TSX: ELD NYSE: EGO
VANCOUVER, May 15, 2017 /CNW/ - Eldorado Gold Corporation
(the "Company" or "Eldorado") is pleased to announce that it has
entered into a definitive agreement with Integra Gold Corp.
("Integra") (TSXV:ICG) (the "Arrangement Agreement"), pursuant to
which Eldorado has agreed to
acquire all of the issued and outstanding common shares of Integra
that it does not currently own, by way of a plan of arrangement
(the "Arrangement") under the Business Corporations Act
(British Columbia).
Under the Arrangement, shareholders of Integra will be entitled
to receive, at their option, for each Integra share they own either
(i) 0.24250 Eldorado shares, (ii)
C$1.21250 in cash, in both (i) and
(ii) subject to pro ration, or (iii) 0.18188 of an Eldorado share and C$0.30313 in cash. The maximum number of
shares issuable by Eldorado under
the Arrangement will be approximately 77 million (based on the
number of Integra shares outstanding less Integra shares currently
owned by Eldorado). The
maximum amount of cash payable by Eldorado under the Arrangement will be
approximately C$129 million equal to
25% of the total consideration. The total transaction value is
approximately C$590 million,
inclusive of Integra shares held by Eldorado.
Eldorado's offer
represents:
- A value of C$1.21250 for each
Integra common share based on the May 12,
2017 closing price of Eldorado common shares on the Toronto Stock
Exchange
- A premium of approximately 52% to Integra's May 12, 2017 closing price and a premium of 46%
based on the volume weighted average prices ("VWAP") of both
companies on the Toronto Stock Exchange for the 20 day period
ending May 12, 2017
Upon completion of the transaction and based on the maximum
number of shares issuable under the Arrangement, current
Eldorado and Integra shareholders
would hold approximately 90% and 10% of the combined Company,
respectively.
Integra's principal asset is the Lamaque project near
Val-d'Or, Quebec. Lamaque
hosts an NI 43-101 indicated resource of 5.1 million tonnes at a
grade of 9.13 g/t gold and an inferred resource of 3.5 million
tonnes at a grade of 7.94 g/t gold (5.0 g/t gold
cut-off)1. A preliminary economic assessment was
completed in February 2017 that
envisions a high-grade underground operation producing 123,000
ounces of gold per year at all-in sustaining costs of US$634 per ounce over 10 years2.
Integra is currently in the process of advancing underground ramp
development to facilitate underground exploration and completion of
a bulk sample.
George Burns, President and Chief
Executive Officer of Eldorado Gold, stated, "The Company has been
following Integra's progress at Lamaque over the last 18 months and
commend their team for the accomplishments to date. From
previous experience of building and operating gold mines in
Canada, I am excited about
Eldorado's entry into the Eastern
Abitibi region of Canada. With our
current balance sheet strength post the sale of our Chinese assets,
this acquisition represents a use of the proceeds complementing our
existing portfolio of high quality, low cost assets."
Benefits to Eldorado's
Shareholders
- Adds a high quality development project that has the potential
to add meaningful near-term production and cash flow with modest
upfront capital
- Establishes an operating presence in Canada and diversifies the operating portfolio
into one of the most productive mining camps in the world
- Maintains the flexibility to fund its development pipeline
- Income tax and G&A synergies with the addition of a future
mining operation in Canada
Benefits to Integra's Shareholders
- Immediate and attractive premium of approximately 52% to spot
and 46% based on the 20-day VWAPs of both companies
- Exposure to Eldorado's
portfolio of high quality mines and development projects, in
addition to ongoing participation in value creation at Lamaque
- Access to Eldorado's
technical, project development and operating capabilities as well
as financial resources
- Potential for value accretion through a re-valuation in
Eldorado's share price as the
Company continues to deliver and de-risk its combined asset
portfolio
- Participation in Eldorado's
dividend program
Transaction Summary
The transaction will be carried out by way of a court-approved
plan of arrangement and will require approval by Integra
shareholders at a special meeting of Integra shareholders by:
- at least 66⅔% of the votes cast by all the shareholders of
Integra; and
- a simple majority of the votes cast by the shareholders of
Integra, excluding votes from certain shareholders, including
Eldorado, as required under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions.
In addition to shareholder approval by Integra shareholders, the
Arrangement is also subject to the receipt of certain regulatory,
court and stock exchange approvals, and other closing conditions
customary in transactions of this nature. It is anticipated
that the special meeting of Integra shareholders will be held in
July 2017.
The Arrangement Agreement includes customary provisions,
including non-solicitation of alternative transactions, a right to
match superior proposals in favor of Eldorado and fiduciary-out provisions.
Integra has agreed to pay a termination fee of approximately
C$18 million to Eldorado upon the occurrence of certain
termination events.
Both companies' Boards of Directors have determined that the
proposed transaction is fair to their respective shareholders and
in the best interests of their respective companies based on a
number of factors, including fairness opinions received from their
respective financial advisors. Each company's Board of
Directors approved the terms of the proposed Arrangement and the
Integra Board of Directors unanimously recommends that its
shareholders vote in favour of the transaction. GMP
Securities L.P. has provided a fairness opinion to the Board of
Directors of Eldorado, Raymond
James Ltd. has provided a fairness opinion to the Board of
Directors of Integra and BMO Nesbitt Burns has provided a fairness
opinion to the Special Committee of Integra. Each of the
directors and senior officers of Integra have agreed to vote in
favour of the transaction.
Full details of the proposed transaction will be included in the
management information circular to be mailed to Integra
shareholders in June 2017.
Eldorado owns 62,170,095 common
shares in the capital of Integra, constituting 13% of the
outstanding common shares of Integra on an undiluted basis.
Following completion of the transaction, Eldorado will own 100% of the issued and
outstanding common shares of Integra. To obtain a copy of the
Early Warning Report to be filed by Eldorado in connection with the transactions
contemplated by the Arrangement Agreement, please contact
Krista Muhr at 1188 - 550 Burrard
Street, Vancouver, B.C. V6C 2B5,
(tel: 604 687 4018).
Advisors and Counsel
Eldorado has retained GMP
Securities L.P. to act as financial advisor and Fasken Martineau
DuMoulin LLP to act as legal advisor.
Integra shareholders and other interested parties are advised to
read the materials relating to the proposed transaction that will
be filed by Integra with securities regulatory authorities in
Canada when they become available
as they will contain important information. Anyone may obtain
copies of these documents when available, free of charge at
www.sedar.com. This announcement is for informational purposes only
and does not constitute an offer to purchase, a solicitation of an
offer to sell the shares or solicitation of a proxy.
Scientific and Technical Disclosure
The scientific and technical information contained in this news
release specific to the Lamaque Project has been reviewed and
approved by Hervé Thiboutot, Eng., Senior Vice-President of Integra
Gold Corp., who is an independent qualified person under National
Instrument 43-101 ("NI 43-101").
1)
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Readers should
refer to Integra's press release and Technical Report entitled
"NI 43-101 Technical Report on the Spring 2017 Mineral Resource
Estimate Update for the Lamaque Project" dated May 5, 2017
for further information on the gold mineral resource estimates
contained in this press release, with an effective date of March
22, 2017, and to Integra's press release dated April 13, 2017 and
Technical Report entitled "NI 43-101 Preliminary Economic
Assessment Update for the Lamaque Project" with an effective date
of February 27, 2017 for further information on Integra's
preliminary economic assessment.
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2)
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Mineral resources
are not mineral reserves and do not have demonstrated economic
viability. Integra's preliminary economic assessment is
preliminary in nature, and includes inferred mineral resources that
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the
preliminary economic assessment will be realized.
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About Eldorado
Eldorado is a leading low cost
gold producer with mining, development and exploration operations
in Turkey, Greece, Serbia, Romania and Brazil. The Company's
success to date is based on a low cost strategy, a highly skilled
and dedicated workforce, safe and responsible operations, and
long-term partnerships with the communities where it
operates. Eldorado's common
shares trade on the Toronto Stock Exchange (TSX: ELD) and the New
York Stock Exchange (NYSE: EGO).
Cautionary Note Regarding Forward Looking
Statements
Certain of the statements made herein may
contain forward-looking statements or information within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 and applicable Canadian securities laws. Often, but not
always, forward-looking statements and forward-looking information
can be identified by the use of words such as "plans", "expects",
"is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or "believes" or the negatives thereof or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved. Forward-looking statements
or information herein include, but are not limited, to statements
or information with respect to the Company's proposed acquisition
of all the shares that it does not already own of Integra Gold
Corporation (ICG).
Forward-looking statements and forward-looking information by
their nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements or information. We have made certain assumptions about
the forward-looking statements and information, including the
ability to acquire the shares that it does not already own in ICG,
the political and economic environment that we operate in, the
future price of commodities, anticipated costs and expenses and the
impact of the disposition on the Company's business. Although our
management believes that the assumptions made and the expectations
represented by such statements or information are reasonable, there
can be no assurance that the forward-looking statements or
information will prove to be accurate. Furthermore, should one or
more of the risks, uncertainties or other factors materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those described in forward-looking statements
or information. These risks, uncertainties and other factors
include, among others, the following: the ability to acquire the
ICG shares that it does not already own, political, economic,
environmental and permitting risks, regulatory restrictions, gold
price volatility, discrepancies between actual and estimated
production, estimated mineral reserves and resources and
metallurgical recoveries; mining operational and development risks,
litigation risks, regulatory restrictions, including environmental
and permitting regulatory restrictions and liabilities, internal
and external approval risks, risks of sovereign investment, and
impact on the Company of the completion of the sale of our Chinese
interests; changes in the use of proceeds; currency fluctuations;
speculative nature of gold exploration, global economic climate;
dilution, share price volatility; competition, loss of key
employees, additional funding requirements, and defective title to
mineral claims or property, as well as those factors discussed in
the sections entitled "Forward-Looking Statements" and "Risk
Factors" in the Company's Annual Information Form & Form 40-F
dated March 30, 2016.
There can be no assurance that forward-looking statements or
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, you should not place undue reliance on the
forward-looking statements or information contained herein. Except
as required by law, we do not expect to update forward-looking
statements and information continually as conditions change and you
are referred to the full discussion of the Company's business
contained in the Company's reports filed with the securities
regulatory authorities in Canada
and the U.S.
All forward looking statements and information contained in
this News Release are qualified by this cautionary
statement.
Cautionary Note to US Investors Concerning Estimates of
Measured, Indicated and Inferred Resources
The terms "mineral resource", "measured mineral resource",
"indicated mineral resource", "inferred mineral resource" used
herein are Canadian mining terms used in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
("NI 43-101") under the guidelines set out in the Canadian
Institute of Mining and Metallurgy and Petroleum (the "CIM")
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as may be amended from time to time. These definitions
differ from the definitions in the United
States Securities & Exchange Commission ("SEC") Industry
Guide 7. In the United States, a
mineral reserve is defined as a part of a mineral deposit which
could be economically and legally extracted or produced at the time
the mineral reserve determination is made.
While the terms "mineral resource", "measured mineral
resource," "indicated mineral resource", and "inferred mineral
resource" are recognized and required by Canadian regulations, they
are not defined terms under standards in the United States and normally are not
permitted to be used in reports and registration statements filed
with the SEC. As such, information contained herein concerning
descriptions of mineralization and resources under Canadian
standards may not be comparable to similar information made public
by U.S. companies in SEC filings.
Mineral resources which are not mineral reserves do not have
demonstrated economic viability. With respect to "indicated
mineral resource" and "inferred mineral resource", there is a great
amount of uncertainty as to their existence and a great uncertainty
as to their economic and legal feasibility. It cannot be assumed
that all or any part of a "measured mineral resource", "indicated
mineral resource" or "inferred mineral resource" will ever be
upgraded to a higher category.
Accordingly, information herein containing descriptions of
our mineral deposits may not be comparable to similar information
made public by US companies subject to the reporting and disclosure
requirements under US federal securities laws and the rules and
regulations thereunder.
SOURCE Eldorado Gold Corporation