Canada-based company Alloy Capital Corp. has entered into a Share Exchange Agreement dated as of October 16, 2010, with the British Virgin Islands-registered company Lancaster Exploration Limited and its sole shareholder Leo Mining and Exploration Limited (Leominex). The agreement is with respect to a proposed acquisition of all of the issued and outstanding shares of the BVI company from Leominex, for an aggregate purchase price of US$9,926,449.50.
By terms of the Share Exchange Agreement, the Purchase Price shall be satisfied by the issuance of 19,852,899 common shares of Alloy at a deemed price of US$0.50 per Common Share to Leominex after a consolidation of the shares on a 2.5 for one basis. Upon completion of the acquisition, Alloy will change its name to Mkango Resources Ltd.
As a result of the acquisition transaction, BVI company will be a wholly-owned subsidiary of the Resulting Issuer and Leominex will be an Insider of the Resulting Issuer.
The acquisition will constitute a reverse takeover by Lancaster of Alloy as the former shareholder of the BVI company will own up to 49.9% of the outstanding common shares on a fully diluted basis and 62.3% on a non-diluted basis. One of the conditions for completion of the acquisition is the completion of the brokered private placement financing of Alloy for the sale of a minimum of 10,000,000 units in the capital of the company at a minimum price of US$0.50 per unit, for gross proceeds of not less than US$5,000,000. Each Unit will consist of one Common Share and one-half of one common share purchase warrant of Alloy. The net proceeds from the Financing will be used to fund exploration and development activities on Lancaster's Songwe Hill project and for general corporate purposes.
Of the five member board of directors of the Resulting Issuer, two members will be designees of Lancaster, and another two board members shall be joint nominees of Lancaster and Alloy.
The acquisition is not a Non-Arm's Length Qualifying Transaction and as such will not require Shareholder approval.
