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Champion Announces Early Warning Report on Its Fancamp Holdings

Date : 05/18/2012 @ 6:09PM
Source : Marketwired

Champion Announces Early Warning Report on Its Fancamp Holdings

Champion Minerals Inc. (XE:A0LF1C)
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CHAMPION MINERALS INC. (TSX:CHM)(OTCQX:CPMNF)(FRANKFURT:P02) ("Champion") announces the completion of the acquisition by Champion of Fancamp's 17.5% joint venture interest in the Fermont Properties in the Fermont iron ore district in north-eastern Quebec, which was 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.

About Champion Minerals Inc.

Champion Minerals is an iron ore exploration and development company with offices in Montreal and Toronto, and is focused on developing its significant iron ore resources in the provinces of Quebec and Newfoundland and Labrador. The Company's projects include: the Fermont Projects in Quebec; and the Attikamagen Iron Property in Quebec and Labrador. Champion's Fermont Projects, including the flagship Fire Lake North Project, are located in Canada's major iron ore producing district, in close proximity to three producing mines. Champion's team and advisory board includes mining and exploration professionals with substantial iron ore expertise to effectively advance the Fire Lake North Project into production.

Please visit Champion's website at www.championminerals.com. For further information about Champion, please contact Thomas G. Larsen, President and CEO, and Jorge Estepa, Vice-President, at (416) 866-2200, or at the head office at 20 Adelaide Street East, Suite 301, Toronto, Ontario.

The statements made in this news release that are not historical facts are "forward-looking statements" and readers are cautioned that any such statements are not guarantees of future performance, and that actual developments or results, may vary materially from those in these "forward-looking" statements.

This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about the acquisition, private placement, royalty waiver and Champion's intentions with respect to the Fancamp common shares and warrants. Forward-looking information is 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 information, including the risks identified in the companies' annual information forms, management discussion and analysis and other securities regulatory filings by the companies on SEDAR (including under the heading "Risk Factors" therein). There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management of the companies and information available to management as at the date hereof. Each of the companies disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

This press release has been prepared by Champion Minerals Inc. and no regulatory authority has approved or disapproved the information contained herein.

Contacts: Champion Minerals Inc. Thomas G. Larsen President and CEO (416) 866-2200 Champion Minerals Inc. Jorge Estepa Vice-President (416) 866-2200 www.championminerals.com



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