The LOI sets out a proposal by Pan American to acquire 100% of the issued and outstanding common shares of Pacific Potash (the “Transaction”) which will constitute a “major acquisition” for Pan American under the policies of the Canadian National Stock Exchange (the “CNSX”).
Pan American Fertilizer (CNSX:PAF) Announces Letter of Intent with Pacific Potash (TSX.V:PP)
1. CANADA
601-570 Granville St. Vancouver,
B.C. Canada V6C 3P1
Tel: +1-604-638-3480
Fax: +1-604-638-3479
ARGENTINA
Av. del Libertador 2442,
Piso 4° (B1636DSR) Olivos,
Buenos Aires,
República Argentina
Tel: +54-11-4711-8253
Fax: +54-11-4711-8201
Email: info@PAFertilizer.com
Web: www.PAFertilizer.com
Pan American Fertilizer Announces (CNSX: PAF) Letter of Intent with Pacific Potash (TSX-V: PP)
VANCOUVER, BRITISH COLUMBIA, August 14, 2012 – Pan American Fertilizer Corp., (CNSX: PAF) (“Pan
American” or the “Company”) is pleased to announce that it has entered into a letter of intent (the “LOI”)
with Pacific Potash Corporation (TSX-V: PP; OTCQX: PPOTF; FSE: P9P) (“Pacific Potash”). The LOI sets out a
proposal by Pan American to acquire 100% of the issued and outstanding common shares of Pacific Potash
(the “Transaction”) which will constitute a “major acquisition” for Pan American under the policies of the
Canadian National Stock Exchange (the “CNSX”).
Pacific Potash, a company listed on the TSX Venture Exchange (the “TSXV”), is engaged in the exploration
and development of the Provost Potash Property and the surrounding potash claims targeting the Prairie
Evaporite Formation. Pacific Potash also has an option to acquire up to an 80% interest in Western Potash
Corporation’s (TSX: WPX) Amazonas Basin claims in Brazil.
Mr. Balbir Johal of Pacific Potash stated “We are very pleased with the proposed transaction as it provides our
shareholders with a meaningful ownership in a stronger combined fertilizer-focused company. We believe this
Transaction to be mutually beneficial to both parties and strategically positions the new company well for
future value creation.”
His views were echoed by Mr. Randy Wright, President and CEO of Pan American who stated “Pan American
considers the combination of the assets held by Pacific Potash and its subsidiaries to be consistent with Pan
American’s mission to bring its shareholders quality projects within the fertilizer industry. We look forward to
building an exceptional company by expanding and diversifying our interest in the growing fertilizer market,
which in turn will result in meaningful value creation for our shareholders”
At closing of the Transaction (the “Closing Date”), Pan American will issue to the shareholders of Pacific
Potash, on a pro rata basis, that number of common shares of Pan American such that, prior to the
completion of the Concurrent Financing (as defined below) and on an undiluted basis, current shareholders
of Pan American will hold 62.5% of the issued and outstanding common shares of Pan American and the
former shareholders of Pacific Potash will hold 37.5% of the issued and outstanding common shares of Pan
American.
In connection with the Transaction, Pan American intends to complete a non-brokered private placement
(the “Concurrent Financing”), by way of subscription receipts (each a “Subscription Receipt”) at a price of
$0.40 per Subscription Receipt for minimum gross proceeds of $2,000,000 and maximum gross proceeds of
$5,000,000. Each Subscription Receipt will be converted into units (the “Units”) upon completion of the
Transaction at no additional consideration. Each Unit will be comprised of one common share of Pan
American and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each
Error! Document Variable not defined.
2. Pan American Fertilizer Corporation
Warrant will entitle the holder to purchase one common share of Pan American at a price of $0.60 for a
period of two years from the Closing Date. If the volume weighted average trading price of Pan American’s
common shares on the TSXV or CNSX, as applicable, exceeds $1.00 for a period of 20 consecutive trading
days, Pan American may, within five days after such an event, provide notice to the Warrant holders of early
expiry and thereafter, the Warrants will expire on the date which is 30 days after the date of such notice. The
Concurrent Financing will be completed by way of a private placement, in reliance on applicable
prospectus exemptions pursuant to National Instrument 45-106. Pan American will pay afinder’s fee in cash,
securities or a combination of both, up to the maximum amount permitted by the TSXV or CNSX, as
applicable.
Pan American intends to use the proceeds of the Concurrent Financing to fund the costs of the Transaction
and to fund the general working capital expenses of the resulting issuer.
It is the intention of Pan American and Pacific Potash to apply for the listing of Pan American’s common
shares on the TSXV concurrently with the completion of the Transaction.
The completion of the Transaction is subject to a number of conditions, including, but not limited to, the
execution of a definitive agreement, completion of satisfactory due diligence, approval of the Transaction by
the board of directors and, if applicable, shareholders of each of Pan American and Pacific Potash, the
completion of the Concurrent Financing for minimum gross proceeds of $2,000,000, and the approval of the
TSXV and the CNSX. There can be no assurance that the Transaction will be completed as proposed, or at all.
Bridge Loan
Pan American is currently in the process of negotiating a loan agreement (the “Loan Agreement”) with an
arm’s length lender (the “Lender”), in the principal amount of CDN$375,000, bearing interest at a rate of 12%
per annum, accrued and payable at the end of the term which is expected to be 12 months. Upon the
advancement of funds from the Lender to Pan American, Pan American will issue to the Lender 50,000
common shares as partial consideration under the Loan Agreement.
About Pan American Fertilizer Corp.
Pan American is a Canadian company dedicated to providing fertilizer to a growing global market. The
company is focused on the extraction of a specific type of fertilizer called calcium sulphate (also referred to
as “Agricultural Gypsum”). To ensure long term development and increase shareholder value, Pan
American currently plans to significantly expand its current operational objectives while expanding its asset
base by acquiring additional calcium sulphate and other fertilizer related assets.
When used as a fertilizer and as a soil remediator, calcium sulphate is a soft sulfate mineral composed of
calcium sulfate dihydrate which is extremely rich in sulphur and calcium. When dissolved in water, the
mineral becomes calcium and sulphate sulphur ions, both of which are required nutrients for plants. Calcium
sulphate plays a vital role in establishing and maintaining good chemical balance in soil, water and plants,
specifically with healthy root development. Ultimately, calcium sulphate increases overall crop quality and
yields.
About Pacific Potash Corporation
Pacific Potash Corporation trades on the TSX Venture Exchange under the symbol: PP, as well on the OTCQX
under the symbol: PPOTF and on the Frankfurt Stock Exchange under P9P. Pacific Potash is engaged in the
exploration and development of the Provost Potash Property and the surrounding potash claims targeting
the prolific Prairie Evaporite Formation, which is host to multiple conventional and solution potash mines. The
3. Pan American Fertilizer Corporation
Company also has an option to acquire an 80% interest in Western Potash Corporation’s (TSX: WPX)
Amazonas Basin claims.
On behalf of the board of directors of Pan American Fertilizer Corp.
“Randy Wright”
Randy Wright
President and CEO
FOR MORE INFORMATION, PLEASE CONTACT:
Jeff French
Investor Relations
jfrench@pafertilizer.com
(604)638-3480
The CNSX does not accept responsibility for the adequacy or accuracy of this release.
Forward Looking Statements
Statements contained in this news release that are not historical facts constitute “forward-looking statements” or “forward-looking information” within the
meaning of applicable securities laws and are based on expectations, estimates and projections as of the date of this release. The words “is expected” or
“estimates” or variations of such words and phrases or statements that certain actions, events or results “may” or “could” occur and similar expressions
identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by Pan American as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and
contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Many of
these factors can affect Pan American’s actual results and could cause actual results to differ materially from those expressed or implied in any forward
looking statements made by, or on behalf of, Pan American. There can be no assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose
of providing information about management’s expectations and plans relating to the future.