Extorre Gold Mines Limited (NYSE MKT:XG)(NYSE
Amex:XG)(TSX:XG)(FRANKFURT:E1R) ("Extorre" or the "Company") is
pleased to announce today that it has entered into a definitive
agreement (the "Agreement") with Yamana Gold Inc.
(TSX:YRI)(NYSE:AUY)(LSE:YAU) ("Yamana") pursuant to which Yamana
will acquire all of the issued and outstanding common shares of
Extorre ("Extorre Shares") by way of a statutory plan of
arrangement (the "Arrangement") under the Canada Business
Corporations Act.
Transaction Details
Under the terms of the Agreement, each Extorre shareholder will
receive in exchange for each Extorre Share held, $3.50 in cash and
0.0467 of a common share of Yamana ("Yamana Share"). Each holder of
an Extorre stock option (an "Option") shall be entitled to receive,
upon the exercise of such Options, Yamana Shares based upon a share
exchange ratio of 0.2648 of a Yamana Share for each Extorre Share
which would have been issuable upon exercise of such Options prior
to the effective date of the Arrangement.
Based on the closing price of the Yamana Shares on the Toronto
Stock Exchange ("TSX") of $16.36 on June 15, 2012, the last trading
day before announcement of the Arrangement, the implied transaction
price of $4.26 per Extorre Share represents a premium of
approximately 54% over the 20-day volume weighted average price of
the Extorre Shares on the TSX for the period ending June 15, 2012.
The transaction value on a basic shares outstanding basis is
approximately $414 million.
Completion of the Arrangement is subject to certain customary
conditions, including receipt of all necessary court, shareholder
and regulatory approvals. The Agreement also provides for, among
other things, customary non-solicitation covenants, a "right to
match" in favour of Yamana in the event of a superior proposal and
the payment by Extorre to Yamana of a $15 million termination fee
should the Arrangement Agreement be terminated in certain
circumstances.
The special meeting for Extorre shareholders to approve the
Arrangement is expected to occur on or about August 15, 2012. The
Arrangement must be approved by 66 2/3% of the Extorre Shares voted
at the meeting.
Yale Simpson, Co-Chairman of Extorre commented on the
Arrangement as follows:
"We are pleased to be entering into this transaction with
Yamana. Extorre's share price has suffered dramatically over the
past few months due to a number of factors including: global
political and economic uncertainty impacting credit markets; a
broad sell-off of all junior non-producing gold companies; concerns
with respect to share dilution arising from a decision to develop
the Cerro Moro project; and a series of events that have raised the
perceived investment risk in Argentina.
Management and the board of directors of Extorre diligently
examined all of the available options to finance the Cerro Moro
project to production, but given current market conditions,
whatever financing mix was chosen, the result would be a serious
erosion of the project returns. In conclusion, if Extorre were to
lock into the current fiscal/operating environment, the value of
the Cerro Moro project to shareholders would be significantly
diminished. Aside from this, management did not believe shelving a
development decision for any length of time would be viable.
The Cerro Moro project fits very well into Yamana's portfolio
and Yamana has both the operational experience in Argentina and
financial strength to develop the project on a timely basis. Given
the full set of circumstances faced by the Company, the board of
directors of Extorre was unanimous in concluding that this
transaction represents a good outcome for all stakeholders."
The board of directors of Extorre, based on the recommendation
of its special committee, unanimously determined the Arrangement to
be in the best interests of the Company and recommends that the
Extorre shareholders vote in favour of the Arrangement.
Voting and Support Agreements
Each of the senior officers and directors of Extorre,
representing, in aggregate, approximately 7.4% of the issued and
outstanding Extorre Shares, has entered into a voting and support
agreement with Yamana, pursuant to which, among other things, they
have agreed to vote their Extorre Shares in favour of the
Arrangement, not to solicit other transactions and to otherwise
support the Arrangement.
Advisors
Extorre's financial advisor for the Arrangement is Canaccord
Genuity Corp. and its legal advisor is Gowling Lafleur Henderson
LLP. The financial advisor to the special committee of independent
directors of Extorre is Gryphon Partners Canada Inc., a wholly
owned subsidiary of Standard Chartered Bank, and its legal advisor
is Blake, Cassels & Graydon LLP. Each of Canaccord Genuity
Corp. and Gryphon Partners Canada Inc. delivered oral opinions that
the consideration to be received by the Extorre shareholders is
fair from a financial point of view to the Extorre shareholders
other than Yamana and its affiliates.
About Extorre
Extorre is a junior mining company with exploration and
development stage precious metals projects in Argentina, the most
advanced of which is its Cerro Moro project in the province of
Santa Cruz. Extorre Shares are listed on the TSX and NYSE-MKT
Exchanges under the symbol XG. You are invited to visit the
Extorre's website at www.extorre.com.
About Yamana
Yamana is a Canadian-based gold producer with significant gold
production, gold development stage properties, exploration
properties, and land positions in Brazil, Argentina, Chile, Mexico
and Colombia. Yamana plans to continue to build on this base
through existing operating mine expansions, throughput increases,
development of new mines, the advancement of its exploration
properties and by targeting other gold consolidation opportunities
with a primary focus in the Americas.
EXTORRE GOLD MINES LIMITED
Mr. Yale Simpson, Co-Chairman
Safe Harbour Statement - This news release contains
"forward-looking information" and "forward-looking statements"
(together, the "forward-looking statements") within the meaning of
applicable securities laws and the United States Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
made as of the date of this news release. Readers are cautioned not
to place undue reliance on forward-looking statements, as there can
be no assurance that the future circumstances, outcomes or results
anticipated in or implied by such forward-looking statements will
occur or that plans, intentions or expectations upon which the
forward-looking statements are based will occur. While we have
based these forward-looking statements on our expectations about
future events as at the date that such statements were prepared,
the statements are not a guarantee that such future events will
occur and are subject to risks, uncertainties, assumptions and
other factors which could cause events or outcomes to differ
materially from those expressed or implied by such forward-looking
statements. Such factors and assumptions include, among others, the
effects of general economic conditions, the price of gold and
silver, changing foreign exchange rates and actions by government
authorities, uncertainties associated with legal proceedings and
negotiations and misjudgements in the course of preparing
forward-looking statements. In addition, there are known and
unknown risk factors which could cause our actual results,
performance or achievements to differ materially from any future
results, performance or achievements expressed or implied by the
forward-looking statements.
Known risk factors include risks associated with project
development; the need for additional financing; operational risks
associated with mining and mineral processing; fluctuations in
metal prices; title matters; uncertainties and risks related to
carrying on business in foreign countries; environmental liability
claims and insurance; reliance on key personnel; the potential for
conflicts of interest among certain of our officers, directors or
promoters of with certain other projects; the absence of dividends;
currency fluctuations; competition; dilution; the volatility of the
price of Extorre Shares and volume traded; tax consequences to U.S.
investors; and other risks and uncertainties, including those
relating to the Cerro Moro project and general risks associated
with the mineral exploration and development industry described in
the Company's Amended Annual Information Form for the fiscal period
ended December 31, 2011, dated March 30, 2012 filed with the
Canadian Securities Administrators and available under the
Company's profile on SEDAR at www.sedar.com. Although we have
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. We are under no obligation to
update or alter any forward-looking statements except as required
under applicable securities laws.
Cautionary Note to United States Investors - The information
contained herein and incorporated by reference herein has been
prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of United States
securities laws. In particular, the term "resource" does not equate
to the term "reserve". The Securities Exchange Commission's (the
"SEC") disclosure standards normally do not permit the inclusion of
information concerning "measured mineral resources", "indicated
mineral resources" or "inferred mineral resources" or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute "reserves" by SEC standards, unless such
information is required to be disclosed by the law of the Company's
jurisdiction of incorporation or of a jurisdiction in which its
securities are traded. U.S. investors should also understand that
"inferred mineral resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. Disclosure of "contained ounces" is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures.
NEITHER THE TSX NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX) ACCEPTS RESPONSIBILITY
FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
Contacts: Extorre Gold Mines Limited Rob Grey VP Corporate
Communications 604.681.9512 or Toll-free: 1.888.688.9512
604.688.9532 (FAX) Extorre Gold Mines Limited Suite 1660, 999 West
Hastings St. Vancouver, BC Canada V6C 2W2 www.extorre.com
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