VANCOUVER, BC, Aug. 31,
2023 /CNW/ - Outcrop Silver & Gold Corp.
(TSXV: OCG) (OTCQX: OCGSF) (DE: MRG1) ("Outcrop")
and Zacapa Resources Ltd. ("Zacapa") (TSXV: ZACA)
(OTCQB: ZACAF) (DE: BH0) are pleased to announce that they
have signed an amalgamation agreement dated August 30, 2023 (the "Agreement") pursuant
to which a wholly-owned subsidiary of Outcrop will amalgamate with
Zacapa and all of the issued and outstanding common shares of
Zacapa following the amalgamation will immediately be exchanged for
common shares of Outcrop on a four-for-one basis (the "Exchange
Ratio")(the "Transaction").
Upon completion of the Transaction, it is expected that the
shareholders of Zacapa (the "Zacapa Shareholders") will hold
approximately 12% of Outcrop's issued and outstanding common
shares. The board of Outcrop will remain the same.
The Transaction constitutes a "related party transaction"
subject to TSXV Policy 5.9 – Protection of Minority Security
Holders in Special Transactions and Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions ("MI 61-101").
Anticipated Benefits of the
Transaction
- Combined entities will further strengthen Outcrop's exploration
and development pipeline and reduce jurisdictional risk;
- Consolidation of the two companies will create a
well-capitalized exploration company and will reduce operating and
overhead costs; and
- Combined entities will likely increase shareholder liquidity,
trading and capital markets exposure.
Anticipated Benefits for Zacapa
Shareholders
- Opportunity for Zacapa shareholders to hold shares of a larger,
more diversified company with a history of stronger access to
markets and capital to further development of the Zacapa
properties;
- There are limited conditions, no break fees or expense
reimbursement and a short timeline to closing the Transaction;
- The Zacapa board established the independent Special Committee
to consider the proposed Transaction as well as alternatives and
the Agreement was negotiated at arm's length between the Special
Committee and Outcrop; and
- Evans & Evans, Inc. has provided an oral fairness opinion
that the Transaction is fair to the shareholders of Zacapa.
Transaction Details
Pursuant to the terms of the Agreement, the Transaction is
expected to be completed by way of a three-cornered amalgamation
under the provisions of the Business Corporations
Act (British Columbia)
whereby 1433180 B.C. Ltd.
("Subco"), a wholly-owned subsidiary of Outcrop, will
amalgamate with Zacapa and all of the issued and outstanding common
shares of Zacapa ("Zacapa Shares") following the
amalgamation will immediately be exchanged for common shares of
Outcrop on a four-for-one basis. Warrants, options and deferred
share units of Zacapa will be exchanged into warrants, options and
deferred share units, respectively, of Outcrop. Closing of the
Transaction is subject to a number of customary conditions being
satisfied or waived by one or both of Outcrop and Zacapa, including
the receipt of Zacapa shareholder approval, together with approval
of the Majority of the Minority (as defined below) at the Meeting
(as defined below), and the receipt of all necessary regulatory
approvals, including the approval of the TSX Venture Exchange.
Outcrop and Zacapa are committed to consummating the Transaction
in an expedited manner and it is anticipated that a special meeting
of Zacapa Shareholders (the "Meeting") to approve the
proposed Transaction will be held in October
2023 and, if approved and all other conditions have been
met, it is expected that the Transaction will close shortly
thereafter. Implementation of the Transaction will be subject to
approval at the Meeting by at least two-thirds of the votes cast by
all the Zacapa Shareholders, based on the votes cast by Zacapa
Shareholders at the Meeting, and by a majority of the votes cast by
disinterested shareholders at the Meeting ("Majority of the
Minority"). In relation to this approval, the "minority"
holders for the purpose of MI 61-101 are anticipated to include all
holders of Zacapa Shares with the exception of Ian Slater and his affiliated entities.
As of the date hereof, Ian
Slater, Jay Sujir,
Marc Boissonneault, Sunil Sharma and Michelle Borromeo (together, the "Supporting
Shareholders") collectively beneficially own, directly or
indirectly, or exercise control or direction over, 18,340,000
Zacapa Shares, which represent approximately 15.27% of the issued
and outstanding Common Shares. Each of the Supporting Shareholders
have, separately entered into voting support agreements with
Outcrop (the "Support Agreements") which they have agreed,
among other things, to vote in favour of the Amalgamation, and to
be restricted by non-solicitation and exclusivity provisions. Forms
of the Support Agreements with the Supporting Shareholders, will be
reviewable on the Zacapa's profile on SEDAR+ at
www.sedarplus.ca.
Further information regarding the Transaction will be contained
in a management information circular to be mailed to Zacapa
Shareholders in connection with the Meeting. All Zacapa
Shareholders are urged to read the management information circular
once available, as it will contain important additional information
concerning the Transaction. Following completion of the
Transaction, the company formed by the amalgamation of Zacapa and
Subco will become a wholly owned subsidiary of Outcrop. There can
be no assurance that the Transaction will be completed as proposed
or at all.
Special Committee and Board
Recommendations
Due to the non-arm's length nature of the Transaction, a special
committee (the "Special Committee") consisting of
Marc Boissonneault, the sole
independent director of Zacapa, has been established by Zacapa to
consider the Transaction. The Special Committee has recommended
that the Board of Directors of Zacapa (the "Zacapa Board")
approve the Transaction. The Zacapa Board (excluding conflicted
directors) having received the recommendation of the Special
Committee, unanimously determined that the Transaction is in the
best interests of Zacapa, is fair to the Zacapa Shareholders and
recommends the approval of the Transaction by Zacapa
Shareholders.
The Board of Directors of Outcrop (excluding conflicted
directors) have determined that the Transaction is in the best
interests of Outcrop and have approved the Transaction.
Fairness Opinion
Evans & Evans, Inc. has provided the Special Committee with
an opinion to the effect that, based upon its analysis and subject
to the full text of the fairness opinion, including the
assumptions, qualifications and limitations set out therein, the
Exchange Ratio is fair, from a financial point of view, to the
Zacapa Shareholders.
Additional Information about the
Transaction
Further details regarding the terms and conditions of the
Transaction are set out in the Agreement, which will be publicly
filed by Outcrop and Zacapa under their respective profiles on
www.sedarplus.ca.
About Outcrop
Outcrop is advancing the Santa Ana high-grade silver deposit
with exploration activities aiming to expand the current mineral
resource. The Santa Ana project is being advanced by a highly
disciplined and seasoned professional team with decades of
experience in Colombia.
About Zacapa
Zacapa is a mineral exploration company engaged in gold and
copper exploration in world class jurisdictions in the southwest
United States, including
Arizona, Nevada, Idaho, and California. The portfolio includes epithermal
gold projects at South Bullfrog, Kramer
Hills, and Miller Mountain
and the Pearl porphyry copper project.
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.
Forward Looking Statements – This news release includes
forward-looking statements that are subject to risks and
uncertainties. All statements within, other than statements of
historical fact, are to be considered forward looking, including,
but not limited to, the timing of the Zacapa Shareholder Meeting
and approval of Zacapa Shareholders, closing of the proposed
Transaction and the anticipated benefits of the Transaction.
Although Outcrop and Zacapa believe the expectations expressed in
such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in forward-looking statements. Factors that
could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions and
regulatory, shareholder and administrative approvals, processes and
filing requirements. There can be no assurances that such
statements will prove accurate and, therefore, readers are advised
to rely on their own evaluation of such uncertainties. We do not
assume any obligation to update any forward-looking
statements.
SOURCE Outcrop Silver & Gold Corporation