The Board of Directors of Freewest Resources Canada Inc. (TSX
VENTURE: FWR) is pleased to announce that Freewest has entered into
an Arrangement Agreement with Cliffs Natural Resources Inc. (NYSE:
CLF)(PARIS: CLF) whereby Cliffs will acquire all of the shares of
Freewest in a Board-supported transaction with a total estimated
value of C$150.6 million, or C$0.70 per Freewest share.
Under the terms of the Arrangement, each Freewest shareholder
will receive a fraction of a Cliffs share representing a fixed
value of C$0.55, and one share of a new company, Freewest Resources
Inc. ("New Freewest"), which will own Freewest's current portfolio
of non-chromite exploration properties, estimated by Freewest to
have a value of C$0.15, for a total estimated value of C$0.70 per
Freewest share.
New Freewest will be a well-funded, Canadian-focused mineral
exploration company with C$2.0 million in cash, Freewest's shares
of Quest Uranium Corporation (TSX VENTURE: QUC), and a portfolio of
exploration assets that include the high-grade Clarence Stream gold
property in New Brunswick, Canada, which currently contains
Indicated Resources of 235,000 ounces of gold grading 8.99 g/t and
Inferred Resources of 156,000 ounces of gold grading 7.35 g/t.
Clarence Stream also has Indicated Resources of antimony estimated
at 126,000 tonnes averaging 2.3% antimony, or 6,395,000 pounds of
antimony. New Freewest will be managed by the current Freewest
Board and management, a highly-experienced team with a proven track
record of finding deposits and creating value for shareholders.
Of the total transaction value of C$150.6 million, C$118.3
million is attributable to the shares of Cliffs while an estimated
C$32.3 million is attributable to the shares of New Freewest to be
distributed to Freewest shareholders. Cliffs' shares are listed on
the New York Stock Exchange, where their closing price on November
20 was US$43.02. The transaction will provide a premium of 122.2%
to the closing price of Freewest's shares on the TSX Venture
Exchange on October 2, 2009, immediately prior to the announcement
by Noront Resources Ltd. of its unsolicited offer for Freewest's
shares, and a premium of 27.3% to Freewest's closing price on
November 20, 2009.
"We are delighted to announce this transaction", said Mackenzie
I. Watson, President and Chief Executive Officer of Freewest. "We
believe this transaction is clearly superior to the proposal put
forward by Noront. It will provide Freewest shareholders with
highly-liquid shares in a company with a market capitalization in
excess of US$5 billion, while allowing New Freewest to continue as
a well-financed exploration company focused on the high-grade
Clarence Stream gold property and an attractive suite of
early-stage exploration properties. The New Freewest shares
represent significant value and ongoing upside potential."
The transaction will be effected by way of Plan of Arrangement.
Freewest expects to mail a management proxy circular to
shareholders in December for a special meeting of shareholders to
be held in January 2010. It is expected that the transaction will
be completed shortly after the special shareholders' meeting.
The transaction with Cliffs has the unanimous support of a
Special Committee of the Board of Directors of Freewest, and of the
entire Board. The decision of the Board was based in part on a
fairness opinion provided by CIBC World Markets Inc., the Board's
financial advisor. A copy of the fairness opinion will be included
in Freewest's management proxy circular.
The details of the agreement with Cliffs are as follows:
- Freewest shareholders will receive C$0.55 per share in fixed
value of Cliffs shares, with the precise number of Cliffs shares to
be issued based on their market value on the NYSE shortly before
the effective date of the transaction, expected to be in January
2010
- Freewest shareholders will also receive one share of New
Freewest, with an estimated value of C$0.15, for each share of
Freewest. New Freewest will:
-- be well capitalized, with C$2 million in cash
-- own all of Freewest's assets and properties, except for the
McFaulds 100%-owned property and McFaulds joint venture
property
-- own 4,187,760 shares of Quest Uranium Corporation, with a
market value as of November 20, 2009 of C$13.3 million
-- apply to list its shares on the TSX Venture Exchange
-- have the current Board of Directors and management of
Freewest, led by Mackenzie I. Watson, as its Board of Directors and
management
- all holders of vested "in-the-money" Freewest warrants and
stock options will receive a cash payment equal to the difference
between C$0.70 and the exercise price of the warrants or stock
options
- all of Freewest's directors and officers have entered into
voting support agreements with Cliffs under which they have agreed
to vote all of their shares in favour of the transaction
"The transaction with Cliffs will benefit all of Freewest's
shareholders", added Mr. Watson. "Our shareholders will become
shareholders of Cliffs, listed on the New York Stock Exchange, as
well as shareholders of New Freewest. The shares of Cliffs are very
liquid, which will be advantageous for our shareholders. As Cliffs
has provided a floating exchange ratio which guarantees C$0.55 per
share on closing, the value of Cliffs' proposal is far less
volatile than Noront's hostile bid, which offers a fixed ratio of
Noront shares as consideration. As well, Cliffs has the resources
to develop the McFaulds chromite properties, while New Freewest
will focus on exploration."
Freewest and Cliffs have also agreed that Cliffs will subscribe
for 6,908,440 common shares of Freewest at a price of C$0.60 per
share, for proceeds to Freewest of C$4,145,064. The proceeds from
the private placement will be used by Freewest for working capital
purposes and for continuing work on Freewest's 100%-owned McFaulds
property. Following the private placement, Cliffs will indirectly
hold 21,658,440 common shares, representing 9.75% of the Freewest
shares that will be outstanding. The private placement is subject
to approval by the TSX Venture Exchange.
Freewest's Board of Directors unanimously recommends that
Freewest shareholders approve the transaction with Cliffs at the
forthcoming special meeting of shareholders. The Board of Directors
continues to recommend that Freewest shareholders REJECT the
hostile take-over bid made by Noront on October 13, 2009 and NOT
tender their shares to the Noront offer, which will expire on
December 1, 2009. The Board of Directors maintains its view that
the Noront offer is financially inadequate and opportunistic, and
fails to recognize the strategic value of Freewest's assets and its
future value-creation.
The Arrangement Agreement with Cliffs contains, among other
things, a non-solicitation covenant by Freewest, subject to
customary provisions that entitle Freewest to consider and accept a
superior proposal; a right in favour of Cliffs to match any
superior proposal; and the payment by Freewest to Cliffs of a
termination payment equal to C$6 million if the transaction is not
completed as a result of a superior proposal, and in certain other
circumstances.
The transaction between Freewest and Cliffs is subject to a
number of conditions, including obtaining the approval of at least
two-thirds of the Freewest shares voted at a special meeting of
shareholders, and a simple majority of the Freewest shares voted at
the special meeting, other than shares held by certain officers of
Freewest. The transaction is also subject to court approval as a
plan of arrangement, listing approval from the TSX Venture Exchange
in respect of the shares of New Freewest to be distributed to
Freewest shareholders, and a number of other customary
conditions.
CIBC World Markets Inc. is acting as financial advisor and
Heenan Blaikie LLP as legal advisor to Freewest in connection with
the transaction. Cliffs is advised by BMO Capital Markets and
Blake, Cassels and Graydon LLP.
Conference Call
Freewest will hold a conference call regarding the transaction
with Cliffs on Tuesday, November 24. Details regarding the
conference call will be communicated shortly.
About Freewest
Freewest is a mineral exploration company actively exploring for
gold, base-metals and chromite within eastern Canada. Corporate
information can be accessed on the Internet at www.freewest.com.
Freewest's shares are listed on Tier 1 of the TSX Venture Exchange
under the symbol FWR.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources (NYSE: CLF)(PARIS: CLF) is an
international mining and natural resources company. It is the
largest producer of iron ore pellets in North America, a major
supplier of direct-shipping lump and fines iron ore out of
Australia and a significant producer of metallurgical coal. With
core values of environmental and capital stewardship, Cliffs'
colleagues across the globe endeavor to provide all stakeholders
operating and financial transparency as embodied in the Global
Reporting Initiative (GRI) framework. Cliffs is organized through
three geographic business units:
The North American business unit is comprised of six iron ore
mines owned or managed in Michigan, Minnesota and Eastern Canada,
and two coking coal mining complexes located in West Virginia and
Alabama. The Asia Pacific business unit is comprised of two iron
ore mining complexes in Western Australia and a 45% economic
interest in a coking and thermal coal mine in Queensland,
Australia. The South American business unit includes a 30% interest
in the Amapa Project, an iron ore project in the state of Amapa in
Brazil.
Over recent years, Cliffs has been executing a strategy designed
to achieve scale in the mining industry and focused on serving the
world's largest and fastest growing steel markets.
Georgeson Inc. is acting as Freewest's solicitation agent in
connection with this transaction. Georgeson may be contacted as
follows:
Georgeson
100 University Avenue
11th Floor, South Tower
Toronto, Ontario
M5J 2Y1
North American Toll Free Number: 1-866-433-7579
Banks and Brokers Collect Number: 1-212-806-6859
Forward-Looking Statements
This news release contains statements that constitute
"forward-looking information" or "forward-looking statements"
within the meaning of applicable securities legislation. More
particularly, this news release contains forward-looking
information concerning a Plan of Arrangement involving Freewest
Resources Canada Inc. and Cliffs Natural Resources Inc. and the
listing of the shares of Freewest Resources Inc. on the TSX Venture
Exchange. This forward-looking information is subject to numerous
risks and uncertainties, certain of which are beyond the control of
Freewest. Actual results or achievements may differ materially from
those expressed in, or implied by, this forward-looking
information. No assurance can be given that any events anticipated
by the forward-looking information will transpire or occur, or if
any of them do so, what benefits that Freewest will derive
therefrom. In particular, no assurance can be given as to whether
the plan of arrangement with Cliffs Natural Resources Inc. will be
completed or as to the ultimate market value or the listing of the
shares of Freewest Resources Inc. Forward-looking information is
based on the estimates and opinions of Freewest's management at the
time the information is released and Freewest does not undertake
any obligation to update publicly or to revise any of the
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities laws.
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: Freewest Resources Canada Inc. Mackenzie I. Watson
President and CEO (514) 878-3551 or 1-888-878-3551 (514) 878-4427
(FAX) Email: info@freewest.com Website: www.freewest.com AGORACOM
Investor Relations Email: FWR@Agoracom.com Website:
http://agoracom.com/ir/freewest
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