Dundee Precious Metals to Provide Incentive for Early Exercise of Warrants
March 25 2013 - 8:00AM
Marketwired Canada
This news release is not for distribution in the United States or over United
States wire services
Dundee Precious Metals Inc. (TSX:DPM)(TSX:DPM.WT.A) ("DPM" or the "Company") is
pleased to announce that the Toronto Stock Exchange ("TSX") has conditionally
approved a warrant incentive program designed to encourage the early exercise of
its 20,439,500 listed warrants that otherwise expire on November 20, 2015 (the
"Warrants").
The proposal is to be effected by way of an amendment to the indenture governing
the Warrants (the "Warrant Amendment") to provide holders of Warrants (the
"Warrantholders") an opportunity to receive a premium to the intrinsic or
"in-the-money" value of their Warrants and the trading price of the Warrants
upon the early exercise of their Warrants. Each Warrant currently entitles a
Warrantholder to acquire one common share of the Company (an "Underlying Share")
at a price of Cdn.$3.25 (the "Current Exercise Price") at any time prior to 5:00
p.m. (Toronto time) on November 20, 2015.
Pursuant to the proposed Warrant Amendment, each Warrant would entitle the
holder thereof to a Cdn.$0.40 reduction in the Current Exercise Price of the
Warrants (the "Exercise Price Reduction"), in the event that the Warrantholder
exercises his or her Warrants during a period of 30 days (the "Early Exercise
Period") expected to commence on or about May 10, 2013. A Warrantholder who
chooses to exercise his or her Warrants during the Early Exercise Period will
pay an exercise price of Cdn.$2.85 per common share rather than the Current
Exercise Price. Each Warrant that is not exercised during the Early Exercise
Period will continue to entitle the holder to acquire one Underlying Share at
the Current Exercise Price until November 20, 2015. The Warrants will continue
to trade on the TSX during the Early Exercise Period.
Illustrative Early Exercise of 100 Warrants
Warrants Owned What is Paid on Exercise What is Received
Cdn.$285 (Cdn.$2.85 per
100 Warrant)(1) 100 common shares
(1) Instead of Cdn.$325 or Cdn.$3.25 per Warrant
In the event that all of the Warrants are exercised during the Early Exercise
Period, the Company would:
i. receive net proceeds of approximately Cdn.$58.3 million, on or before
June 9, 2013; and
ii. issue 20,439,500 common shares.
The proceeds raised from the early exercise of the Warrants will further
strengthen the Company's balance sheet and support its planned growth capital
expenditures.
The Company believes that the trading pattern of the Warrants is currently
substantially the same as the trading pattern of the common shares of the
Company, and that the trading price of the Warrants does not include a
significant option value component in addition to the intrinsic or the
"in-the-money" value of the Warrants. Management of the Company is therefore
proposing to provide an incentive to Warrantholders to encourage the exercise of
the Warrants during the Early Exercise Period. The Company has entered into
support agreements with certain Warrantholders who hold approximately 32% of the
issued and outstanding Warrants, and have thereby agreed to vote their
securities of DPM in favour of the Warrant Amendment and to exercise their
Warrants during the Early Exercise Period.
The following table compares the trading value and the intrinsic value of the
Warrants for the 10 trading days prior to March 22, 2013, the last trading day
prior to the date of this news release.
10 Trading Day Premium
(March 11, 2013 to March 22, 2013)
Percentage of
Premium to Trading
Stock Symbol Trading Price Intrinsic Value Price
----------------------------------------------------------------------------
TSX: DPM.WT.A Cdn.$5.10 Cdn.$4.92 4.2%
The independent members of the board of directors of the Company approved the
submission of the Warrant Amendment to Warrantholders and shareholders of the
Company for their approval at meetings scheduled to be held on May 9, 2013. In
connection with the proposed Warrant Amendment, the Company has engaged Dundee
Securities Ltd. ("Dundee Securities") and GMP Securities L.P. ("GMP") to act as
financial advisors (the "Financial Advisors") to the Company and the directors
of the Company in connection with the Exercise Price Reduction. GMP has provided
a fairness opinion to the board of directors indicating that the Exercise Price
Reduction is fair, from a financial point of view, to Warrantholders and
shareholders (in both cases excluding insiders of the Company).
The Warrant Amendment requires final approval of the TSX, approval by holders of
66 2/3% of the Warrants, voting in person or by proxy at the meeting of holders
of Warrants, and approval by a simple majority of those holders of Warrants that
are not insiders of the Company. The transaction also requires approval of a
simple majority of the votes cast by shareholders, excluding insiders, at the
meeting of shareholders.
The Underlying Shares to be issued upon exercise of the Warrants have not been
and will not be registered under the U.S. Securities Act of 1933, as amended
(the "U.S. Securities Act") or any state securities laws and may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons unless registered under the U.S. Securities Act and applicable state
securities laws or an exemption therefrom is available.
About DPM
Dundee Precious Metals Inc. is a Canadian based, international gold mining
company engaged in the acquisition, exploration, development, mining and
processing of precious metals. The Company's principal operating assets include
the Chelopech operation, which produces a gold, copper and silver concentrate,
located east of Sofia, Bulgaria; the Deno Gold operation, which produces gold,
copper, zinc and silver concentrate, located in southern Armenia; and the Tsumeb
smelter, a concentrate processing facility located in Namibia. DPM also holds
interests in a number of developing gold properties located in Bulgaria, Serbia,
and northern Canada, including interests held through its 53.1% owned
subsidiary, Avala Resources Ltd., its 47.3% interest in Dunav Resources Ltd. and
its 10.7% interest in Sabina Gold & Silver Corp.
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking statements" that involve a number of
risks and uncertainties. Forward-looking statements include, but are not limited
to, statements with respect to the Warrant Amendment, receipt of all necessary
approval thereof, future growth opportunities, the future price of gold and
silver, the estimation of mineral reserves and resources, the realization of
mineral estimates, the timing and amount of estimated future production and
output, costs of production, capital expenditures, costs and timing of the
development of new deposits, success of exploration activities, permitting time
lines, currency fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims, limitations on insurance coverage and timing
and possible outcome of pending litigation. Often, but not always,
forward-looking statements can be identified by the use of words 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 or be achieved. Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made, and they
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 other future results, performance or achievements expressed
or implied by the forward-looking statements. Such factors include, among
others: the uncertainties inherent to receiving all necessary approvals for the
Warrant Amendment, the availability of future growth opportunities, the actual
results of current exploration activities; actual results of current reclamation
activities; conclusions of economic evaluations; changes in project parameters
as plans continue to be refined; future prices of gold, copper, zinc and silver;
possible variations in ore grade or recovery rates; failure of plant, equipment
or processes to operate as anticipated; accidents, labour disputes and other
risks of the mining industry; delays in obtaining governmental approvals or
financing or in the completion of development or construction activities,
fluctuations in metal prices, as well as those risk factors discussed or
referred to in documents filed from time to time with the securities regulatory
authorities in all provinces and territories of Canada and available at
www.sedar.com.
Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or intended. There
can be no assurance that forward-looking statements will prove to be accurate,
as actual results and future events could differ materially from those
anticipated in such statements. Unless required by securities laws, the Company
undertakes no obligation to update forward-looking statements if circumstances
or management's estimates or opinions should change. Accordingly, readers are
cautioned not to place undue reliance on forward-looking statements.
This press release is not an offer of securities for sale in the United States.
The securities have not been and will not be registered under the U.S.
Securities Act of 1933. Securities may not be offered or sold in the United
States absent registration or an exemption from registration. Any public
offering of securities that may be made in the United States will be made by
means of a prospectus that may be obtained from the issuer and that will contain
detailed information about the Company and management, as well as financial
statements.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE CONCERNING THE
EARLY EXERCISE WARRANT TRANSACTION, PLEASE CONTACT:
Kingsdale Shareholder Services Inc.
North America Toll-Free Phone: 1-866-581-0512
Outside North America Call Collect: 416-867-2272
E-mail: contactus@kingsdaleshareholder.com
FOR FURTHER INFORMATION PLEASE CONTACT:
Dundee Precious Metals Inc.
Jonathan Goodman
President & Chief Executive Officer
(416) 365-2408
Dundee Precious Metals Inc.
Lori Beak
Senior Vice President, Investor & Regulatory Affairs and
Corporate Secretary
(416) 365-5165
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