Friday, July 15, 2011 – VICTORIA, BC, CANADA – Cancana Resources Corp. (TSXV: CNY) (the “Company” or “Cancana”) announces the renegotiation of its acquisition of Amazon Resources Limited, (“Amazon”).
On November 22, 2010 Cancana announced the acquisition of a 30% interest in Amazon. This acquisition provided for the shareholders of Amazon to have entered into a share exchange agreement, (“SEA”), whereby Cancana had the opportunity to purchase, by way of an option, up to 100% of Amazon on or before March 31, 2011. The SEA required a minimum of 85% participation by the Amazon shareholders. In this initial acquisition 92.54% of the shareholders participated in the SEA. Cancana issued 4,504,255 common shares under escrow provisions to the shareholders of Amazon. The shares were held in trust pending acceptance of the transaction by the TSX Venture Exchange, (“TSXV”).
Prior to the projected closing date of March 31, 2011 Cancana reopened discussions with the board of directors of Amazon. This was for the renegotiation of the terms and conditions for the take-up and acquisition of the balance of shares held by the 92.54% shareholders who participated in the original SEA.
Cancana sought to renegotiate the acquisition value as a result of the general market conditions as well as the value it had managed to procure as a result of its ongoing activities in Brazil. Cancana felt that the overall value of the company had grown relative to when the original transaction value had been contemplated. Therefore Cancana proposed to complete the share exchange for 92.54% of Amazon in exchange for the 4,504,255 shares that were issued for the original 30% acquisition. The originally proposed transaction called for the issuance of approximately 16.5 million shares for the 92.54% acquisition of Amazon. This reduction represents a substantial benefit to the value of this transaction. Given the revised value, if accepted by the shareholders of Amazon, the totality of this acquisition is expected to be completed by way of an Expedited Transaction under the rules of the TSXV. The same shareholder escrow provisions prevail within this revised acquisition and SEA.
The Board of Directors of Amazon, after careful consideration, agreed with the revised valuation subject to the establishment of a Net Smelter Royalty, (“NSR”), so as to provide for some additional deferred compensation to the shareholders of Amazon. The shareholders of Amazon are considering the SEA and overall transaction at this time. The Board of Directors of Amazon anticipate being able to respond to Cancana by July 22, 2011.
Cancana Director, Mr. Andrew Male, states: “I am pleased that the shareholders of Amazon are considering this revised proposal and I am happy that the Amazon Board of Directors were willing to support the revised acquisition and transaction. Cancana has worked very hard over the past six months to establish a strong land package in Brazil for the development and production of manganese mining opportunities that will provide near-term cash flow with a strong step out program for exploration. The ability to also look forward to the commissioning of Amazon’s Parauna diamond and gold processing facility begins to round out the overall objective of Cancana. We are very keen to see operations commence.
In anticipation of the positive outcome from the shareholders of Amazon in regards to the revised SEA, Cancana will be able to define its capital requirements succinctly and begin to move forward with its financing objectives. The company has continued to stay in close contact with its financial advisors as it relates to the modifications of this transaction and it is felt that these revisions are positive and enhance overall shareholder value.
Cancana Resources Corp., formerly Sola Resource Corp., is an exploration stage company with assets in Brazil and Canada, has primarily focused on diamond, manganese and gold resource properties. Recently the Company has been seeking projects that expand its resource base and provide for near term production and revenue. All available resource reports and information on the Company’s properties are located on the Company website.
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Issued on behalf of the Board of Directors of Sola Resource Corp.
Dr. William (Bill) Pfaffenberger CEO and Director