Troilus Gold Corp. (TSX: TLG) (OTCQB: CHXMF) (“Troilus” or the
“Company”) and UrbanGold Minerals Inc. (TSXV: UGM) (“UrbanGold”)
are pleased to announce that the companies have entered into a
definitive agreement (the “Agreement”), pursuant to which Troilus
has agreed to acquire all of the issued and outstanding common
shares of UrbanGold (the “UrbanGold Shares”) that it does not
currently own (the “Transaction”). Troilus currently owns 6,156,291
UrbanGold Shares, or approximately 9.7% of the UrbanGold Shares
outstanding. The Transaction is being carried out by way of a
three-cornered amalgamation (the “Amalgamation”) under the Canada
Business Corporations Act (Canada). UrbanGold shareholders will be
asked to vote on the Amalgamation at a special meeting of UrbanGold
shareholders (the “UrbanGold Meeting”) with closing expected to
take place by the end of May 2021.
Under the terms of the
Agreement, UrbanGold shareholders will receive 0.3004 of a Troilus
common share (the “Troilus Shares”) for each UrbanGold Share (the
“Exchange Ratio”). The Exchange Ratio implies a consideration of
C$0.30 per UrbanGold Share based on the 20-day volume weighted
average price (“VWAP”) of the Troilus Shares on the Toronto Stock
Exchange (“TSX”) on March 22, 2021 for a total consideration of
approximately C$19 million on a 100% and basic basis. The Exchange
Ratio represents a premium of 35.3% based on the 20-day VWAP of the
UrbanGold shares ending on March 22, 2021. All of UrbanGold
management and board, together representing 6.59% of the UrbanGold
Shares, are supportive of the Transaction and have entered into
support agreements with Troilus to vote their UrbanGold Shares in
favour of the Amalgamation.
“The acquisition of
Urban Gold aligns with Troilus’ focus on developing a near-term
production asset while executing a growth strategy supported by a
broad portfolio of exploration and early-development assets within
the Frôtet Evans Belt and Quebec. We look forward to welcoming
Urban’s shareholders to Troilus and our continued success
together,” stated Justin Reid, Troilus CEO.
Jens E. Hansen,
Interim President and CEO of UrbanGold Minerals stated, “We’re
incredibly pleased to be working with Troilus Gold in further
developing the Troilus area properties and our other Quebec assets.
This amalgamation will benefit UrbanGold shareholders by giving
exposure to a nearby advanced gold-copper permitted deposit, with
an established infrastructure, and will allow for fast tracking of
exploration work on UrbanGold’s property, with substantial cost
savings. I want to thank the UrbanGold team for putting together an
excellent property package, especially in regards to the Bullseye
and Pallador properties located in the Troilus area.”
Transaction
Highlights
Consolidation of Near-Term Growth
Targets Within the Frôtet-Evans Greenstone Belt
– UrbanGold will add its 35.1 thousand-hectare land
package adjacent to Troilus’ existing 107.3 thousand-hectare
Troilus property, further solidifying Trolius’ status as the
largest mineral claims holder in the region. Drill-ready targets
throughout the consolidated land package offer further growth
potential to the long-term scale and scope of the Troilus
asset.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/4b58f65c-88c9-4341-8da1-eb4fe93f1c57
Figure 1: Troilus
Property and Claims in which Troilus will acquire
an interest from UrbanGold
Benefits to
UrbanGold Shareholders
- An immediate and
significant premium;
- Continued
exposure to UrbanGold’s assets and the opportunity to participate
in the anticipated benefits of further consolidating the
Frôtet-Evans Greenstone Belt through the ownership of the Troilus
Shares;
- Diversification
away from joint ventures and exposure to Troilus’ 100% owned
properties;
- Exposure to
Troilus’ permitted advanced development asset with extensive
infrastructure already in place at site, an existing total
estimated indicated mineral resource of 4.96 Moz AuEq (177 Mt with
an average grade of 0.87 g/t AuEq) and total estimated inferred
mineral resource of 3.15 Moz AuEq (116.7 Mt with an average grade
of 0.84 g/t AuEq) and a Preliminary Economic Assessment that
demonstrates robust economics and operational viability;
- Access to an
experienced and proven technical and management team that has
demonstrated the ability to advance mineral exploration
projects;
- Significantly
strengthened balance sheet and access to capital, thereby avoiding
highly dilutive equity financings that are expected to be required
if UrbanGold were to pursue a “go-alone” strategy;
- Significantly
greater trading liquidity through receiving the Troilus Shares,
providing exposure to a larger and more diverse group of
institutional and retail investors; and
- Enhanced capital
markets support through Troilus’ current equity research coverage
and capital markets relationships in the United States, Europe and
Canada.
Benefits to
Troilus Shareholders
- Solidifies
Troilus’ strategic positioning as the preeminent mineral
exploration and development company in the Frôtet-Evans Greenstone
Belt with a pro forma land position of 142.4 thousand-hectares upon
completion of the Transaction;
- Enhances
Troilus’ exploration and growth profile with the addition of
UrbanGold’s underexplored asset portfolio, including the BullsEye
project;
- Cashless
transaction expands Troilus property by 33%, including the highly
prospective Cressida block directly adjacent to Troilus’ recent
Beyan discovery, with no negative impact on the balance sheet of
the Company;
- Addition of
UrbanGold claims contributes to continuity of land holdings,
building upon Troilus’ objective to identify multiple mineral
production centres on the property; and
- Future blue-sky
opportunities via UrbanGold’s portfolio of non-core properties in
other parts of Quebec.
Terms of the
Agreement
Subject to the TSX
Venture Exchange and any other required regulatory authority
approval, outstanding UrbanGold warrants will be exercisable in
accordance with their terms into Troilus Shares at the Exchange
Ratio until their expiry date.
Pursuant to the
Amalgamation, Troilus will issue approximately 17.2 million Troilus
Shares (or approximately 18.7 million Troilus Shares assuming the
exercise of all UrbanGold options) to UrbanGold shareholders (other
than itself) and UrbanGold will amalgamate with a newly
incorporated wholly owned subsidiary of Troilus to become a wholly
owned subsidiary of Troilus. The Amalgamation represents
approximately 11.5% dilution to Troilus shareholders (or 12.4%
assuming the exercise of all UrbanGold options).
Implementation of the
Amalgamation is subject to approval by (i) at least two-thirds of
the votes cast by all UrbanGold shareholders and (ii) a simple
majority of the votes cast by UrbanGold shareholders other than
“interested parties” and their “joint actors” as such terms are
defined in Multilateral Instrument 61-101 Protection of Minority
Security Holders in Special Transactions, all at the UrbanGold
Meeting. In addition to shareholder approval, completion of the
Amalgamation is subject to the receipt of regulatory approvals,
including stock exchange approvals, as well as certain other
closing conditions customary in transactions of this nature.
The Agreement contains
customary non-solicitation provisions which are subject to
UrbanGold’s right to consider and accept a superior proposal
subject to a matching right in favour of Troilus. In the event that
the Amalgamation is not completed as a result of a superior
proposal or in certain specific circumstances, UrbanGold will pay
Troilus a termination fee in the amount of $500,000.
Board of
Directors Recommendation
The board of directors
of UrbanGold (the “UrbanGold Board”) has formed a special committee
(the “Special Committee”) to consider and evaluate the
Amalgamation. The Special Committee, following a review of the
terms and conditions of the Agreement and consideration of a number
of factors, unanimously recommended that the UrbanGold Board
approve the Amalgamation. After receiving the recommendation of the
Special Committee and advice, including a fairness opinion, from
its advisors, the UrbanGold Board has unanimously determined that
the Amalgamation is in the best interests of UrbanGold and will
recommend that UrbanGold shareholders vote in favour of the
Amalgamation. Prior to the execution of the Agreement, iA Capital
Markets provided a fairness opinion that, based upon and subject to
the assumptions, limitations and qualifications in such opinion,
the consideration to be received by the UrbanGold shareholders is
fair, from a financial point of view, to UrbanGold shareholders
(other than Troilus and its affiliates). A summary of the fairness
opinion will also be included in the UrbanGold management
information circular.
UrbanGold
Delisting and SEDAR
If the Amalgamation is
completed, the UrbanGold Shares will be delisted from the TSX
Venture Exchange.
A copy of the
Agreement will be available through UrbanGold and Troilus’ filings
with the applicable securities regulatory authorities in Canada on
SEDAR at www.sedar.com.
Advisors and
Counsel
Cormark Securities
Inc. is acting as financial advisor and Cassels Brock &
Blackwell LLP is acting as legal counsel to Troilus. iA Capital
Markets has provided the Special Committee with a fairness opinion
in respect of the Transaction and Lavery, de Billy LLP is acting as
legal counsel to UrbanGold.
Qualified PersonThe technical
and scientific information in this press release as it relates to
Troilus has been reviewed and approved by Bertrand Brassard, M.Sc.,
P.Geo., Chief Geologist, who is a Qualified Person as defined by NI
43-101. Mr. Brassard is an employee of Troilus and is not
independent of the Company under NI 43-101. Please refer to
Troilus’ Technical Report available on SEDAR and titled
“Preliminary Economic Assessment of the Troilus Gold Project,
Quebec, Canada” dated October 14, 2020 (the mineral resource has an
effective date of July 20, 2020 and the PEA has an effective date
of August 31, 2020) prepared by Gordon Zurowski, P. Eng. Principal
Mining Engineer, AGP Mining Consultants Inc. (“AGP”), Paul Daigle,
P. Geo, Senior Associate Geologist, AGP and Mr. Andy Holloway, P.
Eng, Principal Processing Engineer, AGP. for more information with
respect to the key assumptions, parameters, methods and risks
associated with the mineral resource estimates disclosed
therein.
About Troilus Gold Corp.
Troilus is a Toronto-based, Quebec focused,
advanced stage exploration and early-development company focused on
the mineral expansion and potential mine re-start of the former
gold and copper Troilus mine. The 107,326-hectare Troilus property
is located within the Frôtet-Evans Greenstone Belt in Quebec,
Canada. From 1996 to 2010, Inmet Mining Corporation operated the
Troilus project as an open pit mine, producing more than 2,000,000
ounces of gold and nearly 70,000 tonnes of copper.
About UrbanGold Minerals
Inc.
UrbanGold is a precious and base metals
exploration company with its activities focused in prospective
areas of Quebec. The Company specializes in project generation
supported by substantial exploration expertise.
For more information:
Justin ReidChief Executive Officer, Troilus
Gold Corp.+1 (647) 276-0050 x 1305justin.reid@troilusgold.com
Jens E. Hansen, P.Eng.Interim CEO, UrbanGold
Mineralsjeskhansen@gmail.com 613-721-2919
Mathieu Stephens, P.
Geo.mstephens@urbangoldminerals.com613-721-2919
Cautionary Note Regarding
Forward-Looking Statements and Information
This press release
contains forward-looking statements and forward-looking information
(collectively, "forward-looking statements") within the meaning of
applicable securities laws. Such forward-looking statements
include, without limitation, statements regarding the anticipated
benefits of the Transaction for the parties thereto and their
shareholders, timing of the completion of the Transaction, expected
regulatory approvals, future results of operations, performance and
achievements of the parties to the Transaction, mineral resource
estimates of Troilus and benefits of the PEA. Although the parties
each believes that such forward-looking statements are reasonable,
it can give no assurance that such expectations will prove to be
correct. Forward-looking statements are typically identified by
words such as: believe, expect, anticipate, intend, estimate,
postulate and similar expressions, or are those, which, by their
nature, refer to future events. Each party cautions investors that
any forward-looking statements contained herein are not guarantees
of future results or performance, and that actual results may
differ materially from those in forward-looking statements as a
result of various factors and risks, including, uncertainties with
respect to obtaining all regulatory and/or shareholder approvals to
complete the Transaction, risks with respect to UrbanGold’s being
integrated successfully in Troilus’ business or such integration
proving more difficult, time consuming or costly than expected,
risks of not realizing on the potential benefits of the proposed
Transaction, uncertainties relating to the COVID-19 pandemic,
uncertainties of the global economy, market fluctuations, any
exercise of termination by counterparties under the Agreement, the
inability of a party to obtain any necessary permits, consents or
authorizations required for its activities, to produce minerals
from its properties successfully or profitably, to continue its
projected growth, to raise the necessary capital or to be fully
able to implement its business strategies, uncertainties inherent
to mineral resource estimates and economic studies such as the PEA
and other risks identified it’s the disclosure documents filed by
each party to the Transaction at www.sedar.com. This press release
is not and is not to be construed in any way as, an offer or
recommendation to buy or sell securities in Canada or in the United
States.
Although the parties
to the Transaction each believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
events, results and/or developments may differ materially from
those in the forward-looking statements. Readers should not place
undue reliance on the ’forward-looking statements contained herein.
No party to the Transaction undertakes to update any
forward-looking statement that may be made from time to time by the
said party or on its behalf, except in accordance with and as
required by applicable securities laws.
UrbanGold shareholders
and other interested parties are advised to read the materials
relating to the proposed transaction that will be filed by
UrbanGold with securities regulatory authorities
in Canada when they become available because they will
contain important information. Anyone may obtain copies of
these documents when available free of charge at the Canadian
Securities Administrators' website at www.sedar.com.
This announcement is for informational purposes only and does not
constitute an offer to purchase, a solicitation of an offer to sell
the shares or a solicitation of a proxy.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER ACCEPTS RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE.
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