TORONTO, June 13, 2014 /CNW/ - Rio Alto Mining Limited ("Rio Alto" or the "Company") (TSX & BVL: RIO, NYSE: RIOM, DB Frankfurt: MS2) and Sulliden Gold Corporation Ltd. ("Sulliden") (TSX & BVL: SUE, OTCQX: SDDDF) are pleased to announce that they have signed a definitive arrangement
agreement (the "Agreement") relating to the previously announced
business combination of Rio Alto and Sulliden (the "Transaction").
The material terms of the Transaction are as previously disclosed in the
joint press release of Rio Alto and Sulliden dated May 21, 2014. The
Transaction remains subject to court and regulatory approval, as well
as the approval of Rio Alto and Sulliden shareholders. The Special
Meeting of Sulliden shareholders and the Special Meeting of Rio Alto
shareholders to approve the Transaction are both scheduled to take
place on July 30, 2014 (the "Meetings") and the record date for
receiving notice of and the right to vote at the Meetings is June 26,
The Transaction combines the respective businesses of Rio Alto and
Sulliden to create a new, leading mid-tier gold producer with
operations focused in the world-class gold mining district of Peru.
Shareholders of both Rio Alto and Sulliden will benefit from the
synergies that result from the combination of Rio Alto's currently
producing, low cost La Arena gold oxide mine and adjoining sulphide
copper-gold deposit with Sulliden's low cost, scalable Shahuindo gold
development project located in northern Peru approximately 30
kilometers away from La Arena. The combined company will have near-term
production potential of approximately 300,000 ounces of gold per year
and the opportunity to materially expand production in the near-term
while maintaining attractive and sustainably low cash costs.
Pursuant to the Transaction, Rio Alto will acquire all of the issued and
outstanding Sulliden common shares that it does not already own by the
issue of 0.525 of a Rio Alto common share for each Sulliden common
share (the "Exchange Ratio"). In addition, as part of the Transaction,
Sulliden shareholders will receive 0.10 of a common share in a newly
incorporated company ("SpinCo") for each Sulliden common share held.
SpinCo will hold Sulliden's 100% interest in the East Sullivan Property
in Val-d'Or, Quebec and will be capitalized with approximately C$25
million which at Rio Alto's option may be provided entirely in cash or
C$15 million in cash and C$10 million in common shares of Rio Alto.
Following completion of the Transaction, each outstanding warrant and
stock option to purchase Sulliden common shares will be exercisable to
purchase 0.525 of a Rio Alto common share and 0.10 of a SpinCo common
share in lieu of each Sulliden share.
The Transaction will be carried out by way of court-approved plan of
arrangement and will require the approval of at least 66⅔% of the votes
cast in person or by proxy of the shareholders of Sulliden at the
Special Meeting of Sulliden shareholders. The Transaction must also be
approved by a simple majority of the votes cast at the Special Meeting
of Sulliden Shareholders in person or by proxy, after excluding votes
cast in respect of Sulliden shares over which certain
officers/directors of Sulliden, exercise control or direction in
accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions). The Transaction is also subject to obtaining approval by a majority
of votes cast by the shareholders of Rio Alto at the Special Meeting of
Rio Alto shareholders. In addition to shareholder approvals, the
Transaction is also subject to the receipt of all necessary regulatory,
court and other approvals and the satisfaction of certain other closing
conditions customary for a transaction of this nature.
The Agreement includes customary deal protection provisions including,
among other things, reciprocal non-solicitation covenants, subject to
"fiduciary out" provisions that entitle a party to consider and accept
a superior proposal and a right in favour of the other party to match
any superior proposal. The Agreement provides for a reciprocal C$15
million termination fee payable and a cost reimbursement fee of C$2
million payable by one party to the other in certain circumstances if
the Transaction is not completed.
Rio Alto currently owns 8.6% of Sulliden's basic common shares
outstanding and has agreed to vote those shares in favour of the
Transaction. In addition, Rio Alto and Sulliden have each received
from the other voting support agreements providing that the holders of
7.18% of Sulliden common shares and the holders of 3.9% of Rio Alto
common shares will vote in favour of the Transaction.
Materials for the Meetings are expected to be mailed to the shareholders
of Rio Alto and Sulliden in the first week of July. The closing of the
Transaction is expected to occur as soon as reasonably practicable
following the Meetings and the satisfaction of all other closing
A copy of the Agreement and the Meetings materials and related documents
will be filed under the SEDAR profile of both Rio Alto and Sulliden at www.sedar.com.
Rio Alto's financial advisor is GMP Securities L.P. and its legal
counsel is Davis LLP.
The financial and legal advisors to Sulliden and its Board of Directors
are Cormark Securities Inc. and Cassels Brock & Blackwell LLP,
respectively. The financial and legal advisors to the Special
Committee of the Board of Directors of Sulliden are National Bank
Financial Inc. and Norton Rose Fulbright Canada LLP, respectively.
Mr. Enrique Garay, MSc. P. Geo (AIG Member), Vice President Geology of
Rio Alto, is a Qualified Person as defined under National Instrument
43-101 ("NI 43-101"). All of the scientific and technical disclosure
contained in this news release regarding the La Arena gold oxide mine
and adjoining sulphide copper-gold deposit was reviewed and approved by
Mr. Garay. For additional information regarding the La Arena gold mine,
including key parameters, assumptions and risks associated with its
mineral resource and reserve estimates, see Rio Alto's Annual
Information Form dated March 28, 2014 and Rio Alto's independent
technical report entitled "La Arena Project, Peru" dated effective
December 31, 2013, copies of which documents are available on SEDAR
under Rio Alto's SEDAR profile at www.sedar.com.
Mr. Stéphane Amireault, MScA, P. Eng, Vice President, Exploration of
Sulliden and Mr. Joseph Milbourne, Vice President, Technical Services
of Sulliden are both qualified persons as defined by NI 43-101. All of
the scientific and technical disclosure contained in this news release
regarding the Shahuindo gold project was reviewed and approved by
Messrs. Amireault and Milbourne. For additional information regarding
the Shahuindo gold project, including key parameters, assumptions and
risks associated with its mineral resource and reserve estimates, see
Sulliden's Annual Information Form dated July 25, 2013 and Sulliden's
independent technical report entitled "Technical Report on the
Shahuindo Heap Leach Project, Cajabamba, Peru" dated effective
September 26, 2012 (the "Sulliden Technical Report"), copies of which
documents are available on SEDAR under Sulliden's SEDAR profile at www.sedar.com.
Mineral resources that are not mineral reserves do not have demonstrated
About Rio Alto Mining Limited
Rio Alto Mining Limited is a Canadian based resource company focused on
the development of the 21,000 ha La Arena gold / copper project located
in north central Peru, the most prolific gold mining district in the
country that is home to a number of world-class gold mines. La Arena
contains total measured and indicated resources of 5.2 million ounces
gold comprised of 1.3 million gold ounces in the oxide resource (100.2
million tonnes at 0.41 g/t gold) and 3.8 million gold ounces in the
sulphide resource (561.7 million tonnes at 0.21 g/t gold) and 3.7
billion pounds copper (561.7 million tonnes at 0.3% copper). First gold
production at La Arena occurred on May 6, 2011 and 214,742 ounces of
gold were poured in 2013. Rio Alto is also in the business of
acquiring, exploring, and developing gold resources and advanced stage
exploration projects in Peru and Latin America. The Company has
assembled a highly experienced team with a proven history of
developing, financing, and operating mining projects in Latin America.
With a focused strategy of mine production and development and an
exploration strategy to discover additional mineral resources, Rio Alto
is strongly positioned to generate significant value for its
shareholders. To learn more about Rio Alto Mining Limited, please
visit: www.rioaltomining.com or Rio Alto's SEDAR profile at www.sedar.com.
About Sulliden Gold Corporation Ltd.
Sulliden is a mineral exploration and development company focused on
advancing its flagship Shahuindo project to production. Currently in
its permitting phase, this low-cost heap leach gold and silver project
is located in a prolific gold-producing district in northern Peru and
has recently received its EIA (environmental permit) approval. A
September 2012 Feasibility Study (based on $1,415 Gold and $27 Silver)
on the foundation phase of the project estimates an initial CAPEX of
$131.8 million that will support an annual mining rate of 3.65 million
tonnes producing approximately 90,000 of gold equivalent ounces for
10.4 years at cash operating costs of $552/oz. This initial mine
scenario features a pre-tax IRR of 52.2% and post-tax IRR of 37.8%. The
technical study considers only approximately 40% of the defined
measured and indicated gold oxide mineral resource. Additional mineral
resource growth is anticipated from a number of highly prospective
exploration targets on the property that remain largely unexplored.
Sulliden is led by a proven management team with hands-on experience
developing and operating mines in Latin America. To learn more about
Sulliden, please visit: www.sulliden.com or Sulliden's SEDAR profile at www.sedar.com.
Cautionary Statement on Forward-Looking Information
This news release contains forward-looking statements and
forward-looking information within the meaning of United States and
Canadian securities laws, respectively. The use of any of the words
"expect", "potential", "target", "anticipate", "continue", "estimate",
"objective", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking information or statements. More particularly and
without limitation, this news release contains forward-looking
statements and information concerning: the anticipated benefits of the
Transaction to Rio Alto, Sulliden and their respective shareholders,
the timing and anticipated receipt of required regulatory, court, and
shareholder approvals for the Transaction; the ability of Rio Alto,
Sulliden and SpinCo to satisfy the other conditions to, and to
complete, the Transaction; the anticipated timing of the mailing of the
information circular regarding the Transaction, the closing of the
Transaction, the development of the Shahuindo gold mine, the future
gold production of Rio Alto and Sulliden, future cash costs of
production, the gold resources and reserves of Rio Alto and Sulliden
and the development of the La Arena sulphide copper gold project.
In respect of the forward-looking statements and information concerning
the anticipated completion of the proposed Transaction and the
anticipated timing for completion of the Transaction, Rio Alto and
Sulliden have provided them in reliance on certain assumptions that
they believe are reasonable at this time, including assumptions as to
the time required to prepare and mail shareholder meeting materials,
including the required information circular; the ability of the parties
to receive, in a timely manner, the necessary regulatory, court,
shareholder and other third party approvals; and the ability of the
parties to satisfy, in a timely manner, the other conditions to the
closing of the Transaction. These dates may change for a number of
reasons, including unforeseen delays in preparing meeting materials,
inability to secure necessary shareholder, regulatory, court or other
third party approvals in the time assumed or the need for additional
time to satisfy the other conditions to the completion of the
Transaction. Accordingly, readers should not place undue reliance on
the forward-looking statements and information contained in this news
release concerning these times.
With respect to the forward looking statements of Sulliden and/or Rio
Alto, the future gold production of Rio Alto and Sulliden, future cash
costs of production, the gold resources and reserves of Rio Alto and
Sulliden, the development of the Shahuindo gold mine and/or the La
Arena sulphide copper-gold project are subject to various key
assumptions described in their Annual Information Forms and Technical
Reports referred to herein.
Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These
include, but are not limited to, the risk that the transaction may not
close when planned or at all or on the terms and conditions set forth
in the arrangement agreement; the failure to obtain the necessary
shareholder, Court, regulatory and other third party approvals required
in order to proceed with the transaction; the synergies expected from
the Transaction not being realized; business integration risks;
operational risks in development, exploration and production for
precious metals; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserve and resource estimates; uncertainties inherent to feasibility
and other economic studies; health, safety and environmental risks;
gold price and other commodity price and exchange rate fluctuations;
marketing and transportation; loss of markets; environmental risks;
competition; incorrect assessment of the value of acquisitions; ability
to access sufficient capital from internal and external sources; and
changes in legislation, including but not limited to tax laws,
royalties and environmental regulations and risks inherent to operating
in developing countries. In addition, the failure of a party to comply
with the terms of the Agreement may result in that party being required
to pay a non-completion or other fee to the other party, the result of
which could have a material adverse effect on the paying party's
financial position and results of operations and its ability to fund
growth prospects and current operations.
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on other risks and factors that
could affect the operations or financial results of Rio Alto and
Sulliden are included in reports on file with applicable securities
regulatory authorities, including but not limited to, Rio Alto's Annual
Information Form for the fiscal year ended December 31, 2013 which may
be accessed on Rio Alto's SEDAR profile at www.sedar.com and Sulliden's Annual Information Form for the fiscal year ended April
30, 2013 which may be accessed on Sulliden's SEDAR profile at www.sedar.com.
Management has included the above summary of assumptions and risks
related to forward looking information provided in this news release in
order to provide shareholders with a more complete perspective on the
proposed transaction and such information may not be appropriate for
other purposes. Actual results, performance or achievement could differ
materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given
that any of the events anticipated by the forward looking statements
will transpire or occur, or if any of them do so, what benefits may be
derived there from.
The forward-looking statements and information contained in this news
release are made as of the date hereof and neither Rio Alto nor
Sulliden undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events, or results or otherwise, other than as
required by applicable securities laws.
"Cash costs" per ounce figures are non-GAAP measures. This data is
furnished to provide additional information and is a non-IFRS measure.
Cash costs presented do not have a standardized meaning under IFRS and
may not be comparable to similar measures presented by other mining
companies. It should not be considered in isolation as a substitute
for measures of performance prepared in accordance with IFRS.
This announcement is for informational purposes only and does not
constitute an offer to purchase, a solicitation of an offer to sell the
share or a solicitation of a proxy.
ON BEHALF OF THE BOARD OF
RIO ALTO MINING LIMITED
ON BEHALF OF THE BOARD OF
SULLIDEN GOLD CORPORATION LTD.
President, CEO and Director
Chairman & CEO
SOURCE: Sulliden Gold Corporation Ltd.
For further information:
RIO ALTO MINING LIMITED
Alex Black, President & CEO
Phone: +511 625 9900
Alejandra Gomez, Investor Relations
SULLIDEN GOLD CORPORATION LTD.
65 Queen Street West, Suite 800
Toronto, Ontario M2H 2M5
Calle San Martin 845, oficina 201
Miraflores - Lima 18