TORONTO, Ontario (August 12, 2013) - Mega Uranium Ltd. (TSX:MGA)("Mega" or the "Company") is pleased to announce thatit has entered into a binding term sheet with Toro Energy Limited ("Toro") (ASX:TOE) to sell its LakeMaitland Uranium Project ("Lake Maitland")in Western Australia to Toro for 415 million ordinary shares of Toro (the "Transaction"). Upon completion of theTransaction, Mega will own approximately 28% of the issued and outstandingshares of Toro.
Torois an Australian uranium company listed on the Australian Stock Exchange. Toro's flagship and wholly-owned Wilunauranium project is located 30 km southeast of Wiluna in Central WesternAustralia and approximately 90 km north-west of Lake Maitland. Toro has updatedprefeasibility estimates and the process engineering phase of the definitivefeasibility study complete for mining of two shallow calcrete deposits, LakeWay and Centipede, for which all government environmental approvals have beenreceived.
Highlights of theTransaction
Consolidates quality WesternAustralian uranium assets and expands Mega's uranium interests into an enlargedWiluna project development;Environmental permits forToro's first two deposits at the Wiluna project, Centipede and Lake Way, havealready been granted, which potentially shortens the development time-frame forLake Maitland; Operational synergies potentialacross geologically similar projects; Opportunity for significantcapital savings due to the requirement for only one central processing facilityto treat ore from Lake Maitland and Toro's Wiluna deposits; andPotential further benefitfor Mega as shareholder in the enlarged Toro.StewartTaylor, Mega's President said, "Mega is pleased to partner with Toro on thedevelopment of Wiluna. Given the proximities and similarities of the maindeposits, the integration of Lake Maitland into the broader Wiluna Project isexpected to unlock benefits for both Toro and Mega shareholders."
TheTransaction is conditional upon the receipt of various approvals, including theapproval of Toro shareholders, Mega's Project Partners (as defined below)consenting to and not exercising any pre-emptive rights that they may have inconnection with the Transaction, and other customary closing conditions. TheTransaction has the support of Toro's major shareholder, OZ Minerals Limited,which has a 39% equity interest in Toro, and which has confirmed that, subjectto the independent expert report obtained by Toro indicating that the acquisitionis fair and reasonable and no superior proposal emerging, it intends to vote infavour of the Transaction. On completion of the Transaction, OZ Minerals willhold a 28.5% interest in Toro.
Megaunderstands that following completion of the Transaction, Toro's focus will beto work towards implementation of the already approved Wiluna Project and tocommence studies to optimise the inclusion of Lake Maitland within the overallWiluna Project over time. This will include reviewing optimal mine planning andinvestigating the opportunity to expand the capacity of the Wiluna Projectabove Toro's currently planned 1.3 Mtpa processing capacity.
TheTransaction does not impact upon Mega's previously announced proposed mergerwith Rockgate Capital Corp. (see June 6, 2013 press release), which the partiescontinue to work toward.
KeyTerms of the Transaction
TheTransaction is expected to be effected by Toro's subsidiary, Nova Energy PtyLtd, acquiring 100% of the issued capital of Mega's subsidiary, RedportExploration Pty Ltd ("Redport"). Redport, through its 100% owned subsidiaries,will own the relevant Lake Maitland tenements and associated assets and rightsand at completion will have a surplus cash balance of $1.5 million.Consideration for the Transaction is 415 million fully paid ordinary shares inToro.
Oncompletion of the Transaction, Mega will hold a 28% equity interest in Toro.Toro has agreed to grant Mega rights to appoint two nominees to the Toro boardof directors for so long as Mega maintains at least a 22% interest in Toro.Initially, Mega's Executive Vice President - Corporate Affairs, RichardPatricio, and Executive Vice President - Australia, Richard Homsany, will join theboard of Toro as non-executive directors. Mega has also agreed to a 12-monthescrow of its Toro shares, with customary market exceptions, and to astandstill which limits Mega's capacity to acquire further Toro shares withinthe next 2 years.
ProjectPartners' Position Regarding Lake MaitlandInJune 2009, Mega entered into a series of agreements with JAURD InternationalLake Maitland Project Pty Ltd ("JAURD")and Itochu Minerals & Energy of Australia Pty Ltd ("IMEA") (together the "Project Partners"). Under those agreements, the Project Partnershold an option to acquire a 35% interest in Lake Maitland for approximatelyUS$49 million (of which US$39 million remains payable) which can be exercisedat any time up to a decision to mine on Lake Maitland. If the Project Partnersexercise their option to acquire an interest in Lake Maitland, they will beentitled to various rights over the development of, and offtake from, LakeMaitland and are obliged to contribute financing for their share of costs for thedevelopment of Lake Maitland in order to maintain their respective jointventure interests in Lake Maitland.
Inaddition, the Project Partners hold certain pre-emptive and consent rights thatmay apply to the Transaction.
ConditionsPrecedent to CompletionTheconditions precedent to completion of the Transaction include, but are notlimited to:
Toro shareholder approvalunder ASX LR7.1 and s611 Item 7 of the Corporations Act;Any necessary FIRB approvalrequired by Mega and Toro in relation to the transaction; andThe Project Partnersconsenting to the Transaction and not exercising any pre-emptive rights thatmay apply.TimingItis anticipated that a meeting of Toro shareholders will be held in earlyOctober 2013 at which Toro shareholders will be asked to approve the Transaction.It is expected that completion of the Transaction would occur soon thereafter,subject to the satisfaction or waiver of all conditions precedent tocompletion.
Break-FeesReciprocalbreak fees of $1.0 million are payable in certain circumstances by each of Megaand Toro.
Mega Advisors
DundeeCapital Markets is acting as financial advisor to Mega.
Mega Uranium Ltd.
MegaUranium Ltd. is a Canadian mineral resources company listed on the TSX, with afocus on uranium properties. Mega has a global presence with projects inAustralia at feasibility and pre-feasibility stages, and exploration projectsin Australia, Canada and Cameroon. Currently, Mega is focused on the developmentof two of its Australian projects, Lake Maitland located in Western Australiaand Ben Lomond located in Queensland. Mega has a farm in and joint venture withJAURD and IMEA on the Lake Maitland Project. Further information on Mega can befound on the company's website at www.megauranium.com.
For further information please contact
For Mega Uranium Ltd.
Investor RelationsMega UraniumLtd.Richard PatricioExecutiveVice President, Corporate AffairsT: (416) 643-7630info@megauranium.comwww.megauranium.com
NoteRegarding Forward-Looking information
Thisnews release contains "forward-looking statements" within the meaningof the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" as such term isdefined in applicable Canadian securities laws (together referred to herein as"forward-looking statements"). Except for statements of historical factrelating to Mega or Toro, information contained herein constitutesforward-looking statements. Forward-looking statements are characterized bywords such as "plan," "expect", "budget","target", "project", "intend,""believe", "anticipate", "estimate" and othersimilar words, or statements that certain events or conditions "may"or "will" occur. Forward-looking statements in this news releaseinclude, but are not limited to, statements relating to completion of thecombination of Mega and Toro and the expected timing of completion, statementsregarding the anticipated completion date of a feasibility studies regarding theWiluna project, statements regarding the shareholding of Mega at closing,statements regarding the expected benefits to Mega shareholders of the proposedtransaction. Forward-looking statements are based on the opinions, assumptionsand estimates of management considered reasonable at the date the statementsare made, and are inherently subject to a variety of risks and uncertaintiesand other known and unknown factors that could cause actual events or resultsto differ materially from those projected in the forward-looking statements.These factors include (i) that Mega and Toro will complete the proposedtransaction described herein, (ii) political developments, whether generally orin respect of the mining industry specifically, in Australia not consistent with Mega and Toro'scurrent expectations, (iii) Mega's and Toro's expectations in connection withthe projects discussed herein being met, (iv) the impact of general businessand economic conditions, global liquidity and credit availability on the timingof cash flows and the values of assets and liabilities based on projectedfuture conditions, fluctuating metal prices and currency exchange rates, (v)the value that the Mega will realize from its Toro shareholdings, (vi) changesin project parameters as plans continue to be refined,(vii) the continuedemployment of key Mega and Toro employees, as well as those risk factorsdiscussed or referred to in Mega's annual Management's Discussion and Analysisand Annual Information Form for their respective most recently completed yearend filed with the applicable securities regulatory authorities and availableat www.sedar.com. Although Mega has attempted to identify important factorsthat could cause actual actions, events or results to differ materially fromthose described in forward-looking statements, there may be other factors thatcause actions, events or results not to be anticipated, estimated or intended.
Therecan be no assurance that forward-looking statements will prove to be accurate,as actual results and future events could differ materially from thoseanticipated in such statements. Mega does not undertake any obligation toupdate forward-looking statements if circumstances or management's estimates,assumptions or opinions should change, except as required by applicable law.The reader is cautioned not to place undue reliance on forward-lookingstatements. The forward-looking information contained herein is presented forthe purpose of assisting investors in understanding Mega's expected financialand operational performance and results as at and for the periods ended on thedates presented in their respective plans and objectives and may not beappropriate for other purposes.
Stewart Taylor, Mega's President and Qualifiedperson under NI43-101, is responsible for this release and has verified thecontents disclosed.