Creation of 1,250 km² District-Scale
Land Package on Houndé Greenstone Belt
MONTREAL and TORONTO, Feb. 11,
2019 /CNW/ - SEMAFO Inc. (TSX: SMF) (OMX: SMF)
("SEMAFO") and Savary Gold Corp. (TSXV: SCA)
("Savary") are pleased to announce that they have entered
into a non-binding letter of intent (the "LOI")
contemplating the acquisition by SEMAFO of all of the outstanding
common shares of Savary (the "Savary Shares") not already
owned by SEMAFO (the "Proposed Transaction").
Under the terms of the LOI, all of the issued and outstanding
Savary Shares will be exchanged on the basis of 0.0336 SEMAFO
common shares (each whole share, a "SEMAFO Share") for each
Savary Share (the "Exchange
Ratio"). The Exchange Ratio implies consideration of
C$0.10 per Savary Share, based on the closing price of the
SEMAFO Shares on the Toronto Stock Exchange ("TSX") on
February 8, 2019. This represents a
premium of 100% based on the closing price of Savary Shares on the
TSX Venture Exchange on February 8,
2019. The Proposed Transaction value (excluding SEMAFO's
existing 15.5% equity interest) is approximately C$22.7 million on a fully diluted in-the-money
basis, representing 2.2% dilution to SEMAFO shareholders. The LOI
provides for exclusivity until March 11,
2019 to enter into definitive agreements. The execution of
any definitive agreements(s) is conditional on, among other things,
all of Savary's management, the members of its board of directors
and certain key shareholders holding in the aggregate 29.3% of
Savary Shares entering into support agreements concurrently with
the definitive transaction agreements on the above terms.
Concurrently with this announcement, SEMAFO has separately
announced a maiden inferred mineral resource estimate of 2,100,666
tonnes at 5.35 g/t Au for 361,288 ounces at its Bantou Zone, which
is contiguous to Savary's Karankasso project. Both projects are
located approximately 170 kilometers south of Mana.
Transaction Highlights
- District-Scale Land Package - Consolidated
properties (see Figure 1 below) become ~25 km by ~50 km, which
creates a district-scale, target-rich, land package
- Entire 1,250 km² Truckable to Central
Plant - Ore from the entire consolidated land
package could be trucked to a central plant, given a current
tentative plant location in the north west of SEMAFO property.
Economic trucking distance is ~25km depending on grade and
recovery.
- Significant Consolidated Resource Base -
Combination of existing mineral resources (Savary's Karankasso
hosts inferred resources of 12.3 Mt at 2.03 g/t Au for 805,000 oz;
SEMAFO's Bantou has inferred mineral resources of 2.1 Mt grading
5.35 g/t Au for 361,000 oz) into a consolidated resource
estimation post-closing will provide a significant base on which to
expand.
- Excellent Location on Prolific Houndé Greenstone
Belt – The district-scale land package is located on the
prospective Houndé Greenstone Belt that hosts Mana and many other
operating mines.
- Accelerated Resource Growth – The 2019 consolidated
exploration program will focus on accelerated resource growth and
will be announced post-closing.
Benoit Desormeaux, President and
CEO of SEMAFO, stated "Our contemplated acquisition of the
Karankasso property reflects our core strategy of creating
long-term value through developing and operating high quality
assets. The transaction would provide a consolidated district-scale
land package in a country we know well and on the prolific Houndé
Greenstone Belt, which we also know very well. We see excellent
potential for resource growth on the combined 1,250 km², and if
this transaction is consummated we anticipate the combined property
will head up our development pipeline."
Don Dudek, President and CEO of
Savary, said, "Over the past few years, Savary has delivered on its
commitment to create value for its shareholders through its
disciplined approach to exploration and resource development. The
proposed transaction with SEMAFO is consistent with that commitment
as our shareholders would benefit from having ownership in an
intermediate, multi-mine producer with a portfolio of high-quality
assets and a proven and experienced management team that shares our
commitment to creating long-term sustainable value. If this
transaction is completed, our shareholders would maintain exposure
to the potential of the combined district-scale land package as it
becomes one of SEMAFO's top development pipeline projects."
Benefits to SEMAFO Shareholders
- Acquisition of a district-scale 1,250 km² land package with
proven exploration and development potential
- Excellent location on the prospective Houndé Greenstone
Belt
- Good alignment with SEMAFO's core competencies of increasing
resources, developing reserves, completing economic studies, and
constructing/operating a third gold mine
- Further strengthening of SEMAFO's exploration and development
pipeline
- Lower exploration and development risk as Burkina Faso is a country where SEMAFO is
well- established and understands how to operate
- Minimal 2.2% dilution
Benefits to Savary Shareholders
- Significant premium (100% based on the closing price of Savary
common shares on the TSX Venture Exchange on February 8, 2019.)
- Diversified ownership in SEMAFO's high-quality portfolio of
assets
- Continued exposure to combined properties' district-scale
exploration upside potential
- SEMAFO has the in-house capabilities and balance sheet to
significantly advance the 1,250 km² district-scale potential
- Significant improvement in trading liquidity and capital
markets exposure
LOI Conditions & Steps to Definitive Agreement
The Proposed Transaction is subject to a range of conditions,
including, but not limited to, SEMAFO and Savary entering into one
or more binding definitive agreements containing customary terms
and conditions, including representations and warranties customary
in a transaction of this nature. In the event that definitive
agreement(s) are entered into between the parties, and subject to
the final transaction structure, the closing of the Proposed
Transaction will be subject to additional conditions precedent
including, but not limited to, the receipt of all required
approvals, approval of the Proposed Transaction by the requisite
majority of shareholders of Savary at a special meeting of Savary
shareholders and agreement on customary non-solicitation covenants,
board support and fiduciary-out provisions for transactions of this
nature.
SEMAFO and Savary are committed to consumating the Proposed
Transaction and will issue further information about the Proposed
Transaction in the near future. However, there is no obligation on
the part of either SEMAFO or Savary to consummate a transaction
relating to the Proposed Transaction or to enter into a definitive
agreement; provided, however, that a break fee of $400,000 is payable by SEMAFO to Savary in the
event that SEMAFO elects not to proceed with the Proposed
Transaction. There can be no assurances that any transaction
relating to the Proposed Transaction or otherwise will result, or
as to the final definitive terms thereof.
SEMAFO currently owns 39,533,333 Savary Shares, representing
approximately 15.5% of the issued and outstanding Savary Shares on
a non-diluted basis. SEMAFO also holds warrants to acquire up to
3,100,000 additional Savary Shares at an exercise price of
$0.05 (subject to adjustment in
certain events) expiring on December 31,
2021. Assuming exercise in full of the warrants, SEMAFO
would own 42,633,333 Savary Shares, representing 16.48% of the
issued and outstanding Savary Shares on a partially diluted
basis.
If SEMAFO decides not to pursue further the Proposed
Transaction, or if such transaction is not consummated for any
reason, SEMAFO intends to continue to review Savary's business
affairs, capital needs and general industry and economic
conditions, and, based on such review, SEMAFO may, from time to
time, depending on market and other conditions, increase or
decrease its ownership, control or direction over the shares or
other securities of Savary, through market transactions, private
agreements, public offerings or otherwise, or approve a corporate
transaction with regard to Savary. A copy of SEMAFO's related
amended early warning report will be filed with the applicable
securities commissions and will be made available on SEDAR at
www.sedar.com, a copy of which may be obtained by contacting Eric
Paul-Hus, V-P, Law, Chief Compliance Officer and Corporate
Secretary, at 514-744-4408.
Advisors and Counsel
Norton Rose Fulbright Canada LLP is acting as SEMAFO's legal
advisor.
Red Cloud Klondike
Strike Inc. is acting as financial advisor to the Board of
Directors of Savary. Dentons LLP is acting as Savary's legal
advisor.
Conference Call
SEMAFO and Savary will host a joint conference call on
Monday, February 11, 2019 at
10:00 a.m. EST for members of the
investment community to discuss the Proposed Transaction.
Participants may join the conference call using the following
call-in details:
Tel. local & overseas: +1 (647) 788 4922
Tel. North America:
1 (877) 223 4471
https://www.semafo.com/English/investor-relations/news-and-events/events/default.aspx
A replay of this conference call will be available until
March 11, 2019. The replay numbers
are:
Replay overseas:
+1 (416) 621
4642
Replay N. America: 1 (800) 585
8367
Replay pass code: 4367906
ABOUT SEMAFO
SEMAFO is a Canadian-based intermediate gold producer with over
twenty years' experience building and operating mines in
West Africa. The Corporation
operates two mines, the Boungou and Mana
Mines in Burkina Faso.
SEMAFO is committed to building value through responsible mining of
its quality assets and leveraging its development pipeline.
ABOUT SAVARY
Savary is a Canadian exploration company focused on exploring
and developing the Karankasso Gold Project in Burkina Faso. The Company holds an approximate
75.2% deemed joint venture ownership at year end 2018 and is the
operator of the joint venture. The project is located within the
Houndé Greenstone Belt, which hosts SEMAFO's Mana mine, Roxgold's
Yaramoko Mine and Endeavor's Houndé Mine. The project contains an
inferred mineral resource estimate (November
2, 2017) of 12.3 million tonnes (Mt) grading 2.03 g/t
gold for 805,000 ounces. For additional information please
visit www.savarygold.com.
Technical Disclosure
This press release contains certain scientific and technical
information of Savary and SEMAFO. Each party is solely responsible
for the contents and accuracy of any scientific and technical
information disclosure relating to it.
Don Dudek, P.Geo., President and
CEO of Savary and a Qualified Person under National Instrument
43-101, has reviewed and approved the Savary scientific and
technical information contained in this press release.
Richard Roy P. Geo,
Vice-President Exploration of SEMAFO and a Qualified Person under
National Instrument 43-101, has reviewed and approved the SEMAFO
scientific and technical information contained in this press
release.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and assumptions and accordingly, actual results and
future events could differ materially from those expressed or
implied in such statements. You are hence cautioned not to place
undue reliance on forward-looking statements. All statements other
than statements of present or historical fact are forward-looking
statements, including statements with respect to the Letter of
Intent and the likelihood that the definitive agreement(s) will be
entered into and that Proposed Transaction will be consummated on
the terms and timeline provided herein or at all, the benefits of
the Proposed Transaction to SEMAFO and Savary and the receipt of
all required approvals including without limitation the
shareholders of Savary and applicable regulatory authorities and
applicable stock exchanges. Forward-looking statements
include words or expressions such as "proposed", "will", "subject
to", "near future", "in the event", "would", "expect", "prepared
to" and other similar words or expressions. Factors that could
cause future results or events to differ materially from current
expectations expressed or implied by the forward-looking statements
include general business, economic, competitive, political and
social uncertainties; the state of capital markets; risks relating
to (i) the preliminary and non-binding nature of the LOI,
(ii) the ability of the parties to satisfy the conditions precedent
to the execution of any definitive agreement(s) or to ultimately
agree on definitive terms, (iii) the impact on the respective
businesses, operations and financial condition of Savary and SEMAFO
resulting from the announcement of the Proposed Transaction and/or
the failure to enter into definitive agreement(s) or to complete
the Proposed Transaction on terms described or at all, (iv) a third
party competing bid materializing prior to the effective date of
any definitive agreement(s) or the completion of the Proposed
Transaction, (v) delay or failure to receive board, shareholder
regulatory or court approvals, where applicable, or any other
conditions precedent to the completion of the Proposed Transaction,
(vi) unforeseen challenges in integrating the businesses of Savary
and SEMAFO, (vii) failure to realize the anticipated benefits of
the Proposed Transaction, (viii) other unforeseen events,
developments, or factors causing any of the aforesaid expectations,
assumptions, and other factors ultimately being inaccurate or
irrelevant; and other risks described in SEMAFO's and Savary's
documents filed with Canadian securities regulatory authorities.
You can find further information with respect to these and other
risks in filings made with the Canadian securities regulatory
authorities and available at www.sedar.com. SEMAFO's and Savary's
documents are also available on their respective websites at
www.semafo.com and www.savarygold.com. We disclaim any obligation
to update or revise these forward-looking statements, except as
required by applicable law.
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.
SOURCE SEMAFO