Kinbauri Responds to Proposed Hostile Takeover
12 May 2009 - 2:43AM
Marketwired
Kinbauri Gold Corp. ("Kinbauri") (TSX-V: KNB) (FRANKFURT: 3KG) has
rejected a written all cash takeover proposal from Orvana Minerals
Corp. ("Orvana") (TSX: ORV) dated May 6, 2009, and amended May 8th.
Under the proposal, Orvana would pay $0.55 per share for all of the
outstanding shares of Kinbauri. The proposal is conditional on
Kinbauri not consummating the previously announced deal with Glen
Eagle Resources Inc. ("Glen Eagle") (TSX-V: GER). (See Kinbauri
press release April 17, 2009; Kinbauri Secures $32M funding for El
Valle / Carles.)
The board of directors ("Board") of Kinbauri appointed an
independent committee to review the proposed offer, consider other
alternatives and make a recommendation to the board of directors.
Based on the committee's recommendations, the Board unanimously
rejected the proposed offer based on the structure provided to
Kinbauri.
The announced transaction with Glen Eagle is moving towards
completion, with an anticipated closing date on or about May 28,
2009. All terms have been agreed to, and signed off by both
parties. The transaction is now waiting for the required approvals
and transfer of funds. Kinbauri has received conditional approval
from the TSX Venture Exchange.
Under terms of the agreements, Glen Eagle will invest C$32M for
a 45% interest in Kinbauri's 100% owned subsidiary, Kinbauri Espana
S.L., ("Espana"), which holds a 100% interest in the El
Valle/Carl�s project for 45% of Espana. The agreement also allows
Glen Eagle the right to buy a further 5% interest for an additional
C$5M. This transaction implies a value for Kinbauri of $1.60 per
share, without consideration of Kinbauri's other assets, far
superior to the offer being made by Orvana.
The implied value is based on Glen Eagle's investment together
with the Scoping Study prepared by Scott Wilson Roscoe Postle
Associates (the "Scoping Study") for the El Valle/Carles project
(see Kinbauri's press release, March 13th, 2009, Kinbauri Files
Revised Scoping Study) and a new mine plan prepared by Kinbauri's
engineers. The calculation follows from the following
assumptions.
-- After Tax Net Present Value (10% discount): CDN$171 million (assuming
$910/ounce Au, $1.50/lb Cu, and EUR 1 = CDN$1.6)
-- Current Kinbauri shares outstanding of 53.24 million
-- Glen Eagle invests CDN$37 million for 50% of Espana
-- Pre-production capex of CDN$57 million (per new mine plan), leaving
$20 million of pre-production capex to be financed by Kinbauri and Glen
Eagle through project financing; no additional equity required
-- Implied price per share of Kinbauri based on after-tax NPV of CDN$171
million with Kinbauri entitled to fifty percent.
Readers should be cautioned that Scoping Study results include
some mineral resources that are not mineral reserves and that only
mineral reserves are accepted as having demonstrated economic
validity.
Dr. Vern Rampton, Kinbauri, President & CEO, commented, "We
have been in discussion with several companies with regard to the
development of El Valle and Carles, with a desire to do what the
board believes is best for the shareholders. To now sell our
company at this price would be without recognition of its true
value and without recognition of upside from development and
production of the property to shareholders. This holds especially
true with the recognition that El Valle should be in production in
approximately one year and generating significant after-tax cash
flows to Kinbauri in excess of the average annual after-tax cash
flows of 18 million Canadian estimated by the Scoping Study."
With the funding supplied by Glen Eagle the company plans to
proceed aggressively towards production, with a current plan that
contemplates a re-start in May 2010. Requests for proposals to
complete the feasibility study are being solicited and work is
scheduled to begin this month. In concert, Kinbauri plans to start
pre-production work based on the recently completed Scoping Study
(SEDAR filed Technical Report of April 20, 2009). This work will
include drilling to convert resources from inferred to measured and
indicated, test mining of the high grade 107 Area ("107 Zone"),
ramp and plant rehabilitation, metallurgical test-work,
geotechnical and environmental studies and permitting.
The new plan, as evolved from the Scoping Study, calls for a new
portal near the El Valle mill to allow early access to the top of
the 107 Zone, allowing early recommencement of production. Decline
development and mining will continue down and parallel to the 107
Zone, allowing mill feed to consist of higher grade material in the
early stages of production. Mill feed will be supplemented with ore
from the present decline and the Carles mine. It is estimated that
the new plan will increase cash flow and profitability relative to
the Scoping Study estimates and decrease pre-production capex
significantly from the Scoping Study estimate of 89M Euros and that
any future financing would be minimal , attracting project
financing at favourable terms.
This press release has been prepared by Dr. Vern Rampton, P.
Eng., President and Brian McEwen, P Geol, Director and Chairman of
Kinbauri's Technical and Strategic Planning Committees in their
capacity as qualified persons. Dr. Rampton previously recorded a
"Beyond the Press Release" webcast concerning the Glen Eagle
investment on April 17th and how it affects development at el
Valle/Carles project on Kinbauri's Investor Relation site at
http://www.agoracom.com/IR/kinbauri.
About Kinbauri:
Kinbauri is a TSXV - Tier 1 Mineral Exploration Company focused
on the development of precious metal prospects in Spain, Nevada and
Canada. Its immediate focus is to begin operations at its El
Valle/Carl�s property in Asturias, northwestern Spain by 2010. It
has 53,243,051 common shares issued and outstanding.
THIS PRESS RELEASE WAS PREPARED BY KINBAURI GOLD CORP. NEITHER
THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS
RELEASE.
This press release contains certain forward-looking statements,
which are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks
and uncertainties and other factors that could cause actual events
or results to differ materially from those projected. Kinbauri
undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change.
The reader is cautioned not to place undue reliance on
forward-looking statements.
FOR FURTHER INFORMATION CONTACT: North America Darrell Munro,
BB.A, LL.B, Manager, Corporate Communications E-mail:
dmunro@kinbauri-gold.com Tel: (613) 836-0198 Dr. Vern Rampton, P.
Eng., President vrampton@kinbauri-gold.com E-mail:
kinbauri@kinbauri-gold.com Tel: (613) 836 2594 Fax: (613) 831 2730
Brian McEwen, P Geol., Director E-mail: bmcewen@kinbauri-gold.com
Tel : (604) 551 6979 Europe Ruediger (Rudy) Hnyk, CEO INVESTEL
Investor Relations & Telecommunications E-mail: ceo@investel.de
OR VISIT: Kinbauri Gold's Hub at
http://www.agoracom.com/IR/kinbauri where investors can post
questions and receive answers or review questions and answers
already posted by other investors. Kinbauri Web-Site:
www.kinbauri-gold.com
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