51-102F3 Material Change Report
Item 1: Name and Address of Company
Merit Mining Corp.
Suite 550 – 580 Hornby Street
Vancouver, BC V6C 3B6
Item 2: Date of Material Change
October 16 and 20, 2009
Item 3: News Release
October 16 and 20, 2009 released via Market News and Stockwatch
Item 4: Summary of Material Change
On October 16, 2009 the Company announced that it had proposed to settle debenture debt in the principal amount of $8,198,411 plus accrued interest in a shares for debt transaction, subject to approval of the TSX Venture Exchange and the debentureholders. On October 20, 2009 the Company announced that certain of the debentureholders rejected the proposal. The Company is continuing negotiations with the debentureholders.
Item 5: Full Description of Material Change
On October 16, 2009 the Company reported that it was proposing to settle debt held in the form of secured convertible debentures in the principal amount of $8,198,411 plus accrued interest, at the deemed price of $0.295 per share, after giving effect to certain agreed discounts on the debentures, subject to approval of the debentureholders. The shares for debt transaction is subject to TSX Venture Exchange approval.
Of the above noted debentures, Wega Mining ASA, which currently holds a 58% interest in the Company, holds a debenture in the principal amount of $2,698,149. As a result of the shares for debt transaction and assuming accrued interest to October 31, 2009, Wega Mining ASA will hold 12,692,613 shares, representing ~57.9% interest in the Company. As a result of the transaction, Munday Home Sales Ltd., which holds a debenture in the principal amount of $1,030,262, will become an insider of the Company holding 3,882,811 shares, representing ~17.7% of the Company’s issued and outstanding shares post-transaction, assuming accrued interest to October 31, 2009.
In December 2008, unable to achieve positive cash flow at its Greenwood Gold Project in the face of operating difficulties, falling metal prices, and poor financial markets, the Company shut down its operations and filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. Subsequently, in the spring of 2009, the Company made a proposal to its unsecured creditors, which was approved by the creditors and the Court. In September 2009, the Company completed a consolidation of its common shares. The proposed settlement of the debentures is a key step in this lengthy restructuring process.
Subsequently, on October 20, 2009, the Company reported that certain of the debentureholders to whom the shares for debt proposal had been made rejected the proposal. Company management and directors are continuing to negotiate with the debentureholders to complete the restructuring of the Company.
Item 6: Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
N/A
Item 7: Omitted Information
N/A
Item 8: Executive Officer
Fred Sveinson
President and CEO
Telephone: (604) 694-2344 loc. 102
Item 9: Date of Report
October 20, 2009
“Fred Sveinson”
Fred Sveinson, President & CEO
