Friday, July 29th, 2011 - VICTORIA, BC, CANADA - Cancana Resources Corp. (TSXV: CNY) (the "Company" or "Cancana") announces that it has successfully renegotiated the acquisition of Amazon Resources Limited, ("Amazon").
Following the renegotiations that Cancana has held with the Board of Directors of Amazon, the Amazon shareholders who originally accepted the Share Exchange Agreement ("SEA") proposed on November 22, 2010, have now agreed to the revised terms of the acquisition.
On July 15th, 2011 Cancana announced that it had been in discussions for some time with the Board of Directors and shareholders of Amazon with respect to a renegotiation of the original SEA. As originally proposed, Cancana would have acquired 30% of Amazon in exchange for 4,504,255 common Cancana shares. The SEA also included an Option to acquire the balance of Amazon, but required that a minimum of 85% of the shares voted by Amazon shareholders accepted the SEA. The result was that shareholders representing 92.54% of the common shares of Amazon agreed to the originally contemplated transaction. The original transaction, if Cancana had agreed to exercise its Option to acquire the remaining 62.54%, would have required that Cancana issue approximately a further 9,389,880 common shares, for a total share issuance of approximately 13,894,135 common shares of Cancana.
As previously disclosed Cancana reopened negotiations for this transaction prior to the projected closing date of March 31, 2011 for the initial 30% acquisition of Amazon. Cancana proposed a revision to the SEA for 85.88% of the common shares of Amazon in exchange for 4,444,798 Cancana shares. Cancana also agreed to the establishment of a Net Smelter Royalty, ("NSR"), so as to provide for some additional deferred consideration to the shareholders of Amazon. The amount of the NSR is a total of 3%.
This reduction in the number of Cancana common shares issued for this transaction represents a substantial savings and benefit to the shareholders of Cancana as well as providing for much less dilution of the Company's share capital. This reduced share issuance combined with the agreed terms for escrow release over a three-year period by the shareholders of Amazon demonstrate the level of commitment the Board of Cancana have to preserving shareholder value.
As a result of the reduction in value for the acquisition of Amazon, Cancana intends to complete the acquisition of the 85.88% of Amazon as an Expedited Transaction under the rules of the TSX Venture Exchange, (“TSXV”) as quickly as possible. Results of the TSXV submission will be provided when available.
Cancana Director & CFO, Mr. Andrew Male, states: "We are very pleased that the shareholders of Amazon have agreed to this revised valuation and acquisition proposal. While it represents a substantial reduction in the number of shares that Amazon shareholders will receive it does preserve the integrity of Cancana's capital structure as we embark on our next phase which is to secure sufficient capital to commission the Amazon production facility at Parauna in Brazil, complete a drilling program on our Dash project in British Columbia as well as work towards establishing our permitting and in turn mining operations for our manganese bearing claims in Rondonia Brazil. With the help and expertise of Amazon director, Mr. Christopher Morgan, we are confident that we will be able to establish viable operations in Brazil."
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 Cancana Resources Corp.
Dr. William (Bill) Pfaffenberger CEO and Director