Mega Uranium Ltd. (TSX:MGA) is pleased to announce that it has entered into a binding term sheet with Toro Energy Limited (ASX:TOE) to sell its Lake Maitland Uranium Project in Western Australia to Toro for 415 million ordinary shares of Toro. Upon completion of the Transaction, Mega will own approximately 28% of the issued and outstanding shares of Toro.
 

Toro is an Australian uranium company listed on the Australian Stock Exchange. Toro’s flagship and wholly-owned Wiluna uranium project is located 30 km southeast of Wiluna in Central Western Australia and approximately 90 km north-west of Lake Maitland. Toro has updated prefeasibility estimates and the process engineering phase of the definitive feasibility study complete for mining of two shallow calcrete deposits, Lake Way and Centipede, for which all government environmental approvals have been received.
 

Highlights of the Transaction

--  Consolidates quality Western Australian uranium assets and expands

    Mega's uranium interests into an enlarged Wiluna project development;

--  Environmental permits for Toro's first two deposits at the Wiluna

    project, Centipede and Lake Way, have already been granted, which

    potentially shortens the development time-frame for Lake Maitland;

--  Operational synergies potential across geologically similar projects;

--  Opportunity for significant capital savings due to the requirement for

    only one central processing facility to treat ore from Lake Maitland and

    Toro's Wiluna deposits; and

--  Potential further benefit for Mega as shareholder in the enlarged Toro.

Stewart Taylor, Mega’s President said, “Mega is pleased to partner with Toro on the development of Wiluna. Given the proximities and similarities of the main deposits, the integration of Lake Maitland into the broader Wiluna Project is expected to unlock benefits for both Toro and Mega shareholders.”
 

The Transaction is conditional upon the receipt of various approvals, including the approval of Toro shareholders, Mega’s Project Partners (as defined below) consenting to and not exercising any pre-emptive rights that they may have in connection with the Transaction, and other customary closing conditions. The Transaction has the support of Toro’s major shareholder, OZ Minerals Limited, which has a 39% equity interest in Toro, and which has confirmed that, subject to the independent expert report obtained by Toro indicating that the acquisition is fair and reasonable and no superior proposal emerging, it intends to vote in favour of the Transaction. On completion of the Transaction, OZ Minerals will hold a 28.5% interest in Toro.
 

Mega understands that following completion of the Transaction, Toro’s focus will be to work towards implementation of the already approved Wiluna Project and to commence studies to optimise the inclusion of Lake Maitland within the overall Wiluna Project over time. This will include reviewing optimal mine planning and investigating the opportunity to expand the capacity of the Wiluna Project above Toro’s currently planned 1.3 Mtpa processing capacity.
 

The Transaction does not impact upon Mega’s previously announced proposed merger with Rockgate Capital Corp. which the parties continue to work toward.
 

Key Terms of the Transaction
 

The Transaction is expected to be effected by Toro’s subsidiary, Nova Energy Pty Ltd, acquiring 100% of the issued capital of Mega’s subsidiary, Redport Exploration Pty Ltd. Redport, through its 100% owned subsidiaries, will own the relevant Lake Maitland tenements and associated assets and rights and at completion will have a surplus cash balance of $1.5 million. Consideration for the Transaction is 415 million fully paid ordinary shares in Toro.
 

On completion of the Transaction, Mega will hold a 28% equity interest in Toro. Toro has agreed to grant Mega rights to appoint two nominees to the Toro board of directors for so long as Mega maintains at least a 22% interest in Toro. Initially, Mega’s Executive Vice President – Corporate Affairs, Richard Patricio, and Executive Vice President – Australia, Richard Homsany, will join the board of Toro as non-executive directors. Mega has also agreed to a 12-month escrow of its Toro shares, with customary market exceptions, and to a standstill which limits Mega’s capacity to acquire further Toro shares within the next 2 years.
 

Project Partners’ Position Regarding Lake Maitland
 

In June 2009, Mega entered into a series of agreements with JAURD International Lake Maitland Project Pty Ltd and Itochu Minerals & Energy of Australia Pty Ltd. Under those agreements, the Project Partners hold an option to acquire a 35% interest in Lake Maitland for approximately US$49 million (of which US$39 million remains payable) which can be exercised at any time up to a decision to mine on Lake Maitland. If the Project Partners exercise their option to acquire an interest in Lake Maitland, they will be entitled to various rights over the development of, and offtake from, Lake Maitland and are obliged to contribute financing for their share of costs for the development of Lake Maitland in order to maintain their respective joint venture interests in Lake Maitland.
 

In addition, the Project Partners hold certain pre-emptive and consent rights that may apply to the Transaction.
 

Conditions Precedent to Completion
 

The conditions precedent to completion of the Transaction include, but are not limited to:

--  Toro shareholder approval under ASX LR7.1 and s611 Item 7 of the

    Corporations Act;

--  Any necessary FIRB approval required by Mega and Toro in relation to the

    transaction; and

--  The Project Partners consenting to the Transaction and not exercising

    any pre-emptive rights that may apply.

Timing
 

It is anticipated that a meeting of Toro shareholders will be held in early October 2013 at which Toro shareholders will be asked to approve the Transaction. It is expected that completion of the Transaction would occur soon thereafter, subject to the satisfaction or waiver of all conditions precedent to completion.
 

Break-Fees
 

Reciprocal break fees of $1.0 million are payable in certain circumstances by each of Mega and Toro.
 

Mega Advisors
 

Dundee Capital Markets is acting as financial advisor to Mega.
 

Mega Uranium Ltd.

Mega Uranium Ltd. is a Canadian mineral resources company listed on the TSX, with a focus on uranium properties. Mega has a global presence with projects in Australia at feasibility and pre-feasibility stages, and exploration projects in Australia, Canada and Cameroon. Currently, Mega is focused on the development of two of its Australian projects, Lake Maitland located in Western Australia and Ben Lomond located in Queensland. Mega has a farm in and joint venture with JAURD and IMEA on the Lake Maitland Project.