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 regard.
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 potential.
- 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 FIU
unit.
- 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 the future.
- 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.
ABOUT ALGOLD
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 securities
laws.
SOURCE First Uranium Corporation