REGULUS ANNOUNCES SPIN-OUT OF NEW COMPANY, ALDEBARAN RESOURCES, WITH AN OPTION TO ACQUIRE A MAJORITY INTEREST IN THE ALTAR COPPER-GOLD PROJECT, ARGENTINA
Regulus Resources Inc. has entered into an arrangement agreement to spin out its Argentine assets, including the Rio Grande and Aguas Calientes projects, into a newly formed company, Aldebaran Resources Inc. Under the terms of the arrangement agreement, Aldebaran will enter into a joint venture and option agreement with Stillwater Canada LLC, an indirect subsidiary of Sibanye Gold Ltd., trading as Sibanye-Stillwater, to acquire up to an 80-per-cent interest in Peregrine Metals Ltd., a wholly owned subsidiary of Sibanye-Stillwater, that owns the Altar copper-gold project in San Juan province, Argentina.
John Black, chief executive officer and a director of Regulus, stated: "The proposed transaction allows Regulus to remain focused on our flagship AntaKori project in Peru while creating a new, well-financed company to realize value on our Argentine assets and participate in another major copper-gold project. The Altar project already has a very large copper-gold resource and we see the potential to materially enhance the value of the project through further discovery and delineation of higher-grade zones. The proposed spinout of Aldebaran shares will allow Regulus shareholders to participate in Aldebaran at no cost to them while retaining the full upside potential from the AntaKori project. The agreement with Sibanye-Stillwater is designed to provide immediate benefits to shareholders of both companies as well as exposure to significant future upside potential from an attractive portfolio of exploration projects."
Neal Froneman, chief executive officer of Sibanye-Stillwater, stated: "This transaction is consistent with our strategy of maintaining our focus and investment on our core mining operations. We believe Aldebaran possesses the vision, skills and experience to unlock the considerable upside potential of the Altar project, in which we will continue to hold a meaningful interest. Consistent with our vision, we believe this partnership with Aldebaran will deliver value for all stakeholders, as the Altar project is progressed up the value curve."
Transaction summary
The proposed spinout of Regulus's Argentine assets will be completed pursuant to a plan of arrangement under the Business Corporations Act (Alberta) subject to the completion of a minimum $30-million (U.S.) common share financing in Aldebaran and the execution of definitive closing documents, including the JV agreement, on closing of the arrangement.
Each Regulus shareholder as of the effective date of the transaction will receive one share of Aldebaran for every three Regulus shares held. Simultaneously, Aldebaran will enter into the JV agreement, entitling it to earn up to 80 per cent of the Altar project. The consideration to acquire the Altar project comprises:
- An upfront cash payment of $15-million (U.S.) to Sibanye-Stillwater upon the closing of the arrangement;
- The issuance of 19.9 per cent of the shares of Aldebaran to Sibanye-Stillwater, subject to proration if the financing exceeds $30-million (U.S.);
- The commitment of Aldebaran to carry the next $30-million (U.S.) of expenditures on Altar over five years (inclusive of 2018 drilling that was conducted between February and May of this year) to earn 60 per cent in the Altar project;
- An option granted to Aldebaran to earn an additional 20 per cent in the Altar project by spending an additional $25-million (U.S.) over a three-year period following the initial earn-in.
The transaction requires approval by two-thirds of the votes cast by the shareholders of Regulus at a special meeting of Regulus shareholders expected to be held in Q3 2018, as well as a simple majority of the votes cast by Regulus shareholders excluding Route One (defined below) and its related funds and any other persons required to be excluded from such vote in accordance with Multilateral Instrument 61-101 of the Canadian securities regulatory authorities. The directors and senior officers of Regulus and certain other shareholders including Route One have entered into voting support agreements, totalling 30.4 per cent of the company's outstanding shares, pursuant to which they will vote their common shares in favour of the arrangement. In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature. Aldebaran intends to make an application to list its shares on the TSX Venture Exchange.
Full details of the transaction will be included in the information circular and meeting materials which are expected to be mailed to the shareholders of Regulus in approximately four to five weeks. Closing of the transaction is expected to occur in the third quarter of 2018.
Financing summary