West African Resources, Ltd. (ASX:WAF) signing of a letter agreement to acquire 79.1% stake in Channel Resources Ltd. (TSXV:CHU) for AUD 3.5 million from La Société d'investissement dans la diversification de l'exploration, Dalmac Management Corp. and others on August 13, 2013. As per the agreement, all of the common shares of Channel will be exchanged for ordinary shares of West African at a ratio of four Channel Shares for one West African Share. Channel shareholders will receive 1 share purchase warrant for each two (2) West African shares received in the transaction, each Warrant being exercisable to acquire one West African Share at a price of AUD 0.40 for 36 months from completion of the Transaction. Each outstanding Channel option to acquire a Channel Share will be replaced or exchanged for one quarter a West African option. Channel shareholders will hold 13.2% of the total outstanding shares of West African on completion.

West African also entered into a private placement with Channel Resources which will be used to fund transaction costs and for working capital purposes. In addition, West African has reserved the right to seek a capped amount of interim equity funding while Channel will not seek any additional financing after the private placement is completed. In conjunction with the transaction, West African intends to list its shares on the TSX Venture Exchange. Channel will pay a break fee of CAD 0.15 million (AUD 0.16 million) if it accepts a superior proposal from a third party. Insiders of Channel holding approximately 8% of Channel Shares have signed lock-up agreements to support the transaction. Under certain circumstances, the lock-up agreements grant to West African the option to buy such shares if the transaction does not complete and if West African elects to proceed with an ‘any-and-all' takeover bid offer. The current management team of West African will manage the affairs of Channel, and one nominee from Channel will join the Board of Directors of West African.

The completion of the transaction is subject to a number of conditions including the receipt by Channel of a favorable fairness opinion, third party approval, approval by a special two-thirds of majority shareholders of Channel together with approval by a simple majority of minority shareholders, as well as approval by regulatory and judicial authorities including the TSX Venture Exchange, the Australian Stock Exchange and the Supreme Court of British Columbia, and receipt by West African of lock-up agreements from each of the directors and officers of Channel, holders of no more than 10% of the outstanding common shares of Channel shall have exercised any right of dissent, the TSXV shall have conditionally accepted for listing the ordinary shares of West African. Other conditions include negotiation of a definitive agreement and other customary closing conditions. The transaction has been unanimously approved by the Board of Directors of West African and Channel. The transaction is expected to close in late October 2013.

West African Resources, Ltd. (ASX:WAF) signed a definitive agreement to acquire Channel Resources Ltd. (TSXV:CHU) from La Société d'investissement dans la diversification de l'exploration and others on September 25, 2013. The agreement has been unanimously approved by the board of directors of both companies. Insiders and shareholders of Channel Resources Ltd. holding approximately 15% of Channel Shares have signed lock-up agreements to support the Arrangement. The meeting of the shareholders of West African Resources will be held on December 6, 2013. As of November 7, 2013, Supreme Court of British Columbia authorized the holding of special Meeting of Channel shareholders to vote on the transaction. The Meeting will be held at the offices of Dentons Canada LLP is subject to, among other things, the approval of a special resolution by at least 66 2/3% of the votes cast by shareholders of Channel either in person or represented by proxy at the meeting. The Board of Directors of Channel urges all Channel shareholders to vote their shares and unanimously recommends that shareholders vote FOR the resolution approving the acquisition. As of December 6, 2013, the transaction was approved by shareholders of Channel. As of December 11, 2013, Channel Resources obtained a final order from the Supreme Court of British Columbia approving the merger. As of January 17, 2014, West African Resources has received conditional approval from the TSX Venture Exchange for West African's listing of ordinary shares and share purchase warrants. To accommodate this process, Channel and West African have extended the completion deadline of the Arrangement to January 17, 2014.

Bernhard J. Zinkhofer of McMillan LLP acted as legal advisor to West African Resources Limited. Alan Hutchison of Dentons Canada LLP acted as legal advisor to Channel Resources Ltd. The currency conversion has been done using oanda.com as on August 13, 2013. Octagon Capital Corporation acted as financial advisor to Channel Resources Ltd. Computershare Investor Services acted as transfer agent and depository for Channel Resources.


West African Resources, Ltd. (ASX:WAF) completed the acquisition of 80.1% stake in Channel Resources Ltd. (TSXV:CHU) from La Société d'investissement dans la diversification de l'exploration, Dalmac Management Corp. and others on January 17, 2014.