Compliance Energy Corporation ('the Company') has announced that it has signed a binding memorandum of understanding for the sale of 100% of its interest in the Basin Coal Mine located near Princeton, BC for consideration of cash and shares totaling Cdn$8M.
Under the terms of the MOU, NWPC Pty Ltd, a private Australian company, has agreed to purchase the Company's interest in the mining agreement under which the Company has the right to mine coal at the Basin Coal Mine as well as all remaining assets of the Mine, including the 400,000 tpa wash plant, for $4M in cash and $4M in shares of a public Australian Company.
On signing the MOU, NWPC made a nonrefundable payment of $75,000 which entitles them to an exclusive period of six weeks to conduct due diligence. NWPC may extend this due diligence period for a further six weeks by making an additional nonrefundable payment of $75,000.
Once the due diligence period is completed, NWPC are required to make a purchase price installment of $125,000. This Purchase Installment is nonrefundable if the transaction contemplated by this MOU does not close by an agreed date.
The closing of the transaction contemplated by this MOU may be extended to 31 December 2008 by NWPC making an additional delay payment of $200,000. On closing, NWPC will pay the balance of the $4M purchase price less the Purchase Installment if applicable and the $4M in shares of a public Australian Company.
The shares of the public Australian Company, which may be subject to escrow, will be issued equally on the following milestone dates: 25% upon closing, 25% upon completion of a feasibility study; 25% upon commencement of production; and 25% upon production of 500,000t of saleable coal from the Basin Coal Mine.
Completion of the transaction contemplated by this MOU will allow the company to focus its activities on the Raven and Bear coal deposits on Vancouver Island. Discussions on a potential JV to develop the Vancouver Island properties are progressing well, and the Company anticipates that it will complete definitive agreements by the end of August 2008.
