Market Overview

EMC Makes a $8 Million Offer to Acquire the Nyngan Scandium Project


EMC Metals Corp. (the “Company” or “EMC”) (TSX: EMC) reported on October 1, 2012 that a court-ordered mediation held in late September between EMC and Jervois Mining Ltd. (Jervois), related to the ongoing dispute over the Nyngan Scandium Project, did not result in a settlement. The litigation in the Victorian Supreme Court therefore continues, and a trial date has been set for 4 February 2013.

EMC announces today that it has made an open and unsolicited offer to Jervois to acquire 100% of the Nyngan Scandium Project (the “Offer”) and settle the outstanding litigation and dispute.

The financial terms of the Offer are as follows:

  1. A$1.3M in cash, due and payable within (the latter of) 6 months or satisfaction of the conditions set out below, and
  2. A$45/kg production royalty payable on the first 150,000 kg of scandium oxide produced and sold from the Nyngan project.

The Offer is conditional on receipt of any approvals required by law, which may include Jervois shareholder approval and FIRB approval, and also on Jervois retaining and protecting the various exploration licenses and project assets until completion.

If the Offer is accepted, then on completion:

  1. The parties agree to discontinue the Victorian Supreme Court litigation underway on this matter, and EMC will surrender its claim for damages of up to A$100M from the wrongful repudiation by Jervois of the Exploration Joint Venture Agreement, and
  2. Both EMC and Jervois agree to pay their own legal costs.

This Offer will remain open for 14 days, at which time it will expire, unless accepted.

EMC recommends this Offer to the directors and shareholders of Jervois as a fair, reasonable and complete offer, for the following reasons:

  1. The A$8M Offer represents more than two times the value of the conditional US$4M offer recently made by Bloom Energy for 100% of the Nyngan Project, and publically rejected by Jervois on 11 October. The EMC Offer is in fact more than four times the value of the Bloom offer, if the assumption is made that Bloom's offer would have necessarily been divided between Jervois and EMC.
  2. The Offer represents fair market value for Jervois' interests, having regard to the commercial value of the project, its current state of development and the fact that the project is now subject to considerable competitive threat from other scandium producers.
  3. Acceptance of the Offer will provide Jervois with a significant cash injection within months, and the potential for an ongoing royalty income stream which can be used to finance other projects, and to conduct the future business of the company.
  4. Acceptance of the Offer will potentially lock in project value and eliminate development and operational risk to Jervois shareholders on the project, and
  5. Acceptance of the Offer will eliminate all risk for Jervois and its shareholders of an adverse judgment against the company in the Supreme Court Action, and also risk of an award to EMC on its counterclaim for damages of up to A$100 million for wrongful repudiation of the Exploration Joint Venture Agreement and subsequent project delay.

In the event that EMC's Offer is not accepted by Jervois, the litigation continues, and EMC will vigorously prosecute its defense and counterclaim, filed on August 20, 2012, seeking relief that includes:

  • A declaration that EMC satisfied the earn-in conditions set out in clause 6.2 of the Exploration Joint Venture Agreement, and
  • A substantial damages award to compensate EMC for loss and damage resulting from Jervois wrongfully treating the Joint Venture as terminated.

The damages counterclaim pleaded by EMC specifically relates to loss caused by the real delay that Jervois has caused to the project development (including the loss of project offtake agreements), associated losses to project value and competitive position, and costs directly suffered by EMC, ranging up to A$100 million.

EMC is also seeking orders preventing Jervois from using for itself all metallurgical testwork reports and studies (including the final SNC-Lavalin Report) specifically commissioned and paid for by EMC-and restricted for use by the Nyngan Project Joint Venture only.

Both the defence and counterclaim pleadings are publicly available from the Court in Victoria, Australia.

Caution with respect to Forward-Looking Statements: This press release contains forward-looking information that does involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements regarding long term prices for tungsten, our ability to find and retain qualified management and key technical persons to operate the tungsten project, our ability to raise the necessary capital to fund a restart of mining operations, the short term or long term economic feasibility of tungsten production at our Springer facility, and in general statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance. Forward-looking information in this press release is based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice, and by other risk factors disclosed in our public filings. Except as required by law, EMC assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

To view this press release as a webpage, please click on the following link:

EMC Metals Corp.
Investor Relations-Nevada, 775-355-9500
Windward Global, Charlotte, NC
Sara Boatright Patterson, 1-704-588-8600

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