Creation of 1,250 km² District-Scale Land
Package on Houndé Belt
MONTREAL and TORONTO, March 11,
2019 /CNW Telbec/ - SEMAFO Inc. (TSX: SMF) (OMX: SMF)
("SEMAFO") and Savary Gold Corp. (TSX-V: SCA)
("Savary") are pleased to announce that they have entered
into a definitive combination agreement (the "Combination
Agreement") pursuant to which SEMAFO will acquire all of the
issued and outstanding common shares of Savary (the "Savary
Shares") not already owned by it. The transaction is being
carried out by way of a three-cornered amalgamation (the
"Amalgamation"). Savary shareholders will vote on the
Amalgamation at a special meeting of Savary shareholders (the
"Savary Meeting") with closing expected to take place by the
end of April 2019.
Under the terms of the Combination Agreement, Savary
shareholders will receive 0.0336 of a SEMAFO common share (the
"SEMAFO Shares") for each Savary
Share (the "Exchange Ratio"). The Exchange Ratio is
the same as was announced on February 11,
2019. All of Savary management and board and significant
shareholders, together representing 29.3% of the Savary Shares, are
supportive of the combination and have entered into support
agreements (collectively, the "Support Agreements") with
SEMAFO to vote their Savary Shares in favour of the
Amalgamation.
Transaction Highlights
- District-Scale Land Package - Consolidated
properties (see Figure 1 below) become ~50 km by ~25 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 on a
consolidated basis and will be announced post-closing.
Figure 1 – Consolidated 1,250
km² District-Scale Land Package
Benoit Desormeaux, President and
CEO of SEMAFO, stated "Our acquisition of the Karankasso property
reflects our core strategy of creating long-term value through
developing and operating high quality assets. The acquisition
provides 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 when 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
transaction with SEMAFO is consistent with that commitment as our
shareholders will 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. On closing, our
shareholders can maintain exposure to the district-scale land
package as it becomes one of SEMAFO's top development pipeline
projects."
Benefits to SEMAFO Shareholders
- Creation 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 immediate value and premium
- 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
Terms of the Combination Agreement
The Combination Agreement follows the announcement by way of a
joint press release dated February 11,
2019 that SEMAFO and Savary had entered into a non-binding
letter of intent in respect of a proposed acquisition of Savary by
SEMAFO.
Subject to TSX Venture Exchange, Toronto Stock Exchange (the
"TSX") and any other required regulatory authority approval,
outstanding Savary options and warrants will be exercisable in
accordance with their terms into SEMAFO Shares at the Exchange
Ratio until their expiry date.
Pursuant to the Amalgamation, SEMAFO will issue approximately
7.26 million SEMAFO Shares to Savary shareholders (other than
itself) and Savary will amalgamate with a newly-incorporated
wholly-owned subsidiary of SEMAFO to become a wholly-owned
subsidiary of SEMAFO. The Amalgamation represents approximately
2.2% dilution to SEMAFO shareholders.
Implementation of the Amalgamation is subject to approval by (i)
at least two-thirds of the votes cast by all Savary shareholders
and (ii) a simple majority of the votes cast by Savary shareholders
other than SEMAFO, all at the Savary Meeting. In addition to
shareholder approval, completion of the Amalgamation is subject to
the receipt of regulatory approvals, including stock exchange
approvals, as well as certain other closing conditions customary in
transactions of this nature.
The Combination Agreement contains customary non-solicitation
provisions which are subject to Savary's right to consider and
accept a superior proposal subject to a matching right in favour of
SEMAFO. In the event that the Amalgamation is not completed as a
result of a superior proposal or in certain specified
circumstances, Savary will pay SEMAFO a termination fee in the
amount of $750,000.
SEMAFO currently owns approximately 15.5% of the issued and
outstanding Savary Shares. As such, SEMAFO is considered a "related
party" of Savary in respect of the Amalgamation and the
Amalgamation is considered to be a "business combination" for
Savary pursuant to Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions ("MI 61-101").
Savary will therefore seek approval of the Amalgamation from
disinterested Savary shareholders at the Savary Meeting, as
required by section 5.6 of MI 61-101. Savary is relying on the
formal valuation exemption in section 5.5(b) of MI 61-101, on the
basis that no securities of Savary are listed on the TSX or other
specified markets. Full details of the Amalgamation will be
included in the management information circular to be filed with
regulatory authorities and mailed to the Savary shareholders in
accordance with applicable securities laws. The record date for the
Savary Meeting will be announced in the near future.
Board Recommendation
The board of directors of Savary (the "Savary Board") has formed
a special committee (the "Special Committee") to consider and
evaluate the Amalgamation. The Special Committee, following a
review of the terms and conditions of the Combination Agreement and
consideration of a number of factors, unanimously recommended that
the Savary Board approve the Amalgamation. After receiving the
recommendation of the Special Committee and advice, including a
fairness opinion, from its advisors, the Savary Board has
unanimously determined that the Amalgamation is in the best
interests of Savary and is fair, from a financial point of view, to
Savary shareholders (other than SEMAFO and its affiliates) and will
recommend that Savary shareholders vote in favour of the
Amalgamation. Prior to the execution of the Combination Agreement,
Red Cloud Klondike Strike Inc. provided an opinion that, based upon
and subject to the assumptions, limitations and qualifications in
such opinion, the consideration to be received by Savary
shareholders is fair, from a financial point of view, to Savary
shareholders (other than SEMAFO and its affiliates). A copy of the
fairness opinion will also be included in the Savary management
information circular.
Savary Delisting and SEDAR
If the Amalgamation is completed, the Savary Shares will be
delisted from the TSX Venture Exchange.
A copy of the Combination Agreement will be available through
Savary's and SEMAFO's filings with the applicable securities
regulatory authorities in Canada
on SEDAR at www.sedar.com.
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 Canada LLP is
acting as Savary's legal advisor.
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.
Notice to Savary Shareholders in the United States
This business combination is made for the securities of a
foreign company. The offer is subject to disclosure requirements of
a foreign country that are different from those of the United States. Financial statements to be
included in the Savary management information circular, if any,
have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board, that may not be comparable to the financial
statements of United States
companies.
It may be difficult for you to enforce your rights and any claim
you may have arising under the federal securities laws, since each
of SEMAFO and Savary is incorporated in a province of Canada, and some or all of their respective
officers and directors are residents of Canada. You may not be able to sue either
SEMAFO or Savary or their officers or directors in a foreign court
for violations of the U.S. securities laws. It may be difficult to
compel SEMAFO or Savary or their respective affiliates to subject
themselves to a U.S. court's judgment.
This press release is not an offer of securities for sale in
the United States. Securities may
not be offered or sold in the United
States absent registration or an exemption from the
registration requirements. The SEMAFO Shares that will be issued to
Savary shareholders will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
the securities laws of any state of the
United States and will be issued in the United States in reliance on the exemption
from the registration requirements of the U.S. Securities Act set
out in Rule 802 thereunder and exemptions provided under the
securities laws of each applicable state of the United States.
Copies of the Savary management information circular (including
any documents to be incorporated therein), Combination Agreement
and certain other reports or information related to the
Amalgamation will be made available through SEMAFO's filings with
the United States Securities and Exchange Commission at
www.sec.gov.
Forward Looking Information
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 Amalgamation
and the likelihood that the Amalgamation will be consummated on the
terms and timeline provided herein or at all, SEMAFO's business and
growth strategies, prospects, operations, projects, development and
exploration plans following the Amalgamation, the anticipated
timing of the special meeting of shareholders of Savary and of the
completion of the Amalgamation, the benefits of the Amalgamation 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
"will", "may", "shall", "if", "subject to", "in the event",
"expected", and other similar words or expressions. In respect of
the forward-looking statements and information concerning the
likelihood that the Amalgamation will be consummated and the
anticipated benefits of the completion of the Amalgamation, SEMAFO
and Savary have provided such statements and information in
reliance on certain assumptions that they each believe are
reasonable at this time, including assumptions as to the ability of
the parties to receive, in a timely manner and on satisfactory
terms, the necessary regulatory, stock exchange and shareholder
approvals where applicable; the ability of the parties to satisfy,
in a timely manner, the other conditions to the completion of the
Amalgamation; general assumptions respecting the business and
operations of both SEMAFO and Savary, including that each business
will continue to operate in a manner consistent with past practice
and pursuant to certain industry and market conditions; and other
expectations and assumptions concerning the Amalgamation. Although
SEMAFO and Savary believe that the expectations reflected in these
forward-looking statements are reasonable, neither SEMAFO nor
Savary can give assurance that these expectations will prove to
have been correct, that the Amalgamation will be completed or that
it will be completed on the terms and conditions contemplated in
this press release. Accordingly, investors and others are cautioned
that undue reliance should not be placed on any forward-looking
statements. For additional information with respect to other
assumptions underlying the forward-looking statements made in this
press release, refer to the Outlook and Strategy and
forward-looking statements sections in SEMAFO's management's
discussion and analysis for the financial year ended December 31, 2018 and for the most recently
completed interim period, which are available at www.sedar.com.
Factors that could cause future results or events to differ
materially from current expectations expressed or implied by the
forward-looking statements include, without limitation, significant
transaction costs or unknown liabilities; economic,
competitive, political and social uncertainties; the state of
capital markets; risks relating to (i) the ability of the parties
to satisfy the closing conditions of the Combination Agreement,
(ii) the ability of the Savary Board to consider and approve a
superior proposal for Savary prior to the completion of the
Amalgamation, (iii) failure to receive the necessary shareholder or
regulatory approvals where applicable, or failure of the parties to
obtain such approvals or satisfy such conditions in a timely
manner, (iv) unforeseen challenges in integrating the businesses of
Savary and SEMAFO, (v) failure to realize the anticipated benefits
of the Amalgamation, (vi) the business, operational and/or
financial performance or achievements of Savary or SEMAFO may be
materially different from that currently anticipated, (v) other
unforeseen events, developments, or factors causing any of the
aforesaid expectations, assumptions, and other factors ultimately
being inaccurate or irrelevant. In particular, the benefits
anticipated in respect of the Amalgamation are based on the current
business, operational and financial position of each of SEMAFO and
Savary, which are subject to a number of risks and uncertainties.
Readers are cautioned that the foregoing list of risks,
uncertainties and assumptions are not exhaustive. In addition, if
the Amalgamation is not completed, and Savary continues as an
independent entity, there are risks that the announcement of the
Combination Agreement and the dedication of substantial resources
of SEMAFO and Savary to the completion of the Amalgamation could
have an impact on each of their respective businesses and strategic
relationships (including with regulatory bodies, future and
prospective employees, customers, suppliers and partners),
operating results and activities in general, and could have a
material adverse effect on each of their current and future
operations, financial condition and prospects. Consequently, the
reader is cautioned not to place undue reliance on the
forward-looking statements and information contained in this press
release. The forward-looking statements in this press release
reflect SEMAFO and Savary's expectations on the date hereof and are
subject to change thereafter.
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