GGG Ggg Resources

 
TIDMGGG 
 
GGG Resources plc 
 
                           (the "Company" or "GGG") 
 
                  ALL SHARE MERGER BETWEEN GGG RESOURCES PLC 
 
                         AND AUZEX RESOURCES LIMITED 
 
The Directors of GGG Resources Plc ("GGG") (ASX: GGB; AIM: GGG) are 
pleased to announce the signing of a binding Heads of Agreement with Auzex 
Resources Limited ("AZX" or "Auzex") (ASX: AZX) to combine the Bullabulling 
Gold Project into a new single corporate entity to be named Bullabulling Gold 
Limited ("BBG") through an all share merger which will be Australian domiciled 
and listed on ASX and AIM. 
 
Highlights: 
 
- Creation of an advanced exploration / pre-development 
gold-focussed company, Bullabulling Gold Ltd., which owns 100% of the 
Bullabulling Gold project, located 65km south-west of Kalgoorlie, Western 
Australia. 
 
- Merger with Auzex and GGG shareholders owning 50% each of BBG 
adjusted for the Auzex securities already owned by GGG prior to its conversion 
to BBG and relative cash holdings of both companies. 
 
- New independent Board to be formed. 
 
- Unified management team with sole focus on the development of 
Bullabulling based in Western Australia. 
 
- Listed on the ASX and AIM providing global access to capital 
markets. 
 
- AZX to demerge its non-Bullabulling assets. 
 
- Outcome enables project to be accelerated through feasibility. 
 
- GGG takeover offer for AZX to lapse on 5 September and GGG will 
not accept any of the shares tendered so far. 
 
Transaction Mechanics: 
 
- Implementation of Two Schemes: 
 
- GGG will create an Australian registered company called 
Bullabulling Gold Limited Pty ("BBG") and go through a UK Scheme of 
arrangement to cancel each ordinary share, warrant and option in GGG for the 
issuance of an equivalent number of shares, warrants and options in BBG. 
Initially the share capital and the Board of Directors of BBG will be exactly 
the same to that of GGG. BBG will seek admission to the Australian Stock 
Exchange ("ASX") as its primary listing with a secondary listing on the AIM 
market in London; and 
 
- All scrip merger of AZX and BBG through an Australian Scheme of 
arrangement. BBG will acquire the whole share capital and outstanding options 
of AZX, except for the AZX securities already owned by BBG. 
 
- Should there be a difference in the cash (net of liabilities) 
between BBG and AZX at the Record Date, BBG will subscribe to a placement of 
shares in AZX at a 10% discount to the five days VWAP. 
 
- Following the implementation of the Australian Scheme, the Board 
of Directors of BBG will change so that it consists of two non-executive 
directors nominated by GGG and two non-executive directors nominated by AZX. 
BBG will appoint three new independent directors including the Chairman and 
Managing Director. 
 
- AZX will spin out its non-Bullabulling assets and its 
shareholding in GGG into a separate vehicle ("AZX2") prior to the Record Date. 
 
Immediately upon execution of the Heads of Agreement, GGG and AZX 
will form a management company ("OpCo"), to be owned by GGG and AZX in equal 
shares. This entity will immediately assume management of Bullabulling Gold 
Project to deliver upon the agreed development strategy. The Board of OpCo 
will initially comprise 3 directors from each GGG and AZX with Nigel Clark and 
Chris Baker acting as co-Chairman until a new Chairman is appointed. The OpCo 
will immediately commence a search for a Non-Executive Chairman, Managing 
Director and a third non-executive director who will subsequently become 
directors of BBG. 
 
GGG and AZX have agreed to each lend OpCo half of three months 
budget for the Bullabulling Joint Venture ($6.5 million) within 5 days of 
completion of a capital raising by AZX and will keep OpCo funded for at least 
two months of budget rolling forward. 
 
Peter Ruxton, Chairman of GGG Resources, said: 
 
"We are delighted to announce that we are consolidating our highly 
attractive Bullabulling gold project into a single corporate entity. This is 
clearly the most desirable outcome for both GGG and AZX shareholders in terms 
of creating value. Asset consolidation was something that we recognised was 
needed from the beginning. With an accelerated development plan in motion, 
coupled with the recent and upcoming JORC update, we feel this is the right 
time to recommend this deal to our shareholders. 
 
"To facilitate its full independence, Bullabulling Gold Limited 
will operate with a new independent board led by a senior management team 
operating out of Western Australia with help and assistance from a number of 
existing GGG and AZX directors during the transition phase. 
 
"And while we are in a high gold price environment, we are pleased 
that BBG will be finding out just how significant the gold deposit could 
potentially be, as well as fast-tracking the mine through feasibility studies. 
Consolidation of the asset will enable this process to be accelerated." 
 
Chris Baker, Chairman of Auzex Resources Limited, commented: 
 
"This transaction delivers an outstanding outcome for all parties, 
it has been complex to structure and negotiate due to requirements of both 
parties ensuring the interests of all shareholders was recognised and that 
they benefited equally from the outcome." 
 
This merger will provide the opportunity to unlock significant 
value for both parties and ensure the fast-track development of the 
Bullabulling Gold project at a critical time in its development." 
 
Transaction Details: 
 
GGG and AZX have entered into a Binding Heads of Agreements ("HOA") 
to give effect to the proposed transaction which involves two Schemes of 
Arrangements. 
 
UK Scheme: 
 
In the first step GGG will create an Australian-registered company 
- Bullabulling Gold Limited Pty ("BBG") - and will seek shareholder approval 
for a UK Scheme of Arrangement under Part 26 of the UK Companies Act 2006 to 
cancel all the issued ordinary shares, warrants and share options in GGG for 
the issuance of an equivalent number of shares, warrants and options in BBG. 
 
Initially the share capital and the Board of Directors of BBG will 
be exactly the same to that of GGG. BBG will then seek for its shares to be 
re-admitted for trading on the ASX and AIM markets. 
 
GGG may elect to propose a demerger of some of its assets and 
excess cash to a new company. This spin out would be transacted as part of the 
UK Scheme. 
 
Auzex Spin Out: 
 
In the meantime AZX will spin out its non-Bullabulling assets and 
its shareholding in GGG into a separate vehicle ("AZX2"), leaving AZX with 50% 
ownership of Bullabulling and cash. This will be done prior to the Australian 
Scheme. 
 
Australian Scheme: 
 
Australian-registered BBG will then go through an Australian Scheme 
of Arrangement under part 5.1 of the Australian Corporations Act under which 
all of the fully paid ordinary shares of AZX are transferred or cancelled for 
new shares in BBG that will result in AZX shareholders holding 50% of all BBG 
shares, subject to any adjustment for shares already held by BBG. 
 
Any difference in cash will be adjusted by private placement of the 
company with larger cash into the company with lesser cash at a 10% discount 
to the 5 days VWAP of that party. 
 
The merger ratio will be calculated according to the formula stated 
below. Using the current capital structure, former GGG shareholders will own 
54% of the shares in BBG. 
 
Existing AZX options are to be exchanged for equivalent options in 
BBG on equivalent terms or converted into shares in AZX prior to the 
Australian Scheme taking effect. 
 
Transaction Conditions: 
 
The transaction is subject to a number of other conditions 
including: 
 
  - receipt of the required regulatory and court approvals; 
  - no prescribed occurrences (except for a capital raising by Auzex 
    to fund ongoing development expenditure of Bullabulling prior to 
    completion); 
  - approvals by GGG and Auzex Shareholders; 
  - the listing of BBG on ASX and AIM; and 
  - Auzex demerger of non-Bullabulling asset. 
 
The HOA also contains customary deal protection mechanisms, 
including no shop and no talk provisions, matching and notification rights in 
the event of a competing proposal and a mutual break fee payable by Auzex or 
GGG in specified circumstances of $750,000 with management control reverting 
to the other party. 
 
Timetable and next steps: 
 
Auzex and GGG will finalise a formal merger implementation 
agreement reflecting the terms of the HOA within 21 days. Other key steps 
include: 
 
  - GGG shareholders will receive a Scheme Document that will contain 
    full details of the proposed Scheme (being the transfer of GGG 
    Shareholders shares in GGG to BGL). 
  - GGG will immediately begin the process of listing BGL on the ASX 
    and AIM. 
  - Auzex shareholders will receive a Scheme Document that will 
    contain full details of the proposed Scheme (being the transfer of AZX 
    Shareholders shares in AZX to BGL). 
 
Advisors: 
 
GGG's Nominated Advisor is Westhouse Securities Limited and GGG's 
legal advisers are Cobbetts LLP (UK) and Steinepreis Paganin (Australia). 
 
Contacts: 
 
Dr. Jeffrey Malaihollo          David McArthur 
 
MD, GGG Resources plc (UK)      GGG Resources plc (Australia) 
 
Tel: + 44 1992 531820           Tel: +61 8 9423 3200 
 
Website: www.gggresources.com 
 
Westhouse Securities Limited    Collins Stewart Europe Limited (Broker) 
(UK Nominated Adviser) 
                                John Prior / Adam Miller 
Tom Price / Martin Davison 
                                Tel: + 44 20 7523 8350 
Tel: + 44 20 7601 6100 
 
Neil Boom                       David Brook 
 
MD, Gresham PR Ltd (UK).        Professional Public Relations (Australia 
                                media) 
Tel: + 44 7866 805 108 
                                T: +61 8 9388 0944/ +61 433 112 936 
 
                                E: david.brook@ppr.com.au 
 
The Australian Scheme Ratio is calculated as follows: 
 
Ratio = R = AZX Share Scheme Consideration / the number of AZX Shares held by 
AZX Scheme Shareholders on the Record Date 
 
AZX Share Scheme Consideration = A (being the total number of BBG Shares on 
issue immediately after the Implementation Date) x C 
 
Where: 
 
A = B / (1-C) 
 
B = the total number of BBG Shares on issue immediately prior to the Implementation Date 
 
C = (0.5 x ((D-E)/D)), being an adjustment to allow for any AZX Shares held by GGG on the Record Date 
 
D = the total number of AZX Shares on issue on the Record Date 
 
E = the total number of AZX Shares held by GGG on the Record Date 
 
As a worked example: 
 
Assuming on the Record Date there are on issue 95.1 million AZX Shares (of 
which GGG holds 8 million AZX Shares, ie 8.4%), and immediately prior to the 
Implementation Date there are 165.7 million BBG Shares on issue: 
 
A = 305.7 million 
 
B = 165.7 million 
 
C = 0.46 
 
D = 95.1 million 
 
E = 8 million 
 
AZX Share Scheme Consideration = 140 million 
 
R = 1.47 
 
In this example, AZX Scheme Shareholders will be issued with 1.47 BBG Shares 
for every 1 AZX Share they hold on the Record Date. 
 
Former GGG shareholders will hold 54.2% of BBG shares. 
 
 
 
 
END 
 

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