VANCOUVER, Aug. 7, 2018 /CNW/ - Golden Reign
Resources Ltd. (TSXV: GRR) ("Golden Reign"), Marlin
Gold Mining Ltd. (TSXV: MLN) ("Marlin") and Sailfish
Royalty Corp. (TSXV: FISH) ("Sailfish") are
pleased to announce that Golden Reign and Marlin have entered into
a definitive agreement (the "Arrangement Agreement"),
unanimously approved by each of the boards of directors of Golden
Reign and Marlin, pursuant to which Golden Reign and Marlin propose
to complete the previously announced business combination whereby
Golden Reign will acquire all of the issued and outstanding shares
of Marlin (following completion of the Marlin Reorganization (as
defined below) and satisfaction of all closing conditions of the
business combination) by way of plan of arrangement (the
"Transaction"). As a condition to closing the Transaction
(the "Closing"), Sailfish has agreed to restructure its
existing gold stream on San Albino, as further discussed below.
The Arrangement Agreement
Under the terms of the Arrangement Agreement, Golden Reign will
acquire all of the outstanding Marlin common shares in exchange for
0.5138 of a Golden Reign common share (each whole common share, a
"GRR Share") for each Marlin common share acquired (the
"Consideration"). In addition, Marlin will distribute
an aggregate of 18,148,654 GRR Shares currently held by Marlin to
the Marlin Shareholders on the basis of 0.1022 GRR Shares for each
Marlin common share, bringing the total GRR Shares to be received
by Marlin shareholders to 0.6160 of a GRR Share for each Marlin
common share outstanding at Closing. The Transaction will
result in Marlin and certain of its subsidiaries, including Oro
Gold de Mexico and Marlin Gold
Trading, becoming wholly-owned subsidiaries of Golden Reign (the
"Combined Company"). In addition to certain terms and
conditions described in this news release, the Arrangement
Agreement includes customary provisions, including covenants not to
solicit other acquisition proposals and the right to match any
superior proposals. Termination fees of C$1
million will be paid to Marlin or Golden Reign in certain
circumstances should the Transaction not be completed.
Upon completion of the Transaction, it is expected that the
shareholders of Marlin, as of the closing time, will own, in
aggregate, approximately 45% of the issued and outstanding common
shares of the Combined Company (including the current Marlin
shareholding of Golden Reign) and the shareholders of Golden Reign,
as of the closing time, will own, in aggregate, approximately 55%
of the issued and outstanding common shares of the Combined
Company.
"By acquiring Marlin, post spin-out of certain loans and
assets, shareholders of Golden Reign (to be renamed Mako Mining
Corp.) will benefit from the producing La Trinidad Gold Mine in
Mexico, over $6,000,000 in cash and no debt, and an
unencumbered, fully permitted, high grade gold development asset in
Northern Nicaragua. With the issuance of new shares at an
exchange ratio of 0.5138, Golden Reign will be issuing 91.2 MM new
shares in connection with this transaction, which will bring its
shares issued and outstanding to 283.4 MM", stated Kevin Bullock, CEO of Golden Reign. He went
on to say "by amending the current Gold Purchase Agreement with
Sailfish, Golden Reign will benefit from building a fully
permitted, unencumbered asset with security and provisions
commensurate with a standard, third party NSR agreement."
Akiba Leisman, Executive Chairman
of Marlin and Chief Executive Officer of Sailfish stated: "Since
Marlin and Sailfish's original involvement with Golden Reign in
2014, it was our belief that the San Albino Gold Deposit is the
most attractive development asset in the Americas today. At
Closing, Marlin's shareholders will own 45% of the Combined Company
and will be able to participate in this opportunity for decades to
come. Furthermore, the restructuring of the Gold Purchase
Agreement will not only make the San Albino Gold Deposit even more
robust, but in return, Sailfish will have a diversified suite of
assets including additional royalties, cash and an exploration
property in a world-class mining jurisdiction. Upon completion
of the Transaction, Sailfish will be well-capitalized, have no
funding obligations and intends to aggressively grow its royalty
business".
Marlin Reorganization
Under the terms of the Arrangement Agreement, as a condition to
Closing, Marlin has agreed to undertake a corporate reorganization,
pursuant to which it will (i) sell its Commonwealth silver and gold
property in Cochise County,
Arizona, to Wexford Capital LP or funds controlled by it
("Wexford"), Marlin's controlling shareholder, which will
extinguish all of Marlin's loans and any other debts and
liabilities owing to Wexford; (ii) assign to Sailfish its 1% net
smelter return royalty on the Parral 2 claims on the La Cigarra
project owned by Kootenay Silver Inc. (the "La Cigarra
Royalty") and its 1.5% net smelter return royalty on the
majority of the concessions at the El
Compas project operated by Endeavour Silver Corp. (the
"El Compas Royalty"), and grant an option to Sailfish to
purchase its Gavilanes property in
Mexico, all as partial
consideration for Sailfish agreeing to enter into the amendment to
the existing gold stream on San Albino; (iii) wind-up certain of
its non-material subsidiaries that will not be acquired by Golden
Reign under the Transaction; and (iv) arrange for the sale of
17,155,191 common shares of Golden Reign, currently held by Marlin,
at a price of $0.1539 on a private
placement basis, pursuant to which Wexford will purchase at least
85% of such Golden Reign common shares and an aggregate of at least
993,464 of such Golden Reign common shares will be purchased by
current stock option holders of Marlin, consisting of Akiba Leisman, Marlin's Executive Chairman, and
Cesar Gonzalez, Marlin's VP
Corporate Development. The full amount of the gross proceeds from
such private placement of $2,640,183.89 will remain in Marlin on the
Closing of the Transaction. These pre-Closing transactions being
completed by Marlin are collectively referred to herein as the
"Marlin Reorganization".
As a result of the Marlin Reorganization, Golden Reign will
acquire Marlin and certain of its material subsidiaries on a debt
free and working capital neutral basis.
Revised Stream Agreement
Another key condition to the closing of the Transaction is that
Golden Reign and its subsidiaries, Marlin and Sailfish enter into a
mutually acceptable agreement to restructure the existing gold
stream on San Albino (the "Amended and Restated Gold Purchase
Agreement"). Accordingly, concurrent with the signing of the
Arrangement Agreement, Golden Reign and its subsidiaries, Marlin
and one of its material subsidiaries and Sailfish have entered into
a master agreement (the "Master Agreement") whereby the
parties have agreed:
(a) to the substantial form of and the terms and conditions
of the Amended and Restated Gold Purchase Agreement, equivalent to
a 3% net smelter returns royalty, to be entered into effective as
of the closing of the Transaction, with respect to a certain area
of interest on San Albino concession (the "AOI"), which
includes as a schedule to the Amended and Restated Gold Purchase
Agreement, the substantial form of and terms and conditions of a
new royalty agreement to be entered into between Golden Reign and
its subsidiaries, and Sailfish, with respect to a 2% net smelter
returns royalty on production from the San Albino concession
(exclusive of the AOI) and the El Jicaro concession;
(b) that Marlin will make cash payments to Sailfish in
respect of any amounts recovered by Marlin in certain lawsuits
Marlin has filed against the Mexican tax authority for the purpose
of obtaining previously denied Mexican value added tax refunds for
an aggregate of $37,379,097 Mexican
pesos ($7,490,437 Mexican pesos of
which have already been received), before certain interest and
inflation adjustments and applicable legal fees;
(c) that Sailfish will extinguish Golden Reign's prepayment
liability associated with the existing gold stream on San Albino
prior to Closing;
(d) that Sailfish's existing funding obligation of
approximately US$13.9 million will be
eliminated prior to Closing; and
(e) to the substantial form of and the terms and conditions of
certain assignment, option and royalty agreements, that will be
entered into as partial consideration to be paid to Sailfish in
consideration for entering into the Amended and Restated Gold
Purchase Agreement. Such agreements provide for Marlin's assignment
to Sailfish, for no additional consideration, of the El Compas
Royalty and La Cigarra Royalty in Mexico. Such agreements also provide for
Marlin's agreement to transfer its Gavilanes property in Mexico, to a designee of Sailfish.
Management Team and Board of Directors
Upon Closing, senior management of the Combined Company will
consist of Kevin Bullock as Chief
Executive Officer, Jesse Muñoz as
Chief Operating Officer and Scott
Kelly as Interim Chief Financial Officer. The board of
directors of the Combined Company is expected to be comprised of
seven members, consisting initially of three directors as
determined by Golden Reign (which will include Kevin Bullock) and three directors as determined
by Marlin, which shall include at least one independent director.
Golden Reign and Marlin will jointly determine one additional
independent board member who will serve as non-executive
chairman.
Following Closing, it is expected that the name of the parent
company will be changed from Golden Reign to "Mako Mining Corp." or
such other name as may be mutually determined by Golden Reign and
Marlin.
Special Committee and Board Recommendations
The boards of directors of Golden Reign, Marlin and Sailfish,
respectively, have each appointed a special committee to consider
the Proposed Transaction, as well as any strategic
alternatives.
The special committee comprised of two independent Marlin
directors (the "Marlin Special Committee") received an oral
fairness opinion (to be supplemented by a written report) from Red
Cloud Klondike Strike Inc. stating that in its opinion, and based
upon and subject to certain assumptions, limitations and
qualifications, the Consideration to be received by Marlin
shareholders is fair, from a financial point of view, to Marlin
shareholders.
The special committee comprised of three independent Golden
Reign directors (the "Golden Reign Special
Committee") received a fairness opinion from PI Financial
Corp. stating that in its opinion, and based upon and subject to
the assumptions, limitations and qualifications set forth therein,
the Consideration is fair, from a financial point of view, to
Golden Reign shareholders.
The special committee comprised of three independent Sailfish
directors (the "Sailfish Special Committee") received a
fairness opinion from Noble Capital Markets stating that in its
opinion, and based upon and subject to the assumptions, limitations
and qualifications set forth therein, the restructuring of the gold
stream on San Albino as contemplated by the Master Agreement is
fair, from a financial point of view, to Sailfish shareholders.
Marlin's board of directors has determined that the Transaction
is in the best interests of Marlin and its shareholders, having
taken into account advice from its financial advisor and the
recommendations of the Marlin Special Committee, and has
unanimously approved the Transaction and the entering into of the
Arrangement Agreement and recommends that Marlin's shareholders
vote in favour of the Transaction. The directors, senior officers
and certain principal shareholders of Marlin, who together control
approximately 85.8% of the outstanding Marlin common shares, have
signed voting support agreements and confirmed their intention to
vote their Marlin common shares in favour of the Transaction.
Golden Reign's Board of Directors has determined that the
Transaction is in the best interest of Golden Reign and its
shareholders, having taken into account advice from its financial
advisor and the recommendations of the Golden Reign Special
Committee, and has unanimously approved the Transaction and the
entering into of the Arrangement Agreement and recommends that
Golden Reign shareholders vote in favour of the issuance of the GRR
Shares in connection with the Transaction, including to Wexford who
will become a new "Control Person" of the Combined Company within
the meaning of the TSX Venture Exchange policies on closing of the
Transaction. The directors and senior officers of Golden Reign, who
control approximately 14.9% of the outstanding Golden Reign common
shares, have signed voting support agreements and confirmed their
intention to vote their Golden Reign common shares in favour of the
issuance of the GRR Shares in connection with the Transaction.
Sailfish's board of directors has determined that the
restructuring of the gold stream on San Albino as contemplated by
the Master Agreement is in the best interests of Sailfish and its
shareholders, having taken into account advice from its financial
advisor and the recommendations of the Sailfish Special Committee,
and has unanimously approved the gold stream restructuring and the
entering into of the Master Agreement and recommends that
Sailfish's shareholders vote in favour of that transaction.
Transaction Conditions and Timing
The Transaction will be carried out by way of a court-approved
plan of arrangement under the Business Corporations Act
(British Columbia) and will
require the approval of: (i) at least 66 2/3% of the votes cast by
the holders of Marlin common shares; and (ii) a simple majority of
the votes cast by holders of Marlin common shares after excluding
any votes of certain persons required to be excluded under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"), at a
special meeting of shareholders currently expected to take place in
the fall of 2018.
Golden Reign shareholders will also be asked to approve the
issuance of the GRR Shares in connection with the Transaction by a
simple majority of the votes cast by holders of Golden Reign common
shares after excluding any votes of certain persons required to be
excluded under MI 61-101 at a special meeting of shareholders
currently expected to take place in the fall of 2018.
Additionally, Sailfish shareholders will be asked to approve the
restructuring of the San Albino gold stream by a simple majority of
the votes cast by holders of Sailfish common shares after excluding
any votes of certain persons required to be excluded under MI
61-101 at a meeting of shareholders currently expected to take
place in the fall of 2018.
In addition to obtaining the shareholder and court approvals,
and the parties entering into the documents contemplated by the
Master Agreement and the Amended and Restated Gold Purchase
Agreement, the Transaction is subject to closing conditions
customary in transactions of this nature. Marlin and Golden Reign currently anticipate that the
Transaction will be completed in October
2018. The effect of Marlin shareholders voting for the
resolution to approve the Transaction and the Transaction becoming
effective will be the cancellation of the common shares of Marlin
from trading on the TSX Venture Exchange following Closing.
None of the GRR Shares to be issued pursuant to the Transaction
have been or will be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities
Act"), or any state securities laws, and any GRR Shares issued
pursuant to the Transaction are anticipated to be issued in
reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. This
press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities.
Further information regarding the Transaction will be included
in the respective management proxy circulars of Golden Reign and
Marlin, which are currently expected to be mailed to Golden Reign
and Marlin shareholders, respectively, in the late summer or early
fall of 2018. Copies of the Arrangement Agreement and management
information circulars will be available on SEDAR at
www.sedar.com.
Golden Reign Bridge Loan
As previously announced, Golden Reign and Marlin entered into a
definitive bridge loan agreement for a bridge loan from Marlin to
Golden Reign of C$4,000,000, having a
term of one year and bearing interest at 8% per annum (the
"Bridge Loan"). On Closing, the Bridge Loan will become
intercompany debt and terminated. In the event that (a) Golden
Reign shareholders vote not to approve the Transaction, or
(b) or the Arrangement Agreement is terminated in accordance
with its terms, then all accrued interest under the Bridge Loan
will become immediately due and the maturity date of the Bridge
Loan will accelerate to the earlier of the original maturity date
or the date that is four months from the negative shareholder vote
or termination of the Arrangement Agreement.
Participation and Standstill Agreement
Effective as of the Closing, the Combined Company and Wexford
will enter into a participation rights agreement pursuant to which
the Combined Company will grant to Wexford a right to participate
in future equity financings of the Combined Company to maintain its
then current equity ownership in the Combined Company on terms no
less favourable than those offered to other investors in such
financings, for so long as Wexford owns at least 20% of the issued
and outstanding common shares of the Combined Company, and Wexford
will be subject to a standstill prohibiting Wexford from increasing
its equity ownership in the Combined Company beyond 45% (on a
fully-diluted basis) without the prior written consent of the board
of directors of the Combined Company.
About Golden Reign
Golden Reign Resources Ltd. is a publicly listed (TSX-V: GRR)
mineral exploration company engaged in exploring the San
Albino-Murra Property and the El Jicaro Property, both of which are
located in Nueva Segovia,
Nicaragua. The company's prime
objective is to bring its San Albino Gold Deposit into production
quickly and efficiently, building cash flow to further advance a
number of its other prospective exploration targets. The Company's
land package comprises 13,771 hectares (138 km2) of prospective
ground for gold and silver mineralization. Hundreds of historical
mines and workings exist within the Corona de Oro Gold Belt, which
is approximately 3 kilometres wide by 20 kilometres long and is
spanned by the company's land package. For additional information
please visit our website at www.goldenreign.com and SEDAR
www.sedar.com.
About Marlin Gold
Marlin is a growth-oriented gold and silver mining company
focused on the Americas. The company owns three properties located
in Mexico and the USA and a portfolio of royalties. Marlin's
priority is to profitably operate its La Trinidad Mine, conduct
further exploration on its other projects and enhance shareholder
value through a strategic relationship with Sailfish Royalty Corp.
(TSX-V:FISH). Marlin is backed by a well-funded investor with a
successful track record in the resources sector. The La Trinidad
Mine in Sinaloa, Mexico declared
commercial production on November 1,
2014 and is one of the highest grade open pit heap leach
gold mines in Mexico.
About Sailfish Royalty
Sailfish is a yield-focussed royalty company. Sailfish owns
the TZ Royalty, which is a 3.5% royalty on revenues derived from
the sale of gold on Eldorado Gold Corp.'s advanced stage
Tocantinzinho gold project, and also holds a gold stream agreement
on the San Albino gold project in Northern Nicaragua.
Forward-Looking Statements: Some of the
statements contained herein may be considered "forward-looking
information" within the meaning of applicable securities laws which
may include, but is not limited to, statements with respect to
management's assessment of the anticipated benefits to Marlin,
Golden Reign and Sailfish shareholders of the Transaction and
matters contemplated by the Master Agreement and the Amended and
Restated Gold Purchase Agreement, anticipated shareholder meeting
dates, timing for Closing and the delisting of the Marlin Shares
from the TSX Venture Exchange. Often, but not always,
forward-looking statements can be identified by the use of words
and phrases such as "plans," "expects," "is expected," "budget,"
"scheduled," "estimates," "forecasts," "intends," "anticipates," or
"believes" or variations (including negative 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 information is based on certain expectations
and assumption that are considered reasonable at the time, however
undue reliance should not be placed on the forward looking
information as the companies can give no assurance that they will
provide to be correct. As forward-looking statements address
anticipated future events and conditions, such forward-looking
information is subject to a variety of risks and uncertainties
which could cause actual events or results to differ materially
from those reflected in the forward-looking information, including,
without limitation, the risk that the Marlin Reorganization is not
completed as contemplated; that the requisite court, regulatory
and/or shareholder approval is not obtained; uncertainties
associated with negotiations; misjudgements in the course of
preparing forward-looking information; that the Transaction may not
close when planned or at all or on the terms and conditions set
forth in the Arrangement Agreement; the benefits expected from the
Transaction not being realized; risks related to the integration of
the acquisition of Marlin and its business; general business,
economic, competitive, political and social uncertainties; legal
challenges to permits or permitting applications; the actual
results of current and future exploration and production
activities; the actual results of reclamation activities;
conclusions of economic evaluations; meeting various expected cost
estimates; changes in project parametres and/or economic
assessments as plans continue to be refined; future prices of
metals; possible variations of mineral grade or recovery rates; the
risk that actual costs may exceed estimated costs; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; political
instability, that the repayment of the Bridge Loan is accelerated,
that any party is unable to satisfy all closing conditions to
completion of the Transaction (including extinguishing or amending
the existing gold stream agreement with Sailfish), that any
anticipated reconstitution of the board of directors and management
of the Combined Company is not as anticipated, and other risks and
uncertainties including those discussed in each company's
disclosure documents which can be found under each company's
profile at www.sedar.com.
Although Golden Reign, Marlin and Sailfish have 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 to differ from those anticipated,
estimated or intended. Forward-looking statements contained herein
are made as of the date of this press release and Golden Reign,
Marlin and Sailfish each disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or results, except as may be required by applicable
securities laws. 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. Accordingly, readers should not place undue reliance on
forward-looking statements.
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 Golden Reign Resources Ltd.