Margaret Lake in binding RTO deal with Emerging Goldfields

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Margaret Lake Diamonds Inc. [DIA-TSXV, DDIAF-OTC] has announced a definitive deal to merge with Emerging Goldfields Resources Ltd. via a reverse takeover transaction.

Emerging Goldfields is a private company with a portfolio of exploration and development projects in Armenia. Emerging, via its United Kingdom subsidiary Goldfields Holdings Ltd., holds an 80% working interest in three polymetallic gold-silver deposits with combined NI 43-101-compliant measured, indicated and inferred resources of 3.3 million ounces of gold and 22.9 million ounces of silver.

In connection with the transaction, the two parties have agreed to used their “commercially reasonable efforts’’ to cause Emerging to complete a private placement that aims to raise $1.5 million. These funds are expected to be used for exploration and development expenses on Emerging properties. There are no proposed advances of funds from Margaret Lake to Emerging.

Under the transaction, each issued and outstanding common share of Margaret Lake will be exchanged for one common share of the resulting issuer on a 1:1 basis, such that all issued and outstanding Margaret common share will be exchanged for 4.74 million Newco common shares.

Under the amalgamation agreement, a wholly-owned subsidiary of Margaret Lake will amalgamate with Emerging to form a new entity (Amalco). All securities of Amalco will be exchange for securities of the resulting issuer on a 1:1 basis (other than Emerging shares or Margaret common shares held by shareholders who exercise their dissent rights, if applicable), at a deemed price of 30 cents per share.

Immediately after the completion of the transaction, but prior to the completion of any private placements, the current shareholders of Margaret Lake will own approximately 4.74 million resulting issuer common shares (7.35%) and holders of Emerging shares existing immediately prior to the transaction will own 59.8 million resulting issuer common shares (92.65%).

Margaret Lake has been engaged in diamond exploration and development in the Northwest Territories. Its key assets include the Diagras property.

On July 11, Margaret Lake announced that it had signed a non-binding letter of intent with Emerging Goldfields which set out the terms of the proposed reverse takeover transaction.

Prior to the announcement of the RTO, Margaret Lake shares were trading at 16 cents in a 52-week range of 30 cents and 13 cents.

A halt trading is expected to continue until completion of the RTO transaction, which is subject to a several conditions, including approval by directors of Margaret Lake and Emerging, satisfactory completion of due diligence, applicable regulatory approvals, and applicable shareholder approvals.

The resulting issuer is expected to be a Tier 2 mining issuer on the TSX Venture Exchange. Margaret Lake and Emerging are expected to hold annual and special meetings of shareholders to approve certain matters related to the transaction.

Upon completion of the RTO, it is expected that all officers and directors of Margaret Lake will resign, with Parvez Tyab emerging as the CEO of he merged company.

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