May 2, 2016 - Toronto, Ontario and Vancouver, British Columbia - Barkerville Gold Mines Ltd. (TSXV: BGM) (“Barkerville”) and Williams Creek Gold Limited (“Williams Creek”) (TSXV: WCX) are pleased to announce that the companies have entered into a definitive arrangement agreement dated April 29, 2016 (the “Agreement”). Pursuant to the terms of the Agreement, Barkerville has agreed to issue an aggregate of 6,800,000 common shares of Barkerville in exchange for all of the issued and outstanding common shares of Williams Creek held by Williams Creek shareholders (the “Transaction”). Upon completion of the Transaction, Williams Creek will become a wholly owned subsidiary of Barkerville and former shareholders of Williams Creek will hold approximately 2.27% of the shares of Barkerville on an outstanding basis.
The Transaction will be implemented by way of plan of arrangement (the “Arrangement”) under the Business Corporations Act(British Columbia). The Arrangement must be approved by two-thirds of the votes cast by shareholders present and voting at the special meeting of Williams Creek shareholders called to consider the Arrangement.
Tom Obradovich, CEO of Barkerville commented “The board of directors of Barkerville believes the proposed transaction will add an important central land package within our dominant land position in the Barkerville camp. This acquisition fits with our strategic focus on finding and mining high-grade gold deposits across British Columbia’s highly celebrated and prospective Cariboo gold district.”
Stephen Leahy, CEO of Williams Creek commented: “This business combination offers Williams Creek shareholders the opportunity to maximize the potential value of their main assets by accessing Barkerville’s more extensive technical and financial resources which are needed to explore and advance our project area. This transaction provides our shareholders exposure to Barkerville’s much larger land base that includes more advanced stage gold targets with defined resources. In our view, the proposal offers shareholders of the combined company the potential for enhanced value appreciation with exposure to a larger asset base in B.C.’s prolific historic Cariboo gold district.”
Elaine Ellingham, Chairman of Williams Creek commented: “Our board of directors believes that our shareholder base will benefit from this combination of companies. We are pleased by the premium that shareholders are receiving from Barkerville and the benefits of greater trading liquidity and access to capital. Barkerville’s management team has a solid track record of adding value to exploration projects and has the funding capacity and technical team to unlock the project’s potential with minimal dilution to its shareholder base.”
Summary of Proposed Transaction
Currently, Barkerville has 293,035,668 common shares outstanding and Williams Creek has 109,057,249 common shares outstanding. The board of directors of each of the companies have approved the Arrangement.
Pursuant to the terms of the Agreement, Williams Creek shareholders will receive 0.062353 common shares of Barkerville for each one common share of Williams Creek held, representing a value of approximately $0.0355 per share based on the closing price of Barkerville on the TSX Venture Exchange (“TSXV”) on April 29, 2016. This represents a 65% premium using the 20-day volume weighted average pricing and represents an aggregate value to Williams Creek shareholders of $3.876 million.
Pursuant to the Agreement, Barkerville has agreed to advance Williams Creek an aggregate amount of up to CDN$500,000, available in multiple draws bearing interest at an effective annual rate of 5% per annum (the “Loan”) evidenced by a grid promissory note. The Loan will be secured against the assets of Williams Creek. Subject to the approval of the TSXV, Barkerville shall have the right, at its option, at any time following the termination of the Agreement under the terms and conditions thereof, to convert the Loan into common shares of Williams Creek at a conversion price equal to $0.02. The parties further agreed that Williams Creek will not give effect to any conversion, if, after giving effect to such conversion, Barkerville would own or exercise control or direction over greater than 19.9% of the total outstanding common shares of Williams Creek immediately after giving effect to such conversion
The Arrangement is subject to the approval of the Supreme Court of British Columbia and all applicable regulatory authorities, including the TSXV and the conditions set out in the Agreement. Barkerville and Williams Creek expect to close the transaction on or about August 5, 2016.
The Arrangement includes customary provisions, including fiduciary-out provisions, covenants not to solicit other acquisition proposals and the right to match any superior proposal.
Upon completion of the Transaction, Williams Creek’s common shares will be de-listed from the TSXV and it is expected that Barkerville will apply to cause Williams Creek to cease being a reporting issuer under applicable Canadian securities laws.
A copy of the Agreement will be filed on SEDAR and will be available for viewing under the respective profiles of Barkerville and Williams Creek at www.sedar.com.