VANCOUVER, June 18, 2018 /CNW/ - Bonterra Resources
Inc. ("Bonterra" or the "Company") (TSX-V:BTR, US:BONXF, FSE:9BR1)
and Metanor Resources Inc. ("Metanor") (TSX-V:MTO) are pleased
to announce that they have entered into a binding letter of intent
dated June 17, 2018 (the "LOI") to
combine Bonterra and Metanor (the "Transaction") to create an
exciting new advanced Canadian gold exploration and development
company focused on becoming the leader in the building out and
future mining development of the Urban Barry Quebec Gold Camp.
The Transaction contemplates that Bonterra will acquire all of
the issued and outstanding common shares of Metanor for
C$0.73 in equity consideration, at an
exchange ratio of 1.6039 Bonterra shares, for each Metanor share.
Immediately prior to the completion of the Metanor acquisition,
Bonterra will spin out its Larder
Lake assets in Ontario,
Canada, and a specified amount of cash (the "Spin-Out"), in
order to create a well-capitalized and exciting new exploration
opportunity for its shareholders.
Highlights of the Transaction:
- Creation of an exciting precious metals growth exploration,
development and production company located in one of the best
mining jurisdictions in the world.
- The proforma entity will have one of the largest contiguous
land packages located in the highly prospective Urban Barry gold camp.
- Control of three advanced high grade gold deposits (Gladiator,
Bachelor, Barry) and significant regional priority targets with
resource upside potential.
- 100% control and operator of the only permitted gold mill in
the region, that provides an expandable centralized production
facility, surrounded by greater than 15 known gold deposits within
a 100km radius.
- De-risking of the Gladiator project: Bonterra's delivery
of its updated National Instrument 43-101 resource for the
Gladiator Gold Deposit remains on schedule for 2H/2018. Metanor's
mill infrastructure provides Bonterra the opportunity to
significantly reduce the capital requirements and compress the
timelines to advance the Gladiator project to potential
production.
- Maintains strong balance sheet: The pro forma company
will have approximately C$32 million
in cash on hand, after the Spin-Out, to further advance the
Gladiator project to production, and increase production at
Bachelor and Barry.
- The creation of a well-capitalized spin out exploration company
("Spinco"), to unlock the value of Bonterra's Larder Lake gold asset, and allowing for a
focused exploration effort and advancement of these assets.
Nav Dhaliwal, President and
CEO of Bonterra, said, "Bonterra has been an extremely
successful exploration company and must continue to evolve and
participate in growth opportunities. We have quickly and
efficiently discovered and developed the Gladiator deposit over the
past two years, and now look to put our exploration skills and
experience to work on the larger combined land package. We believe
we will be able to develop a much larger and more significant
resource profile within the Urban Barry Camp. The
availability and ownership of a permitted and expandable processing
facility certainly places Bonterra in an excellent position to
rapidly and cost effectively become a significant Quebec based gold producer."
Greg Gibson, Chairman and
Interim CEO of Metanor, commented, "Putting together two,
arguably, undervalued companies like Metanor and Bonterra is
extremely beneficial and logical in a number of ways.
Resource growth, exploration synergies and de-risking the path to
production are all considerations, as well as potential to access
different and larger markets and shareholders. I look forward to
working with the Bonterra team, as the combined effort provides the
opportunity to create significant shareholder value."
Benefits to Bonterra
- Provides Bonterra with a clear and cost-effective pathway to
bring its Gladiator deposit into production.
- Addition of the Bachelor Mine and the Barry Deposit and
associated exploration potential to its existing resource
portfolio.
- Consolidates the entire southern portion of the Urban Barry
Camp, when combined with the recently announced transaction with
Beaufield Resources, and places Bonterra as one of the largest
landholders in the region.
- Access to and control of an expandable mill/processing
facility, centrally located in the Urban Barry Camp, further
de-risking the Gladiator Gold Deposit.
- Adds tremendous exploration potential to Bonterra's portfolio
with several high priority regional targets to explore.
- Addition of strong technical team and increased knowledge base
of this rich camp.
Benefits to Metanor
- Immediate and significant premium of approximately 40% based on
the 30-day volume weighted average price ("VWAP") on the TSX
Venture Exchange ("TSXV") on June 15,
2018.
- Superior financial strength and flexibility to simultaneously
increase production and exploration programs while leveraging and
enhancing existing infrastructures.
- Exposure to potential long-life asset to supplement current
production.
- Increased trading liquidity, enhanced value proposition and
capital markets profile.
- Addition of key strategic institutional, corporate and retail
shareholders to broaden existing base.
Under the terms of the LOI, Bonterra will acquire all of the
issued and outstanding common shares of Metanor (the "Transaction")
for C$0.73 in equity consideration
per share (the "Purchase Price"), at an exchange ratio of 1.6039
Bonterra shares for each Metanor share (the "Exchange Ratio"),
representing an aggregate transaction value of C$78 million on a fully diluted in-the-money
basis.
The Purchase Price represents a 40% premium to the VWAP of
Metanor's common shares on the TSXV on June
15, 2018 and a premium of 30% to the closing price as of
such date.
Upon completion of the Transaction, existing Bonterra and
Metanor shareholders will own approximately 58% and 42% of the pro
forma company, respectively.
Immediately prior to the completion of the proposed Transaction,
Bonterra will complete the Spin-Out of its Larder Lake, Ontario project to current
shareholders of Bonterra in order to create a new exploration
company Spinco focused on the growth of this multi-deposit high
grade project. Spinco will be well capitalized with
C$7 million of cash. Further details
of the Spin-Out will be included as part of an information circular
to be distributed prior to a Bonterra shareholder meeting to
approve the Transaction and the Spin-Out.
Wexford Capital LP, Kirkland Lake Gold Ltd., Eric Sprott, Van Eck Associates Corp. and other
shareholders controlling greater than 50% of Metanor's voting
securities as of June 18, 2018, have
provided their support for the proposed Transaction.
Transaction Summary and Timing
Metanor and Bonterra expect the Transaction will take place by
way of a plan of arrangement whereby Bonterra, and/or a wholly
owned subsidiary, will enter into an arrangement agreement with
Metanor in accordance with the terms of the LOI.
Pursuant to the terms of the LOI, the completion of the
Transaction is conditional upon a number of items, including,
without limitation: (a) approval by the shareholders of Bonterra
and Metanor, such approval to be the affirmative vote of the
holders of 66 2/3% of the issued and outstanding plus any minority
approvals if so required pursuant to Multilateral Instrument
61-101; (b) each party shall have performed and complied in all
material respects with all of the covenants and obligations thereof
required to be performed by them prior to the completion of the
Transaction; (c) the representations and warranties of each party
set out in the LOI being true and accurate, in all material
respects; (d) the receipt of all regulatory and other required
approvals; (e) other normal conditions precedent, including the
absence of a material adverse effect in Bonterra or Metanor; (f)
all material third party consents shall have been obtained; (g)
holders of no more than 5% of the outstanding shares of Bonterra
and no more than 5% of the outstanding shares of Metanor shall have
exercised their rights of dissent in respect of the Transaction;
(h) the execution, delivery and continued enforceability of
required support agreements; (i) completion of satisfactory due
diligence by Bonterra and Metanor; and, (j) receipt of all
necessary regulatory approvals by the regulatory authorities.
The LOI contains customary deal support provisions, including a
reciprocal break fee of C$3.75
million, payable if the proposed Transaction is not
completed in certain circumstances. In addition, the LOI includes
mutual customary non-solicitation covenants together with customary
exemptions to permit each party's board of directors to exercise
its fiduciary duties, as well as a right to match any superior
proposal that may arise.
Full details of the Transaction will be included in the formal
definitive agreement and management information circulars to be
filed with the regulatory authorities and mailed to Metanor's and
Bonterra's shareholders in accordance with applicable securities
laws. All shareholders are urged to read the information circulars
once they become available as they will contain additional
important information about the Transaction.
The Transaction is expected to be completed in the third quarter
of 2018 or such later date as the parties may agree. A special
meeting of the shareholders of each of Bonterra and Metanor will be
held at a time yet to be determined to approve the proposed
transaction.
Advisors and Counsel
Sprott Capital Partners acted as financial advisor to Bonterra
and Miller Thomson LLP acted as Bonterra's legal advisors.
Irwin Lowy LLP acted as Metanor's legal advisor.
About Bonterra
- Well financed with approximately $65
million raised since 2017.
- Strong Shareholder Base including: Eric Sprott, Van
Eck, Kirkland Lake Gold
- Gladiator Gold Deposit:
-
- Deposit extension and resource expansion underway with
60,000 m completed in 2017 and
70,000 m planned for 2018.
- Advancing to the completion of an updated NI 43-101 Mineral
Resource Estimate in the second half of 2018.
- Drilled dimensions of the Gladiator Gold Deposit are currently
outlined to a depth of over 1,000 m
below surface, and a strike length of 1,300
m.
- Gladiator remains open in all directions, where at least six
distinct sub-parallel zones or mineralized horizons have been
identified.
- Drilling is currently focused on the continued expansion of
Gladiator Gold Deposit and exploration targets within the
10,541-hectare Urban-Barry property.
- Larder Lake Gold Property:
-
- 100% controlled 2,221-hectare in the Cadillac-Larder Break camp
in Ontario (refer to March 17, 2016 news release highlighting
historical gold resource).
- Excellent access to three high grade gold deposits between
Kirkland Lake and Virginiatown.
- The Larder Lake project
contains a historic mineral resource set out in the below table
with three gold deposits situated along the Cadillac Break between
Kirkland Lake and Virginiatown. The combined contiguous land
package is more than 10 km in length.
Disclosure of Historical Mineral Resource Estimates:
The Larder Lake project
contains a historic estimate. In August 15,
2011, P&E Mining Consultants prepared for Kerr Mines a resource estimate as reported in a
technical report titled "43-101 Technical Report and Updated
Resource Estimates on the Larder Lake Property, Larder Lake, Ontario for Bear Lake Gold Ltd."
Bonterra considers the historical estimate to be relevant and
reliable given that it was prepared under NI 43-101 standards.
Bonterra considers this resource estimate to be historical; it has
not independently verified it. A qualified person of Bonterra has
not done sufficient work to classify the historical estimate as
current mineral resources or mineral reserves, and Bonterra is not
treating the historical estimate as current mineral resources.
*2011 Total Resource Estimate @ 2.5 g/t Au Cut-Off Utilizing
Gold Price of US$1,207/oz(1)(2), dated August 15, 2011 by P&E Mining Consultants
Bear Lake Deposit and
Cheminis Deposit
|
Classification
|
Tonnes
|
Grade (Au
g/t)
|
Contained Ounces
(Au)
|
Indicated
|
335,000
|
4.07
|
43,800
|
Inferred
|
5,141,000
|
5.55
|
917,000
|
(1) Mineral
resources which are not mineral reserves do not have demonstrated
economic viability. The estimate of mineral resources may be
materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant
issues.
|
(2) The quantity
and grade of reported inferred resources in this estimation are
uncertain in nature and there has been insufficient exploration to
define these inferred resources as an indicated or measured mineral
resource and it is uncertain if further exploration will result in
upgrading them to an indicated or measured mineral resource
category.
|
Dale Ginn, P.Geo. has approved
the technical information contained in this release. Mr. Ginn is a
Director and Vice President of Exploration of Bonterra and is a
Qualified Person as defined by National Instrument 43-101.
About Metanor
Metanor Resources Inc. is an emerging gold producer having its
main assets, the Bachelor Mine and the Barry project, in addition
to over 15,000 ha of exploration property, located in the
mining-friendly jurisdiction of Quebec in the heart of the Urban-Barry
Camp.
The Bachelor mine extracts gold from a series of sub-vertical
narrow veins using an underground long-hole mining method with
access through conventional track drifts from a vertical shaft, and
the new sector below level 14 is accessed from a ramp system.
The ore is processed on site in a mill using carbon in pulp to
separate the gold from the ore. All the lodging facilities
are on site, connected to the power grid, and accessible from a
paved highway. Metanor is in the permitting process, to increase
the daily capacity of the mill from 800 tonnes per day to 2,400
tonnes per day.
The Barry project is located in the Urban-Barry camp, 110 km
east from the city of Lebel-sur-Quévillon, and 110 km south of the
Bachelor mill. 624,414 tonnes of ore grading 2.2 g/t Au for
43,970 ounces were extracted from three small pits between 2008 and
2010. The gold mineralization at the Barry project is
structurally controlled and is hosted in a sheared basalt
containing quartz-carbonate-albite veins with pyrite. Metanor has
identified three main sub-vertical shear zones and approximately
ten secondary lower dipping tension veins. These structures are
open in all directions. The Company completed construction of
a new camp in May, to accommodate the additional workers required
to proceed with the 50,000 underground bulk sample scheduled to be
completed by the Q4 in 2018.
Pascal Hamelin, P. Eng.,
President of Metanor, is the Qualified Person of Metanor as defined
under National Instrument 43-101 and has reviewed and approved the
technical information relating to Metanor contained in this news
release.
ON BEHALF OF THE BOARD OF DIRECTORS,
Nav Dhaliwal, President &
CEO
Bonterra Resources Inc.
Cautionary Statement:
Certain information contained in this press release
constitutes "forward-looking information", within the meaning of
Canadian legislation concerning the business, operations and
financial performance and condition of Bonterra and
Metanor.
Generally, these forward-looking statements can be identified
by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur", "be
achieved" or "has the potential to".
Forward looking statements contained in this press release
may include statements regarding our ability to complete the
Transaction and benefits of the Transaction and the Spin-Out, which
involve known and unknown risks and uncertainties which may not
prove to be accurate. Actual results and outcomes may differ
materially from what is expressed or forecasted in these
forward-looking statements. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding future
expectations. Among those factors which could cause actual results
to differ materially are the following: uncertainties as to the
timing of the Transaction and satisfaction of the conditions
thereto, market conditions and other risk factors listed from time
to time in reports filed with Canadian securities regulators on
SEDAR at www.sedar.com.
Neither the TSX nor 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.
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SOURCE Bonterra Resources Inc.