Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE: KNB)(FRANKFURT:
3KG.DE) has rejected a written all cash takeover proposal from
Orvana Minerals Corp. ("Orvana") (TSX: ORV) dated May 6, 2009, and
amended May 8th. Under the proposal, Orvana would pay $0.55 per
share for all of the outstanding shares of Kinbauri The proposal is
conditional on Kinbauri not consummating the previously announced
deal with Glen Eagle Resources Inc. ("Glen Eagle") (TSX VENTURE:
GER). (See Kinbauri press release April 17, 2009;Kinbauri Secures
$32M funding for El Valle / Carles.)
The board of directors ("Board") of Kinbauri appointed an
independent committee to review the proposed offer, consider other
alternatives and make a recommendation to the board of directors.
Based on the committee's recommendations, the Board unanimously
rejected the proposed offer based on the structure provided to
Kinbauri.
The announced transaction with Glen Eagle is moving towards
completion, with an anticipated closing date on or about May 28,
2009. All terms have been agreed to, and signed off by both
parties. The transaction is now waiting for the required approvals
and transfer of funds. Kinbauri has received conditional approval
from the TSX Venture Exchange.
Under terms of the agreements, Glen Eagle will invest C$32M for
a 45% interest in Kinbauri's 100% owned subsidiary, Kinbauri Espana
S.L., ("Espana"), which holds a 100% interest in the El
Valle/Carles project for 45% of Espana. The agreement also allows
Glen Eagle the right to buy a further 5% interest for an additional
C$5M. This transaction implies a value for Kinbauri of $1.60 per
share, without consideration of Kinbauri's other assets, far
superior to the offer being made by Orvana.
The implied value is based on Glen Eagle's investment together
with the Scoping Study prepared by Scott Wilson Roscoe Postle
Associates (the "Scoping Study") for the El Valle/Carles project
(see Kinbauri's press release, March 13th, 2009, Kinbauri Files
Revised Scoping Study) and a new mine plan prepared by Kinbauri's
engineers. The calculation follows from the following
assumptions.
- After Tax Net Present Value (10% discount): CDN$171 million
(assuming $910/ounce Au, $1.50/lb Cu, and 1 Euro = CDN$1.6)
- Current Kinbauri shares outstanding of 53.24 million
- Glen Eagle invests CDN$37 million for 50% of Espana
- Pre-production capex of CDN$57 million (per new mine plan),
leaving $20 million of pre-production capex to be financed by
Kinbauri and Glen Eagle through project financing; no additional
equity required
- Implied price per share of Kinbauri based on after-tax NPV of
CDN$171 million with Kinbauri entitled to fifty percent.
Reader's should be cautioned that Scoping Study results include
some mineral resources that are not mineral reserves and that only
mineral reserves are accepted as having demonstrated economic
validity.
Dr. Vern Rampton, Kinbauri, President & CEO commented, "We
have been in discussion with several companies with regard to the
development of El Valle and Carles, with a desire to do what the
board believes is best for the shareholders. To now sell our
company at this price would be without recognition of its true
value and without recognition of upside from development and
production of the property to shareholders. This holds especially
true with the recognition that El Valle should be in production in
approximately one year and generating significant after-tax cash
flows to Kinbauri in excess of the average annual after-tax cash
flows of 18 million Canadian estimated by the Scoping Study."
With the funding supplied by Glen Eagle the company plans to
proceed aggressively towards production, with a current plan that
contemplates a re-start in May 2010. Requests for proposals to
complete the feasibility study are being solicited and work is
scheduled to begin this month. In concert, Kinbauri plans to start
pre-production work based on the recently completed Scoping Study
(SEDAR filed Technical Report of April 20, 2009). This work will
include drilling to convert resources from inferred to measured and
indicated, test mining of the high grade 107 Area ("107 Zone"),
ramp and plant rehabilitation, metallurgical test-work,
geotechnical and environmental studies and permitting.
The new plan, as evolved from the Scoping Study, calls for a new
portal near the El Valle mill to allow early access to the top of
the 107 Zone, allowing early recommencement of production. Decline
development and mining will continue down and parallel to the 107
Zone, allowing mill feed to consist of higher grade material in the
early stages of production. Mill feed will be supplemented with ore
from the present decline and the Carles mine. It is estimated that
the new plan will increase cash flow and profitability relative to
the Scoping Study estimates and decrease pre-production capex
significantly from the Scoping Study estimate of 89M Euros and that
any future financing would be minimal , attracting project
financing at favourable terms.
This press release has been prepared by Dr. Vern Rampton, P.
Eng., President and Brian McEwen, P Geol, Director and Chairman of
Kinbauri's Technical and Strategic Planning Committees in their
capacity as qualified persons. Dr. Rampton previously recorded a
"Beyond the Press Release" webcast concerning the Glen Eagle
investment on April 17th and how it affects development at el
Valle/Carles project on Kinbauri's Investor Relation site at
http://www.agoracom.com/IR/kinbauri.
About Kinbauri:
Kinbauri is a TSXV - Tier 1 Mineral Exploration Company focused
on the development of precious metal prospects in Spain, Nevada and
Canada. Its immediate focus is to begin operations at its El
Valle/Carles property in Asturias, northwestern Spain by 2010. It
has 53,243,051 common shares issued and outstanding.
This press release contains certain forward-looking statements,
which are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks
and uncertainties and other factors that could cause actual events
or results to differ materially from those projected. Kinbauri
undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change.
The reader is cautioned not to place undue reliance on
forward-looking statements.
VISIT:
Kinbauri Gold's Hub at http://www.agoracom.com/IR/kinbauri where
investors can post questions and receive answers or review
questions and answers already posted by other investors. Kinbauri
Web-Site: www.kinbauri-gold.com.
THIS PRESS RELEASE WAS PREPARED BY KINBAURI GOLD CORP. 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
RELEASE.
Contacts: North America Kinbauri Gold Corp. Darrell Munro, BB.A,
LL.B Manager, Corporate Communications 613-836-0198
dmunro@kinbauri-gold.com Kinbauri Gold Corp. Dr. Vern Rampton, P.
Eng. President 613-836-2594 613-831-2730 (FAX)
vrampton@kinbauri-gold.com kinbauri@kinbauri-gold.com Kinbauri Gold
Corp. Brian McEwen, P Geol. Director 604-551-6979
bmcewen@kinbauri-gold.com Europe INVESTEL Ruediger (Rudy) Hnyk CEO
Investor Relations & Telecommunications ceo@investel.de
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