New Gold and Silver Quest Resources Execute Definitive Arrangement Agreement
08 November 2011 - 12:00AM
PR Newswire (Canada)
(All figures are in Canadian dollars unless otherwise indicated)
VANCOUVER, Nov. 7, 2011 /CNW/ - New Gold Inc. ("New Gold") and
Silver Quest Resources Ltd. ("Silver Quest") today jointly announce
that they have entered into a definitive arrangement agreement (the
"Arrangement Agreement") which replaces and supersedes the
previously announced (October 17, 2011) letter agreement between
the companies. Under the terms of the Arrangement Agreement, New
Gold will acquire, under a plan of arrangement, all of the
outstanding shares of Silver Quest (the "Arrangement"). Pursuant to
the Arrangement, Silver Quest shareholders will receive 0.09 of a
New Gold share and $0.0001 in cash for each Silver Quest share held
and one common share in a new precious metals-focused exploration
company, Independence Gold Corp. ("Independence Gold") (formerly
referred to as McIntyre Minerals Inc.), for every three Silver
Quest shares held. Upon closing of the Arrangement, which is
expected in December 2011, New Gold will acquire Silver Quest's 25%
interest in the Davidson Property, which forms the northern half of
the Blackwater Project and in which New Gold currently holds the
remaining 75% interest, as well as Silver Quest's Capoose Property.
The terms of the Arrangement will be described in further detail in
the Management Information Circular of Silver Quest to be filed
with regulatory authorities and mailed to Silver Quest shareholders
in accordance with applicable securities laws. The special meeting
of Silver Quest shareholders to approve the Arrangement is expected
to take place on December 15, 2011 (the "Meeting"). Directors and
Officers of Silver Quest have entered into lock-up agreements with
New Gold under which they have agreed to vote in favour of the
Arrangement, their Silver Quest shares and options, which represent
approximately 7.7% of Silver Quest's fully diluted shares
outstanding. As part of the Arrangement, New Gold will purchase, on
a private placement basis, $3.5 million of Independence Gold
shares, which will result in New Gold holding 9.9% of the shares
outstanding of Independence Gold. Current Silver Quest shareholders
will hold the remaining 90.1% upon completion of the Arrangement.
Including the proceeds from the New Gold private placement, it is
expected Independence Gold will have approximately $15 million in
cash to fund an aggressive two year exploration program focused on
the 3Ts Gold Project in central British Columbia and a number of
Yukon exploration properties. A Special Committee comprised of
independent directors of Silver Quest, established to review the
transaction, received a written opinion from Paradigm Capital Inc.
The opinion stated that the consideration to be received by the
Silver Quest securityholders under the terms of the transaction is
fair, from a financial point of view, to the securityholders of
Silver Quest. Silver Quest directors have determined that the
transaction is in the best interest of Silver Quest and its
securityholders and have unanimously approved the transaction. The
directors intend to recommend, in the information circular for the
Meeting, that Silver Quest shareholders vote in favour of the
transaction. The Arrangement has been approved unanimously by the
Board of Directors of both New Gold and Silver Quest and will be
subject to, among other things, the Silver Quest shareholder, court
and regulatory approval. In the event that the Arrangement is not
completed, Silver Quest has agreed, under certain circumstances, to
pay New Gold a termination fee equal to $5 million. Silver Quest
has also provided New Gold with certain other customary rights,
including a right to match competing offers. Silver Quest
securityholders and other interested parties are advised to read
the materials relating to the proposed Arrangement that will be
filed by Silver Quest with securities regulatory authorities in
Canada when they become available. Anyone may obtain copies of
these documents when available free of charge at the Canadian
Securities Administrators' website at www.sedar.com. This
announcement is for informational purposes only and does not
constitute an offer to purchase, a solicitation of an offer to sell
the shares or a solicitation of a proxy. New Gold's financial
advisor is Canaccord Genuity Corp. and its legal advisor is Cassels
Brock & Blackwell LLP. Silver Quest's financial advisor is
Paradigm Capital Inc. and its legal advisor is Gowling Lafleur
Henderson LLP. The legal advisor for the Special Committee of
Silver Quest is DuMoulin Black LLP. About New Gold Inc. New Gold is
an intermediate gold mining company. The company has a portfolio of
three producing assets and three significant development projects.
The Mesquite Mine in the United States, the Cerro San Pedro Mine in
Mexico and Peak Gold Mines in Australia are expected to produce
between 380,000 and 400,000 ounces of gold in 2011. The
fully-funded New Afton project in Canada is scheduled to add
further growth in 2012. In addition, New Gold owns 30% of the
world-class El Morro project located in Chile and, in June 2011,
New Gold acquired the exciting Blackwater project in Canada. For
further information on the company, please visit www.newgold.com.
About Silver Quest Resources Ltd. Silver Quest is a gold and silver
exploration company, whose main areas of interest are central
British Columbia and the White Gold District of the Yukon. Silver
Quest maintains a portfolio of highly prospective projects, ranging
from grassroots exploration through advanced stage resource
expansion. The Company is poised to add shareholder value through
project advancement, while evaluating early to advanced stage gold
and silver projects for possible acquisition. For further
information on the company, please visit www.silverquest.ca.
Cautionary Note Regarding Forward-Looking Statements Certain
information contained in this news release, including any
information relating to New Gold's, Silver Quest's or Independence
Gold's future financial or operating performance may be deemed
"forward looking". All statements in this news release, other than
statements of historical fact, that address events or developments
that New Gold/Silver Quest expects to occur, are "forward-looking
statements". Forward-looking statements are statements that are not
historical facts and are generally, but not always, identified by
the words "expects", "does not expect", "plans", "anticipates",
"does not anticipate", "believes", "intends", "estimates",
"projects", "potential", "scheduled", "forecast", "budget" and
similar expressions, or that events or conditions "will", "would",
"may", "could", "should" or "might" occur. All such forward-looking
statements are based on the opinions and estimates of the relevant
management as of the date such statements are made and are subject
to important risk factors and uncertainties, many of which are
beyond New Gold/Silver Quest/Independence Gold's ability to control
or predict. Forward-looking statements are necessarily based on
estimates and assumptions (including that the Arrangement will be
completed successfully on the terms agreed upon by the parties and
that the business of Silver Quest will be integrated successfully
in the New Gold organization) that are inherently subject to known
and unknown risks, uncertainties and other factors that may cause
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking statements. In the case of New Gold, such factors
include, without limitation: significant capital requirements;
fluctuations in the international currency markets and in the rates
of exchange of the currencies of Canada, the United States,
Australia, Mexico and Chile; price volatility in the spot and
forward markets for commodities; impact of any hedging activities,
including margin limits and margin calls; discrepancies between
actual and estimated production, between actual and estimated
reserves and resources and between actual and estimated
metallurgical recoveries; changes in national and local government
legislation in Canada, the United States, Australia, Mexico and
Chile or any other country in which New Gold currently or may in
the future carry on business; taxation; controls, regulations and
political or economic developments in the countries in which New
Gold does or may carry on business; the speculative nature of
mineral exploration and development, including the risks of
obtaining and maintaining the validity and enforceability of the
necessary licenses and permits and complying with the permitting
requirements of each jurisdiction that New Gold operates,
including, but not limited to, Mexico, where New Gold is involved
with ongoing challenges relating to its environmental impact
statement for the Cerro San Pedro Mine; the lack of certainty with
respect to the Mexican and other foreign legal systems, which may
not be immune from the influence of political pressure, corruption
or other factors that are inconsistent with the rule of law; the
uncertainties inherent to current and future legal challenges the
company is or may become a party to, including the third party
claim related to the El Morro transaction with respect to New
Gold's exercise of its right of first refusal on the El Morro
copper-gold project in Chile and its partnership with Goldcorp
Inc., which transaction and third party claim were announced by New
Gold in January 2010; diminishing quantities or grades of reserves;
competition; loss of key employees; additional funding
requirements; actual results of current exploration or reclamation
activities; changes in project parameters as plans continue to be
refined; accidents; labour disputes; defective title to mineral
claims or property or contests over claims to mineral properties.
In the case of Silver Quest, such risks include, among other risks,
the approvals of regulators, availability of funds, the results of
financing and exploration activities, the interpretation of
drilling results and geological data, project cost overruns or
unanticipated costs and expenses. In addition, there are risks and
hazards associated with the business of mineral exploration,
development and mining, including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins,
flooding and gold bullion losses (and the risk of inadequate
insurance or inability to obtain insurance to cover these risks) as
well as "Risk Factors" included in New Gold's and Silver Quest's
continuous disclosure documents filed on and available at
www.sedar.com. Forward-looking statements are not guarantees
of future performance, and actual results and future events could
materially differ from those anticipated in such statements. All of
the forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold/Silver
Quest/Independence Gold's expressly disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, events or otherwise, except
in accordance with applicable securities laws. 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.
Paradigm Capital Inc. CONTACT: Hannes Portmann, Vice President,
Corporate DevelopmentNew Gold Inc.Direct: +1 (416) 324-6014Email:
info@newgold.comRandy Turner, President & CEOSilver Quest
Resources Ltd.Direct: +1 (604) 687-3959Email:
info@silverquest.cathere
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