Benz Capital Corp. Announces Agreement for Qualifying Transaction

Benz Capital Corp. Announces Agreement for Qualifying Transaction

December 5, 2012 – Vancouver, British Columbia (TSX-V: BZ).  Benz Capital Corp. (“Benz” or the “Company”), a capital pool company, is pleased to announce that it has entered into an option purchase and assignment agreement dated November 30, 2012 (the “Purchase Agreement”) with Avaron Mining Corp. (“Avaron”) and Avino Silver & Gold Mines Ltd. (“Avino”). Pursuant to the Purchase Agreement, Benz will acquire, subject to the approval of the TSX Venture Exchange (the “Exchange”), all of Avaron’s interest in an Option Agreement between Avaron and Avino pursuant to whichAvaron has the option (the “Option”) to acquire from Avino up to an undivided 100% interest in and to certain mineral mining leases in the Yukon Territory known collectively as the Eagle Property.

 

Benz is a capital pool company and the acquisition of the Option (the “Option Purchase”) is intended to constitute the Company’s Qualifying Transaction under Policy 2.4 of the Exchange. Upon completion of the Option Purchase, Benz expects to be listed as a Tier 2 Mining Issuer on the Exchange.

 

Avaron is a private junior mining company incorporated under the laws of British Columbia.  Other than Carlos Escribano, the Company’s Chief Financial Officer and director, each of the directors and officers of Benz is also a director and officer of Avaron and collectively they control more than 50% of Avaron’s issued and outstanding shares. As a result, the Option Purchase constitutes a related party transaction pursuant to the policies of the Exchange and Multilateral Instrument 61-101 and is therefore required to be approved by the shareholders of Benz.

 

Avino is a British Columbia mining exploration company listed on the Exchange.

 

Purchase Price

 

Pursuant to the terms of the Purchase Agreement, Benz will pay to Avaron a cash payment of $25,000 and issue 400,000 of its common shares at the time of closing of the Option Purchase (the “Closing”). Additionally, Benz will also issue 50,000 common shares to Avino as consideration for Avino’s consent to the Option Purchase, as required under the terms of the Option Agreement.

Completion of the Option Purchase is subject to a number of conditions including, but not limited to receipt of all required approvals, including Exchange and shareholder approval and completion of the financing

Terms of Option

 

Upon completion of the Option Purchase, the terms of the Option Agreement will allow Benz to exercise the Option to acquire a 75% interest in the Eagle Property by making cash payments to Avino in an aggregate amount of $350,000, issuing a total of 500,000 common shares and either completing drilling on a total of 35,000 metres in depth or incurring cumulative exploration expenditures of $7,100,000 on the Eagle Property all over a five year period. Upon acquisition of a 75% interest, Benz will have the option to acquire an additional 25% interest in the Eagle Property or form a joint venture with Avinofor the further exploration and development of the Eagle Property. Benz may exercise the additional option by either determining to put the Eagle Property into commercial production within three years of the exercise of the 75% interest and paying advance royalty payments to Avino in the amount of $1,000,000 or, alternatively, by making further cash payments to Avino in the amount of $200,000, issuing an additional 500,000 common shares and drilling an additional 10,000 metres or incurring exploration expenditures of $2,000,000 over a two year period following the exercise of the 75% interest.

 

Eagle Property

 

The Eagle Property is comprised of 14 quartz mining leases granted under the Quartz Mining Act (Yukon) and is located in the Mayo District in the Yukon Territory. Since discovery of the Eagle vein in 1920, the Eagle Property has undergone sporadic surface exploration including two phases of core drilling. There has been no underground development or production. A 2009 work program identified strong zinc-lead-silver-gold-indium mineralization hosted in the Eagle vein fault.

 

The Eagle Vein has displayed a consistent and predictable structure. High-grade intercepts in widely-spaced drilling indicate the presence of “ore shoots” requiring additional drilling to define. Results included Hole D09EE-02 which intersected three vein structures within a 21.0 metre true width zone assaying 47.1g/t Ag, 0.38 % Pb, 3.85% Zn and 37.7 g/t In. Hole DDH E64-23, drilled in 1964, returned a reported 7,624.9 g/t Ag, 1.2% Pb and 1.5% Zn over 0.10 metres true width.

 

Drilling has also produced significant gold assays that reflect distal zoning of the gold mineralization distal to the principal silver-rich galena veins of the Keno Hill District.

 

Concurrent Financing

 

Concurrently with the closing of the Option Purchase, Benz will complete, on a brokered and/or non-brokered basis, a private placement comprised of units (each, a “Unit”) at a price of $0.25 per Unit for gross proceeds of up to $250,000 (the “Concurrent Financing”).  Each Unit shall consist of one common share in the capital of the Company (each a “Share”) and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant shall entitle the holder to purchase one common share in the capital of the Company (a “Warrant Share”) at a price of $0.35 per Warrant Share for a period of 24 months following the Closing.

In connection with the Concurrent Financing, the Company may pay agent’s commissions and/or finder’s fees in cash or securities in accordance with the policies of the Exchange.

 

The proceeds from the Concurrent Financing will be used by Benz to finance the recommended work program on the Eagle Property and for general working capital. All securities issued pursuant to the Concurrent Financing will be subject to a four month hold period from the date of issue.

 

Management of Resulting Issuer

 

The current directors of the Company will all remain as directors of the Company following completion of the Option Purchase. In addition, Benz proposes to appoint William Macdonald as a director of the Company effective at Closing.

 

Mr. Macdonald is a solicitor and a founder and principal of Macdonald Tuskey, Corporate and Securities Lawyers, a boutique securities and corporate finance firm located in Vancouver, British Columbia established in April 2008. Prior thereto, from February 1998 to April 2008, Mr. Macdonald was a partner with Clark Wilson LLP and a member of the firm’s Corporate Finance / Securities Practice Group. Since May 2008 Mr. Macdonald has also been the President and a director of Blackbird Energy Inc., an oil and gas company listed on the Exchange and since April 2008, a director of First Americas Gold Corporation, an exploration mining issuer listed on the Exchange.  Mr. Macdonald is also a director of Faith Spring Venture Inc. and Black Springs Capital Corp., each a capital pool company listed on the Exchange.  Mr. Macdonald has been a member of the Law Society of British Columbia since February 1998 and a member of the New York State Bar since February 2002. Mr. Macdonald obtained his Bachelor of Law degree from the University of Western Ontario in 1997 and his Bachelor of Arts degree from Simon Fraser University in 1993.

 

Sponsorship

 

Sponsorship of a Qualifying Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies.  Benz intends to apply for an exemption from sponsorship requirements, however, there is no assurance that it will be able to obtain this exemption.

Trading Halt

In accordance with Exchange policies, the Company’s common shares are currently halted from trading and will remain so until the documentation required by the Exchange for the proposed Qualifying Transaction can be provided to the Exchange and may remain halted until completion of the proposed Qualifying Transaction.

About the Company

The Company is designated as a Capital Pool Company by the Exchange.The Company has not commenced commercial operations and has no assets other than cash. The only business of the Company is the identification and evaluation of assets or businesses with a view to completing a “Qualifying Transaction” in accordance with Exchange Policy 2.4 – Capital Pool Companies.

Technical aspects of this news release have been reviewed and approved by Robert Stroshein, P.Eng., a qualified person within the meaning of National Instrument 43-101.

 

For further information, please contact Miloje Vicentijevic, President and Chief Executive Officer at:

 

Suite 900, 570 Granville Street

Vancouver, BC V6C 3P1

Telephone: 604.682.3701 #242

Facsimile: 604.682.3600

Email: info@benzmining.com

This news release contains statements about the Company’s expectations regarding the completion of the Option Purchase that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties.  Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them as actual results may differ materially from the forward-looking statements.  Factors that could cause the actual results to differ materially from those in forward-looking statements include failure to complete the Option Purchase.  The forward-looking statements contained in this news release are made as of the date hereof, and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, except as required by law.

This news release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any “U.S Person” (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “1933 Act”)) of any equity or other securities of the Company. The securities of the Company have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

 

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

 

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the accuracy or adequacy of this release.