TORONTO, March 2, 2015 /CNW/ - Sulliden Mining Capital Inc. ("Sulliden" or the "Company") (TSX: SMC) and Coastal Gold Corp. ("Coastal Gold") (TSXV: COD) have signed a definitive arrangement agreement (the "Agreement") pursuant to which Sulliden will acquire all of the issued and outstanding common shares of Coastal Gold by way of a plan of arrangement under the Business Corporations Act (Ontario) (the "Transaction").
Under the terms of the Transaction, Sulliden will acquire each outstanding Coastal Gold common share for 0.05 of a Sulliden share (the "Exchange Ratio"). The Exchange Ratio represents $0.0166 per Coastal Gold common share, based on Sulliden's 60-trading day volume weighted average price ("VWAP") of $0.33. The implied transaction value is approximately $4.06 million, including the assumption of $1.25 million in debt. Upon completion of the Transaction, Coastal Gold will be a wholly-owned subsidiary of Sulliden. The directors of each company have unanimously approved the Transaction.
Highlights of the Hope Brook Gold Project & Benefits to Shareholders:
- High Quality, Advanced Gold Project in Friendly Mining Jurisdiction
Coastal Gold's Hope Brook Project is an advanced-stage gold project located in southwestern Newfoundland with on site grid power, a good road network and a wharf. Hope Brook formerly produced approximately 750,000 oz of gold from 1987 to 1997, and important mine infrastructure remains on site, including a ramp, a tailings pond and an air strip. In the last three years, Coastal Gold has outlined a significant mineral resource, which can immediately be taken to the engineering stage. - Excellent Mineral Expansion Potential
In January 2015, Coastal Gold released a mineral resource of 5,500,000 tonnes grading 4.77 g/t gold containing 844,000 ounces gold in the Indicated category and 836,000 tonnes grading 4.11 g/t gold containing 110,000 ounces gold in the Inferred category. This mineral resource covers approximately 1.5 km of a mineralized structure extending for at least 8 km along strike on its 25,000 ha land package. A number of targets have already been outlined, which have potential to provide excellent exploration upside in the short and long term. Reference is made to the technical report entitled "2015 Mineral Resource Estimate, Technical Report Hope Brook Gold Project, Newfoundland and Labrador, Canada" prepared by Michael Lullen, P.Geo, Mercator Geological Services Limited, effective January 12, 2015 and filed on SEDAR under Coastal Gold's profile on February 24, 2015. - Fast-track Development Potential
Sulliden has the financial resources to rapidly advance the Hope Brook project, while continuing to expand the mineral resource. Upon successful closing of the transaction, Sulliden intends to immediately initiate a preliminary economic assessment on the project. - Management Teams with Proven Track-Record
Sulliden's strong technical team and its capital markets experience will greatly complement the excellent geological work completed at Hope Brook. - Improved Market Presence
The Hope Brook project will become Sulliden's cornerstone asset and will provide a re-rating opportunity as a well funded development-stage company with a proven operating team coupled with significant exploration potential.
Justin Reid, President and CEO of Sulliden, commented "For many months our team has been actively evaluating and visiting global mining projects. Hope Brook proved to be the most accretive for Sulliden. The project met all our criteria with its mining-friendly jurisdiction, its stage of development and the excellent mineral growth potential. With our financial resources and the focus of a proven team, we believe that the fast-track development of this project will generate tangible short and long term value for our shareholders."
Peter Tagliamonte, Director of Sulliden and former Chairman of Sulliden Gold Corporation, commented, "This acquisition represents a great opportunity for the shareholders of both Sulliden and Coastal Gold. By leveraging the exploration success of Coastal Gold's excellent geological team, and Sulliden's strong technical and engineering team, we feel that the Hope Brook project can quickly be advanced to a production decision stage. Our intention will be to immediately advance the engineering side of the Hope Brook Project."
Transaction Summary
The proposed transaction will be completed pursuant to a court-approved plan of arrangement and will require approval by at least 66 2/3% of the votes cast by the shareholders of Coastal Gold at a special meeting. The directors, senior officers and a principal shareholder of Coastal Gold have entered into support agreements pursuant to which they have agreed to vote in favor of the proposed Transaction.
In addition to shareholder and court approvals, the proposed transaction will be subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature, including the acceptance of the Toronto Stock Exchange. It is anticipated that the Coastal Gold shareholder meeting will be held in April 2015. Subject to shareholder, court and regulatory approvals, the Transaction is expected to close by the end of April 2015.
The Agreement includes a commitment by Coastal Gold not to solicit alternative transactions to the proposed Transaction, and a break fee. Each party has also been provided with certain other rights, representations and warranties and covenants customary for a transaction of this nature, and Sulliden has the right to match any competing offers made to Coastal Gold.
Certain officers of Coastal Gold are contractually entitled to severance payments that could be triggered by the Transaction, however each such officer has waived in full his or her severance payments.
The directors of each of Coastal Gold and Sulliden unanimously support the proposed Transaction.
Loan Agreement to Coastal Gold
On February 28, 2015 Sulliden and Coastal Gold entered into a loan agreement whereby Sulliden made available to Coastal Gold up to $150,000 (the "Loan"). The Loan will accrue interest at the rate of 10% per annum and mature on the earlier of the completion of the Transaction and the date that is six months following the termination of the Agreement (the "Maturity Date"). In the event of the termination of the Definitive Agreement, Coastal Gold will have to repay the Loan and all interest accrued.
Qualified Persons
Dr. Bill Pearson, President and CEO of Coastal Gold, is a qualified person as defined under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and has reviewed and approved the scientific and technical content of this news release.
About Sulliden Mining Capital
Sulliden Mining Capital is a venture capital company focused on investments, acquisitions and the development of brownfield, development-stage and early production-stage mining projects in the Americas.
About Coastal Gold
Coastal Gold is a mineral exploration and development company advancing the Hope Brook Gold Project located in southwestern Newfoundland.
Sulliden Mining Capital Inc.
On behalf of the Board
"Justin Reid"
President & Chief Executive Officer
Caution regarding forward-looking information:
Certain information contained in this press release, including any information relating to the Transaction (including the anticipated benefits of the Transaction), and statements that address events or developments that Sulliden or Coastal Gold expects to occur, are "forward-looking information". Forward-looking information includes statements that are not historical facts and are generally, but not always, identified by the words "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. Forward-looking information includes, but is not limited to, statements relating to completion and timing of the acquisition of Coastal Gold, the delivery of the Hope Brook PEA, the upside potential of Hope Brook and the Hope Brook mineral resource estimate and its potential to be increased. All such forward-looking information is subject to important risk factors and uncertainties, many of which are beyond Sulliden's or Coastal Gold's ability to control or predict. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause Sulliden's or Coastal Gold's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Assumptions upon which such forward-looking information is based on include the estimation of mineral resources, the availability of necessary financing and materials to continue to explore and develop Hope Brook, that Sulliden and Coastal Gold will be able to satisfy the conditions contained in the Letter of Intent, that the required approvals will be obtained from the shareholders of Coastal Gold, that all third party, court, regulatory and governmental approvals to the Transactions will be obtained, including from the Exchange and all other conditions to completion of the Transaction will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Sulliden and Coastal Gold and there is no assurance they will prove to be correct. Such factors include, without limitation: capital requirements; fluctuations in the international currency markets and in rates of exchange of metal prices; changes in national and local government legislation in Canada or any other country in which Sulliden and Coastal Gold currently or may in the future carry on business; taxation; controls, regulations and political or economic developments in the countries in which Sulliden and Coastal Gold do or may carry on business; competition; loss of key employees; and additional funding requirements.
Any forward-looking information speaks only as of the date on which it is made and Sulliden and Coastal Gold expressly disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws. Although each of Sulliden and Coastal Gold believe that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
SOURCE Sulliden Mining Capital
