TSX-V: NWM
TORONTO, June 8, 2015 /CNW/ - NWM Mining
Corporation ("NWM" or the "Company") (TSX-V:NWM) announces that
the Company has entered into a definitive arrangement agreement
(the "Arrangement Agreement") with GFM Minera S.A.P.I. de C.V.
("GFMM"), and one of its affiliates, and the Company's lender,
Global Resource Fund ("Global"), pursuant to which GFMM will
acquire, for cash, all of the issued and outstanding common shares
of NWM ("NWM Shares") subject to a court-approved plan of
arrangement (the "Arrangement") under the Business Corporations
Act (Ontario). GFMM will
acquire each outstanding NWM Share for cash consideration of
C$0.005.
In connection with the Arrangement, GFMM and its affiliate, SFM
Holdings, S.A.P.I. de C.V. ("SFM"), have entered into a purchase
agreement ("Purchase Agreement") with Global, pursuant to which SFM
will satisfy NWM's existing debt to Global and GFMM will purchase
the NWM Shares held by Global and all royalties owned by
Global.
Darren Koningen, President &
CEO of NWM, stated: "The Arrangement Agreement is essential for the
Company's future. At the gold price levels seen over the last
12 months, the revenues generated by the Company's operation in
Mexico have not allowed it to make
any debt and interest payments during this time. The
operation urgently requires a significant capital injection in
order to expand production levels and help to lower costs.
This is not possible due to the Company's current financial
situation."
Mark Selby, Chair of the NWM
Board of Directors continues: "After an exhaustive and
comprehensive process of reviewing the strategic alternatives
available to the Company, and in light of current equity capital
market conditions for junior gold miners, we believe this is the
most attractive option to preserve value for our shareholders."
Benefits for NWM Shareholders:
- Provides liquidity for NWM shareholders,
- Avoids NWM from seeking bankruptcy protection given the
Company's large debt position and capital requirements for
expansion.
Global has agreed to provide additional interim debt funding up
to an aggregate amount of approximately US$2,500,000 in order to cover critical short
term capital shortages such that mining operations can continue
uninterrupted pending the completion of the Arrangement.
Subject to certain terms and conditions, Global has agreed with the
Purchasers not to demand repayment of, or enforce its security on
the the debt, while the Arrangement Agreement is in effect.
SFM must pay US$3,000,000 into
escrow as a deposit under the Purchase Agreement which could be
forfeited to Global as a break fee if the transaction does not
close. Global has agreed with NWM that if the deposit is
forfeited to Global, US$300,000 will
be forwarded to NWM. The Purchase Agreement also permits GFMM
to acquire Global's interests in NWM in certain cases if the
Arrangement is not completed. Exercise of the purchase option
under the Purchase Agreement would result in GFMM holding in excess
of 10% of the NWM shares.
If the Arrangement does not receive the required support of NWM
shareholders at the annual and special meeting of shareholders to
be called in connection with the Arrangement, the Arrangement will
not close and the debt (plus interest) owing to Global, will become
immediately payable by NWM. Given its current financial
situation, the Company does not expect to have sufficient funds to
repay these amounts and would be forced to consider filing for
creditor protection.
Background to the Arrangement
The terms of the Arrangement Agreement are the result of a
comprehensive process undertaken by NWM to review its strategic
alternatives. The process has taken place over the span of several
years.
Although the Company has produced gold at an annualized rate of
approximately 20,000 ounces over the last two years, a decline in
gold prices combined with an inability to raise the additional
capital required to expand production has left the Company in a
severly financially distressed position. NWM currently owes
Global in excess of US$25,000,000
(principal plus accrued interest).
During November of 2011, NWM engaged a financial advisor to
explore potential strategic alternatives; however no suitable
outcome was found. In August of 2013, NWM engaged Macquarie
Capital Markets Canada Ltd. ("Macquarie") and initiated a follow-up
formal strategic review process. Macquarie was engaged to
design, implement and coordinate the process to review strategic
alternatives, including a process to solicit proposals from
interested parties. The process was overseen by a special
committee of independent Directors of NWM.
As part of the strategic review process, NWM considered many
different alternatives including, business combinations with other
entities, a sale of NWM, partial asset sales, strategic debt and
equity investments in NWM, and combinations thereof. During
this period several non-binding proposals were received and
presented to and analyzed by NWM, in consultation with its legal
and financial advisors, and many were shared with the Company's
lender Global. As many of the non-binding proposals were not
acceptable to NWM and/or Global, the process stalled on several
occasions. During this time discussions continued to advance
with GFMM.
A more detailed summary of the Background to the Arrangement
will be provided in the Management Information Circular (the
"Circular"), which is expected to be mailed to shareholders of NWM
this month.
Transaction Summary
The Arrangement will be completed pursuant to a court-approved
plan of arrangement, which will require approval by the affirmative
vote of: (i) at least 66 2/3% of the votes cast by the shareholders
of NWM at a special meeting of NWM shareholders, voting as a single
class, represented in person or by proxy and entitled to vote at
the meeting; and (ii) the majority of the votes cast by
shareholders of NWM, excluding the votes cast by interested or
related parties or joint actors of NWM, including those shares held
by Global (approximately 10.8%). The directors and senior officers
of NWM, who together hold approximately 11.5% of the outstanding
NWM common shares, have entered into voting agreements with GFMM
pursuant to which they have each agreed to vote in favour of the
Arrangement. Global has also agreed to support the
Arrangement in the Purchase Agreement. Details of the Arrangement
and the annual and special meeting will be included in the
Circular, which will be mailed to the shareholders of NWM as soon
as practicable. The Arrangement is expected to close in late
July or August, 2015.
The special committee of independent NWM directors considered
refinancing alternatives potentially available to the Company
including the currently proposed Arrangement. Macquarie has
provided an opinion to the Board of Directors of NWM that, based
upon and subject to the assumptions, limitations and qualifications
contained therein, as of the date hereof, the consideration to be
received by NWM shareholders in connection with the Arrangement is
fair, from a financial point of view, to NWM shareholders. After
due and careful consideration, the NWM special committee
unanimously recommended to the Board of Directors of NWM that they
authorize and approve the execution of the Arrangement
Agreement. The Board of Directors of NWM has determined that
the Arrangement is in the best interest of NWM and its shareholders
and has unanimously recommended that NWM shareholders vote in
favour of the Arrangement.
In addition to NWM shareholder approval and court approval, the
Arrangement will be subject to the satisfaction of certain other
conditions. NWM has also provided GFMM with certain other
customary rights, including a non-solicitation covenant and a right
to match competing offers.
Advisors and Counsel
Macquarie is acting as NWM's exclusive financial advisor and
Minden Gross LLP is acting as legal advisor to NWM. Canales
Dávila, S.C. is acting as Mexican legal advisor to GFMM and
Osler, Hoskin & Harcourt LLP is acting as Canadian legal
advisor to GFMM. Cassels Brock LLP is acting as legal advisor
to Global.
About NWM Mining Corporation
NWM is in commercial gold production at its wholly owned
Lluvia-Jojoba gold mine. The mine is an open pit heap leach
operation in Sonora State, Mexico.
Additional information about NWM can be found on the NWM website
at www.nwmmining.ca or on SEDAR at www.sedar.com.
On behalf of
Management and the Board:
|
"Darren
Koningen"
|
"Mark
Selby"
|
Cautionary Note Regarding Forward Looking
Information
Certain information set forth in this press release contains
"forward-looking statements", and "forward-looking information
under applicable securities laws. Except for statements of
historical fact, certain information contained herein constitutes
forward-looking statements, which include the Company's
expectations about the completion of the Arrangement and are based
on the Company's current internal expectations, estimates,
projections, assumptions and beliefs, which may prove to be
incorrect. Some of the forward-looking statements may be identified
by words such as "will", "expects", "anticipates", "believes",
"projects", "plans", and similar expressions. These statements are
not guarantees of future performance and undue reliance should not
be placed on them. Such forward-looking statements necessarily
involve known and unknown risks and uncertainties, which may cause
the Company's actual performance and financial results in future
periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking
statements. These risks and uncertainties include, but are not
limited to: liabilities inherent in mine development and
production; geological, mining and processing technical problems;
mine permits and regulatory approvals required in connection with
mining and mineral processing operations; competition for, among
other things, capital, acquisitions of reserves, undeveloped lands
and skilled personnel; incorrect assessments of the value of
acquisitions; changes in commodity prices and exchange rates;
currency and interest rate fluctuations; various events that could
disrupt operations and/or the transportation of mineral products,
including labour stoppages and severe weather conditions; the
demand for and availability of rail, port and other transportation
services; the ability to secure adequate financing, and
management's ability to anticipate and manage the foregoing factors
and risks. There can be no assurance that forward-looking
statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such
statements. The Company undertakes no obligation to update
forward-looking statements if circumstances or management's
estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements outlined in the
Arrangement Agreement, which is available on the Company SEDAR
profile at www.sedar.com.
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 of
this press release.
SOURCE NWM Mining Corporation