Adamus Resources Limited - Chairman's Address to Scheme Meeting

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

PERTH, Western Australia, Nov. 28, 2011 /CNW/ -

Introduction

On 22 August 2011, Adamus Resources Limited (ASX:ADU, TSX-V:ADU, FSE:AXM) (Adamus) announced that it had signed a Merger Implementation Agreement with Endeavour Mining Corporation (TSX:EDV) (Endeavour), a TSX listed entity, to combine through an all-stock merger of equals. The merger will be implemented as a Scheme of Arrangement between Adamus and its shareholders under the Australian Corporations Act. If this resolution is passed and the merger is implemented, Endeavour Gold Corporation (a wholly owned subsidiary of Endeavour) will acquire all of the issued ordinary shares of Adamus and Adamus shareholders will receive 0.285 of an Endeavour share (in the form of CHESS depository interests or shares) for each Adamus share they hold1. Following successful completion of the merger, Adamus shareholders will own approximately 53.01% of the merged group.

The merger will create a leading West African gold production, development and exploration company as a platform for future growth and acquisitions. The merged group's assets will include two operating gold mines in Burkina Faso and Ghana, a feasibility stage project in Côte d'Ivoire which should increase total production to approximately 250,000 ounces from the end of 20132, and an attractive portfolio of exploration opportunities in Ghana, Burkina Faso, Côte d'Ivoire, Mali and Liberia.

Recently, all shareholders were sent a scheme booklet which included a notice of meeting for today's scheme meeting. The scheme booklet provided shareholders with a detailed overview of the merger proposal including a summary of reasons why you may vote for or against the scheme.

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1 Ineligible Foreign Shareholder will not receive Endeavour shares (in the form of CDIs or shares) under the Scheme.  Instead, the number of Endeavour shares that would otherwise have been issued to them under the Scheme will be issued to a Sale Agent, as each Ineligible Foreign Shareholders nominee in trust, who will sell those Endeavour shares on the TSX following the implementation of the Scheme.  The Sale Agent will then pay each Ineligible Foreign Shareholder the sale proceeds, net of any brokerage, taxes and charges.

2 Assuming a favourable construction decision on the Agbaou Gold Project in Côte d'Ivoire.

Advantages of the merger

Your Directors unanimously believe the benefits of the merger to significantly outweigh the potential disadvantages.

There are a number of reasons why the Directors think that you should vote in favour of the scheme to effect the merger. These are set out in Section 1.1 of the scheme booklet. Rather than go through each of them in detail, I would just like to highlight some of the key reasons for our recommendation, including:

  • The merger will create a growth focused West African gold producer, with an enhanced suite of production, development and exploration assets.  The merged group's assets will includes:
    • two operating gold mines - Nzema in Ghana and the Youga Gold Mine in Burkina Faso - with pro forma 2011 gold production of 172,000 ounces; and

    • a feasibility stage project - the Agbaou Gold Project in Côte d'Ivoire, on which a construction decision is expected in the first quarter of 2012.
  • The merged group will have a materially stronger balance sheet with a pro forma cash and marketable securities position of US$217.5 million (versus US$22m for Adamus standalone) as at 30 June 2011.  Furthermore, a new revolving corporate loan facility of US$200 million, to be provided by UniCredit Bank AG3, will provide the Merged Group with significant flexibility.

  • The merger will deliver development projects and future opportunities with an improved risk profile and enhance the scale and growth platform of Adamus, including through greater access to global capital markets.

Your Board's belief that the scheme is in the best interests of the shareholders is also supported by the recommendations of the Independent Expert, Ernst & Young Transaction Advisory Services Limited, who has opined that in the absence of a superior proposal, the scheme and therefore the proposed merger is fair and reasonable, and in the best interests of Adamus shareholders.  The Independent Expert's Report was included as Annexure A of the scheme booklet.

As with any transaction, there are a number of risks relating to the implementation of the merger. These risks are set out in detail in section 11 of the scheme booklet.

Adamus would like to note that on 10 November 2011, Endeavour announced the sale of its debt finance and related mergers and acquisitions advisory business. The advisory business is an immaterial non-core asset of Endeavour. This sale has been considered by the Independent Expert who have confirmed to Adamus that they agree it is an immaterial non-core asset of Endeavour and the sale will not affect their opinion that the scheme is in the best interests of Adamus shareholders. As the position of the Independent Expert has not altered, the Adamus board considers that the sale is not a significant matter that has arisen which would have required inclusion in the scheme booklet. The full ASX announcement in relation to this issue can be viewed on the website of the ASX (www.asx.com.au).

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3 The availability of this facility is subject to implementation of the Scheme, execution of final facility agreements and satisfaction of the facility's conditions.

Management and governance

Following implementation of the merger, the merged entity will have the significant advantage of combining two talented and experienced boards and management teams. On completion of the scheme, Neil Woodyer from Endeavour will be Chief Executive Officer and Mark Connelly from Adamus will be Chief Operating Officer of the merged entity. The merged entity's operational management will be led from Perth and will report to the Chief Operating Officer (Mark Connelly). Michael Beckett will be Non-Executive Chairman of the merged entity whose Board of Directors will comprise of three nominees from each of Adamus and Endeavour (in addition to the Chairman). Adamus' nominees are Mark Connelly, Martin Reed and Dr Antony Harwood. Endeavour's nominees are Neil Woodyer, Jorge Gamarci and Wayne McManus.

Scheme process

The merger between Adamus and Endeavour requires a number of conditions, set out in the scheme booklet, to be satisfied.  I am pleased to report that all third party approvals have now been obtained except for the shareholder approvals which we are seeking at the meeting today and certain conditions relating to the approval of the Federal Court of Australia (which may only occur subsequent to shareholder approvals being obtained at today's meeting).

The key conditions that remain outstanding are as follows:

  • The scheme resolution must be approved by a majority in number of Adamus shareholders voting at this scheme meeting (whether in person or proxy), who must together hold at least 75% of the votes cast on the resolution.

  • Secondly, the Federal Court of Australia must approve the scheme following approval by Adamus shareholders.  The Second Court Hearing for the scheme is scheduled for Friday, 2 December 2011, subject to the scheme first being approved at this scheme meeting.

Recommendations

Taking all of the matters outlined today and in the scheme booklet into account, the Adamus Board unanimously believe that the advantages of the merger outweigh its disadvantages and risks and each Director recommends that you vote in favour of the resolution. Each Director intends to vote all Adamus shares held by them in favour of the scheme.

I encourage you vote in favour of the scheme and support Adamus and Endeavour as we enter this next exciting chapter.

It's now time for the shareholders to express their view.


SOURCE Adamus Resources Limited

For further information:

Mr Ian Cunningham - Company Secretary
on +61 8 9322 5943

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