TORONTO,
Jan. 24, 2014 /CNW/ - Wesdome Gold
Mines Ltd. ("Wesdome") (TSX:WDO) and Moss Lake Gold Mines
Ltd. ("Moss Lake") (TSXV:MOK) are pleased to announce that
they have entered into a business combination agreement (the
"Agreement"), pursuant to which Wesdome will acquire (the
"Transaction") all of the issued and outstanding common
shares of Moss Lake (the "Moss Lake Shares") that it does
not already own. Wesdome currently owns 26,708,586 Moss Lake
Shares, representing approximately 57.6% of the issued and
outstanding Moss Lake Shares. The Transaction is subject to
minority shareholder approval and to the other conditions set out
below.
Pursuant to the terms of the Agreement, Moss
Lake shareholders (the "Moss Lake Shareholders") (other than
Wesdome) will receive one common share of Wesdome (a "Wesdome
Share") for every 3.85 Moss Lake Shares held (the "Exchange
Ratio").
The Transaction will be completed by way of a
three-cornered amalgamation with a new subsidiary of Wesdome.
Following completion of the Transaction, it is expected that Moss
Lake will be a private company wholly-owned by Wesdome.
Based on the currently issued and outstanding
Moss Lake Shares as of the date of this announcement, there will be
approximately 5,279,505 Wesdome Shares issued to Moss Lake
Shareholders as consideration for the Moss Lake Shares not already
owned by Wesdome, representing approximately 5% of Wesdome's
currently issued and outstanding shares on a non-diluted basis.
Following completion of the Transaction, former Moss Lake
Shareholders (other than Wesdome) will own approximately 4.75% of
the issued and outstanding Wesdome Shares on a non-diluted basis,
based on their current shareholdings in Moss Lake. Pursuant to the
Agreement, it is also expected that all outstanding stock options
of Moss Lake will be converted into options to acquire Wesdome
Shares, with the number of Wesdome options and the exercise price
thereof being calculated based on the Exchange Ratio.
The board of directors of Moss Lake (the
"Moss Lake Board") formed a committee of independent
directors (the "Moss Lake Independent Committee") to
consider the Transaction. Based on the recommendation of the Moss
Lake Independent Committee, directors at a meeting of the Moss Lake
Board unanimously recommended that Moss Lake Shareholders vote in
favour of the Transaction.
Directors and officers of Moss Lake have entered
into voting support agreements with Wesdome pursuant to which each
such party has agreed to vote in favour of the Transaction. Such
locked-up Moss Lake Shares represent approximately 9% of the issued
and outstanding Moss Lake Shares on a non-diluted basis.
Directors at a meeting of the Wesdome board
unanimously approved the Transaction.
Strategic Rationale
The purpose of the Transaction is to consolidate important gold
assets under one corporate roof for clarity and cost effectiveness
moving forward.
"The Transaction brings a significant low-grade
open pit resource to Wesdome" commented Rowland Uloth, Chief Executive Officer of
Wesdome. "While Wesdome controlled the deposit through its
ownership of Moss Lake equity, the Transaction brings 100% of the
deposit into the Wesdome resource statement, reduces overall
overhead, provides immediate liquidity for Moss Lake Shareholders
and significantly reduces the investment confusion surrounding the
way to participate in future exploration at Moss Lake. We
welcome the Moss Lake Shareholders to the Wesdome family and look
forward to participating with them in the future exploration and
development at Moss Lake."
"The conversion of Moss Lake into a wholly-owned
subsidiary of Wesdome is an excellent opportunity for our
shareholders to get exposure to an operating mine and participate
in a cash-flowing company", commented John
Hilland an independent director of Moss Lake. "The current
financial markets have made it difficult to continue with our
exploration efforts as an independent company. We believe
that the Moss Lake deposit is a significant resource that could
easily become a mine in the right investment environment. The
amalgamation with Wesdome ensures that our shareholders will
continue to have exposure to this excellent property while also
participating in an active producer with 25 years of continued
production in a stable political area."
Other Aspects of the Transaction
Financial Advisors
Pollitt & Co. acted as financial advisor to
Wesdome and Jennings Capital Inc. acted as financial advisor to
Moss Lake in respect of the Transaction and provided the Moss Lake
Independent Committee and Moss Lake Board with its opinion that, as
of the date of the Agreement and subject to review of final
documentation, the consideration to be received by the holders of
Moss Lake Shares under the Transaction is fair, from a financial
point of view, to such holders. A copy of the fairness opinion will
be included in the information circular to be sent to Moss Lake
Shareholders for the special meeting to be called to consider the
Transaction.
MI 61-101
Wesdome currently owns approximately 57.6% of
the issued and outstanding Moss Lake Shares. As such, Wesdome is
considered a "related party" of Moss Lake in respect of the
Transaction and the Transaction is considered to be a "business
combination" for Moss Lake pursuant to Multilateral Instrument
61-101 - Protection of Minority Security Holders in Special
Transactions ("MI 61-101") and the policies of the TSX
Venture Exchange (the "TSXV"). Moss Lake has determined that
there is an exemption available from the formal valuation
requirements of MI 61-101 applicable to business combinations
because no securities of Moss Lake are listed or quoted for trading
on a senior stock exchange.
Conditions to Closing
Completion of the Transaction is subject to a
number of conditions, including: (i) a favourable vote of at least
(A) 66 2/3% of the Moss Lake Shareholders; and (B) a simple
majority of the votes cast by minority Moss Lake Shareholders,
voted at a special meeting of shareholders (the "Moss Lake
Meeting") expected to be held on April
8, 2014; (ii) satisfactory completion of due diligence by
Wesdome and Moss Lake; and (iii) other standard closing
conditions.
Terms and Conditions of the
Transaction
The terms and conditions of the Agreement will
be disclosed in more detail in Moss Lake's management information
circular, which is expected to be filed and mailed to Moss Lake
Shareholders in March 2014.
Details regarding these and other terms of the
Transaction are set out in the Agreement, which will be available
on SEDAR at www.sedar.com.
About Wesdome
Wesdome is in its 26th year of
continuous mining operations in Canada. It currently has two producing gold
mines in Wawa, Ontario and owns
the Kiena Complex in Val d'Or,
Québec. Wesdome currently has approximately 105.8 million Wesdome
Shares issued and outstanding which trade on the Toronto Stock
Exchange under the symbol "WDO".
About Moss Lake
Moss Lake, currently a 57.6%-owned subsidiary of
Wesdome, was created in 1994 to consolidate ownership of the Moss
Lake gold deposit. Moss Lake currently has approximately 47
million Moss Lake Shares issued and outstanding which trade on the
TSXV under the symbol "MOK".
Forward Looking Statements
This press release includes certain
statements that constitute "forward‐looking statements" and
"forward‐looking information" within the meaning of applicable
securities laws (collectively, "forward‐looking
statements"). These statements include statements regarding
Wesdome's or Moss Lake's intent, or the beliefs or current
expectations of Wesdome's or Moss Make's directors and officers.
Such statements are typically identified by words such as
"believe", "anticipate", "estimate", "project", "intend", "expect",
"may", "will", "plan", "should", "would", "contemplate",
"possible", "attempts", "seeks" and similar expressions.
Forward‐looking statements may relate to Wesdome's or Moss Lake's
future outlook and anticipated events or results.
By their very nature, forward‐looking
statements involve numerous assumptions, inherent risks and
uncertainties, both general and specific, and the risk that
predictions and other forward‐looking statements will not prove to
be accurate. Do not unduly rely on forward‐looking statements, as a
number of important factors, many of which are beyond Wesdome's or
Moss Lake's control, could cause actual results to differ
materially from the estimates and intentions expressed in such
forward‐looking statements. These factors include, but are not
limited to: (i) the inability of Moss Lake to obtain approval of
the Transaction by the Moss Lake Shareholders at the Moss Lake
Meeting; and (ii) the occurrence of any other event, change or
circumstance that could give rise to the termination of the
Agreement, or the delay of consummation of the Transaction or
failure to complete the Transaction for any other reason.
Forward‐looking statements speak only as of
the date those statements are made. Except as required by
applicable law, neither Wesdome nor Moss Lake assume any obligation
to update, or to publicly announce the results of any change to,
any forward‐looking statement contained herein to reflect actual
results, future events or developments, changes in assumptions or
changes in other factors affecting the forward‐looking
statements.
Neither the TSX, TSXV nor its Regulation
Services Provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this
press release.
SOURCE Wesdome Gold Mines Ltd.