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