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Apogee Enters Into Letter Agreement With Prophecy Coal Corp.
October 15, 2014
TORONTO, ONTARIO--(Marketwired - Oct. 15, 2014) -

http://www.apogeesilver.com/English/News/News-Details/2014/Apogee-Enters-Into-Letter-Agreement-With-Prophecy-Coal-Corp/default.aspx

NOT FOR RELEASE IN THE UNITED STATES OR TO U.S. NEWS WIRE SERVICES

Apogee Silver Ltd. ("Apogee" or the "Company") (TSX VENTURE:APE) has entered into a binding letter agreement with Prophecy Coal Corp. ("Prophecy") (TSX:PCY), whereby Prophecy has agreed to acquire Apogee's wholly owned subsidiaries Apogee Minerals Bolivia S.A. and ASC Bolivia LDC (the "Subsidiaries"), which in turn hold the Pulacayo-Paca Silver Lead Mining Project in Bolivia (the "Proposed Transaction").

In consideration, Prophecy will pay Apogee a cash fee in the amount of $250,000 and shall issue to Apogee 60,000,000 Class B convertible non-voting shares of Prophecy (the "Class B Shares"). The Class B Shares will become eligible for conversion by Apogee into an equal amount of listed shares of Prophecy in the following instances: a) over a two-year period in tranches with the first tranche to be converted within twelve months of the closing of the Proposed Transaction; (b) on an accelerated basis in the event that the Prophecy common shares are trading above certain prices for a period of no less than five consecutive trading days on the TSX; or (c) in the event of certain major triggering events relating to Prophecy. Prophecy has agreed to assume certain liabilities, including all legal and tax liabilities, associated with the Subsidiaries and the Pulacayo-Paca project.

G. Scott Paterson, the Chairman of the Board of Apogee, noted, "We are confident that the highly experienced Prophecy Coal mining team, led by John Lee, will be able to bring the Pulacayo project into production in due course, adding value for both the Apogee and Prophecy shareholders." Through its holdings in Prophecy, Apogee shareholders will be able to simultaneously benefit in the potential upside of both the Pulacayo-Paca project and the Prophecy coal energy projects located in Mongolia. In addition the Proposed Transaction will provide the Company with immediate cash and near term liquidity to strengthen its balance sheet.

Currently, Prophecy has 251,878,634 common shares issued and outstanding as of the date hereof. Assuming Apogee were able to convert all Class B shares as of today's date, Apogee would hold a 19.2% interest in Prophecy. Based on the closing price of the Prophecy shares as at October 10, 2014 being $0.05, the conversion of all of the Class B Shares represents an implied value of $3,000,000 to Apogee.

Approvals and Summary of the Proposed Transaction

The Proposed Transaction remains subject to the parties entering into a definitive agreement on or before October 24, 2014 and the receipt of all necessary regulatory approvals and necessary shareholder approvals at the special meetings of Apogee and Prophecy, respectively, to be held no later than December 19, 2014. Closing of the Proposed Transaction is set to occur by no later than December 29, 2014.

The terms of the Proposed Transaction will be described in further detail in the Management Information Circular of Apogee to be filed with the regulatory authorities and mailed to shareholders of Apogee in accordance with applicable securities laws. Officers, directors and major shareholders of Apogee who hold an aggregate of 18.2% of Apogee common shares, have agreed to enter into lock-up and support agreements with Prophecy under which they have agreed to vote in favour of the Proposed Transaction. In addition, officers, directors and major shareholders of Prophecy who hold approximately 5.5% of Prophecy, have agreed to enter into lockup and support agreements with Apogee under which they have agreed to vote in favour of the Proposed Transaction.

The Board of Directors of Apogee and the Board of Directors of Prophecy have determined to recommend that shareholders of Apogee and Prophecy, respectively, vote in favour of the Proposed Transaction.

The Letter Agreement includes a commitment by Apogee not to solicit alternative transactions to the proposed Transaction. Prophecy has also been provided with certain other rights customary for a transaction of this nature, including the right to match competing offers made to Apogee. Pursuant to the terms of the Letter Agreement, in the event Apogee accepts a superior offer or fails to complete the Proposed Transaction in certain circumstances, Apogee shall be required to pay to Prophecy a break fee in the amount of $850,000.

Apogee has engaged Cairn Merchant Partners LP ("Cairn") as its financial advisor. Cairn has provided an oral opinion to the Board of Directors of Apogee to the effect that, as of the date of such opinion and subject to certain assumptions, limitations and qualifications set out therein, the proposed transaction is fair, from a financial point of view, to shareholders of Apogee.

ABOUT PROPHECY COAL CORP.

Prophecy Coal Corp. is a Canadian public company listed on the Toronto Stock Exchange that is engaged in developing energy projects in Mongolia. Further information on Prophecy Coal can be found at www.prophecycoal.com. In addition, readers are referred to the Canadian regulatory filings set out in Prophecy's profile on SEDAR at www.sedar.com.

About Apogee Silver Ltd.

Apogee Silver Ltd. is a mineral exploration and development stage company listed on the TSX Venture Exchange under the symbol APE. Apogee targets advanced, high grade silver-zinc-lead projects in South America. Currently its projects are located in the historic silver producing regions of southwest Bolivia and northern Chile.

Apogee's most advanced project is the 100% controlled Pulacayo Paca project in Bolivia for which a positive feasibility study has been completed. The Company also has properties in Chile.

Completion of the Proposed Transaction is subject to a number of conditions, including receipt of regulatory approvals and the receipt of shareholder approval. The Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed at all.

Investors are cautioned that, except as disclosed in the Management Information Circular of Apogee to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.

Cautionary Note Regarding Forward-Looking Information

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINTED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information:
Prophecy Coal Corp.
Bekzod Kasimov
+1.604.563.0699
+1.888.513.6286
[e-mail]
www.prophecycoal.com


Apogee Silver Ltd.
Jennifer Wagner
Interim Chief Executive Officer
[phone]
[e-mail]
http://www.apogeesilver.com

http://www.apogeesilver.com/English/News/News-Details/2014/Apogee-Enters-Into-Letter-Agreement-With-Prophecy-Coal-Corp/default.aspx




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