B2Gold, Central Sun sign binding agreementB2Gold, Central Sun sign binding agreement to combine
2009-02-02 08:19 ET - News Release
Also News Release (C-CSM) Central Sun Mining Inc
Mr. Clive Johnson of B2Gold reports
B2GOLD AND CENTRAL SUN SIGN BINDING AGREEMENT
B2Gold Corp. and Central Sun Mining Inc. have signed a binding agreement to combine the two companies at the agreed exchange ratio of 1.28 B2Gold shares per Central Sun share, which represented a purchase price of approximately 65 cents per Central Sun share using closing share prices on Jan. 26, 2009, and represented a 45-per-cent premium over the CSM closing price on Jan. 26, 2009. Based on the Jan. 30, 2009, closing price of B2Gold on the Toronto Stock Exchange of 83 cents per share, the transaction was valued at approximately $1.06 per CSM share, for a total transaction value of $66.8-million.
The combination of B2Gold and Central Sun will result in B2Gold commencing with initial production of approximately 45,000 ounces of gold per year and a planned production of approximately 130,000 ounces of gold per year following completion of the Orosi mill project, scheduled for the fourth quarter of 2009.
The Central Sun board of directors has unanimously recommended that Central Sun shareholders vote in favour of the B2Gold transaction. Further, CSM officers, directors and shareholders that hold approximately 13.5 per cent of the outstanding shares have entered into lock-up agreements with B2Gold, pursuant to which they will vote their shares in favour of the B2Gold transaction.
In connection with the B2Gold transaction, B2Gold and CSM will enter into a convertible debenture agreement, pursuant to which CSM will issue to B2Gold a convertible debenture in the amount of up to $10-million on a subordinated basis. CSM will use the proceeds of the debenture to finance immediate working capital requirements and development expenditures at the Orosi mine to permit commissioning of the mill and restart of operations in the fourth quarter of 2009. The debenture will be repayable 30 days after any termination of the agreement to effect the B2Gold transaction. A portion of the $10-million debenture is convertible at the option of B2Gold at any time at an exercise price of 60 cents per share for up to 9.9 per cent of the issued and outstanding shares of CSM at the time of conversion. Completion of the convertible debenture agreement is subject to the satisfaction of certain regulatory requirements.
Clive Johnson, president and chief executive officer of B2Gold, stated, "We are pleased to have signed this agreement, which has received enthusiastic market support and upon completion will immediately transform B2Gold into a producing gold company and allow our team's financial and technical resources to combine with Central Sun's strong team and add value to Central Sun's operations and projects."
Peter Tagliamonte, president and chief executive officer of CSM, stated: "The market's reaction to the B2Gold transaction has been overwhelmingly positive for both groups of shareholders. B2Gold has an exceptional foundation of exploration and mining professionals, and is led by one of the most entrepreneurial and experienced management teams in the junior-gold-producer space. This is an exciting period and represents a great opportunity for CSM shareholders, who will own a significant stake in B2Gold."
Conference call
A conference call will be held on Tuesday, Feb. 3, 2009, at 11 a.m. Toronto time (8 a.m. Vancouver time) to discuss the B2Gold transaction. Please use the following information to access the call.
In Vancouver: 604-899-4201
In Toronto: 416-883-7132
Toll-free: 888-205-4499
Passcode: 56742, followed by the number sign
There will be a question-and-answer session following management presentations during the call.
B2Gold transaction highlights:
- Approximately $55-million in cash and cash equivalents at Jan. 25, 2009, which is sufficient to finance the capital expenditures required to achieve and sustain gold production of 130,000 ounces per year;
- Management from B2Gold and Central Sun, with its combined extensive mine exploration, development, financing and operating experience;
- Strategic position and management experience to leverage continued consolidation in the gold industry;
- A strong portfolio of mining, development and exploration assets.
Upon completion of the B2Gold transaction, B2Gold will have approximately 245 million common shares issued and outstanding, with former Central Sun shareholders holding approximately 33 per cent of the issued and outstanding common shares of the combined company.
B2Gold transaction details -- update
The B2Gold transaction is subject to, among other things, the parties entering into a definitive agreement by Feb. 6, 2009, the receipt of all necessary regulatory and court approvals, and obtaining shareholder approval of the B2Gold transaction at special meeting of the Central Sun shareholders to be held no later than April 30, 2009. Closing of the B2Gold transaction is set to occur by no later than April 30, 2009.
B2Gold's financial adviser is Genuity Capital Markets and its legal counsel is Lawson Lundell LLP. Central Sun's financial adviser is Macquarie Capital Markets Canada Ltd. and its legal counsel is Cassels Brock & Blackwell LLP.
The Dec. 24, 2008, letter agreement between Central Sun and Linear Gold Corp. regarding their previously proposed business combination has been terminated in accordance with its terms, and Central Sun will be making a $1-million termination payment to Linear Gold.
We seek Safe Harbor.