SCOTTSDALE, AZ, July 29, 2014 /CNW Telbec/ - Chaparral Gold Corp.
("Chaparral" or the "Company") (TSX: CHL) announced today that it has
filed with the Canadian regulators, and has mailed to its shareholders
(the "Shareholders"), an updating notice of change to the Company's
directors' circular (the "Notice of Change") in response to the revised
hostile take-over bid (the "Revised Offer") made by Waterton Precious
Metals Fund II Cayman, LP ("Waterton") on July 17, 2014 to acquire 100%
of the common shares of the Company (the "Common Shares") at C$0.55 per
share in cash.
The Notice of Change contains the unanimous recommendation of the
Company's board of directors (the "Board") that the Chaparral
Shareholders REJECT the Revised Offer by Waterton and DO NOT TENDER their Common Shares.
The Board's recommendation to Shareholders to REJECT THE REVISED OFFER is based on numerous factors, including the recommendation of the
special committee of independent directors (the "Special Committee")
and an opinion provided by the Company's financial advisor, Maxit
Capital LP, with respect to the financial inadequacy of the Revised
Offer by Waterton. The full text of the opinion is attached as Schedule
"A" to the Notice of Change.
The Board urges the Company's Shareholders to read the Notice of Change
in its entirety. A copy of the Notice of Change will be available on
SEDAR (www.sedar.com) under the Company's profile.
The following is a summary of the principal reasons listed in the Notice
of Change for the Board's recommendation that Shareholders REJECT the Revised Offer by Waterton and DO NOT TENDER their Common Shares:
The Revised Offer implies INSUFFICIENT value for the Company's mineral properties;
The Revised Offer is not credible as it implies that the Company's two
open-pit, heap leach gold projects in Nevada are immaterial at March
31, 2014 to the Company's value. The Revised Offer, net of the
Company's estimated working capital, implies a value of only
approximately US$4.8 million for Chaparral's mineral properties.
Comparatively, the book value of Chaparral's mineral properties is
approximately US$50 million (at March 31, 2014). Effectively, Waterton
is using Chaparral's cash and receivables to fund Waterton's proposed
acquisition of Chaparral.
The timing of the Revised Offer is OPPORTUNISTIC;
Waterton is attempting to acquire Chaparral when Chaparral is
negotiating for an acceptable "limited ability to pay" settlement with
the US Environmental Protection Agency ("EPA") for the Eureka smelter
issue. By minimizing the potential liability associated with this
issue by way of such a settlement, it is expected that alternative
higher value proposals for the Company will emerge.
The Revised Offer is highly COERCIVE;
After eight extensions and never having had more than 1.1% of the Common
Shares tendered to its original offer, Waterton is dropping its minimum
tender condition, which is highly coercive to shareholders and a clear
attempt to secure a minority blocking position to thwart Chaparral's
strategic alternative process before Chaparral can reach a settlement
with the EPA.
The Revised Offer fails to recognize the strategic value of the
Company's asset base in mining friendly Nevada;
The Revised Offer is significantly below precedent multiples for
similar-scale gold developers;
The Revised Offer represents an inadequate premium to the share price;
The Revised Offer is financially inadequate;
Rejection of the Revised Offer by the Company's directors and officers;
The Revised Offer is highly conditional.
For these reasons, the Board unanimously recommends that Shareholders REJECT the Revised Offer and NOT TENDER their Common Shares to the Revised Offer. Shareholders who have
already tendered their Common Shares to the Revised Offer and wish to
withdraw them, may do so by following the withdrawal procedures
provided in Section 7 of the Waterton Offering Circular.
About Chaparral Gold
Chaparral is a Nevada-focused precious metals company actively
permitting the 100%-owned Gemfield deposit at the Goldfield property,
in central Nevada. In addition, Chaparral holds a 100% interest in the
advanced-stage Converse property, also located in Nevada.
Some of the statements contained in this release are "forward-looking
statements" within the meaning of Canadian securities law requirements,
including statements relating to the Eureka smelter site issue, in
respect of potential higher value proposals for the Company and in
respect of the Company's Goldfield property. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements
to differ materially from the anticipated results, performance or
achievements expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially from
anticipated results include risks and uncertainties such as: risks
relating to a potential resolution of the Eureka smelter site issue and
permitting activities at Goldfield. Except as required pursuant to
applicable securities laws, the Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
SOURCE: Chaparral Gold Corp
For further information:
In North America:
Tel: 1 480 483 9932
Renmark Financial Communications
Tel: 1 514 939 3989
Tel: +41 44 853 00 47
Or email the Company at: firstname.lastname@example.org
Web Site: www.chaparralgold.com