Anyone know if ALS retained Paragon Royalty
VANCOUVER, BRITISH COLUMBIA, Jul 31, 2012 (MARKETWIRE via COMTEX) -- Canadian Zinc Corporation CA:CZN+5.26% (otcqb:CZICF) (the "Company" or "Canadian Zinc") is pleased to announce that it has entered into a binding arrangement agreement (the "Agreement") to complete a business combination (the "Merger") as well as a non-brokered private placement (the "Private Placement") with Paragon Minerals Corporation ("Paragon"). The completion of the merger will create a premier base and precious metals exploration and development company with a portfolio of projects in established mining jurisdictions in Canada.
Paragon's flagship project is its 100% interest in the South Tally Pond Property, which includes the Lemarchant deposit, and is located in a proven mining district near Buchans, Newfoundland. The South Tally Pond Property covers 261 km2 and is immediately adjacent to Teck Resources Limited's Duck Pond Cu-Zn mine and mill complex. The Lemarchant deposit is a significant precious metal-rich copper-lead-zinc Volcanogenic Massive Sulphide ("VMS") discovery with a potential opportunity to develop into a viable economic resource. An initial National Instrument ("NI") 43-101 mineral resource estimate that was recently completed on the Lemarchant deposit includes the following defined mineral resources:
-- Indicated resource estimate: 1.24 million tonnes at an average grade of 5.38% Zn, 0.58% Cu, 1.19% Pb, 1.01 g/t Au and 59.17 g/t Ag; and -- Inferred resource estimate: 1.34 million tonnes at an average grade of 3.70% Zn, 0.41% Cu, 0.86% Pb, 1.00 g/t Au and 50.41 g/t Ag.
See Paragon Technical Report and Mineral Resource Estimate on Lemarchant Deposit, South Tally Pond VMS Project, Central Newfoundland, dated March 2, 2012 filed on SEDAR.
The Lemarchant deposit has been defined to a 210 m depth and remains open along strike and at depth. The exploration potential outside of the Lemarchant area of the South Tally Pond Property is still relatively untapped with numerous priority VMS targets that have seen limited or no drilling. Paragon is also exploring an excellent portfolio of gold properties through partner-funded and company-funded exploration programs.
Pursuant to the terms of the Agreement, Canadian Zinc will acquire all of the outstanding common shares of Paragon in exchange for common shares of Canadian Zinc by way of a statutory plan of arrangement on the basis of 0.136 of a share of Canadian Zinc for each share of Paragon (the "Exchange Ratio").
Based on the closing share price of Canadian Zinc on the Toronto Stock Exchange ("TSX") on July 30, 2012, the Exchange Ratio implies an offer price of C
.052 per Paragon common share and values Paragon's equity at C$2.8 million on a fully diluted in-the-money basis.
The consideration represents a total of C
.061 per Paragon share, based on the volume weighted average price of Canadian Zinc shares on the TSX for the 30 trading days ended July 20, 2012 and a premium of 52% to the volume weighted average price of Paragon shares on the TSX-Venture for the same period.
Upon completion of the Merger, Canadian Zinc and Paragon shareholders will own approximately 95.5% and 4.5% of the combined company, respectively.
John Kearney, Chairman and Chief Executive Officer of Canadian Zinc, commented, "This merger with Paragon is consistent with Canadian Zinc's strategy of building a growth focused base metal producer in North America and represents an excellent value opportunity for shareholders of both companies.
"We believe that the addition of Paragon's advanced exploration assets, such as the South Tally Pond VMS project in central Newfoundland, is a major step towards achieving our strategy of creating a strong intermediate base metal company with an attractive growth profile focused on enhancing shareholder value."
Transaction Highlights
-- Creation of a new, premier base and precious metals exploration and development company with high grade projects located in established mining jurisdictions in Canada. -- Allows Paragon shareholders to participate in the upside from the advancement of the Prairie Creek Project, one of the highest grade zinc projects in the world, through permitting, construction and production as well as the continued exploration and development of the South Tally Pond Project. -- The combined company will be better positioned to expand the current VMS resource and advance the South Tally Pond Project through feasibility studies. -- Provides Canadian Zinc entry into a well established mining district with significant potential for resource growth. -- Increased diversification across projects for Canadian Zinc and Paragon shareholders. -- Enhanced capital markets profile of the combined company.
Terms of the Business Combination between Canadian Zinc and Paragon
-- Canadian Zinc will acquire all of the outstanding common shares of Paragon at an exchange ratio of 0.136 of a share of Canadian Zinc for each share of Paragon. -- Pursuant to the Agreement, Canadian Zinc will issue 7,296,298 shares of Canadian Zinc for 53,649,254 common shares of Paragon currently outstanding. -- The acquisition of the common shares of Paragon by Canadian Zinc will be accomplished by a statutory plan of arrangement, whereby Paragon will merge with a wholly owned subsidiary of Canadian Zinc. -- Upon completion of the Merger, all currently outstanding share purchase warrants and options of Paragon will be exercisable to acquire common shares of Canadian Zinc at the same Exchange Ratio. -- Completion of the Merger will be subject to, among other things, the favourable vote of 66 2/3% of the votes cast by Paragon shareholders and by a simple majority of the votes cast by "disinterested" Paragon shareholders pursuant to Multilateral Instrument 61-101 "Protection of Minority Shareholders in Special Transactions" at a special meeting called to approve the transaction which is expected to take place in September 2012. -- Completion of the Merger will be subject to receipt of necessary consents, approvals and other authorizations by applicable regulatory authorities and third parties approvals.
In the event that the Merger is not approved by Paragon shareholders, or if for any other reason (other than through the failure of Canadian Zinc to satisfy any conditions or perform any covenants provided for in the Agreement) the Merger is not completed, Canadian Zinc will be entitled to the immediate payment by Paragon of a "break fee" of C$150,000.
The Agreement has been approved by the Board of Directors of Paragon. All of the Directors and Officers of Paragon have entered into lock-up agreements with Canadian Zinc under which they have agreed to vote their Paragon shares in favour of the Merger, representing approximately 2.7% of the shares entitled to vote at the Paragon special meeting.
Paragon and Canadian Zinc shareholders as well as all other interested parties are advised to read the materials relating to the Agreement that will be filed by Canadian Zinc and Paragon with securities regulatory authorities in Canada when they become available. Anyone may obtain copies of these documents when available free of charge at the Canadian Securities Administrators' website at www.sedar.com .
Terms of the Private Placement Financing in Paragon
Canadian Zinc has agreed to purchase in a non-brokered private placement financing, 7,000,000 common shares of Paragon (the "Shares") at a price of C
.07 per share for a total consideration of C$490,000. The closing of the Private Placement will be subject to acceptance by the TSX Venture Exchange and all other required regulatory approvals. The completion of the Private Placement is not conditional upon the completion of the Merger.
Canadian Zinc does not currently own, control or direct, directly or indirectly, any securities of Paragon and on the closing of the private placement will own 7,000,000 common shares of Paragon. On issuance, the Shares will represent approximately 11.54% of Paragon's issued and outstanding common shares, calculated on a non-diluted basis assuming that no outstanding convertible securities of Paragon are exercised.
Canadian Zinc will acquire the Shares for investment purposes, and will acquire the balance of all issued and outstanding Paragon shares on completion of the Transaction. An early warning report will be filed with applicable securities regulators which will be available on SEDAR ( www.sedar.com ) and a copy of which may be obtained by contacting Canadian Zinc as follows: