/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
TORONTO and ROUYN-NORANDA, QC, March 3, 2017 /CNW/ - Anaconda Mining Inc.
("Anaconda") (ANX: TSX) and Orex Exploration Inc.
("Orex") (OX: TSXV) are pleased to announce that they have
entered into a definitive arrangement agreement (the
"Agreement"), pursuant to which Anaconda has agreed to
acquire all of the issued and outstanding common shares of Orex, by
way of a court-approved plan of Arrangement (the
"Arrangement"). Pursuant to the Agreement, the consideration
to be received by the shareholders of Orex consists of 0.85 of a
common share of Anaconda (each, an "Anaconda Share") for
each common share of Orex (each an "Orex Share") held.
Outstanding options of Orex ("Orex Options") that have not
been duly exercised prior to the effective date on the Arrangement,
will be exchanged for a fully vested option of Anaconda to purchase
from Anaconda the number of Anaconda Shares (rounded down to the
nearest whole share) equal to: (i) the exchange ratio, being 0.85,
multiplied by (ii) the number of Orex Shares subject to such Orex
Option immediately prior to the effective date of the Arrangement.
Outstanding warrants of Orex ("Orex Warrants") that do not
already contain adjustment provisions triggered by the Arrangement,
will be amended to include such an adjustment feature, such that
upon completion of the Arrangement, the holders of Orex Warrants
will be entitled to receive, upon exercise of their securities, the
number of Anaconda Shares which the holders would have been
entitled to receive as a result of the Arrangement, if immediately
prior to the effective date the holders had exercised their
securities.
Following completion of the Arrangement, Orex will be a wholly
owned subsidiary of Anaconda. Existing Anaconda and Orex
shareholders will own approximately 54.9% and 45.1% of the combined
company, respectively, on a non-diluted basis.
Arrangement Benefits
The Arrangement is intended to provide significant benefits for
securityholders of both companies, including:
- Acceleration of development of Orex's Goldboro Project
("Goldboro Project") by combining Orex's mineral resources
with Anaconda's proven operating infrastructure at the Point Rousse
Project ("Point Rousse Project") and experienced management
team;
- Potential for substantial capital cost reductions at the
Goldboro Project through leveraging Anaconda's existing port, mill
and tailings facilities;
- Potential for gold producing operations in two mining friendly
jurisdictions in Atlantic Canada -
Newfoundland & Labrador and
Nova Scotia;
- Establishment of a strong position from which to participate in
any future consolidation in the mining industry in Atlantic Canada; and
- Greater market presence, enhanced liquidity and a broader
capital markets profile.
Anaconda's Point Rousse Project has been producing gold for
nearly seven years and, in that time, Anaconda has incrementally
improved its operating infrastructure, which includes a 1,300-tonne
per day mill, tailings capacity for approximately 15 years (based
on the current mill throughput rate) and a port facility. Both the
Point Rousse Project and Goldboro Project are located on tidewater.
With favourable logistics and existing infrastructure in place,
Anaconda expects it will be able to accelerate the development of
the Goldboro Project at a lower capital cost than if it were a
stand-alone project.
Combining the two companies will create a single enterprise with
expanded mineral resources, most of which are high grade. On a
pro-forma basis, the mineral resource portfolio will include
457,400 Measured and Indicated ounces of gold and 372,900 Inferred
ounces at the Goldboro Project in Nova
Scotia (see Orex's news release dated March 1, 2017); 107,230 Indicated ounces of gold
and 37,030 Inferred ounces at the Point Rousse Project; and 83,000
Indicated ounces of gold and 31,000 Inferred ounces at the Viking
Project ("Viking Project") in Newfoundland and Labrador (Table 1). Detailed resource tables
(Table 2) prepared in accordance with National Instrument 43-101
("NI 43-101") are presented below.
Table 1. A summary of Mineral Resources at Goldboro, Point Rousse and Viking Projects
|
|
|
|
|
Goldboro,
NS
|
Point Rousse,
NL
|
Viking, NL
|
Category
|
Tonnes
|
Grade^
(g/t)
|
Ounces
|
Tonnes
|
Grade^
(g/t)
|
Ounces
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
M+I
|
2,556,000
|
5.57
|
457,400
|
1,764,100
|
1.89
|
107,230
|
1,817,000
|
1.42
|
83,000
|
Inferred
|
2,669,000
|
4.35
|
372,900
|
460,700
|
2.50
|
37,030
|
847,000
|
1.15
|
31,000
|
^ tonnage weighted
average grade:
|
NOTE: Goldboro
includes all three zones described in the Technical Reports and
Point Rousse includes the Pine Cove and Stog'er Tight deposits. M+I
refers to Measured and Indicated resource categories
|
Dustin Angelo, President and CEO
of Anaconda, said, "We believe that the Arrangement with Orex is a
great opportunity for our shareholders and we are acquiring mineral
resources at an attractive price. Over the last nearly seven years,
we have built a scalable platform for growth with an ever-improving
mill facility, plenty of tailings capacity and a new port facility.
We have a track record of success, developing and operating gold
mining projects. The Goldboro Project provides the mineral
resources to extend the longevity of Anaconda and potentially
increase annual production to much higher levels. We are excited to
leverage our people, talents and Point Rousse infrastructure to
meet our goal of bringing the Goldboro Project into production as
soon as reasonably possible."
"The Orex board of directors is committed to building a
profitable junior gold production company and has assessed a
variety of financial and strategic options. The board
believes the proposed business combination with Anaconda represents
the best option. We have undertaken a thorough due diligence review
of Anaconda's Pine Cove Mine and Mill facilities and exploration
properties in Newfoundland and,
equally importantly, we have had the opportunity to engage directly
with Anaconda's management and operations team. We believe the
combined business will (i) be capital efficient; (ii) reduce the
time required to bring the Goldboro Project into production; (iii)
be supported by an experienced operations team and (iv) redefine
and revalue our business in the capital markets. The Orex board of
directors unanimously recommends the proposed business combination
and believes that this bold strategic undertaking is in the best
long-term interest of our valued shareholders." said Jonathan Fitzgerald, CEO of Orex.
Board of Directors' Recommendations
The Anaconda and Orex board of directors have determined that
the Arrangement is in the best interest of their respective
shareholders and securityholders, as applicable, taking into
account advice from their financial advisors, and have unanimously
approved the Arrangement. The Anaconda and Orex board of directors
recommend that their respective shareholders and securityholders,
as applicable, vote in favor of the transactions.
Red Cloud Klondike Strike Inc. has provided a verbal
fairness opinion to the board of directors of Anaconda to the
effect that, as of the date of the fairness opinion and based upon
and subject to the limitations and qualifications therein, the
consideration payable by Anaconda pursuant to the Arrangement for
the Orex Shares is fair, from a financial point of view, to
Anaconda.
M Partners Inc. has provided a verbal fairness opinion to the
special committee of the board of directors and to the board of
directors of Orex to the effect that, as of the date of the
fairness opinion and based upon and subject to the limitation and
qualifications therein, the Arrangement is fair, from a financial
point of view, to Orex.
Transaction Summary
Immediately prior to the Arrangement, Orex will be continued
from the Province of Québec into the Province of Ontario (the "Continuance"). The
Arrangement will be carried out by way of a court-approved plan of
arrangement pursuant to the Business Corporations Act
(Ontario) and must be approved by
the affirmative vote of two-thirds of the votes cast by Orex
shareholders and certain warrantholders at a special meeting that
is expected to be held in May 2017.
Pursuant to the Agreement, the consideration to be received by the
shareholders of Orex consists of 0.85 of an Anaconda Share for each
Orex Share held. Following completion of the Arrangement, Orex will
be a wholly owned subsidiary of Anaconda.
Outstanding Orex Options that have not been duly exercised prior
to the effective date on the Arrangement, will be exchanged for a
fully vested option of Anaconda to purchase from Anaconda the
number of Anaconda Shares (rounded down to the nearest whole share)
equal to: (i) the exchange ratio, being 0.85, multiplied by (ii)
the number of Orex Shares subject to such Orex Option immediately
prior to the effective date of the Arrangement. Outstanding Orex
Warrants that do not already contain adjustment provisions
triggered by the Arrangement, will be amended to include such an
adjustment feature, such that upon completion of the Arrangement,
the holders of Orex Warrants will be entitled to receive, upon
exercise of their securities, the number of Anaconda Shares which
the holders would have been entitled to receive as a result of the
Arrangement, if immediately prior to the effective date the holders
had exercised their securities.
In addition to applicable securityholder and court approvals,
the Arrangement is subject to applicable regulatory approvals
including Toronto Stock Exchange and TSX Venture Exchange approval
and the satisfaction of certain other customary closing conditions
customary in transactions of this nature.
The Arrangement is expected to be completed in May 2017.
Following completion of the Arrangement, the number of directors on
Anaconda's board will be seven and be comprised of five current
members of the Anaconda board of directors and two directors
who are current members of the Orex board of directors. In
addition, Anaconda may consolidate the Anaconda Shares on terms to
be determined by Anaconda (the "Consolidation"). The
Arrangement is not conditional on the Consolidation.
For Orex, the Arrangement and Continuance will require approval
by two-thirds of the votes cast by its shareholders and, in respect
of the Arrangement, certain warrantholders at a special
securityholders meeting. The issuance of the Anaconda Shares will
require the approval of a simple majority of the shareholders of
Anaconda at a special shareholders meeting. The Consolidation will
require approval by two-thirds of the votes cast by Anaconda
shareholders.
Officers and directors and certain principal shareholders of
Anaconda, who together control approximately 20.64% of the
outstanding Anaconda Shares, have entered into voting support
agreements pursuant to which they have agreed to vote their
Anaconda Shares in favor of the issuance of the Anaconda Shares
pursuant to the Arrangement. Officers, directors and certain
principal shareholders of Orex, who together control approximately
25.38% of the outstanding Orex Shares, have entered into voting
support agreements pursuant to which they have agreed to vote their
Orex Shares and other securities, as applicable, in favor of the
Arrangement and Continuance.
Copies of the Agreement and certain related agreements are
available through Anaconda and Orex's filings with the securities
regulatory authorities in Canada
on SEDAR at www.sedar.com.
None of the securities to be issued pursuant to the Arrangement
Agreement have been or will be registered under the United State
Securities Act of 1933, as amended (the "U.S. Securities
Act"), or any state securities laws, and any securities issued
in the Arrangement are anticipated to be issued in reliance upon
available exemptions from such registration requirements pursuant
to Section 3(a)(10) of the U.S. Securities Act and applicable
exemptions under state securities laws. This press release
does not constitute an offer to sell or the solicitation of an
offer to buy any securities
Advisor and Counsel
Red Cloud Klondike Strike Inc. is acting as financial
advisor to Anaconda with Cassels
Brock & Blackwell LLP acting as its Canadian legal
advisor and Neal, Gerber & Eisenberg LLP acting as Anaconda's
US legal counsel.
M Partners Inc. is acting as financial advisor to Orex with
Fasken Martineau DuMoulin LLP acting as Orex's Canadian legal
advisor and Troutman Saunders LLP acting as Orex's US legal
counsel.
NI 43-101 Resource Summary
Following completion of the Arrangement Anaconda's mineral
resource portfolio will include three mineral projects with current
NI 43-101 mineral resources including the Goldboro Project, the
Point Rousse Project and the Viking Project. Mineral
resources for each of these projects are summarized in Table 2.
Table 2: A summary of NI 43-101 Mineral
Resourcese,f
Goldboro, Nova
Scotia
|
|
|
|
|
|
|
|
|
|
Boston
Richardsonazone
|
West
Goldbrookazone
|
East
Goldbrookazone
|
Category
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Measured
|
171,000
|
5.39
|
29,600
|
|
|
|
|
|
|
Indicated
|
1,507,000
|
5.27
|
255,400
|
464,000
|
5.39
|
80,400
|
414,000
|
6.91
|
92,000
|
Inferred
|
1,083,000
|
4.56
|
158,800
|
459,000
|
4.42
|
65,200
|
1,127,000
|
4.11
|
148,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point Rousse
(PR)/Viking (VK), Newfoundland and Labrador
|
|
|
|
|
|
Pine
Covebdeposit (PR)
|
Stog'er
Tightcdeposit (PR)
|
Thorddeposit (VK)
|
|
Category
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Tonnes
|
Grade
(g/t)
|
Ounces
|
Indicated
|
1,560,000
|
1.67
|
83,690
|
204,100
|
3.59
|
23,540
|
1,817,000
|
1.42
|
83,000
|
Inferred
|
208,700
|
1.57
|
10,570
|
252,000
|
3.27
|
26,460
|
847,000
|
1.15
|
31,000
|
Probable
Reservesb
|
858,800
|
1.46
|
40,400
|
|
|
|
|
|
|
a.
|
Resource stated using
a 2.0 g/t cutoff as per Orex's news release of March 1, 2017.
Any additional information regarding the current estimate will be
available upon filing of a Technical Report.
|
b.
|
Resource is stated
using a 0.7 g/t cutoff as per "NI43-101 Technical Report, Mineral
Resource and Mineral Reserve Update on the Pine Cove Mine and
Mineral Resource Estimate on the Stog'er Tight Deposit, Point
Rousse Project, Baie Verte, Newfoundland and Labrador, Canada" with
an effective date of October 22, 2015 and authored by independent
qualified persons David Copeland, P. Geo. (an independent
consultant) and Catherine Pitman, P.Geo. (AMC Mining Consultants
(Canada) Ltd.) and qualified persons David Evans, P.Geo.
(Silvertip Exploration Consultants Inc.), Paul McNeill, P. Geo.
(Anaconda Mining Inc.) and Gordana Slepcev, P. Eng. (Anaconda
Mining Inc.).
|
c.
|
Resource is stated
using a 0.8 g/t cutoff as per "NI43-101 Technical Report, Mineral
Resource and Mineral Reserve Update on the Pine Cove Mine and
Mineral Resource Estimate on the Stog'er Tight Deposit, Point
Rousse Project, Baie Verte, Newfoundland and Labrador, Canada" with
an effective date of October 22, 2015 and independent qualified
persons David Copeland, P. Geo. (an independent consultant) and
Catherine Pitman, P.Geo. (AMC Mining Consultants (Canada)
Ltd.) and qualified persons David Evans, P.Geo. (Silvertip
Exploration Consultants Inc.), Paul McNeill, P. Geo. (Anaconda
Mining Inc.) and Gordana Slepcev, P. Eng. (Anaconda Mining
Inc.).
|
d.
|
Resource is stated
using a 0.5 g/t cutoff as per "NI 43-101 Technical Report and
Mineral Resource Estimate on the Thor Deposit, Viking Project,
White Bay Area, Newfoundland and Labrador, Canada" with an
effective date of August 29, 2016 and authored by independent
qualified persons David A. Copeland, M.Sc., P.Geo., (an independent
consultant), Shane Ebert, Ph.D., P.Geo. (an independent consultant)
and Gary Giroux, MASc, P.Eng. (Giroux Consultants Ltd.).
|
e.
|
Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. This estimate of mineral resources may be materially
affected by environmental permitting, legal, title, taxation,
sociopolitical, marketing, or other relevant issues.
|
f.
|
Mineral Resource
Estimate were prepared in accordance with NI 43-101 and the CIM
Standards.
|
ABOUT ANACONDA MINING INC.
Anaconda is a growth-oriented, gold mining and exploration
company with a producing project called the Point Rousse Project
and three exploration/development projects called the Viking and
Great Northern Projects and the Tilt Cove Property in Newfoundland.
The Point Rousse Project is approximately 6,300 hectares of
property on the Ming's Bight Peninsula located in the Baie Verte
Mining District in Newfoundland,
Canada. Since 2012, Anaconda has increased its property
control by ten-fold on the peninsula and gold production to nearly
16,000 ounces per year. In an effort to expand production, it is
currently exploring three primary, prospective gold trends, which
have approximately 20 km of cumulative strike length and include
five deposits and numerous prospects and showings, all within 8 km
of the Pine Cove Mill. A second project called the Tilt Cove
Property, consisting of 350 hectares, is located approximately 60
kilometres by road from the Pine Cove Mill but is also within the
Baie Verte Mining District and underlain by similar geology to the
Point Rousse Project.
Anaconda also controls the Viking and Great Northern Projects,
which have approximately 6,225 and 6,375 hectares of property,
respectively, in White Bay, Newfoundland, approximately 100 kilometres by
water (180 kilometres via road) from the Pine Cove Mill. The Viking
Project contains the Thor Deposit and other gold prospects and
showings and the Great Northern Project includes numerous prospects
and showings within a similar geological setting as the Viking
Project. Anaconda's plan is to discover and develop more resources
within these project areas and substantially increase annual
production at the Pine Cove Mill from its current rate of nearly
16,000 ounces.
As the only pure play gold producer in Atlantic Canada, Anaconda Mining is turning
the rock we live on into a growing and profitable resource. With a
young and motivated workforce, innovative technology and the
support of local suppliers, Anaconda is investing in the people of
Newfoundland & Labrador and
giving back to the communities in which we operate – building a
better future for all our stakeholders, from the ground up.
Paul McNeill, Anaconda's VP of
Exploration and a qualified person pursuant to NI 43-101, has
reviewed and approved the scientific and technical data of Anaconda
contained in this press release.
ABOUT OREX EXPLORATION INC.
Orex is a mineral exploration company based in the Province of
Quebec, Canada. Orex's principal
asset is the Goldboro Project in Nova
Scotia in which it holds a 100% interest. The Goldboro
Project is located approximately 180 kilometres northwest of
Halifax, on the eastern shore of
Nova Scotia. The property
comprises 37 contiguous claims, covering 600 hectares.
Mineral resources occur in three spatially contiguous zones
along the Upper Seal Harbour anticline. These comprise the total
"Goldboro Deposit" and consist of the Boston Richardson Zone, the
East Goldbrook Zone and the West Goldbrook Zone.
Jean-Pierre Landry, P. Eng.,
director and consultant of Orex, is a qualified person pursuant to
NI 43-101, has reviewed and approved the technical information
relating to Orex contained in this press release.
For further details on Orex and the Goldboro Project, please
visit Orex's website at www.orexexploration.ca or Canadian public
filings at Orex's profile at www.sedar.com.
FORWARD-LOOKING INFORMATION
This document contains or refers to forward-looking
information. Such forward-looking information includes, among other
things, the Arrangement, statements regarding the combined company,
estimates and/or assumptions in respect of future production, mine
development costs, unit costs, capital costs, timing of
commencement of operations and future economic, market and other
conditions, and is based on current expectations that involve a
number of business risks and uncertainties. Factors that could
cause actual results to differ materially from any forward-looking
statement include, but are not limited to: the approval of the
Arrangement by the Toronto Stock Exchange and the TSX Venture
Exchange; the approval of the Arrangement by the Ontario Superior
Court of Justice; capital and operating costs varying significantly
from estimates; inflation; changes in exchange rates; fluctuations
in commodity prices; delays in the development of the any projects
caused by unavailability of equipment, labour or supplies, climatic
conditions or otherwise; termination or revision of any debt
financing; failure to raise additional funds required to finance
the completion of a project; the realization of the expected
benefits resulting from the combination of the two entities (or the
strategies or future actions of the companies); and other factors.
Additionally, forward-looking statements look into the future and
provide an opinion as to the effect of certain events and trends on
the business. Forward-looking statements may include words such as
"plans," "may," "estimates," "expects," "intends," "indicates,"
"targeting," "potential" and similar expressions. These
forward-looking statements, including statements regarding Anaconda
and Orex's beliefs in the potential mineralization, are based on
current expectations and entail various risks and uncertainties.
Forward-looking statements are subject to significant risks and
uncertainties and other factors that could cause actual results to
differ materially from expected results. Readers should not place
undue reliance on forward-looking statements. These forward-looking
statements are made as of the date hereof and we assume no
responsibility to update them or revise them to reflect new events
or circumstances, except as required by law.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL
REPORTING
The parties prepare their disclosure in accordance with
the requirements of the securities laws in effect in
Canada, which differ from the
requirements of United States
securities laws. Terms relating to mineral resources in this
press release are defined in accordance with NI 43-101 and the
Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM")
— CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended, which standards
differ significantly from the disclosures permitted by the United
States Securities and Exchange Commission requirements and
terminology set forth in SEC Industry Guide 7. Accordingly,
information contained in this press release and the public filings
of the parties containing descriptions of mineral deposits may not
be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements under
the United States federal
securities laws and the rules and regulations thereunder.
Neither the TSX Venture Exchange nor its regulation service
provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
SOURCE Anaconda Mining Inc.