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Brazil Resources to acquire Brazilian Gold
2013-09-30 08:22 ET - News Release
See News Release (C-BRI) Brazil Resources Inc
Mr. Amir Adnani of Brazil reports
BRAZIL RESOURCES TO ACQUIRE BRAZILIAN GOLD CORPORATION
Brazil Resources Inc. and Brazilian Gold Corp. have entered into an arrangement agreement, pursuant to which Brazil Resources will acquire all of the outstanding common shares of BGC by way of a plan of arrangement under the Business Corporations Act (British Columbia).
Under the arrangement, BGC shareholders will receive 0.172 common share of Brazil Resources for each BGC share. The share exchange ratio represents a premium on the BGC shares of approximately 38.9 per cent based on the volume-weighted average price of each company's shares for the 30 preceding trading days. Total aggregate consideration under the arrangement is approximately $13.5-million.
Amir Adnani, chairman of Brazil Resources, stated: "We are very pleased to announce this transaction, which is representative of the accretive opportunities that have arisen as a result of recent market conditions. The addition of BGC's assets will position us with a leading project portfolio and development pipeline in Para state, which is one of the most active mining jurisdictions in Brazil. Our stated growth strategy is predicated on identifying and executing on value opportunities such as this transaction and our acquisition of the Cachoeira project last year."
Ian Stalker, chief executive officer of BGC, stated: "The verbal opinion received from our independent financial adviser Clarus Securities Inc. confirms the offer is fair to BGC shareholders. We believe the enlarged Brazilian gold exploration and development company, will as a consequence of the merger, have a greater market visibility and penetration, allowing the company to move forward with more certainty on the development of the quality assets in its portfolio. The board of BGC supports the merger and is committed to the success of the new enlarged company, and whilst recognizing the difficult market trading/financing environment for junior gold companies at present, believe the quality of the assets will allow value to be unlocked in the future."
Update by Brazil Resources on its technical disclosure
Brazil Resources is in the process of reviewing and amending its technical report titled "Technical report and resource estimate on the Cachoeira property, Para state, Brazil" dated effective April 17, 2013, to respond to items of non-compliance in the technical report identified by the British Columbia Securities Commission as a result of a review of Brazil Resources' technical disclosure.
Transaction details
The arrangement will be carried out by way of a plan of arrangement and is subject to court approval and the approval of at least 66-2/3 per cent of the votes cast by BGC shareholders at BGC's special meeting, which is expected to be held in late November, 2013. The arrangement is also subject to customary conditions, including, among other things, the receipt of applicable regulatory approvals, including approval of the TSX Venture Exchange, certain third party consents and the satisfaction of other customary closing conditions. Subject to satisfaction and/or waiver of the conditions under the arrangement agreement pursuant to the terms thereof, the parties expect to complete the arrangement in late November, 2013.
An independent special committee of the BGC board of directors has reviewed and unanimously recommended approval of the arrangement to the BGC board of directors. After taking into account such recommendation and considering, among other things, the verbal opinion of Clarus Securities Inc., financial adviser to BGC, that the consideration to be received by BGC shareholders under the arrangement is fair from a financial point of view to BGC shareholders, the BGC board of directors has unanimously determined that the arrangement is in the best interests of BGC and is fair from a financial point of view to BGC shareholders (other than Brazil Resources and its affiliates).
The BGC board of directors unanimously recommends that the BGC shareholders vote in favour of the arrangement.
Pursuant to the arrangement agreement, BGC has agreed that it will not solicit or initiate any discussions concerning any other acquisition proposals. In the event that the arrangement is not completed, BGC has agreed, in certain circumstances, to pay Brazil Resources a termination fee of $570,000. BRI has agreed to pay BGC its expenses up to $200,000 in relation to the arrangement if the arrangement agreement is terminated in certain circumstances.
Directors, senior officers and key shareholders of BGC, collectively holding approximately 19.7 per cent of the issued and outstanding BGC shares, have entered into agreements with Brazil Resources under which they have agreed to vote their BGC shares in favour of the arrangement. Pursuant to the arrangement agreement, BGC's directors and senior officers have also entered into lock-up agreements with Brazil Resources providing that they will, among other things, not dispose of common shares of BRI acquired pursuant to the arrangement until the earlier of: (i) 12 months after Brazil Resources completes an equity financing of at least $5.0-million; and (ii) 18 months after the closing of the arrangement.
Subject to TSX-V approval, certain senior officers, directors and consultants of BGC have agreed to accept BRI shares after closing of the arrangement in satisfaction of deferred compensation and directors fees amounting to approximately $190,000. Such shares are expected to be issued at a price per share of 78 cents after completion of the arrangement.
Following completion of the arrangement and based on the current number of shares outstanding for each company, it is expected that current Brazil Resources shareholders will own approximately 70 per cent of the outstanding Brazil Resources shares and BGC shareholders will own approximately 30 per cent of the outstanding Brazil Resources shares (not including any shares issued after completion of the arrangement by Brazil Resources in lieu of deferred compensation payable to BGC's officers and directors).
Details regarding these and other terms of the arrangement are set out in the arrangement agreement, which will be available on SEDAR. Additional information respecting the arrangement and the arrangement agreement will be included in the management information circular to be filed and mailed to BGC shareholders in connection with approval of the arrangement at the meeting.
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