Canarc, Rembrandt settle differences

A legal dispute involving Rembrandt Gold Mines (ASE) and Canarc Resources (VSE) has been settled.

The original lawsuit was brought against Canarc, its directors and certain investors by International Precious Metals (IPM), a major shareholder in Rembrandt. IPM launched the lawsuit in the name of Rembrandt’s minority shareholders, alleging certain improprieties took place during an attempt to merge Rembrandt with Canarc.

Canarc subsequently launched a counterclaim, alleging a number of improprieties by IPM and its major shareholder with regard to certain historic dealings with Rembrandt.

Terms of the settlement agreement call for Canarc to acquire a 100% interest in the Polaris-Taku property in northwestern British Columbia and 78.5% of the 23.28% carried interest that Rembrandt holds in the Bellavista property in Costa Rica.

Polaris-Taku contains an estimated underground resource of 2.4 million tons grading 0.43 oz. gold per ton.

In return, Rembrandt will receive $375,000 in cash plus 600,000 common shares of Canarc valued at $4.50 each. Canarc will also transfer all of its 3.4 million shares of Rembrandt back to that company.

Rembrandt will retain a 15% net profits interest in Polaris-Taku, which Canarc may reduce to 10%, by issuing an additional 150,000 shares, within one year of the start of production.

Rembrandt will retain its long-term debt of $760,000 and will have just over two million shares outstanding on closing of the deal, plus the cash, Canarc stock and net-profit interests.

Canarc President Bradford Cooke said the settlement will likely require a fairness opinion and valuation followed by a minority shareholder vote. He said the minority shareholder vote would allow dissenting shareholders to request to be paid in cash, according to the fairness opinion and valuation. The settlement agreement clears the way for work to begin once again on the Polaris-Taku property.

Cooke expects to receive approval from shareholders, regulators and the court by July. A drilling program is scheduled to get underway in mid-July.