Highlights
- Brazil Resources agrees to acquire BGC for all-share
consideration.
- BGC shareholders to receive 0.172 Brazil Resources shares
for each BGC share held, representing a premium of approximately
38.9%.
- Directors, officers and significant shareholders of BGC
representing, 19.7% of the outstanding BGC shares have agreed to
support the transaction.
- Following completion of the transaction, current Brazil
Resources shareholders will own approximately 70% of the
outstanding Brazil Resources
Shares and current BGC shareholders will hold approximately 30% of
the outstanding Brazil Resources shares.
- Upon completion, the transaction will significantly expand
the project and resource base of Brazil Resources in Pará State,
including the addition of BGC's Sao Jorge and Boa Vista projects to
its portfolio. At the same time current BGC shareholders have the
opportunity to participate in the combined project portfolio of the
companies.
VANCOUVER, Sept. 30, 2013 /PRNewswire/ - Brazil Resources
Inc. ("Brazil Resources") (TSX-V:
BRI; OTCQX: BRIZF) and Brazilian Gold Corporation ("BGC") (TSX-V:
BGC) are pleased to jointly announce that they have entered into an
arrangement agreement (the "Arrangement Agreement"), pursuant to
which Brazil Resources will acquire all of the outstanding common
shares of BGC (the "BGC Shares") by way of a plan of arrangement
under the Business Corporations Act (British Columbia) (the "Arrangement").
Under the Arrangement, BGC shareholders will
receive 0.172 common shares of Brazil Resources for each BGC Share.
The share exchange ratio represents a premium on the BGC Shares of
approximately 38.9% based on the volume weighted average price of
each company's shares for the 30 preceding trading days. Total
aggregate consideration under the Arrangement is approximately
$13.5 million.
Amir Adnani,
Chairman of Brazil Resources stated: "We are very pleased to
announce this transaction, which is representative of the accretive
opportunities that have arisen as a result of recent market
conditions. The addition of BGC's assets will position us with a
leading project portfolio and development pipeline in Pará State,
which is one of the most active mining jurisdictions in
Brazil. Our stated growth strategy
is predicated on identifying and executing on value opportunities
such as this transaction and our acquisition of the Cachoeira
Project last year."
Ian Stalker,
Chief Executive Officer of BGC stated: "The verbal opinion received
from our independent financial advisor Clarus Securities Inc.
confirms the offer is fair to BGC shareholders. We believe the
enlarged Brazilian gold exploration and development company, will
as a consequence of the merger, have a greater market visibility
and penetration, allowing the company to move forward with more
certainty on the development of the quality assets in its
portfolio. The Board of BGC supports the merger and is committed to
the success of the new enlarged company and whilst recognizing the
difficult market trading/financing environment for junior gold
companies at present believe the quality of the assets will allow
value to be unlocked in the future."
Update by Brazil Resources on its Technical
Disclosure
Brazil Resources also announces that it is in
the process of reviewing and amending its technical report titled
"Technical Report and Resource Estimate on the Cachoeira Property,
Pará State, Brazil" dated
effective April 17, 2013 (the
"Technical Report") to respond to items of non-compliance in the
Technical Report identified by the British Columbia Securities
Commission as a result of a review of Brazil Resources' technical disclosure.
Transaction Details
The Arrangement will be carried out by way of a
plan of arrangement and is subject to court approval and the
approval of at least 66⅔% of the votes cast by BGC shareholders at
BGC's special meeting (the "Meeting"), which is expected to be held
in late-November 2013. The
Arrangement is also subject to customary conditions, including,
among other things, the receipt of applicable regulatory approvals,
including approval of the TSX-V, certain third-party consents and
the satisfaction of other customary closing conditions. Subject to
satisfaction and/or waiver of the conditions under the Arrangement
Agreement pursuant to the terms thereof, the parties expect to
complete the Arrangement in late-November
2013.
An independent special committee of the BGC
board of directors has reviewed and unanimously recommended
approval of the Arrangement to the BGC board of directors. After
taking into account such recommendation and considering, among
other things, the verbal opinion of Clarus Securities Inc.,
financial advisors to BGC, that the consideration to be received by
BGC shareholders under the Arrangement is fair from a financial
point of view to BGC shareholders, the BGC board of directors has
unanimously determined that the Arrangement is in the best
interests of BGC and is fair from a financial point of view to BGC
shareholders (other than Brazil Resources and its affiliates).
The BGC board of directors unanimously
recommends that the BGC shareholders vote in favour of the
Arrangement.
Pursuant to the Arrangement Agreement, BGC has
agreed that it will not solicit or initiate any discussions
concerning any other acquisition proposals. In the event that the
Arrangement is not completed, BGC has agreed, in certain
circumstances, to pay Brazil Resources a termination fee of
$570,000. BRI has agreed to pay BGC
its expenses up to $200,000 in
relation to the Arrangement if the Arrangement Agreement is
terminated in certain circumstances.
Directors, senior officers and key shareholders
of BGC, collectively holding approximately 19.7% of the issued and
outstanding BGC Shares, have entered into agreements with Brazil
Resources under which they have agreed to vote their BGC Shares in
favour of the Arrangement. Pursuant to the Arrangement Agreement,
BGC's directors and senior officers have also entered into lock-up
agreements with Brazil Resources
providing that they will, among other things, not dispose of common
shares of BRI acquired pursuant to the Arrangement until the
earlier of: (i) 12 months after Brazil Resources completes an
equity financing of at least $5.0
million; and (ii) 18 months after the closing of the
Arrangement.
Subject to TSX-V approval, certain senior
officers, directors and consultants of BGC have agreed to accept
BRI shares after closing of the Arrangement in satisfaction of
deferred compensation and directors fees amounting to approximately
$190,000. Such shares are expected to
be issued at a price per share of $0.78 after completion of the Arrangement.
Following completion of the Arrangement and
based on the current number of shares outstanding for each company,
it is expected that current Brazil Resources shareholders will own
approximately 70% of the outstanding Brazil Resources shares and
BGC shareholders will own approximately 30% of the outstanding
Brazil Resources shares (not including any shares issued after
completion of the Arrangement by Brazil Resources in lieu of
deferred compensation payable to BGC's officers and directors).
Details regarding these and other terms of the
Arrangement are set out in the Arrangement Agreement, which will be
available on SEDAR at www.sedar.com. Additional information
respecting the Arrangement and the Arrangement Agreement will be
included in the management information circular to be filed and
mailed to BGC shareholders in connection with approval of the
Arrangement at the Meeting.
About Brazil Resources Inc.
Brazil Resources is a public mineral exploration
company with a focus on the acquisition and development of projects
in emerging producing gold districts in Brazil, Paraguay and other parts of South America. Currently, Brazil Resources is
advancing its Cachoeira, Montes Áureos and Trinta Gold Projects
located in the Gurupi Gold Belt in the state of Maranhão,
northeastern Brazil, and its
Artulandia Copper-Gold Project in central Brazil.
About Brazilian Gold Corporation
BGC is a Canadian-based public company with a
focus on the acquisition, exploration and development of gold
properties located in northern Brazil. BGC has title to one of the largest
mineral exploration land packages (3,753 km2) in the
Tapajós and adjacent Alta Floresta
gold provinces. The land package contains green fields to more
advance stage projects including BGC's flagship São Jorge project.
Rapid improvements to regional infrastructure continue to provide
underlying support to Brazilian Gold's activities in northern
Brazil.
Forward Looking Statements
This document contains certain
forward-looking statements that reflect the current views and/or
expectations of Brazil Resources and/or BGC (the "Companies") with
respect to their respective business and future events, including
statements regarding the Companies' beliefs and expectations
regarding the completion and/or timing of the transactions
contemplated under the Arrangement Agreement. Forward-looking
statements are based on the then-current expectations, beliefs,
assumptions, estimates and forecasts about the business and the
markets in which the Companies operate, including that: the
Companies will be able to obtain all necessary consents and
approvals, including any necessary court, shareholder, third-party
consents and/or regulatory approval; and other conditions under the
Arrangement Agreement will be fulfilled or waived by the parties.
Investors are cautioned that all forward-looking statements involve
risks and uncertainties, including that the Companies may not be
able to satisfy and/or obtain a waiver of their respective
conditions to the transaction thereunder. These risks, as well
as others, including those set forth in the Companies' respective
filings with Canadian securities regulators, could cause actual
results and events to vary significantly. Accordingly, readers
should not place undue reliance on forward-looking statements and
information. There can be no assurance that forward-looking
information, or the material factors or assumptions used to develop
such forward looking information, will prove to be accurate.
Neither Company undertakes any obligations to release publicly any
revisions for updating any voluntary forward-looking statements,
except as required by applicable securities law.
Neither the TSX Venture Exchange nor its
Regulation Services 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.
Brazil Resources Inc.
Stephen Swatton, Chief Executive
Officer
Patrick Obara, Chief Financial
Officer
Telephone: (855) 630-1001
Brazilian Gold Corporation
Ian (John) Stalker, Chief Executive
Officer
Joanne Yan, President
Telephone: (604) 602-8188
SOURCE Brazil Resources Inc.