Calgary, Alberta (FSCwire) - BACANORA MINERALS LTD. ("Bacanora" or the "Company") (TSX-V: BCN and AIM: BCN), the Canadian and London listed lithium exploration and development company, announces that it has filed a statement of claim with the Court of Queen's Bench (Alberta) seeking to void ab initio, a 3% gross over-riding royalty held by the Estate of Colin Orr-Ewing over certain of the Company's lithium assets in Sonora, Mexico (the "Royalty"). In addition, ahead of the completion of the Feasibility Study for the Sonora Lithium Project in Q4 2017 and Bacanora's transition from an exploration to a development company, the Company announces amendments to the employment arrangements of certain members of the executive management team.
The Royalty
The basis of the Company's claim is that the Royalty was originally granted based on the misrepresentation of Colin Orr-Ewing that he held a pre-existing royalty granted prior to the acquisition of the lithium properties by the Company. The Board of Directors of Bacanora has completed a review of the historical background and concluded that no such pre-existing royalty existed and accordingly there was no basis for the grant of the royalty by the Company. Further updates on the progress of the claim will be provided to the market as and when it is appropriate to do so.
Executive Employment Arrangements
With the Feasibility Study for the Sonora Lithium Project nearing completion, Bacanora is set to transition from an exploration to a development company. To reflect this change, the Company's independent directors have reviewed the current executive employment arrangements and agreed to amend the employment and consultancy arrangements respectively between the Company and each of Peter Secker, Chief Executive Officer, and Fernan Pty Ltd, which provides the services of Mark Hohnen, Executive Chairman.
In line with this, Peter Secker has been issued with a new English law governed service contract. This is on broadly similar terms to the existing Canadian law governed service contract which has been terminated, save for changes required to meet English law and practice requirements and for the following material changes:
- the removal of performance bonus provisions of up to £250,000;
- the removal of a £250,000 change of control payment;
- an increase of £50,000 in annual salary;
- the inclusion of new pensions arrangements; and
- the inclusion of a cash payment representing an acceleration of unvested options in the event of a change of control of the Company at an acquisition price of at least 130 pence per Bacanora share. Such cash payment will be calculated on the basis of the difference between the acquisition price per Bacanora share and 102 pence (being the middle market price of a Bacanora share at close of business in London on 17 November 2017), multiplied by 2,550,000 in the event that such change of control is completed prior to the award of performance based options in relation to the financial year ended 30 June 2018 and a further 2,550,000 in the event that such change of control is completed prior to the award of performance based options in relation to the financial year ended 30 June 2019. In the event the Board has resolved upon Mr Secker's award in the relevant financial year (which may be zero) then the right to the relevant payment terminates for that period.
The consultancy agreement with Fernan Pty Ltd has been amended to provide Mark Hohnen also with a cash payment representing an acceleration of unvested options in the event of a change of control of the Company on the same terms as Peter Secker, save that the multiplier for each relevant financial year is 2,124,150.
The changes to the employment arrangements are considered to be related party transactions under the AIM Rules for Companies. The independent directors, having consulted with independent remuneration consultants and the Company's Nominated Adviser, consider that the terms of these amended arrangements are fair and reasonable insofar as the Company's shareholders are concerned.
