Kaizen Discovery to Combine With West Cirque Resources in an
All-Share Transaction and Expects the Support of Strategic Partner,
ITOCHU
TOKYO, JAPAN and VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr
16, 2014) - Kaizen Discovery Inc. (TSX-VENTURE:KZD) and West Cirque
Resources Ltd. (TSX-VENTURE:WCQ) are pleased to announce the
signing of a definitive agreement that would see Kaizen acquire all
of the common shares of West Cirque in an all-share
transaction.
Under the terms of the planned acquisition, each West Cirque
shareholder would receive one-half of one Kaizen common share for
each West Cirque common share.
West Cirque is a Vancouver-based mineral exploration company
with seven highly prospective copper-gold porphyry exploration
projects in British Columbia, Canada - three of which are subject
to an earn-in agreement with Freeport-McMoRan of Canada
Limited.
Matthew Hornor, President and Chief Executive Officer of Kaizen,
said the planned acquisition of West Cirque is a significant step
in the strategy of positioning Kaizen for future growth, and is
expected to gain the support of its strategic financing partner,
ITOCHU, in pursuit of Kaizen's objective of delivering minerals to
Japan's industrial sector.
"The combination of Kaizen's existing portfolio of exploration
projects in Australia and Africa, and West Cirque's portfolio in
Canada, will establish a stronger company with an impressive and
diverse pipeline of projects," Mr. Hornor added.
West Cirque President and Chief Executive Officer Steve Vanry
added: "Our transaction with Kaizen is truly complementary, as it
combines our strong technical expertise with a group that has a
long-established track record of exploration success and mine
financing. The combined entity offers shareholders early-stage
ownership in a uniquely positioned enterprise focused on rapidly
becoming a dominant player in the minerals discovery and
development industry."
Expected support from strategic partner ITOCHU
ITOCHU Corporation, a leading Japanese trading house, holds a
6.3% stake in Kaizen. An earlier framework agreement entered into
between Kaizen and ITOCHU in January 2014 established a
collaborative working arrangement under which both companies can
evaluate opportunities to explore and develop selected,
high-quality, international mineral projects. Based on the signed
framework agreement, ITOCHU has the right of first offer to enter
into projects introduced by Kaizen. After completing the planned
acquisition of West Cirque, Kaizen expects ITOCHU to participate in
West Cirque's exploration projects.
The details of the framework agreement were provided in Kaizen's
January 30, 2014, news release available here.
Highlights of the West Cirque transaction
- West Cirque's portfolio of Canadian exploration properties
would complement Kaizen's existing projects in Australia and
Africa.
- West Cirque shareholders would participate in a larger,
well-capitalized Kaizen, which has current cash holdings of
approximately C$13.4 million.
- Kaizen's in-house technical expertise will be enhanced through
the addition of members of West Cirque's experienced senior
management team, who are expected to continue their employment with
the combined company.
- The size and composition of Kaizen's current board will remain
unchanged.
- New opportunities would be provided to apply proprietary
geophysical and exploration technologies available to Kaizen under
licence from its controlling shareholder, HPX TechCo, to the
exploration of West Cirque's projects.
Outline of the West Cirque portfolio
Since 2011, West Cirque has been focused on advancing porphyry
copper-gold prospects in British Columbia's main porphyry belts,
the Early Mesozoic arcs of the Stikine and Quesnel terranes. In
2013, West Cirque partnered with Freeport-McMoRan of Canada Limited
to explore three projects in northern Stikine terrane - Castle,
Tanzilla and Pliny. West Cirque and Freeport are planning to
initiate the first drill test of the large lithocap-associated
porphyry target at Tanzilla in July 2014. In southern Quesnel
terrane, West Cirque has acquired a large land position in the
Aspen Grove copper belt, located halfway between the Highland
Valley and Copper Mountain mines. Initial exploration of the Aspen
Grove project in 2013 resulted in discovery of a significant
porphyry copper-gold target at the Par prospect. West Cirque's
projects are shown in the accompanying map.
Freeport can earn an initial 51% interest in the Castle,
Tanzilla and Pliny projects by funding expenditures of C$8 million
over a four-year period. Kaizen expects to continue West Cirque's
close working relationship with Freeport.
Acquisition terms
Full details of the planned acquisition will be included in a
West Cirque management information circular expected to be mailed
to its shareholders in May 2014 in advance of a special meeting of
shareholders and option holders to be held on or before July 15,
2014. The circular will be available for download at
www.sedar.com.
Holders of West Cirque options on the effective date of the
acquisition will receive replacement Kaizen options in exchange for
their existing West Cirque options. The number of replacement
options and the exercise price of those options will be determined
and adjusted based on the exchange ratio of Kaizen and West Cirque
common shares. Following completion of the transaction, West Cirque
shareholders would hold approximately 9.8% of the outstanding
common shares of Kaizen.
Approvals required
The transaction will be subject to approval by 66.66% of the
votes cast by West Cirque shareholders and option holders voting
together as a single class.
Kaizen's controlling shareholder, HPX TechCo, supports the
transaction. To the extent required by the TSX Venture Exchange
(TSXV), Kaizen intends to satisfy any shareholder meeting
requirement through a written resolution of HPX TechCo.
The transaction also is subject to the satisfaction of other
customary closing conditions and deliveries, including the approval
of the Supreme Court of British Columbia; required TSXV approvals;
that there is no material adverse change to West Cirque prior to
completion of the arrangement; and a due diligence condition in
favour of Kaizen. A copy of the arrangement agreement will be filed
on SEDAR at www.sedar.com.
Pursuant to the transaction, Kaizen expects to issue
approximately 14.5 million common shares to West Cirque
shareholders on an undiluted basis. Kaizen will have approximately
148.3 million common shares and 11.6 million options outstanding,
pro forma after the transaction. These figures include West Cirque
options adjusted as to number and exercise price, based on the
exchange ratio of Kaizen and West Cirque common shares.
Deal protections
The arrangement agreement includes customary deal-protection
provisions in favour of Kaizen, including a customary
non-solicitation covenant from West Cirque (except for certain
unsolicited approaches) and a break fee of C$400,000 if, following
an unsolicited superior proposal, West Cirque wishes to terminate
the arrangement agreement and pursue that proposal. However, if an
unsolicited, superior proposal is to be pursued by West Cirque,
Kaizen has a customary five-day right to match such a proposal. The
arrangement agreement also provides for mutual limited expense
reimbursements of C$150,000 in certain circumstances.
Voting lock-up agreements
Officers and directors of West Cirque have entered into
voting-support and lock-up agreements, totalling approximately
21.3% of the West Cirque common shares, by which they have agreed
to certain lock-up provisions in respect of their shares and to
vote their West Cirque shares and options in favour of the proposed
transaction. In addition, a shareholder of West Cirque owning
approximately 5.5% of the West Cirque common shares has agreed to
vote in favour of the transaction.
Board approvals
The Boards of Directors of both companies have determined that
the proposed transaction is in the best interests of their
respective companies based on a number of factors, including, in
the case of West Cirque, a fairness opinion, which concludes that
the consideration to be received by West Cirque shareholders is
fair, from a financial point of view. Each company's Board of
Directors also has unanimously approved the terms of the
transaction and West Cirque's directors will recommend that their
shareholders vote in favor of the transaction at its shareholder
meeting.
In the United States, the issuance of Kaizen securities under
the transaction will be conducted in reliance on the exemption from
registration requirements found in section 3(a) (10) of the
Securities Act of 1933.
Conference call on Tuesday, April 22, 2014
Kaizen and West Cirque executives will host a telephone
conference call on Tuesday, April 22, at 12:00 p.m. Eastern time
(9:00 a.m. Pacific) to discuss the transaction and answer
questions.
The conference call may be accessed by dialling toll-free
+1-866-225-0198 in North America and toll-free +1-800-9559-6849
internationally. An operator will register participants.
About Kaizen Discovery
Kaizen is a Canadian technology-focused, mineral exploration
company that was formed in late 2013 through a combination of
Concordia Resource Corp. and assets acquired from HPX TechCo Inc.,
a 100%-owned subsidiary of High Power Exploration Inc. With its
collaboration agreement with ITOCHU Corporation of Japan and access
to HPX TechCo's proprietary geophysical technology, Kaizen's
long-term growth strategy is to work with Japanese partners to
identify, explore and develop high-quality mineral projects that
have the potential to produce and deliver minerals to Japan's
industrial sector.
More information on Kaizen is available at
www.kaizendiscovery.com.
About West Cirque Resources
West Cirque is a mineral exploration company focused on creating
shareholder wealth by identifying, acquiring and defining resources
in world-class precious and base-metal projects in the North
American Cordillera.
More information on West Cirque is available at
www.westcirqueresources.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 or
accuracy of this release.
FORWARD-LOOKING STATEMENTS
Statements in this press release that are forward-looking
statements are subject to various risks and uncertainties
concerning the specific factors disclosed here and elsewhere in
both Kaizen's and West Cirque's periodic filings with Canadian
securities regulators. When used in this press release, words such
as "will, could, plan, estimate, expect, intend, may, potential,
should," and similar expressions, are forward-looking statements.
Information provided in this document is necessarily summarized and
may not contain all available material information. The terms of
the arrangement are subject to the Arrangement Agreement, the full
text of which will be made available on the SEDAR website at
www.sedar.com.
Forward-looking statements may include, without limitation,
statements regarding the completion and expected benefits of the
proposed transaction and other statements that are not historical
facts. Forward-looking statements are based on a number of
assumptions and estimates that, while considered reasonable by
management based on the business and markets in which Kaizen and
West Cirque operate, are inherently subject to significant
operational, economic and competitive uncertainties and
contingencies. Assumptions upon which forward looking statements
relating to the transaction have been made include that Kaizen and
West Cirque will be able to satisfy the conditions in the
Arrangement Agreement; that ongoing due diligence investigations of
Kaizen will not identify any materially adverse facts or
circumstances; that the required approvals will be obtained from
the shareholders of West Cirque; and that all required third party,
regulatory, stock exchange, court and government approvals will be
obtained. In addition, the factors described or referred to in the
section entitled "Risk Factors" in the MD&A of both companies
and which are available on the SEDAR website at www.sedar.com,
should be reviewed in conjunction with the information found in
this press release.
Although Kaizen and West Cirque have attempted to identify
important factors that could cause actual results, performance or
achievements to differ materially from those contained in the
forward-looking statements, there can be other factors that cause
results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that such
information will prove to be accurate or that management's
expectations or estimates of future developments, circumstances or
results will materialize. As a result of these risks and
uncertainties, the proposed transaction could be modified,
restricted or not completed, and the results or events predicted in
these forward looking statements may differ materially from actual
results or events.
Accordingly, readers should not place undue reliance on
forward-looking statements. The forward-looking statements in this
press release are made as of the date of this press release, and
Kaizen and West Cirque disclaim any intention or obligation to
update or revise such information, except as required by applicable
law, and neither Kaizen or West Cirque assume any liability for
disclosure relating to the other company herein.
Kaizen Discovery Inc.Matthew HornorPresident and
CEO+1-604-669-6446matthew@kaizendiscovery.comKaizen Discovery
Inc.Bill TrenamanVP, Investor
Relations+1-604-669-6446bill@kaizendiscovery.comwww.kaizendiscovery.comWest
Cirque Resources Ltd.Steve Vanry, CFAPresident and
CEO+1-604-558-4604svanry@westcirqueresources.comwww.westcirqueresources.com
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