MONTREAL AND TORONTO, Oct. 29, 2013 /CNW/ - Algold Resources Ltd.
("Algold") (TSXV:ALG) and First Uranium Corporation ("FIU") (NEX:
FIU.H) (JSE: FUU) are pleased to announce that they have entered into a
definitive agreement (the "Agreement") pursuant to which Algold will
acquire, by way of a court-approved plan of arrangement, all of the
issued and outstanding units ("FIU Units") of FIU (the "Transaction").
Pursuant to the terms of the Agreement, FIU shareholders will receive
0.0729849 of an Algold share for each FIU Unit held, implying an offer
of approximately C$0.011 per unit based on the closing price of
Algold's shares on the TSX Venture Exchange on Friday, October 25,
2013. In addition, for every full Algold share issued to an FIU
shareholder, such holder will receive ½ of one Algold common share
purchase warrant (the "Algold Warrants"). Each full Algold Warrant
entitles the holder thereof to purchase one Algold share at a price of
$0.20 per Algold share at any time for a period of eighteen months
following the issuance of the Algold Warrants.
Pro forma the Transaction, FIU shareholders will own approximately 52%
of Algold (based on fully diluted in the-money shares outstanding).
Approximately 33,465,671 common shares of Algold are expected to be
outstanding upon closing, subject to any adjustments pursuant to the
terms of the Agreement.
BENEFITS TO ALGOLD SHAREHOLDERS
Upon completion of the proposed Transaction, Algold would gain access to
FIU's net cash and cash-equivalent assets, which as of today, total
approximately C$3.1 million.
Each of AngloGold Ashanti Limited, Franco-Nevada Corporation and Village
Main Reef Limited, who collectively own or exercise control or
direction over 78,122,653 FIU Units, representing approximately 33% of
the total issued and outstanding FIU Units, have agreed, subject to
certain conditions, to vote their FIU Units in favour of the
Transaction and will enter into support agreements with FIU in this
BENEFITS TO FIU SHAREHOLDERS AND REASONS FOR THE TRANSACTION
The proposed Transaction provides FIU shareholders with the opportunity
to hold a majority interest in a mineral exploration company that has a
number of properties and growth potential, which create the possibility
for future value for FIU shareholders if Algold is successful in
developing its business.
The Algold Warrants to be issued pursuant to the Transaction provide FIU
shareholders with further upside potential if Algold is successful
developing its business.
Prior to negotiating the terms of the proposed Transaction with Algold,
the board of directors of FIU pursued a variety of strategic
alternatives with a view to the best interests of FIU and its
shareholders. The board is of the view that the Transaction represents
the best alternative for the FIU shareholders with the greatest upside
An alternative to the Transaction would be the voluntarily dissolution
of FIU. The liquidation and dissolution of the Corporation would
provide certain but extremely limited value to FIU shareholders, with
such distribution contemplated to be in the range of $nil to $0.01 per
In addition to providing limited value to the FIU shareholders, the
process to liquidate and dissolve FIU may be complex, time-consuming
and costly, which would further deplete the assets available for
distribution to FIU shareholders.
Pursuant to the Transaction, FIU shareholders are being provided with an
opportunity to receive Algold shares and Algold Warrants for their
NEX-listed FIU Units. The Algold shares are currently listed for
trading on the TSXV, which is expected to provide FIU shareholders with
increased liquidity should they desire to sell their Algold shares in
As a result of the proposed Transaction, Algold will be better funded to
proceed with its current exploration program, which, if successful,
could increase its ability to access the capital markets in the future.
The fairness opinion received from Paradigm Capital Inc. indicates that
the consideration payable pursuant to the Transaction is fair, from a
financial point of view, to FIU shareholders.
SUMMARY OF THE TRANSACTION
The acquisition of FIU will be completed by way of a court-approved plan
of arrangement, whereby Algold will acquire each issued and outstanding
FIU Unit in exchange for 0.0729849 of a common share of Algold. In
addition, for every full Algold share issued to an FIU shareholder,
such holder will receive ½ of one Algold Warrant. The number of Algold
shares to be issued will be 17,402,149 based on the currently issued
and outstanding shares as of the date of this announcement, but will be
subject to change depending on the number of Algold options and
warrants exercised while the offer is outstanding.
The board of directors of FIU has unanimously approved the transaction
and will recommend that shareholders vote in favour of the transaction.
Each senior officer and each member of the board of directors of FIU who
owns FIU Units has entered into support agreements with Algold pursuant
to which each has agreed to vote in favour of the transaction.
The terms and conditions of the Agreement will be disclosed in more
detail in the management information circular which will be filed and
mailed to FIU shareholders in early November 2013. Completion of the
transaction is subject to customary conditions, including court
approvals, a favourable vote of at least 66 2/3% of the holders of FIU
units voted at a special meeting of shareholders, and the receipt of
all necessary regulatory and stock exchange approvals. The Agreement
includes a reciprocal non-solicitation clause, right to match covenants
and provides for the payment of a C$100,000 break fee to Algold or FIU
under certain circumstances.
Algold Resources Ltd is focused on the exploration and development of
gold deposits in West Africa. The board of directors and management
team are seasoned resource industry professionals with extensive
experience in the exploration and development of world-class gold
projects in Africa.
CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING INFORMATION
This news release contains and refers to forward‐looking information
based on current expectations. All other statements other than
statements of historical fact included in this release are forward
looking statements (or forward‐looking information). The Corporation's
plans involve various estimates and assumptions and its business is
subject to various risks and uncertainties. For more details on these
estimates, assumptions, risks and uncertainties, see the Corporation's
most recent Annual Information Form and most recent Management
Discussion and Analysis on file with the Canadian provincial securities
regulatory authorities on SEDAR at www.sedar.com. These forward looking statements are made as of the date hereof and
there can be no assurance that such statements will prove to be
accurate, such statements are subject to significant risks and
uncertainties, and actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward‐looking statements
that are included herein, except in accordance with applicable
SOURCE: First Uranium Corporation
For further information:
FIRST URANIUM COPRORATION
President and CEO
ALGOLD RESOURCES LTD.
President and CEO
(514) 889 5089