/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
PERTH, Western Australia, Feb. 24, 2014 /CNW/ - RTG Mining Inc.
(TSX:RTG) (RTG) and Sierra Mining Limited (ASX:SRM) (Sierra) are pleased to announce that they have entered into a conditional
Scheme Implementation Deed (Merger Agreement) to combine the two companies at an agreed exchange ratio1 of:
3 RTG shares for each Sierra share held; plus
1 RTG option for every 3 Sierra shares held.
The RTG options will be exercisable for a period of three years at an
exercise price of C$0.15 ($A0.152).
This consideration represents:
approximately A$0.3013 (C$0.301) per Sierra share;
a premium of 27.4% to the 30 day VWAP of the Sierra share price based on
the 30 day VWAP of the RTG share price; and
a premium of 15.9%4 to the closing price of Sierra shares of A$0.26 on 21 February 2014.
The resultant combined entity will be led by a management team which
holds the exploration, mine development and operating experience in the
Philippines to progress Sierra's Mabilo and Bunawan Projects. The
management team of RTG was previously responsible for the successful
development and operation of the Masbate Gold Mine for CGA Mining
Limited prior to its acquisition by B2Gold Corp. in early 2013. The
transaction with RTG will also provide improved funding capability, a
listing on the Toronto Stock Exchange (TSX) and a strong institutional shareholder following, resulting in a
combined company well positioned to capitalise on the significant mine
development opportunity at Mabilo and Sierra's other regional projects
in the Philippines.
The Mabilo Project is a potentially high grade polymetallic development
project, with a direct shipping opportunity in the early years of
operation which would strongly mitigate the need for development
capital. Mabilo is a near-surface deposit, and it is anticipated that
the newly combined company will be well positioned to further explore
and develop the mineral potential of the area in the near-term. Sierra
also owns the Bunawan Project which is a highly prospective high grade
gold exploration project, situated contiguous to the existing high
grade Co-O mine owned by Medusa Mining Limited.
1 To allow comparison with current share market trading prices, the
exchange ratio shown is a pre-RTG share consolidation basis. On a post
RTG share consolidation basis, the exchange ratio is 3 RTG shares for
each 10 Sierra Shares held and 1 RTG Option for every 30 Sierra Listed
Options held with the RTG Options to be issued as consideration having
an exercise price of C$1.50 after the RTG Share Consolidation.
2 Assumes an exchange rate on 21 February 2014 of CAD:AUD 1.005.
3 Calculated using the closing share price for RTG on TSX on 21 February
2014, and the Black-Scholes option pricing model based on Sierra's 12
4 Based on the closing price for RTG shares and Sierra shares on 21
The merger will be implemented by way of Scheme of Arrangement between
Sierra and its shareholders under the Australian Corporations Act 2001 (Merger). RTG is listed on the TSX, and will also seek a listing on the
Australian Securities Exchange (ASX) as part of the transaction.
The Merger is conditional upon approvals from Sierra shareholders, RTG
shareholders and the Australian Court as well as necessary regulatory
approvals and other customary conditions (see Merger Agreement for more
details). In conjunction with the Merger, RTG also intends to undertake
a consolidation of its shares on a 10:1 basis5.
The Merger Agreement will be available on SEDAR (www.sedar.com) under the profile of RTG, the electronic filing system for the
disclosure of Canadian public companies.
The Merger Agreement will also be released to the ASX by Sierra in a
Sierra Directors unanimously recommend that Sierra shareholders vote in
favour of the Merger in the absence of a superior proposal and subject
to an Independent Expert concluding that the Scheme is in the best
interests of Sierra shareholders. On the same basis, the Sierra
Directors intend to vote the Sierra shares they respectively currently
control in favour of the Merger. In aggregate, the Sierra Directors
control approximately 15.9% of the diluted capital of Sierra.
The RTG Directors unanimously recommend that RTG shareholders vote in
favour of all resolutions required to implement the Merger, and they
intend to vote all RTG shares they respectively control in favour of
Ms Justine Magee, Chief Executive Officer of RTG said "The acquisition fits well with our strategy of targeting projects with
low technical and project risk where we can add value through rapid and
successful development and optimisation. RTG's strong financial
position, technical expertise and track record of building mines
responsibly and efficiently in the Philippines positions us to rapidly
advance the Mabilo Project and maximise value for both RTG and Sierra
shareholders and other stakeholders."
Mr Matthew Syme, Chief Executive Officer of Sierra said "We believe we have put together an unsurpassed package of exploration
and development assets in Sierra. We have great confidence that Mike
Carrick, Justine Magee and the RTG team are the right management group
to now extract the best value from Sierra's projects, given their
outstanding track record of delivering profitable mining outcomes in
the Philippines. This transaction puts the right assets, management and
capital together, while ensuring that Sierra's shareholders retain
maximum exposure to the outstanding potential of the merged entity. We
have taken advice from our financial and legal advisers and concluded
that this offer is in the best interests of Sierra's shareholders.
Therefore the Board and management recommends this offer to Sierra
shareholders, subject to confirmation by an Independent Expert's
B2 Gold has advised both companies that it supports the transaction. B2
Gold is the largest shareholder in both RTG and Sierra, with an 18.2%
shareholding in RTG and a 7.4% interest in Sierra.
Clive Johnson, President and Chief Executive Officer of B2 Gold said "The RTG management team have an excellent track record in the
development of new gold projects and particularly in the Philippines.
The business case for this merger is compelling and we look forward to
continuing our support of the merged entity."
5 To allow comparison with current share market trading prices, the
information and exchange ratios in this announcement are shown on a pre
RTG share consolidation basis. On a post RTG share consolidation
basis, the exchange ratio is 3 RTG shares for each 10 Sierra Shares
held and 1 RTG Option for every 30 Sierra Listed Options held with the
RTG Options to be issued as consideration having an exercise price of
C$1.50 after the RTG Share Consolidation.
Merged entity board of Directors
Following the Merger becoming effective, Mr Matthew Syme, Sierra's
current Managing Director will be invited to join the Board of the
merged RTG entity as a Non-Executive Director with the existing RTG
Board of Directors.
Treatment of Sierra options
Sierra's listed options will be acquired under a separate scheme of
arrangement between Sierra and its optionholders under the Corporations
Act (Option Scheme). The exchange ratio6 for the listed options of 2 RTG shares for each Sierra listed option
held plus 2 RTG options for every 9 Sierra listed options held,
reflects the exchange ratio for the acquisition of Sierra shares under
the Merger. The Merger is subject to a waivable condition that the
Option Scheme is approved. The Option Scheme is itself conditional and
will only be implemented if the Merger proceeds. See the Merger
Agreement for more details.
If the Merger becomes effective, RTG also proposes to acquire all
outstanding unlisted Sierra options and will issue RTG shares and
options as consideration for the transfer of these options at an
exchange ratio which reflects the exchange ratio for the acquisition of
Overview of Merger process
The Merger and the Option Scheme are subject to various ASX, TSX and
Australian Securities and Investments Commission approvals, shareholder
approvals and Australian Court approval. The parties are progressing
to obtain these approvals.
A Scheme booklet setting out information relevant to the Merger,
including an Independent Expert's Report on whether the Merger is in
the best interests of Sierra shareholders will be sent to all Sierra
shareholders and listed optionholders to consider before the meetings
of Sierra shareholders and optionholders to approve the Merger and the
Option Scheme respectively.
In addition RTG shareholders will receive a circular in relation to the
RTG shareholder approvals required to implement the Merger.
Indicative timing for implementation of the Merger is as follows:
Court hearing to approve scheme booklet
late March 2014
RTG Circular sent to RTG shareholders
late March 2014
Scheme booklet sent to Sierra shareholders and optionholders
late March 2014
RTG shareholders meeting
mid April 2014
Sierra shareholders meeting and optionholders meeting
late April 2014
Court hearing to approve Merger and Option Scheme
late April 2014
Merger and Option Scheme become effective
late April 2014
Sierra shareholder and optionholders receive RTG shares and options
early May 2014
RTG listed on ASX
early May 2014
6 To allow comparison with current market trading prices, the information
and exchange ratios in this announcement are shown on a pre RTG share
consolidation basis. On a post RTG share consolidation basis, the
exchange ratio under the Option Scheme is 2 RTG shares for each 10
Sierra Shares held and 1 RTG Option for every 45 Sierra Listed Options
held with the RTG Options to be issued as consideration having an
exercise price of C $1.50 after the RTG Share Consolidation.
The Merger Agreement also contains customary exclusivity arrangements,
including no-shop and no-talk provisions, matching and notification
rights in the event of a competing proposal and a reciprocal
reimbursement fee payable by RTG or Sierra in specified circumstances.
Details are set out in the Merger Agreement.
RTG's Australian legal counsel is Corrs Chambers Westgarth and its
Canadian legal counsel is Blake, Cassels & Graydon LLP. RTG's
financial advisor is Haywood Securities Inc.
Sierra's Australian legal counsel is Hardy Bowen Lawyers and its
Canadian Legal Counsel is Stikeman Elliott LLP.
RTG Mining Inc. is a British Virgin Islands-incorporated company listed
on the main board of the TSX. It is a mining exploration company
focused on identifying new gold development and operating acquisition
As at 31 December 2013, RTG had cash and receivables of in excess of
US$12.8m (A$14.3m8). RTG has sold its interest in the Mkushi Copper Project in Zambia for
consideration of US$13.1m, including US$6.6m in shares of Elephant
Copper Limited and a convertible note due in January 2015 for US$6.5m.
RTG has also entered into a sale agreement for its interest in the
Segilola Gold Project in Nigeria to the current joint venture partner
for a total consideration of US$14m, with US$1m due on completion,
US$5m due in 18 months after completion and a 3% net smelter royalty,
under which up to a maximum of US$8m may be paid to RTG. The sale also
resolves the existing dispute with the current joint venture partner.
Completion is anticipated in the next couple of months.
RTG is led by the previous management team of CGA Mining Limited which
developed the Masbate Gold project in the Philippines and successfully
merged with B2Gold Corp. in a US$1.1bn scheme of arrangement in January
2013. The RTG Board comprises Michael Carrick (Chairman), Justine
Magee (President and CEO), Phil Lockyer, David Cruse and Rob Scott (Non
Sierra is an Australian company listed on ASX which is focused on
exploration and development of gold and copper projects in the
Sierra has a majority interest in the Mabilo Project, with exploration
to date highlighting high grade gold, copper and magnetite
mineralisation and significant exploration potential. Sierra has a
joint venture with Galeo Equipment and Mining Company, Inc. in relation
to the Mabilo Project, under which Galeo can hold and retain up to 42%10 of the joint venture, subject to payment of farm-in expenditures,
provision of approximately 14,000 metres of drilling within a 2 year
period (further mitigating near term funding requirements), provision
of management services and satisfaction of other conditions within
defined periods. Sierra also has an interest in the Nalesbitan Project
in Eastern Luzon and two permit applications in eastern Mindanao known
as the Bunawan Project which provides a significant land holding of
over 88 square kilometres adjacent to Medusa Mining Limited's Co-O
Mine. Sierra had cash reserves of approximately A$2m as at 31 December
7 Information in this announcement regarding RTG has been prepared by RTG
and RTG takes responsibility for the accuracy and completeness of that
8 Assumes an exchange rate on 21 February 2014 of USD:AUD 1.114.
9 Information in this announcement regarding Sierra has been prepared by
Sierra and Sierra takes responsibility for the accuracy and
completeness of that information.
10 The joint venture arrangements with Galeo are subject to a Memorandum
of Understanding announced in November 2013 and also a subsequent
conditional MOU with Galeo which allows it to earn up to 42% of the
joint venture by mining 1.5Mt of waste, subject to satisfaction of a
range of conditions, including Sierra shareholder approval.
Cautionary Note Regarding Forward Looking Statements
Certain statements contained in this announcement constitute forward
looking statements within the meaning of applicable securities laws
including, among others, statements made or implied relating to RTG's
and / or Sierra's objectives, strategies to achieve those objectives,
beliefs, plans, estimates and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward looking statements generally can be identified by words such as
"objective", "may", "will", "expect", "likely", "intend", "estimate",
"anticipate", "believe", "should", "plans" or similar expressions
suggesting future outcomes or events. All statements, other than
statements of historical fact, included herein including, without
limitation; statements about the completion of the Merger, development
and exploration potential of Sierra's properties, use of proceeds and
the business objectives of RTG, Sierra and the merged entity, are
forward-looking statements. By their nature, such forward looking statements are not guarantees of future performance
and reflect RTG's and Sierra's current beliefs based on information
currently available to them. Such statements involve estimates and
assumptions that are subject to a number of known and unknown risks,
uncertainties and other factors inherent in the businesses of RTG and
Sierra and the risk factors discussed in materials filed with the
relevant securities regulatory authorities from time to time which may
cause the actual results, performance or achievements of the companies
to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements.
Those risks and uncertainties include, but are not limited to: the
mining industry (including operational risks; risks in exploration, and
development; the uncertainties involved in the discovery and
delineation of mineral deposits, resources or reserves; and the
uncertainty of mineral resource and mineral reserve estimates); the
risk of gold, copper and other commodity price and foreign exchange
rate fluctuations; the ability to fund the capital and operating
expenses necessary to achieve stated business objectives; the
uncertainty associated with commercial negotiations and negotiating
with foreign governments; the risks associated with international
business activities including disputes with joint venture partners;
risks related to operating in the counties in which the respective
companies operate; environmental risk; the dependence on key personnel;
and the ability to access capital markets.
Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of the date the statements were
made and readers are advised to consider such forward looking
statements in light of the risks set forth above. Except as required
by applicable securities laws, RTG and Sierra assume no obligation to
update or revise any forward looking statements to reflect new
information or the occurrence of future events or circumstances.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these
securities, in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction. The securities have not been and
will not be registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act"), or any state securities laws
and may not be offered or sold within the United States, unless an
exemption from such registration is available.
SOURCE: RTG Mining Inc.
For further information:
Tel: +61 8 6489 2900
Fax: +61 8 6489 2920
Chief Executive Officer
Tel: +61 8 6489 2900
Fax : +61 8 6489 2920
Tel: +44 207 478 3900
Fax : +44 207 434 4450
Tel: +61 8 9322 6322
Fax : +61 8 9322 6558