RE:Taseko arranges all-share takeover of Curis Resources 2014-09-08 20:36 ET - News Release
See News Release (C-TKO) Taseko Mines Ltd
Mr Russell Hallbauer of Taseko reports
TASEKO MINES ANNOUNCES FRIENDLY ACQUISITION OF CURIS RESOURCES
Taseko Mines Ltd. has entered into a definitive agreement whereby Taseko will acquire all the issued and outstanding common shares of Curis Resources Ltd. under a plan of arrangement pursuant to the Business Corporations Act (British Columbia). Curis's principal asset is the Florence copper project, an in situ copper recovery and solvent extraction/electrowinning (SX/EW) project located adjacent to the town of Florence in central Arizona, United States. The Florence deposit contains approximately 2.4 billion pounds of copper reserves with an average grade of 0.36 per cent total copper, contained within a measured and indicated resource of 2.8 billion pounds of copper with an average grade of 0.33 per cent TCu.
Under the terms of the agreement, each Curis shareholder will receive 0.438 of a Taseko common share for each Curis common share held, representing consideration of $1.055 per share based on Taseko's 20-day volume-weighted average price (VWAP) for the period ended Sept. 5, 2014. The offer represents a 21-per-cent premium to Curis's 20-day VWAP and a 31-per-cent premium to Curis's 60-day VWAP, each for the period ended Sept. 5, 2014, and based on Taseko's 20-day VWAP and 60-day VWAP during the same period. Following the completion of the transaction, Curis shareholders, excluding Taseko, will hold 12 per cent of the pro forma company, calculated using basic shares outstanding.
Russell Hallbauer, president and chief executive officer of Taseko, stated: "The addition of the Florence copper project to Taseko continues to strengthen the company's near-term development pipeline with an advanced-stage project. The project is located in a favourable mining jurisdiction with access to key infrastructure, including power, rail, natural gas and roads. We believe our board and combined management teams have both the permitting and technical experience to advance this opportunity to production in a timely manner. From an operational perspective, Taseko has the technical experience to effectively build and operate the Florence SX/EW facilities. The SX/EW plant at our Gibraltar mine, which was restarted in 2007, is not unlike the facility which will be constructed at Florence. If our Gibraltar plant was processing the same oxide copper grade as Florence, it would produce at roughly half the capacity of Florence.
"Florence adds diversity to our pipeline of development projects. There are very few copper projects in secure jurisdictions which have first-quartile operating costs, such as Florence, and the timing of anticipated production from the project could be ideal for the next copper price cycle. Florence's low initial capital costs should allow us to manage the project's funding requirements through to production," continued Mr. Hallbauer.
"With our Aley niobium project also entering the environmental assessment phase, we could potentially have two projects ready for construction in the next 24 months. In an era with few economically viable projects available, we are in an enviable position," concluded Mr. Hallbauer.
Commenting on the transaction, David Copeland, president and CEO of Curis, stated: "With the announcement today of the acquisition of Curis by Taseko, I believe there is an opportunity for shareholders of Curis to benefit from both retained exposure to our Florence copper project and Taseko's continuing success in operating the Gibraltar mine and developing the New Prosperity and Aley projects. The transaction also provides Curis shareholders with access to additional financial resources to derisk the funding of the Florence copper project, ownership in a mature, cash-flowing producer, as well as enhanced trading liquidity and analyst coverage."
Summary of the transaction
The transaction is structured as a plan of arrangement and subject to Multilateral Instrument 61-101, protection of minority security holders in special transactions, since Taseko currently owns 12,916,667 common shares of Curis, representing approximately 17.3 per cent of Curis's outstanding common shares. The transaction is subject to the approval of the Supreme Court of British Columbia and: (i) at least two-thirds of the votes cast by Curis shareholders; (ii) two-thirds of the votes cast by Curis shareholders and optionholders voting as a single class; and (iii) a majority of the votes cast by disinterested Curis shareholders (as required by MI 61-101) at a special meeting of Curis shareholders, which is expected to be held in October, 2014. Prior to executing the agreement, the board of directors of Curis obtained a formal valuation from Deloitte LLP, as required by MI 61-101. The formal valuation was prepared under the supervision of a special committee of the board of directors of Curis, consisting of independent directors, and will be included in the management information circular to be mailed to Curis shareholders. All Curis shareholders will be treated on the same basis and no additional consideration or benefit is available to any Curis shareholder. All Curis optionholders will receive an amount of Taseko shares equal to the in-the-money value of their Curis options outstanding at the closing date, less any applicable withholdings.
In addition to the aforementioned approvals, completion of the transaction is subject to other customary conditions, including the receipt of all necessary regulatory approvals. The transaction is expected to close in October, 2014.
In the event that the transaction is not completed, Curis has agreed to pay Taseko a termination fee of $3-million, under certain circumstances. Curis has also provided Taseko with certain other customary rights, including a right to match any superior offers.
The special committee, following a review of the terms and conditions of the agreement and consideration of a number of factors, unanimously recommended the transaction to Curis's board of directors. The special committee and the board of directors have received an opinion from Paradigm Capital that, as of the date of the opinion and subject to the assumptions outlined therein, the consideration payable to Curis shareholders (other than Taseko) under the transaction is fair, from a financial point of view to Curis. Curis's board of directors, after receiving the recommendation of the special committee and advice from its advisers (including the opinion from Paradigm Capital), has unanimously determined that the transaction is in the best interests of Curis and is fair to Curis shareholders (other than Taseko), and will recommend that Curis shareholders (other than Taseko) vote in favour of the transaction. All the directors and senior officers of Curis have entered into customary lock-up agreements with Taseko pursuant to which, among other things, they have agreed to vote their shares in favour of the transaction.
As part of the transaction, Taseko has agreed to provide $2-million (U.S.) of unsecured short-term financing pursuant to a convertible loan agreement entered into by Taseko and Curis concurrent with the agreement. The proceeds of the loan are intended to ensure Curis has sufficient liquidity to operate through closing of the transaction. Taseko has the right to convert any indebtedness outstanding under the convertible loan into common shares of Curis at a price of 90 cents per Curis share.
About Curis and Florence Copper
Florence Copper's March, 2013, prefeasibility study outlines average annual production of approximately 75 million pounds of copper at average cash operating costs of $1.11 (U.S.) per pound with an initial capital requirement of approximately $210-million (U.S.).
Florence Copper is engaged in the final stages of permitting for the phase 1 production test facility (PTF) for an in situ copper recovery project in Arizona. The PTF includes a 24-well in situ recovery well field and a state-of-the-art SX/EW plant that will produce copper cathode. The PTF will assist in the demonstration of the science and safety of the in situ process and provide an opportunity for the public to fully engage and understand this modern copper extraction technology. Concurrently, Florence Copper continues to advance engineering, testwork, environmental studies and permitting for phase 2 commercial operations.
FLORENCE COPPER MINERAL RESERVES AND RESOURCES All oxide in bedrock Category (at 0.05% TCu cut-off) Million tons % TCu grade Billion lb copper Reserves Probable 340 0.36 2.44 Resources Measured 296 0.35 2.10 Indicated 133 0.28 0.74 Total M&I 429 0.33 2.84 Inferred 63 0.24 0.30 Notes: Mineral reserves are contained within the measured and indicated resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Contained metal in mineral resources and reserves does not have metallurgical recovery applied.
For further information on the 2013 prefeasibility study on the Florence copper project, see Curis's news releases dated Feb. 13, 2013, and March 26, 2013, and the technical report that is filed under Curis's profile on SEDAR.
Advisers
Taseko's financial adviser in relation to the transaction is BMO Capital Markets and its legal adviser is Dentons LLP. Curis's financial adviser in relation to the transaction is Paradigm Capital Inc. and its legal adviser is McCarthy Tetrault LLP.
Both Taseko and Curis are associated with Hunter Dickinson Inc.
The technical information on Curis has been reviewed and approved by David Copeland, PEng, Curis's president and CEO, who is a qualified person. The technical information on Taseko has been reviewed and approved by John McManus, PEng, chief operating officer, Taseko, who is a qualified person.
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