. Paul Ankcorn, one of the nominees of Champion, has been appointed to the Board of Directors of Fancamp, and Mr. Jean Lafleur, one of the nominees of Fancamp, has been appointed to the Board of Directors of Champion. With that appointment, Mr. Ankcorn has resigned from the Board of Directors of Champion but joins its Advisory Board. The remaining nominees of Champion and Fancamp will be nominated for election to the Board of Directors of the other at their respective next annual meetings of shareholders.

The boards of directors of Fancamp and Champion have each unanimously determined that the proposed transaction is fair and in the best interest of their respective companies. Raymond James Ltd, financial advisor to Fancamp and its board of directors, for this transaction has provided an opinion to the effect that the consideration offered to Fancamp shareholders is fair, from a financial point of view, to Fancamp shareholders. Primary Capital Inc. acted as financial advisor to Champion and its board of directors for these transactions.

For past services rendered, Fancamp has issued 250,000 common shares at a price of $0.30 per share to Raymond James Ltd. as part of its compensation. The shares are subject to a four-month regulatory hold period.

Early Warning

Champion has acquired the Fancamp common shares and warrants in these transactions for investment and has no present intention of acquiring additional securities of Fancamp. Depending upon its evaluation of the business, prospects and financial condition of Fancamp, the market for Fancamp's securities, general economic and tax conditions and other factors, Champion may acquire more or sell some or all of its securities of Fancamp, subject to the limitations on transfer and exercise set forth above. Following these transactions, Champion holds 18,000,000 common shares of Fancamp, representing approximately 16.46% of the issued and outstanding common shares of Fancamp as well as warrants exercisable into 10,000,000 common shares of Fancamp, which, if exercised, would represent approximately 8.38% of the issued and outstanding common shares of Fancamp. Further details regarding the early warning report may be obtained from the Early Warning Report filed in respect of these transactions under Fancamp's profile on www.sedar.com.

We seek Safe Harbor.

© 2012 Canjex Publishing Ltd.