TIDMPGD
RNS Number : 7198A
Hunt Mining Corp.
31 May 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
(INCLUDING THE UNITED STATES) WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
For immediate release
31 May 2019
RECOMMED ALL-SHARE OFFER
for
PATAGONIA GOLD PLC
by
HUNT MINING CORP.
TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER PART 26 OF THE COMPANIES ACT 2006
Summary
-- The boards of directors of Hunt Mining Corp. ("Hunt") and
Patagonia Gold Plc ("Patagonia Gold" or the "Company") are pleased
to announce that they have reached agreement on the terms of a
recommended share for share exchange offer to be made by Hunt for
the entire issued and to be issued share capital of Patagonia Gold
(the "Offer"). It is intended that the Offer will be implemented by
way of a Court-sanctioned scheme of arrangement between Patagonia
Gold and its shareholders under Part 26 of the Companies Act 2006
(the "Scheme").
-- Hunt is a Canadian company listed on the TSX Venture Exchange
(the "TSX-V") (ticker code: HMX), active in precious metals
exploration and development, which is currently producing silver
and gold in the Santa Cruz Province, Argentina, where it holds
mineral rights to 39 properties covering approximately 125,572
hectares.
-- The Offer is a share for share exchange offer at a ratio of
approximately 10.76 New Hunt Shares in exchange for each Scheme
Share (the "Exchange Ratio"). The Exchange Ratio attributes an
implied value for the entire issued share capital of Patagonia Gold
of approximately GBP17.18 million (based on the closing price of
C$0.115 per Hunt Share on 30 May 2019, being the last Business Day
in Canada prior to the date of this Announcement and using an
exchange rate of C$0.5874/GBP1).
-- The proposed combination of Patagonia Gold and Hunt will
result in Scheme Shareholders holding 80.0 per cent. of the
Combined Group and Hunt Shareholders holding 20.0 per cent. of the
Combined Group.
-- At the value implied by the Exchange Ratio, the Offer
represents a premium of approximately:
o 35.9 per cent. to the middle market closing price of GBP0.535
per Patagonia Gold Share on 30 May 2019 (being the last Business
Day in London prior to the date of this Announcement); and
o 76.7 per cent. to the volume weighted average price per
Patagonia Gold Share of GBP0.41135 over the three month period
ended on and including 30 May 2019 (being the last Business Day in
London prior to the date of this Announcement).
-- Implementation of the Scheme will be subject to, amongst
other things, the approval of the Scheme by the Scheme Shareholders
at the Court Meeting and the passing of the special resolution by
Patagonia Gold Shareholders necessary to implement the Scheme at
the General Meeting, and the sanction of the Scheme by the Court.
The Scheme Document, setting out full details of the Scheme and the
procedures to be followed by Patagonia Gold Shareholders to approve
the Scheme, together with the Forms of Proxy, are expected to be
despatched to Patagonia Gold Shareholders shortly. It is expected
that the Scheme will become Effective during July 2019, subject to
the Conditions and certain further terms set out in Appendix I to
this Announcement and to be set out in the Scheme Document being
satisfied or waived.
-- It is expected that the Scheme Document will be published as
soon as practicable, but in any event no later than 28 days from
the date of this Announcement. The Scheme Document will contain an
expected timetable for the Offer process.
-- The transaction constitutes a reverse takeover for Hunt
pursuant to the rules of the TSX-V. Accordingly, Hunt Shares will
be halted from trading on the TSX-V with effect from market open on
31 May 2019 pending completion of the Offer, when the Combined
Group will resume trading under its proposed new issuer name of
Patagonia Gold Corp. In addition, Hunt published a Filing Statement
on 30 May 2019 in respect of the reverse takeover, which is now
available on SEDAR (www.sedar.com), under Hunt's existing issuer
profile. Hunt's largest shareholder, Tim Hunt, has granted
shareholder approval for the acquisition by way of irrevocable
written consent in respect of the, in aggregate, 53,306,925 Hunt
Shares owned or controlled by him, representing approximately 83.83
per cent. of Hunt's existing issued share capital.
-- The Offer will lapse if the Scheme does not become Effective
by the Longstop Date or such later date (if any) as Hunt and
Patagonia Gold may agree and, if required, the Court and the Panel
may approve.
-- The Patagonia Gold Directors, who have been so advised by
Strand Hanson Limited ("Strand Hanson"), the Company's financial
adviser, as to the financial terms of the Offer, consider the terms
of the Offer to be fair and reasonable. In providing its advice to
the Patagonia Gold Directors, Strand Hanson has taken into account
the commercial assessments of the Patagonia Gold Directors. Strand
Hanson is providing independent financial advice to the Patagonia
Gold Directors for the purposes of Rule 3 of the Code.
-- Accordingly, the Patagonia Gold Directors intend unanimously
to recommend that the Scheme Shareholders vote in favour of the
Scheme at the Court Meeting and that the Patagonia Gold
Shareholders vote in favour of the special resolution necessary to
implement the Scheme at the General Meeting.
-- The Patagonia Gold Directors have irrevocably undertaken to
vote in favour of such resolutions in respect of their own direct
and indirect holdings of, in aggregate, 12,978,887 Patagonia Gold
Shares representing approximately 54.91 per cent. of Patagonia
Gold's existing issued share capital.
-- Hunt has, as a result, received, in total, irrevocable
undertakings to vote (or to procure or direct that the registered
holders of Patagonia Gold Shares of which they are the beneficial
holders or in which they are otherwise interested, vote) in favour
of the Scheme at the Court Meeting and the special resolution
necessary to implement the Scheme to be proposed at the General
Meeting in respect of 12,978,887 Patagonia Gold Shares,
representing, in aggregate, approximately 54.91 per cent. of
Patagonia Gold's existing issued share capital.
-- Further details of the abovementioned irrevocable
undertakings are set out in section 6 of, and Appendix III to, this
Announcement.
-- Patagonia Gold's Non-Executive Chairman and majority
shareholder, Carlos Miguens and Cantomi (a company owned and
controlled by Mr Miguens), together with Hunt's largest
shareholder, Tim Hunt, will be deemed to be Principals of the
Combined Group (together, the "Locked-in Parties"). On the Scheme
becoming Effective, each Locked-in Party will enter into a
Resulting Issuer Escrow Agreement with Hunt and Computershare
Canada, as escrow agent, in respect of, for Carlos Miguens and
Cantomi, the New Hunt Shares to be issued to them pursuant to the
Offer and, in respect of Tim Hunt, his existing Hunt Shares.
Pursuant to the terms of the Resulting Issuer Escrow Agreement and
in accordance with the requirements of the TSX-V, such parties will
agree, inter alia, to place their entire shareholdings of Hunt
Shares into escrow, with the following release provisions:
o In respect of Carlos Miguens and Cantomi: 10 per cent. of such
holdings being released on the listing date of the New Hunt Shares
on the TSX-V with the remaining 90 per cent. of such Hunt Shares
remaining held in escrow, until being released in equal 15 per
cent. tranches at the end of every six month period thereafter,
with the final tranche being released 36 months following the
listing date of the New Hunt Shares on the TSX-V.
o In respect of Tim Hunt: 25 per cent. of such holdings being
released on the listing date of the New Hunt Shares on the TSX-V
with the remaining 75 per cent. of such Hunt Shares remaining held
in escrow, until being released in equal 25 per cent. tranches at
the end of every six month period thereafter, with the final
tranche being released 18 months following the listing date of the
New Hunt Shares on the TSX-V.
Subject to the Scheme becoming Effective, it is expected that
the Locked-in Parties will hold, in aggregate, 190,426,782 Hunt
Shares, representing, in aggregate, approximately 59.89 per cent.
of the issued common shares of the Combined Group on completion of
the Offer.
Commenting on the Offer on behalf of Hunt, Tim Hunt, Chairman
and Chief Executive Officer of Hunt, said:
"Hunt is pleased to align with Patagonia Gold in advancing our
combined projects which we ultimately believe will generate growth
in shareholder value. I believe that the synergies obtainable from
combining the two companies serve that primary objective, as we
share a long-term vision for our projects."
Commenting on the Offer on behalf of Patagonia Gold, Carlos
Miguens, Non-Executive Chairman of Patagonia Gold, said:
"The combination with Hunt represents a highly complementary
strategic fit that we believe will enable Patagonia Gold
Shareholders to benefit as substantial stakeholders in the enlarged
entity with a strong platform for future growth and value
creation."
This summary should be read in conjunction with, and is subject
to, the full text of this Announcement (including the Appendices).
The Offer will be subject to the Conditions and certain further
terms set out in Appendix I to this Announcement and to the full
terms and conditions which will be set out in the Scheme Document.
Appendix II to this Announcement contains the sources of
information and bases of calculation of certain information
contained in this Announcement. Appendix III to this Announcement
contains a summary of the irrevocable undertakings received in
relation to the Offer. Appendix IV to this Announcement contains
definitions of certain terms used in this summary and the following
content of this Announcement.
Any statement of intention, belief or expectation for the
Combined Group following the Effective Date is an intention, belief
or expectation of the Hunt Directors and not of the Patagonia Gold
Directors.
A copy of this Announcement will be made available, subject to
certain restrictions relating to persons resident in Restricted
Jurisdictions, for inspection on Hunt's website at
www.huntmining.com and Patagonia Gold's website at
www.patagoniagold.com, along with certain other documentation
required to be posted online pursuant to the Code.
Enquiries:
Hunt Mining Corp.
Tim Hunt, Chairman and Chief Executive Tel: +1 509 290 5659
Officer
Patagonia Gold Plc
Carlos Miguens, Non-Executive Chairman Tel: +54 11 5278 6950
Christopher van Tienhoven, Chief Executive
Officer
Strand Hanson Limited
(Financial Adviser to Patagonia Gold) Tel: +44 (0)207 409 3494
Stuart Faulkner
Matthew Chandler
James Dance
Jack Botros
Important Notice
Strand Hanson Limited, which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting
exclusively as financial adviser to Patagonia Gold in connection
with the Offer and other matters set out in this Announcement and
for no-one else and will not be responsible to anyone other than
Patagonia Gold for providing the protections afforded to its
clients or for providing advice in relation to the Offer and other
matters set out in this Announcement. Neither Strand Hanson Limited
nor any of its subsidiaries, branches or affiliates owes or accepts
any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Strand Hanson Limited in
connection with this Announcement, any statement contained herein
or otherwise.
Further information
This Announcement is made pursuant to Rule 2.7 of the Code and
is for information purposes only and is not intended to, and does
not, constitute or form part of any offer or invitation, or the
solicitation of an offer, to purchase, otherwise acquire, subscribe
for, sell or otherwise dispose of, any securities or the
solicitation of any vote or approval in any jurisdiction pursuant
to the Offer or otherwise nor will there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law.
The Offer will be made solely pursuant to the disclosures and
information contained in the Scheme Document which, together with
the Forms of Proxy, will contain the full terms and conditions of
the Offer, including details of how Patagonia Gold Shareholders may
vote at the Meetings in respect of the Offer.
Patagonia Gold will prepare the Scheme Document to be
distributed to Patagonia Gold Shareholders (with input from Hunt,
including with respect to information about the New Hunt Shares and
the Combined Group). Patagonia Gold urges Patagonia Gold
Shareholders to read the Scheme Document when it becomes available
because it will contain important information in relation to the
Offer, the New Hunt Shares and the Combined Group. Any vote in
respect of the Scheme or other response in relation to the Offer
should be made only on the basis of the information contained in
the Scheme Document.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or other independent financial
adviser duly authorised under the Financial Services and Markets
Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial
adviser.
Overseas jurisdictions
The release, publication or distribution of this Announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with the applicable requirements may constitute a violation
of the securities laws of any such jurisdiction. In particular, the
ability of persons who are not resident in the United Kingdom to
participate in the Offer may be affected by the laws of the
relevant jurisdictions in which they are located. This Announcement
has been prepared for the purposes of complying with English law
and with the Code and the information disclosed may not be the same
as that which would have been disclosed if this Announcement had
been prepared in accordance with the laws and regulations of
jurisdictions outside the United Kingdom.
The Offer will be implemented in accordance with applicable
English law and will be subject to the applicable requirements of
the Code, the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the Panel and the rules of the London
Stock Exchange (including the AIM Rules) and also, as a result of
Hunt being a Canadian company, listed on the TSX-V, with the
applicable requirements of Canadian laws and the policies of the
TSX-V.
Unless otherwise determined by Hunt or required by the Code, and
permitted by applicable law and regulation, the Offer will not be
made directly or indirectly, in or into, or by the use of
(electronic) mail or any means or instrumentality (including, but
not limited to, facsimile, e-mail or other electronic transmission,
telex or telephone) of interstate or foreign commerce of, or of any
facility of a national, state or other securities exchange of any
Restricted Jurisdiction and no person may vote in favour of the
Scheme by any such use, means, instrumentality or facilities.
Accordingly, copies of this Announcement, the Scheme Document, the
notices of Court Meeting and General Meeting, the Forms of Proxy
and all other documents relating to the Offer are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction
and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward,
distribute or send them in or into or from any Restricted
Jurisdiction. All persons receiving this Announcement (including,
without limitation, custodians, nominees and trustees) should
observe these restrictions and any applicable legal or regulatory
requirements of their jurisdiction and must not mail or otherwise
forward, send or distribute this Announcement in, into or from any
Restricted Jurisdiction. To the fullest extent permitted by
applicable law, the companies and persons involved in the Offer
disclaim any responsibility or liability for the violation of such
restrictions by any person.
The receipt of securities pursuant to the Offer by Overseas
Shareholders may be a taxable transaction under applicable
national, state and local, as well as foreign and other tax laws.
Each Overseas Shareholder is urged to consult their independent
professional adviser regarding the tax consequences of the
Offer.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document.
Additional information for US investors
These materials are not for distribution, directly or
indirectly, in or into the United States (including its territories
and possessions, any State of the United States and the District of
Columbia). These materials do not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in
the United States.
The New Hunt Shares have not been and will not be registered
under the US Securities Act of 1933 (the "US Securities Act") or
under the securities laws of any State or other jurisdiction of the
United States. Accordingly, the New Hunt Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into the United States absent
registration under the US Securities Act or an exemption therefrom.
The New Hunt Shares to be issued pursuant to the Offer are expected
to be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10)
thereof. There will be no public offer of New Hunt Shares in the
United States.
Patagonia Gold is incorporated under the laws of England and
Wales and Hunt is incorporated under the laws of British Columbia.
All of the officers and directors of Patagonia Gold are residents
of countries other than the United States. Whilst a majority of the
officers and directors of Hunt are residents of the United States,
it may not be possible to sue Patagonia Gold and Hunt in a non-US
court for violations of US securities laws. It may also be
difficult to compel Patagonia Gold, Hunt and their respective
affiliates to subject themselves to the jurisdiction and judgment
of a US court.
The Offer, to be implemented by way of the Scheme, is being made
to acquire the entire issued and to be issued share capital of a
company incorporated in England and Wales by way of a scheme of
arrangement provided for under Part 26 of the Companies Act. A
transaction effected by way of a scheme of arrangement is not
subject to the proxy solicitation or tender offer rules under the
US Securities Exchange Act of 1934 (the "US Exchange Act").
Accordingly, the Scheme is subject to the disclosure requirements,
rules and practices applicable in the UK to schemes of arrangement
and takeover offers, which differ from the disclosure requirements,
style and format of US tender offer and proxy solicitation rules.
If Hunt determines to extend the offer into the US, the Offer will
be made in compliance with applicable US laws and regulations.
Financial information included in this Announcement and the Scheme
Document has been or will have been prepared in accordance with
non-US accounting standards that may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with generally accepted accounting
principles in the US. However, if Hunt were to elect to implement
the Offer by means of a contractual offer, rather than the Scheme,
such offer will be made in compliance with all applicable laws and
regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such offer would be made in the US by
Hunt and no one else.
Neither the US Securities and Exchange Commission nor any
securities commission of any state of the United States has
approved or disapproved the Offer, nor have such authorities passed
upon or determined the fairness of the Offer or the adequacy or
accuracy of the information contained in this Announcement. Any
representation to the contrary is a criminal offence in the United
States.
If the Offer is required to be made in the US, it will be done
in compliance with the applicable tender offer rules under the US
Exchange Act.
Cautionary note regarding forward-looking statements
This Announcement contains certain statements that are, or may
be deemed to be, forward-looking statements with respect to the
financial condition, results of operations and business of Hunt
and/or Patagonia Gold and/or the Combined Group and certain plans
and objectives of Hunt with respect thereto. These forward-looking
statements can be identified by the fact that they do not relate to
historical or current facts. Forward-looking statements also often
use words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "hope", "aims", "continue",
"will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments
made by Hunt and/or Patagonia Gold (as applicable) in light of
their experience and perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. By their nature, forward-looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this
Announcement could cause actual results and developments to differ
materially from those expressed in or implied by such
forward-looking statements. Although it is believed that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct and you are therefore cautioned not to place
undue reliance on these forward-looking statements which speak only
as at the date of this Announcement. Hunt does not assume any
obligation to update or correct the information contained in this
Announcement (whether as a result of new information, future events
or otherwise), except as required by the Panel, the Code or by
applicable law.
Forward-looking statements are not guarantees of future
performance. Such forward-looking statements involve known and
unknown risks and uncertainties that could significantly affect
expected results and are based on certain key assumptions. Many
factors could cause actual results to differ materially from those
projected or implied in any forward-looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of
the date of this Announcement. Neither Hunt nor Patagonia Gold
undertakes any obligation to update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except to the extent legally required.
There are several factors which could cause actual results to
differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are changes in the global, political,
economic, business and competitive environments, market and
regulatory forces, future exchange and interest rates, changes in
tax rates, and future business combinations or dispositions.
For a discussion of important factors which could cause actual
results to differ from forward-looking statements in relation to
the Hunt Group or the Patagonia Gold Group, refer to the Filing
Statement and the annual report and accounts of the Patagonia Gold
Group for its financial year ended 31 December 2018,
respectively.
No member of the Hunt Group or the Patagonia Gold Group nor any
of their respective associates, directors, officers, employees or
advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any
forward-looking statements in this Announcement will actually
occur.
Except as expressly provided in this Announcement, no
forward-looking or other statements have been reviewed by the
auditors of the Hunt Group or the Patagonia Gold Group. All
subsequent oral or written forward-looking statements attributable
to any member of the Hunt Group or the Patagonia Gold Group, or any
of their respective associates, directors, officers, employees or
advisers, are expressly qualified in their entirety by the
cautionary statement above.
No profit forecasts, quantified financial benefit statements or
estimates
No statement in this Announcement is intended, or is to be
construed, as a profit forecast, profit estimate or quantified
financial benefit statement for any period. No statement in this
Announcement should be interpreted to mean that earnings per
Patagonia Gold Share or earnings per Hunt Share for the current or
future financial years would necessarily match or exceed the
historical published earnings per Patagonia Gold Share or earnings
per Hunt Share.
Dealing and Opening Position Disclosure requirements of the
Code
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 p.m. (London time) on the 10th Business Day in London
following the commencement of the offer period and, if appropriate,
by no later than 3.30 p.m. (London time) on the 10th Business Day
in London following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m.
(London time) on the Business Day in London following the date of
the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of the offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on websites and availability of hard copies
This Announcement and the documents required to be published
pursuant to Rule 26.1 of the Code will be available free of charge,
subject to certain restrictions relating to persons resident in
Restricted Jurisdictions, on Hunt's website at www.huntmining.com
and on Patagonia Gold's website at www.patagoniagold.com by no
later than 12.00 p.m. (London time) on the Business Day in London
following this Announcement.
Neither the content of any website referred to in this
Announcement nor the content of any website accessible from
hyperlinks is incorporated into, or forms part of, this
Announcement.
A hard copy of this Announcement will be sent to Patagonia Gold
Shareholders (other than Patagonia Gold Shareholders who have
elected to receive electronic communications) in the near future.
Patagonia Gold Shareholders may request a hard copy of this
Announcement by contacting Computershare on +44 (0) 370 873 5856
between 8.30 a.m. to 5.30 p.m., Monday to Friday (except public
holidays in England and Wales) or by submitting a request in
writing to Computershare at Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS13 8AE. Patagonia Gold
Shareholders may also request that all future documents,
announcements and information to be sent to them in relation to the
Offer should be in hard copy form. If you have received this
Announcement in electronic form, copies of this Announcement and
any document or information incorporated by reference into this
Announcement will not be provided unless such a request is
made.
Rule 2.9 information
Pursuant to Rule 2.9 of the Code, Hunt confirms that it has
63,588,798 common shares of no par value each in issue with
International Securities Identification Number CA4456455001.
Pursuant to Rule 2.9 of the Code, Patagonia Gold confirms that it
has 23,634,749 ordinary shares of 1p each in issue with
International Securities Identification Number GB00BF5B8R55.
Electronic Communications
Please be aware that addresses, electronic addresses and certain
other information provided by Patagonia Gold Shareholders, persons
with information rights and other relevant persons for the receipt
of communications from Patagonia Gold may be provided to Hunt
during the Offer Period as required under Section 4 of Appendix 4
of the Code to comply with Rule 2.11(c) of the Code.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Time
All times shown in this Announcement are London times, unless
otherwise stated.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
(INCLUDING THE UNITED STATES) WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
For immediate release
31 May 2019
RECOMMED ALL-SHARE OFFER
for
PATAGONIA GOLD PLC
by
HUNT MINING CORP.
TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER PART 26 OF THE COMPANIES ACT 2006
1. Introduction
The boards of directors of Hunt and Patagonia Gold are pleased
to announce that they have reached agreement on the terms of a
recommended share for share exchange offer for the entire issued
and to be issued share capital of Patagonia Gold by Hunt (the
"Offer"). It is intended that the Offer will be implemented by way
of a Court-sanctioned scheme of arrangement between Patagonia Gold
and its shareholders under Part 26 of the Companies Act (the
"Scheme").
Hunt, a Canadian company listed on the TSX Venture Exchange
(ticker code: HMX), is a precious metals exploration and
development company, with core projects located in the Santa Cruz
Province of Argentina, where it holds mineral rights to 39
properties covering approximately 125,572 hectares. Since 2006,
Hunt has drilled more than 62,000 metres of diamond core, conducted
416 line kilometres of Induced Polarisation/Resistivity geophysical
surveys and collected more than 20,000 surface soil, sediment,
channel, chip and trench samples. Such drilling activity has led to
the identification of six mineralised zones between Hunt's flagship
projects, La Josefina and La Valenciana, and the El Gateado
Project. In March 2006, Hunt's wholly owned subsidiary, CCSA,
acquired the right to conduct exploration on the El Gateado
property for a period of at least 1,000 days, commencing after the
Government issues a formal claim notice, and to retain 100 per
cent. ownership of any mineral deposit found within. Hunt has not
yet received a formal claim notice pertaining to the El Gateado
property.
Hunt continues to drill on established mineralised zones, all of
which remain open to expansion. In May 2016, Hunt acquired the
Martha mine from Coeur Mining Inc. and, in January 2017, it
commenced generating silver concentrate from this mine.
If the Offer is successful, the combination of Patagonia Gold
and Hunt will result in Scheme Shareholders holding 80.0 per cent.
of the Combined Group and Hunt Shareholders holding 20.0 per cent.
of the Combined Group.
2. The Offer
Under the terms of the Offer, which will be subject to the
Conditions and further terms summarised below and in Appendix I to
this Announcement and to the full terms and conditions to be set
out in the Scheme Document, Scheme Shareholders who are on the
register of members of Patagonia Gold at the Scheme Record Time
will be entitled to receive:
for each Scheme Share approximately 10.76 New Hunt Shares
This Exchange Ratio attributes an implied value for the entire
existing issued share capital of Patagonia Gold of approximately
GBP17.18 million (based on the closing price of C$0.115 per Hunt
Share on 30 May 2019, being the last Business Day in Canada prior
to the date of this Announcement and using an exchange rate of
C$0.5874/GBP1).
Following successful completion of the Offer, Scheme
Shareholders will hold 80.0 per cent. of the Combined Group and
Hunt Shareholders will hold 20.0 per cent. of the Combined
Group.
At the value implied by the Exchange Ratio, the Offer represents
a premium of approximately:
-- 35.9 per cent. to the middle market closing price of GBP0.535
per Patagonia Gold Share on 30 May 2019 (being the last Business
Day in London prior to the date of this Announcement); and
-- 76.7 per cent. to the volume weighted average price per
Patagonia Gold Share of GBP0.41135 over the three month period
ended on and including 30 May 2019 (being the last Business Day in
London prior to the date of this Announcement).
The transaction constitutes a reverse takeover for Hunt pursuant
to the rules of the TSX-V. Accordingly, Hunt Shares will be halted
from trading on the TSX-V with effect from market open on 31 May
2019 pending completion of the Offer, when the Combined Group will
resume trading under its proposed new issuer name of Patagonia Gold
Corp. Hunt published a Filing Statement on 30 May 2019 in respect
of the reverse takeover, which is now available on SEDAR
(www.sedar.com), under Hunt's existing issuer profile. Hunt's
largest shareholder, Tim Hunt, has granted shareholder approval for
the acquisition by way of irrevocable written consent in respect of
the, in aggregate, 53,306,925 Hunt Shares owned or controlled by
him, representing approximately 83.83 per cent. of Hunt's existing
issued share capital.
The New Hunt Shares will be issued credited as fully paid and
will rank pari passu in all respects with the existing Hunt Shares
in issue at the time the New Hunt Shares are issued, including the
right to receive and retain dividends and other distributions
declared, made or paid by reference to a record date falling after
the date on which the Scheme becomes Effective.
Fractional entitlements to New Hunt Shares for each Scheme
Shareholder will be rounded down to an integral number and will not
be allotted or issued to holders of Scheme Shares pursuant to the
Scheme. These fractional entitlements will be aggregated and shall,
on a reasonable basis, be sold for the benefit of the Scheme
Shareholders. The equivalent of the net proceeds of such sale of
New Hunt Shares (after deduction of brokerage charges and
associated expenses) will be paid to the Scheme Shareholders
pro-rated to their holdings of Patagonia Gold Shares at the Scheme
Record Time as soon as practicable after receipt, except that if
the aggregate amount due to any Scheme Shareholder in respect of
the amounts due to him/it in respect of fractional entitlements to
New Hunt Shares is less than GBP5.00 such sum will not be
distributed but will instead be aggregated and accrued to the
benefit of Hunt. Neither Hunt nor any other person shall be
responsible or have any liability whatsoever for any loss or damage
(actual or alleged) arising from the terms or the timing of the
sales or the sales or any failure to sell fractional entitlements
to New Hunt Shares.
It is expected that the Scheme Document will be published as
soon as reasonably practicable. It is therefore expected that the
Scheme will become Effective during July 2019, subject to the
Conditions and certain further terms set out in Appendix I to this
Announcement and to be set out in the Scheme Document being
satisfied or waived. The Scheme Document will contain an expected
timetable for the Offer process.
3. Background to and reasons for the Offer
Patagonia Gold, indirectly via its subsidiaries or under option
agreements, holds mineral rights to approximately 300 properties in
several provinces of Argentina, Chile and Uruguay. In particular,
it is one of the largest landholders in the province of Santa Cruz,
Argentina, where its 90 per cent. owned subsidiary, Patagonia Gold
S.A., holds mineral rights to 71 properties covering, in aggregate,
an area of approximately 194,000 hectares and its wholly owned
subsidiary, Minera Minamalu S.A., holds 90 properties covering, in
aggregate, an area of approximately 209,000 hectares.
In light of Hunt's own significant landholding in the province
of Santa Cruz, where it holds mineral rights to 39 properties
covering, in aggregate, an area of approximately 125,572 hectares,
hosting its producing Martha silver and gold mine and associated
processing facilities, the Hunt Board believes that the proposed
combination of Hunt and Patagonia Gold will be highly
complementary, forming a leading, enlarged junior precious metals
explorer and producer in the region with an attractive, high
quality project portfolio. Ongoing production at the Martha mine is
being undertaken without established mineral resources or reserves
and Hunt has not established the economic viability of the
operations at the Martha mine. As a result, there is increased
uncertainty and economic risk of failure associated with these
production activities.
As part of the Combined Group, Patagonia Gold's Cap-Oeste mine,
which produced 42,906 ounces AuEq in the year ended 31 December
2018, prior to being placed on care and maintenance on 28 February
2019 as a result of lower than expected monthly production volumes,
will have access to Hunt's enhanced facilities at its nearby Martha
mine going forward, for the processing of material from any future
development of the Cap-Oeste Underground Mine.
Accordingly, following completion of the Offer, the Hunt Board
believes that shareholders in the Combined Group will benefit from
its expanded, more efficient and higher-grade production
capabilities, via utilisation of Hunt's local processing
facilities, with access to significant mineral resources.
Furthermore, the Combined Group will benefit from anticipated
increased production, utilising the spare capacity at the Martha
Processing Plant, with greater recoveries being achievable than is
currently the case. The Hunt Board believes that this should lead
to more stable future cash flow generation, which, in turn, should
serve to reduce the overall risk profile of the Combined Group and
better position it for future growth and value creation for the
benefit of shareholders in the Combined Group. In addition, Hunt's
underground mining experience can be utilised in any future
development of the Cap-Oeste Underground Mine.
Patagonia Gold has an experienced and proven exploration and
mine-development team, which successfully developed Lomada de Leiva
and the previous open-pit mining operations at Cap-Oeste. It is
envisaged that the Patagonia Gold Group's existing exploration
equipment and operational and technical expertise can be utilised
to continue to advance Calcatreu and further advance the Combined
Group's other exploration projects.
The Hunt Board believes that, as a relatively small gold and
silver exploration, development and production company quoted on
AIM (with the restraints, regulatory burden and costs associated
with maintaining such a quotation), it is difficult for Patagonia
Gold to attract and retain interest and research coverage in its
activities; such that it suffers from a general lack of liquidity
and low trading volumes in its shares. Hunt has experienced similar
challenges and believes that the Combined Group, with a larger and
more diverse shareholder base on the TSX-V, will be better placed
to achieve greater liquidity, which, alongside the Combined Group's
increased market capitalisation and consolidated asset base, should
serve to attract additional research coverage and shareholder
interest.
Patagonia Gold's senior management has significant experience
and expertise of operating in Argentina, as well as maintaining
strong relationships with a number of funders, including Argentine
banks, and is therefore confident in its ability to access and
secure both short and longer-term borrowings for the Combined Group
as and when required. The Hunt Board believes that the operational
synergies highlighted above, together with potential efficiencies
and cost savings in central overheads and operating expenses,
including those arising from the intended cancellation of Patagonia
Gold's admission to trading on AIM and the potential utilisation of
the spare capacity at the Martha Processing Plant, will enable
positive net cash flow generation in the near-term and thereby
facilitate funding of the Combined Group's future exploration and
development activities, most notably at Calcatreu, which has an
existing NI 43-101 compliant mineral resource estimate of 1.14 Moz
AuEq.
4. Recommendation of the Patagonia Gold Directors
The Patagonia Gold Directors, who have been so advised by Strand
Hanson, the Company's financial adviser, as to the financial terms
of the Offer, consider the terms of the Offer to be fair and
reasonable.
In providing its advice to the Patagonia Gold Directors, Strand
Hanson has taken into account the commercial assessments of the
Patagonia Gold Directors. Strand Hanson is providing independent
financial advice to the Patagonia Gold Directors for the purposes
of Rule 3 of the Code.
In addition, the Patagonia Gold Directors consider the terms of
the Offer to be in the best interests of Patagonia Gold
Shareholders as a whole.
Accordingly, the Patagonia Gold Directors intend unanimously to
recommend that Scheme Shareholders vote or procure votes in favour
of the Scheme at the Court Meeting and Patagonia Gold Shareholders
in favour of the special resolution to be proposed at the General
Meeting, which will be convened in connection with the Offer.
5. Background to and reasons for the Patagonia Gold Directors' recommendation
The Patagonia Gold Board believes that the combination of Hunt
and Patagonia Gold represents a strong strategic fit which will be
highly complementary, forming a leading, enlarged, junior precious
metals explorer and producer focussed on the Santa Cruz region of
Argentina. On completion of the Offer, Scheme Shareholders will
hold 80 per cent. of the Combined Group, which is expected to
benefit significantly from expanded and more efficient production
capabilities. In particular, Patagonia Gold's Cap-Oeste underground
resource will gain access to Hunt's Martha Processing Plant, which
is able to treat such mineralisation, which is expected to lead to
more stable cash flow generation from any planned future
development of the Cap-Oeste Underground Mine, which could be
utilised to reduce the Combined Group's debt obligations and invest
in its exploration and development stage projects, thereby
ultimately lowering the risk profile of the Combined Group.
Hunt's Martha Processing Plant, which is located approximately
125km from the Cap-Oeste site, consists of an industry--standard
crushing, grinding and flotation plant, with a maximum throughput
of 480tpd. The Martha Processing Plant is currently operating
under-capacity, processing approximately 240tpd and operating on a
two-weeks-on / two-weeks-off basis. In 2018, Hunt produced 70,800
ounces Ag (2017: 529,300 ounces Ag) and 190 ounces Au (2017: 590
ounces Au) from its Martha mine, with processing recovery rates of
87 per cent. and 84 per cent. (2017: 92 per cent. and 87 per cent.)
respectively. Ongoing production at the Martha mine is being
undertaken without established mineral resources or reserves and
Hunt has not established the economic viability of the operations
at the Martha mine. As a result, there is increased uncertainty and
economic risks of failure associated with these production
activities.
During the year ended 31 December 2018, Patagonia Gold produced
42,906 ounces AuEq from the re-handling of material previously
placed on the leach pad at Cap-Oeste, which did not achieve the
recovery rates initially planned due to high clay content. In
February 2019, the Cap-Oeste mine was put on care and maintenance
as a result of continued low production volumes. The Patagonia Gold
Board believes that the Cap-Oeste Underground Mine can be developed
successfully, which has an existing independent Indicated Resource
estimate of 298,000 ounces AuEq grading at 19.42g/t AuEq at a
cut-off grade of 0.5g/t AuEq, such that this will be a principal
focus of the Combined Group going forward. In addition, the
Combined Group will focus on continued exploration and development
activities at Calcatreu, which has an existing NI 43-101 compliant
mineral resource estimate of 1.14 Moz AuEq.
Utilising the funding available for draw-down under the existing
Cantomi Loan Facility, the Combined Group ultimately intends to
commission a feasibility study for Calcatreu and update the mineral
resource estimate for the project. The Patagonia Gold Board
believes that the Calcatreu project is sufficiently large to
justify a standalone operation and its continued exploration and
development will be a priority for the Combined Group.
In addition, following completion of the Offer, Patagonia Gold's
development team will be able to access Hunt's underground mining
experience which is expected to facilitate and may accelerate the
future development of operations at the Cap-Oeste Underground Mine,
with the objective of transporting any extracted ores to the Martha
Processing Plant once production is on-line.
Whilst the near-term focus will be on the development of the
Cap-Oeste Underground Mine, the Combined Group will also hold
mineral rights to 200 properties in Argentina, covering a total
area of 528,572 hectares, representing significant exploration and
development upside potential. Promising assets within the Combined
Group's portfolio will include Patagonia Gold's Calcatreu project
(as well as its other exploration projects) and Hunt's highly
prospective La Josefina project, which has an existing NI 43-101
compliant mineral resource estimate of approximately 6.5 million
tonnes of measured and Indicated Resource grading at 0.74 g/t Au
and 13.13 g/t Ag, for approximately 156,000 and 2,757,000 contained
Au and Ag ounces, respectively.
As an AIM quoted junior mining company engaged in the
exploration and development of gold and silver projects in
Argentina, Chile and Uruguay, the Patagonia Gold Board has found it
extremely difficult to raise meaningful funds from the UK capital
markets in recent years. Furthermore, the Patagonia Gold Board
believes that any significant short to medium-term equity raises
that could potentially be secured by Patagonia Gold would
potentially only be available at a lower price when compared to the
effective value placed on existing Patagonia Gold Shares pursuant
to the Offer, thereby potentially resulting in a significantly
higher level of dilution for Patagonia Gold Shareholders.
The costs, restraints and regulatory burden associated with
maintaining a quotation on AIM also make it difficult for Patagonia
Gold to justify maintaining such trading facility, particularly as
it is challenging for Patagonia Gold to attract and retain interest
and research coverage in its activities, resulting in a general
lack of liquidity and low trading volumes in Patagonia Gold Shares.
The Patagonia Gold Board believes that the increased scale and more
diverse shareholder base of the Combined Group, should ultimately
lead to enhanced liquidity and wider research coverage in Canada,
where the Patagonia Gold Board believes that the investor audience
is more generally knowledgeable of, familiar with and amenable to
investing in natural resource projects particularly those located
in Latin America.
Views of Patagonia Gold's Directors
The Patagonia Gold Board considers that the intentions of Hunt
as set out in section 9 of this Announcement are consistent with
its own plans and ambitions for the Patagonia Gold Group, including
its plans for retaining Patagonia Gold's head office location in
Buenos Aries and its principal mining assets, and, in particular,
considers that the effects of the implementation of the Offer will
be beneficial to the employees of the Patagonia Gold Group going
forward.
Hunt is offering Patagonia Gold Shareholders the opportunity to
exchange their Patagonia Gold Shares for New Hunt Shares at an
attractive premium to the closing middle market price of a
Patagonia Gold Share on 30 May 2019 (being the latest practicable
date prior to this Announcement) and at an Exchange Ratio where
Scheme Shareholders will hold, in aggregate, 80 per cent. of the
Combined Group, following the Scheme becoming Effective.
In addition, Patagonia Gold's major shareholder and
Non-Executive Chairman, Carlos Miguens, and the other Patagonia
Gold Directors have provided Hunt with irrevocable commitments to
vote in favour of the Scheme at the Court Meeting and in favour of
the special resolution to be proposed at the General Meeting in
respect of their entire direct and indirect shareholdings in the
Company, being, in aggregate, 12,978,887 Patagonia Gold Shares,
representing approximately 54.91 per cent. of Patagonia Gold's
issued share capital (further details of the irrevocable
undertakings obtained by Hunt are set out in Appendix III to this
Announcement).
6. Irrevocable Undertakings and Escrow / Lock-in arrangements
Irrevocable Undertakings
Hunt has received irrevocable undertakings from the Patagonia
Gold Directors who beneficially hold Patagonia Gold Shares as at
the date of this Announcement, namely, Carlos Miguens, Christopher
van Tienhoven, Gonzalo Tanoira and Manuel de Prado, who have
irrevocably undertaken to vote (or procure the vote) in favour of
the Scheme at the Court Meeting and in favour of the special
resolution to be proposed at the General Meeting (or, in the event
that the Offer is implemented by way of a Takeover Offer, to
accept, or procure the acceptance of such an offer) in respect of
their entire direct and indirect holdings of Patagonia Gold Shares,
amounting, in aggregate, to 12,978,887 Patagonia Gold Shares,
representing approximately 54.91 per cent. of the existing issued
share capital of Patagonia Gold.
Further details of these irrevocable undertakings (including the
circumstances in which they will fall away) are set out in Appendix
III to this Announcement.
Escrow / Lock-in arrangements
Patagonia Gold's Non-Executive Chairman and majority
shareholder, Carlos Miguens and Cantomi (a company owned and
controlled by Mr Miguens), together with Hunt's largest
shareholder, Tim Hunt, will be deemed to be Principals of the
Combined Group (together, the "Locked-in Parties"). On the Scheme
becoming Effective, each Locked-in Party will enter into a
Resulting Issuer Escrow Agreement with Hunt and Computershare
Canada, as escrow agent, in respect of, for Carlos Miguens and
Cantomi, the New Hunt Shares to be issued to them pursuant to the
Offer and, in respect of Tim Hunt, his existing Hunt Shares.
Pursuant to the terms of the Resulting Issuer Escrow Agreement and
in accordance with the requirements of the TSX-V, such parties will
agree, inter alia, to place their entire shareholdings of Hunt
Shares into escrow, with the following release provisions:
-- In respect of Carlos Miguens and Cantomi: 10 per cent. of
such holdings being released on the listing date of the New Hunt
Shares on the TSX-V with the remaining 90 per cent. of such Hunt
Shares remaining held in escrow, until being released in equal 15
per cent. tranches at the end of every six month period thereafter,
with the final tranche being released 36 months following the
listing date of the New Hunt Shares on the TSX-V.
-- In respect of Tim Hunt: 25 per cent. of such holdings being
released on the listing date of the New Hunt Shares on the TSX-V
with the remaining 75 per cent. of such Hunt Shares remaining held
in escrow, until being released in equal 25 per cent. tranches at
the end of every six month period thereafter, with the final
tranche being released 18 months following the listing date of the
New Hunt Shares on the TSX-V.
Subject to the Scheme becoming Effective, it is expected that
the Locked-in Parties will hold, in aggregate, 190,426,782 Hunt
Shares, representing, in aggregate, approximately 59.89 per cent.
of the issued common shares of the Combined Group on completion of
the Offer.
7. Information relating to the Hunt Group
Hunt is a Canadian company incorporated in January 2006 under
the laws of Alberta and the Hunt Shares have been listed for
trading on the TSX Venture Exchange, under the ticker code: HMX,
since 5 February 2010 (following a reverse takeover of Sinomar
Capital Corporation by HuntMountain Resources Ltd). Hunt continued
its jurisdiction of incorporation to British Columbia in 2013. Hunt
is a precious metals exploration and development company, with its
core projects located in the Santa Cruz Province of Argentina,
where it holds mineral rights to 39 properties covering
approximately 125,572 hectares.
Since 2006, Hunt has drilled more than 62,000 metres of diamond
core, conducted 416 line kilometres of Induced
Polarisation/Resistivity geophysical surveys and collected more
than 20,000 surface soil, sediment, channel, chip and trench
samples. Such drilling activity has led to the identification of
six mineralised zones between Hunt's flagship projects, La Josefina
and La Valenciana, and the El Gateado Project. In March 2006,
Hunt's wholly owned subsidiary, CCSA, acquired the right to conduct
exploration on the El Gateado property for a period of at least
1,000 days, commencing after the Government issues a formal claim
notice, and to retain 100 per cent. ownership of any mineral
deposit found within. Hunt has not yet received a formal claim
notice pertaining to the El Gateado property.
On 11 May 2016, Hunt completed the acquisition of the Martha
mine, which is located in the province of Santa Cruz, Argentina
from New York Stock Exchange listed Coeur Mining Inc. The
processing plant at the Martha mine had an estimated useful life of
eight years at the time of the acquisition, with the plant expected
to be used to process material from both the Martha and La Josefina
projects.
The Martha property consists of approximately 7,850 hectares of
concessions, various buildings and facilities, surface and
underground mining and support equipment, a nameplate 480 tpd
crushing, grinding and flotation plant, tailings facility, various
stockpiles and waste dumps, employee living and cafeteria quarters
and miscellaneous physical materials. Hunt restored and repaired
the physical assets acquired during the latter part of 2016 and the
first quarter of 2017. In addition, Hunt has access to surface
ranch lands surrounding the mine and mill site comprising
approximately 35,700 hectares. Royal Gold Inc. holds a 2 per cent.
Net Smelter Return (NSR) royalty on all production from the Martha
property; the obligation for which transferred from Coeur to Hunt
as part of the acquisition of the Martha mine. In addition, the
provincial government holds a 3 per cent. pithead royalty from
future production.
Hunt's issued share capital comprises 63,588,798 common shares
which, at the closing share price on the TSX-V on 30 May 2019 of
C$0.115 equates to a market capitalisation of C$7.31 million
(approximately GBP4.30 million at an exchange rate of
C$0.5874/GBP1). In its audited results for the year ended 31
December 2018, Hunt generated approximately US$0.4 million (GBP0.3
million) of revenue and an approximate US$3.6 million (GBP2.9
million) gross loss.
The Hunt Directors comprise Tim Hunt (Chairman of the Hunt Board
and Chief Executive Officer), Darrick Hunt, Alastair Summers and
Alan Chan. Hunt has 31 employees, of which one is situated in
Canada and 30 are situated in Argentina.
8. Information relating to the Patagonia Gold Group
Patagonia Gold was incorporated in England and Wales in May 2000
and its ordinary shares have been admitted to trading on AIM since
March 2003. Patagonia Gold is a precious metals mining company,
with a particular focus on exploration and development in the
Patagonia region of Argentina. The Company is primarily focused on
extracting value from its Cap-Oeste project in Santa Cruz and the
more recently acquired Calcatreu project in Rio Negro. In summary,
Patagonia Gold, indirectly via its subsidiaries or under option
agreements, holds mineral rights to approximately 300 properties in
several provinces of Argentina, Chile and Uruguay and is one of the
largest landholders in the province of Santa Cruz, Argentina.
Cap-Oeste
Cap-Oeste was in production from the end of 2016 until February
2019 and was Patagonia Gold's sole producing asset, following the
cessation of operations at Lomada de Leiva in November 2017. On 15
July 2018, mining from the open pit operations at Cap-Oeste ceased
and the mine was put on care and maintenance. From the end of July
2018, until February 2019, production was being sourced from the
re-handling of the material previously placed on the leach pad
which did not recover as initially planned due to high clay
content, which impacted overall recoveries. In February 2019, the
Patagonia Gold Board decided to cease all production activity at
Cap-Oeste as a result of lower than expected monthly production
volumes. In 2018, Patagonia Gold produced 42,906 ounces AuEq (2017:
20,088 ounces AuEq, excluding production from Lomada de Leiva of
5,917 ounces Au), with an average cash cost of US$507/ounce AuEq
(2017: US$552/ounce AuEq) including depreciation and
amortisation.
Below the existing open pit at Cap-Oeste, there is an estimated
NI 43-101 compliant Indicated Resource of approximately 298,000
ounces AuEq at an average grade of 19.42g/t AuEq at a cut-off grade
of 0.5g/t AuEq. Following completion of the Offer, it is
anticipated that Hunt's underground mining experience can be
utilised to advance the development of an underground mine at
Cap-Oeste in order to access this mineralisation.
Calcatreu
In May 2017, Patagonia Gold announced that it had signed an
exclusive six-month option agreement with a wholly owned subsidiary
of Pan American Silver Corp. (TSX:PAAS) to acquire its Calcatreu
gold-silver project in the Rio Negro province. Such purchase option
was exercised in December 2017 at a cost of US$15 million and
Patagonia Gold completed the acquisition in January 2018.
The Calcatreu project has an independent NI 43-101 compliant
mineral resource estimate of 746,000 ounces AuEq grading at 2.36
g/t AuEq in the Indicated Resource category and 390,000 ounces AuEq
grading at 1.50 g/t AuEq in the Inferred Resource category, and
provides the opportunity to potentially develop a large scale and
long life asset, in a new pro-mining jurisdiction. In September
2018, the necessary permits to commence drilling were granted and a
7,000 metre drilling programme commenced in October 2018. In
February 2019, Patagonia Gold announced the results of the drilling
programme, which confirmed the existence of blind/covered,
mineralised structures suggested by the geophysics. The Patagonia
Gold Board believes that Calcatreu is of sufficient size to justify
a standalone operation and its continued exploration and
development will be a priority for the Combined Group. Utilising
the funding available for draw down under the existing Cantomi Loan
Facility, the Combined Group ultimately intends to commission a
feasibility study for Calcatreu and update the mineral resource
estimate at the project.
Patagonia Gold's issued share capital comprises 23,634,749
ordinary shares which, at the prevailing middle market closing
share price on 30 May 2019 of GBP0.535, equates to a current market
capitalisation of GBP12.65 million. In its audited results for the
year ended 31 December 2018, Patagonia Gold generated approximately
US$48.1 million (GBP38.2 million) of revenue and an approximate
US$22.5 million (GBP17.8 million) gross loss.
The Patagonia Gold Directors comprise Carlos Miguens (Chairman),
Christopher van Tienhoven (Chief Executive Officer), Gonzalo
Tanoira (Non-Executive Director) and Manuel De Prado (Non-Executive
Director). The Patagonia Gold Group has approximately 90 employees,
all of whom are situated in Argentina.
Current trading and prospects
On 19 February 2019, Patagonia Gold announced that, effective
from 28 February 2019, Lomada de Leiva was to be closed and all
activity at the Cap-Oeste project placed on care and maintenance,
due to lower than expected production volumes from both operations.
On 1 March 2019, Patagonia Gold announced that it had entered into
an agreement with Cantomi for the Cantomi Loan Facility of up to
US$15 million. On 11 April 2019, Patagonia Gold released its final
results for the year ended 31 December 2018. Further financial and
other information on Patagonia Gold will be set out in the Scheme
Document.
9. Patagonia Gold's Directors, management, employees and locations
For the reasons set out in section 3 above entitled "Background
to and reasons for the Offer", Hunt sees clear, long-term strategic
benefit to all stakeholders by the combination of these two
complementary businesses.
Hunt recognises the significant skills, technical ability and
Argentinian operating experience of the Patagonia Gold Board, its
management and employees. Accordingly, Hunt expects that certain
members of the Patagonia Gold Board and the majority of Patagonia
Gold's management and employees will play an important role in the
future development of the Combined Group.
Hunt's Board does not plan to make any changes to the research
and development functions of Patagonia Gold, nor does it, save for
the mutually agreed resignations of Patagonia Gold's two
non-executive directors and changes pursuant to the employee
assessment (each as set out below), have any plans to make any
other material changes, either to the continued existence or terms
and conditions of employment or in the balance of skills and
functions of the management and employees of the Patagonia Gold
Group or the Hunt Group. Accordingly, Hunt expects that, following
successful completion of the Offer, Patagonia Gold will operate
principally as it does today, but within the Hunt organisation.
Shortly following the Effective Date, the Directors of the
Combined Group will conduct a thorough assessment of the available
skillsets of the employees of both Patagonia Gold and Hunt, which
is expected to last three months, and, as far as possible,
Patagonia Gold's employees will be integrated into the combined
team. The assessment may result in redundancies where the
businesses have overlapping functions or where operational
efficiencies are identified, however Hunt anticipates that the
majority of its employees will be retained. Hunt will so far as is
possible, following conclusion of the assessment, endeavour to
reallocate any personnel identified as at risk within the Combined
Group to avoid redundancies.
As set out in section 14, Hunt intends to seek the cancellation
of the admission of the Patagonia Gold Shares to trading on AIM
from or shortly after the Effective Date, resulting in Patagonia
Gold's general and administrative team being entirely focussed on
supporting business growth, rather than AIM investor and UK
publicly quoted company related matters.
As set out in section 6 above, on the Scheme becoming Effective,
each of Carlos Miguens, Cantomi and Tim Hunt will enter into a
Resulting Issuer Escrow Agreement with Hunt and Computershare
Canada, as escrow agent, in respect of, for Carlos Miguens and
Cantomi, the New Hunt Shares to be issued to them pursuant to the
Offer and, in respect of Tim Hunt, his existing Hunt Shares.
Pursuant to the terms of the Resulting Issuer Escrow Agreement and
in accordance with the requirements of the TSX-V, such parties will
agree, inter alia, to place their entire shareholdings of Hunt
Shares into escrow, with such shares to be released in tranches, as
detailed in section 6 above.
The Hunt Board has given assurances to the Patagonia Gold
Directors that, following the successful completion of the Offer,
the existing contractual and statutory employment rights, and terms
and conditions of employment, of all Patagonia Gold Group employees
will be fully safeguarded. Patagonia Gold does not have any pension
obligations.
The Hunt Board has also indicated that, following the successful
completion of the Offer, the head office of the Combined Group will
be Patagonia Gold's existing head office in Buenos Aires and that
Hunt's registered office will remain in Vancouver, although the
location in Vancouver may change. Patagonia Gold's UK registered
office is an administrative address only and there are no Patagonia
Gold employees in the United Kingdom. Accordingly, Hunt may change
the registered office of Patagonia Gold following completion of the
Offer but it will remain in the UK and will have no effect on
Patagonia Gold employees.
It is intended that Christopher van Tienhoven will join the
senior management of the Combined Group as Chief Executive Officer,
with Carlos Miguens and Cristian Lopez Saubidet (currently interim
Chief Financial Officer of Patagonia Gold) joining the board of
directors of the Combined Group as Non-Executive Chairman and Chief
Financial Officer respectively. It has also been mutually agreed
that, subject to the Scheme becoming Effective, the appointments of
Gonzalo Tanoira and Manuel De Prado as Non-Executive Directors of
Patagonia Gold will terminate with effect from the Effective Date
and that they will each receive remuneration in line with the
termination provisions of their respective letters of appointment
by way of compensation.
Save for the above, there are no agreements or arrangements
between Hunt and the management or employees of Patagonia Gold in
relation to their ongoing involvement in the business and the Offer
will not be conditional on reaching agreement with such persons.
Hunt has not entered into, and is not in discussions on any
proposals to enter into, any form of incentivisation arrangement
with members of Patagonia Gold's management who are interested in
Patagonia Gold Shares and has no plans so to do. Following
completion of the Offer, Hunt may put in place incentive
arrangements for certain members of Patagonia Gold's management
team. No proposals have been made on the terms of any such
incentive arrangements for relevant management.
Hunt's intentions in relation to the deployment of Patagonia
Gold's fixed assets are aligned with Patagonia Gold's intentions to
utilise Hunt's underground mining experience in order to develop
the Cap-Oeste Underground Mine and it is expected that the Combined
Group will utilise Patagonia Gold's existing equipment to progress
development of its exploration assets. Patagonia Gold's fixed
assets are predominantly based in Argentina and no redeployment of
such assets outside of Argentina is intended to occur after the
Effective Date.
Hunt believes that the integration of the two businesses can be
achieved without significant disruption to either business. Save as
described above, the Offer is not expected to have any impact on
Hunt and its existing business.
In accordance with Rule 2.11 of the Code, Patagonia Gold will
make available to its employees a copy of this Announcement and
will inform its employees of the rights of any employee
representatives under Rule 25.9 of the Code to require that a
separate opinion of any employee representatives on the effects of
the Scheme on employment be appended to the Scheme Document. If and
to the extent that Patagonia Gold is provided with an opinion from
the employee representatives after the date of publication of the
Scheme Document, Patagonia Gold will publish that opinion in
accordance with Rule 25.9 of the Code.
10. Structure of the Offer
It is intended that the Offer will be effected by means of a
Court-sanctioned scheme of arrangement between Patagonia Gold and
Scheme Shareholders under Part 26 of the Companies Act.
The purpose of the Scheme is to provide for Hunt to become the
owner of the entire issued and to be issued ordinary share capital
of Patagonia Gold. This is to be achieved by the transfer by Scheme
Shareholders of all of the Scheme Shares to Hunt, in consideration
for which, Scheme Shareholders will receive the New Hunt Shares on
the basis of the Exchange Ratio. The transfer to Hunt of the Scheme
Shares will result in Patagonia Gold becoming a wholly-owned
subsidiary of Hunt.
To become Effective, the Scheme requires, among other things,
the approval of a majority in number of the Scheme Shareholders
present and voting in person or by proxy at the Court Meeting,
representing not less than 75 per cent. in value of the Scheme
Shares held by such Scheme Shareholders, together with the sanction
of the Court and the passing by the Patagonia Gold Shareholders of
the special resolution necessary to implement the Scheme at the
General Meeting.
The Scheme can only become Effective in accordance with its
terms if all the Conditions have been satisfied or, where relevant,
waived. Subject to satisfaction (or, where applicable, waiver) of
the Conditions, the Scheme is expected to become Effective in
accordance with its terms by the Longstop Date or such later date
(if any) as Hunt or Patagonia Gold may, with the consent of the
Panel, agree and (if required) the Court may allow.
Under the terms of the Scheme, the Scheme Shares being acquired
will be fully paid and free from all liens, equities, charges,
encumbrances, options, rights of pre-emption and any other third
party rights and interests of any nature whatsoever (except for any
arising by operation of law) and together with all rights attaching
or accruing to them, including voting rights and the right to
receive and retain in full all dividends and other distributions
(if any) declared, made or paid on or after the Effective Date.
Further details of the Scheme, including an indicative timetable
for its implementation and notices of the Court Meeting and General
Meeting, will be set out in the Scheme Document, which will also
specify the action to be taken by Patagonia Gold Shareholders.
It is expected that the Scheme Document and the Forms of Proxy
will be published as soon as practicable, but in any event by no
later than 28 days from the date of this Announcement. The Scheme
Document together with the Forms of Proxy will be posted to Scheme
Shareholders and, for information only, to persons with information
rights and holders of options, as soon as practicable. Subject,
among other things, to the satisfaction or waiver of the
Conditions, it is expected that the Scheme will become Effective
during July 2019.
The Scheme will be governed by English law and will be subject
to the jurisdiction of the Court. The Scheme will also be subject
to the applicable requirements of the Code, the Disclosure Guidance
and Transparency Rules of the FCA, the Panel and the rules of the
London Stock Exchange (including the AIM Rules) and also with the
applicable requirements of Canadian laws and the policies of the
TSX-V as a result of Hunt being a Canadian company, listed on the
TSX-V.
11. Patagonia Gold Share Plans
All options to acquire Patagonia Gold Shares that have been
granted and are outstanding under the Patagonia Gold Share Plans
have an exercise price that is greater than the value of a
Patagonia Gold Share implied by the Exchange Ratio. Holders of such
options will be contacted regarding the effect of the Scheme on
their rights under the Patagonia Gold Share Plans. Options that are
not exercised will lapse to the extent unexercised, in due course,
in accordance with their terms, following the Effective Date.
12. Conditions to the Offer
The Offer will be subject to the Conditions and further terms
summarised below and in Appendix I to this Announcement and to be
set out in full in the Scheme Document.
Subject to satisfaction (or, where applicable, waiver) of the
Conditions, the Scheme is expected to become effective in
accordance with its terms during July 2019.
The Offer is conditional on, among other things:
-- the approval of the Scheme by the Scheme Shareholders at the Court Meeting;
-- the passing of the special resolution by the Patagonia Gold
Shareholders necessary to implement the Scheme at the Patagonia
Gold General Meeting;
-- the Scheme becoming unconditional and Effective and being sanctioned by the Court; and
-- Hunt having taken all necessary actions so that the New Hunt
Shares begin trading, and the existing Hunt Shares resume trading,
on the TSX-V by not later than 14 days after the Effective
Date.
Hunt has obtained shareholder approval for the acquisition of
the entire issued and to be issued share capital of Patagonia Gold,
as required by the policies of the TSX-V, by way of written consent
from Hunt's largest shareholder, Tim Hunt, in respect of, in
aggregate, 53,306,925 Hunt Shares owned or controlled by him,
representing approximately 83.83 per cent. of Hunt's existing
issued share capital.
The New Hunt Shares will not be, directly or indirectly, offered
or sold in Canada. Hunt is not required to publish a prospectus or
offering circular in connection with the issuance of the New Hunt
Shares. The transaction constitutes a reverse takeover for Hunt
pursuant to the rules of the TSX-V. Hunt's Shares will be halted
from trading on the TSX-V with effect from market open on 31 May
2019 pending completion of the Offer, when the Combined Group will
resume trading under the proposed new issuer name of Patagonia Gold
Corp. In addition, Hunt published a Filing Statement on 30 May 2019
in respect of the reverse takeover, which is now available on SEDAR
(www.sedar.com), under Hunt's existing issuer profile.
13. Scheme Document
It is expected that the Scheme Document and the Forms of Proxy
will be published as soon as practicable. The Scheme Document will
be made available to all Patagonia Gold Shareholders (other than
Restricted Overseas Persons) at no charge to them.
Patagonia Gold Shareholders are urged to read the Scheme
Document in full because it will contain important information. Any
Patagonia Gold Shareholder who is in any doubt about the content of
this Announcement should consult an appropriate independent
professional adviser in the relevant jurisdiction without
delay.
14. Cancellation of admission to trading on AIM and re-registration
On completion of the Offer, Patagonia Gold will become a wholly
owned subsidiary of Hunt. Prior to the Scheme becoming Effective,
it is intended that an application will be made to the London Stock
Exchange for admission of the Ordinary Shares to trading on AIM to
be cancelled from or shortly after the Effective Date. The last day
of dealings in, and registration of transfers of, the Ordinary
Shares (other than the registration of the transfer of the Scheme
Shares to Hunt pursuant to the Scheme) on AIM is expected to be the
Business Day in London immediately prior to the Effective Date and
no transfers shall be registered after 6.00 p.m. on that date.
On the Effective Date, share certificates in respect of Ordinary
Shares will cease to be valid and entitlements to Ordinary Shares
held within the CREST system will be cancelled or transferred. It
is also intended that shortly after the Effective Date, Patagonia
Gold will be re-registered as a private limited company under the
relevant provisions of the Companies Act and, in due course, Hunt
plans to transfer Patagonia Gold's operating subsidiaries to a Hunt
subsidiary and dissolve or liquidate Patagonia Gold.
Hunt will remain listed on the TSX-V following completion of the
Offer and trading in Hunt Shares is expected to resume following
completion under the proposed new issuer name for the Combined
Group of Patagonia Gold Corp. with symbol PGDC.
15. Settlement
Subject to implementation of the Scheme (and except as provided
in the Scheme Document in relation to Overseas Shareholders),
settlement of the consideration to which any holder of Scheme
Shares is entitled under the Scheme will be effected in the manner
set out below.
15.1 Consideration where Scheme Shares are held in uncertificated form (that is, in CREST)
Unlike Patagonia Gold Shares, New Hunt Shares are not capable of
being directly held, transferred or settled through the usual UK
settlement systems, such as CREST. For this reason, Scheme
Shareholders who hold their Patagonia Gold Shares in uncertificated
form through CREST will not be issued with New Hunt Shares directly
but will instead be issued with Depositary Interests (as explained
in more detail below and subject to the position of Restricted
Overseas Persons).
The Depositary Interest arrangements reflect the economic rights
attached to the New Hunt Shares. However, while the holders of
Depositary Interests will have an entitlement to the underlying New
Hunt Shares, they will not be the registered holders of the New
Hunt Shares. New Hunt Shares to which Scheme Shareholders (other
than Restricted Overseas Persons) will be entitled under the Scheme
will be delivered, held and settled in CREST.
Hunt will enter into the Depositary Deed Poll pursuant to which
it will have, through Computershare Investor Services PLC (to be
appointed as the "Depositary"), a facility whereby Depositary
Interests, representing Hunt Shares, will be issued by the
Depositary to persons entitled in electronic form within the CREST
system. Under the Depositary Deed Poll, the Depositary (or its
Custodian) will hold Hunt Shares in certificated form on trust for
shareholders and it will issue uncertificated Depositary Interests
(on a one-for-one basis) representing those underlying Hunt Shares
and provide the necessary custodian services. The relevant Scheme
Shareholders will retain the beneficial interest in the Hunt Shares
held through the Depositary Interest facility and voting rights,
dividends or any other rights relating to those Hunt Shares, as
well as information to make choices and elections, and to attend
and vote at general meetings, shall be passed on by the Depositary
(or its nominee) in accordance with the terms of the Depositary
Deed Poll. The Depositary Interests can then be held and settled
within the CREST system in the same way as any other CREST
security.
The custodian of the New Hunt Shares is expected to be
Computershare Company Nominees Limited, who will hold those New
Hunt Shares on trust (as bare trustee under English law) for the
uncertificated Scheme Shareholders to whom it will issue a
corresponding number of Depositary Interests.
Each Depositary Interest will be treated as one Common Share for
the purposes of determining eligibility for dividends and voting
entitlements. In respect of any dividends declared, Hunt will
provide the Depositary (or its appointed custodian) with funds for
the payment and the Depositary will transfer the money to the DI
Holders. In respect of voting, the Depositary will cast votes in
respect of the Hunt Shares as directed by the DI Holders which the
relevant Hunt Shares represent. Any dividends paid on the New Hunt
Shares will be paid to holders of Depositary Interests in the
currency in which the relevant holder has elected through CREST to
receive such payments.
The Depositary Interests will be created pursuant to, and issued
on, the terms of the Depositary Deed Poll. Prospective DI Holders
should note that they will have no rights in respect of the
underlying Hunt Shares or the Depositary Interests representing
them against CREST or its subsidiaries. The Depositary Interests
will have the same ISIN as the underlying Hunt Shares.
It should be noted that holders of Depositary Interests may not
have the opportunity to exercise all of the rights and entitlements
available to holders of Hunt Shares, including, for example, the
ability to vote on a show of hands. In relation to voting, it will
be important for holders of Depositary Interests to give prompt
instructions to the Depositary or its nominated custodian, in
accordance with any voting arrangements made available to them, to
vote the underlying Hunt Shares on their behalf or, to the extent
possible, to take advantage of any arrangements enabling holders of
Depositary Interests to vote such Hunt Shares as a proxy of the
Depositary or its nominated Custodian.
Notwithstanding the above, Hunt reserves the right to settle all
or part of such consideration in the manner set out in section 15.2
if, for reasons outside its reasonable control, it is not able to
effect settlement in accordance with this section 15.1.
On the Scheme becoming Effective each holding of Scheme Shares
credited to any stock account in CREST will be disabled and all
Scheme Shares will be removed from CREST in due course.
Pending the crediting of CREST accounts in respect of DIs
representing New Hunt Shares and the despatch of DRS Advices for
New Hunt Shares, temporary documents of title will not be issued.
Euroclear UK & Ireland Ltd, as the operator of the CREST
system, will be instructed to cancel the entitlements to Patagonia
Gold Shares transferred as part of the Scheme.
If a holder of DIs wishes to cancel its Depositary Interest, it
will need to either directly, or through its broker, instruct the
applicable CREST participant to initiate a CREST withdrawal (where
such withdrawal is sent to the Depositary) for the name that is to
appear on the Hunt register of members. The Depositary Interest
will then be cancelled by the Depositary and the related Common
Share(s) will be transferred to the account on the share register
by the Registrar. The Registrar will either send the registered
holder a new DRS Advice if held directly, or if held in nominee
form, by electronically updating the CDS position associated with
the holder's broker.
Computershare will enter into a deed poll, pursuant to which it
will hold (either directly or via a custodian) the New Hunt Shares
as bare trustee and all rights and other securities, property and
cash attributable to the underlying securities pertaining to the
Depositary Interests for the benefit of the holders of the relevant
Depositary Interests (the "Deed Poll"). The Depositary will be
required to pass on to the Depositary Interest holders and, so far
as they are reasonably able, exercise on behalf of the Depositary
Interest holders all rights and entitlements received or to which
they are entitled in respect of the New Hunt Shares which are
capable of being passed on or exercised. Rights and entitlements to
cash distributions, to information, to make choices and elections
and to call for, attend and vote at general meetings and any class
meetings will, subject to the Deed Poll, be required to be passed
on to the underlying holders of the Depositary Interests, together
with any amendments and additional documentation necessary to
effect such passing-on. The Deed Poll will contain customary
provisions excluding and limiting the Depositary's liability to
holders of the Depositary Interests.
In connection with those arrangements, Hunt and Computershare
will also enter into a depositary agreement whereby Computershare
as Depositary is appointed to act as depositary of Hunt upon the
terms of the Deed Poll.
15.2 Consideration where Scheme Shares are held in certificated form
Where, at the Scheme Record Time, a Scheme Shareholder holds
Scheme Shares in certificated form, any New Hunt Shares to which
such Scheme Shareholder is entitled pursuant to the Scheme will be
issued shortly after the Effective Date.
Hunt's constitutional documents allow for Hunt to participate in
the Canadian Direct Registration System ("DRS"). DRS is a system
that allows securities in to be held in "book-entry" (i.e.
registered) form without having a physical security certificate
issued as evidence of ownership. Instead, Hunt Shares are held in
each shareholder's name and registered electronically on Hunt's
records, which are maintained by its transfer agent, Computershare
Canada. Holders of securities in DRS (book-entry form) have all the
traditional rights and privileges as holders of securities in
certificated form.
The use of DRS eliminates the need for physical share
certificates to be safely held and stored and also provides an
audit trail of all transactions within DRS. Use of DRS also removes
the requirement for a shareholder who has lost the share
certificate of a Canadian issuer to obtain a surety bond (at 3 per
cent. of the market value of the shares represented by the lost
certificate) in order to have a replacement certificate issued.
Therefore, Scheme Shareholders who hold Scheme Shares in
certificated form will receive, in hard copy, an initial DRS Advice
setting out the number of New Hunt Shares held by them. Each time a
holder of Hunt Shares held within DRS acquires or disposes of
shares, an updated DRS Advice will be sent to such holder. In
addition, a holder of Hunt Shares held within DRS can review their
account online at any time.
Holders of Hunt Shares held within DRS can transfer their Hunt
Shares to a broker and disposals of Hunt Shares held within DRS can
also be effected through Computershare Canada as Hunt's transfer
agent. Full details of how to undertake such actions in respect of
Hunt Shares held within DRS will accompany the initial DRS
Advice.
Holders of Hunt Shares held within DRS can also at any time
request from Computershare Canada a share certificate for all or a
portion of the Hunt Shares held within DRS. In such an event, a
share certificate representing the requested number of shares will
be sent out by post. A fee may be levied by Computershare Canada
for the production of such a certification.
DRS Advices setting out ownership of such New Hunt Shares will
be despatched, at the recipients' risk, by first class post to
Scheme Shareholders who hold their Scheme Shares in certificated
form as soon as practicable after the Effective Date and, in any
event, no later than 14 days after the Effective Date, to the
address appearing on the register of members of Patagonia Gold at
the Scheme Record Time (or, in the case of joint holders, to the
address of that joint holder whose name stands first in the said
register in respect of such joint holding).
Temporary documents of title will not be issued. The existing
certificate(s) held by every certificated holder of Patagonia Gold
Shares will become null and void pursuant to the Scheme becoming
Effective.
15.3 General
All documents sent to, by, from or on behalf of Scheme
Shareholders in accordance with this section will be sent entirely
at the risk of the person entitled thereto.
Settlement of the consideration to which any Scheme Shareholder
is entitled under the Scheme will be implemented in full in
accordance with the terms set out in this section 15 without regard
to any lien, right of set off, counterclaim or analogous right to
which Hunt may otherwise be, or claim to be, entitled against any
Scheme Shareholder.
Fractional entitlements to New Hunt Shares for each Scheme
Shareholder will be rounded down to an integral number and will not
be allotted or issued to holders of Scheme Shares pursuant to the
Scheme. These fractional entitlements will be aggregated and shall,
on a reasonable basis, be sold for the benefit of the Scheme
Shareholders. The equivalent of the net proceeds of such sale of
New Hunt Shares (after deduction of brokerage charges and
associated expenses) will be paid to the Scheme Shareholders
pro-rated to their holdings of Patagonia Gold Shares at the Scheme
Record Time as soon as practicable after receipt, except that if
the aggregate amount due to any Scheme Shareholder in respect of
the amounts due to him/it in respect of fractional entitlements to
New Hunt Shares is less than GBP5.00 such sum will not be
distributed but will instead be aggregated and accrued to the
benefit of Hunt. Neither Hunt nor any other person shall be
responsible or have any liability whatsoever for any loss or damage
(actual or alleged) arising from the terms or the timing of the
sales or the sales or any failure to sell fractional entitlements
to New Hunt Shares.
16. Offer related arrangements
Confidentiality Agreement
Hunt and Patagonia Gold entered into a confidentiality agreement
on 20 March 2019 (the "Confidentiality Agreement") pursuant to
which each of Hunt and Patagonia Gold has undertaken to keep
confidential information relating to the other party and not
disclose it to third parties (other than to permitted persons)
unless required by law or regulation. These confidentiality
obligations will remain in force for a period of 12 calendar months
from the date of the Confidentiality Agreement.
Resulting Issuer Escrow Agreement
As noted in section 6 above, on the Scheme becoming Effective,
Carlos Miguens, Cantomi and Tim Hunt will enter into a Resulting
Issuer Escrow Agreement with Hunt and Computershare Canada, as
escrow agent, in respect of, for Carlos Miguens and Cantomi, the
New Hunt Shares to be issued to them pursuant to the Offer and, in
respect of Tim Hunt, his existing Hunt Shares. Pursuant to the
terms of the Resulting Issuer Escrow Agreement and in accordance
with the requirements of the TSX-V, such parties will agree, inter
alia, to place their entire shareholdings of Hunt Shares into
escrow, with the following release provisions:
-- In respect of Carlos Miguens and Cantomi: 10 per cent. of
such holdings being released on the listing date of the New Hunt
Shares on the TSX-V with the remaining 90 per cent. of such Hunt
Shares remaining held in escrow, until being released in equal 15
per cent. tranches at the end of every six month period thereafter,
with the final tranche being released 36 months following the
listing date of the New Hunt Shares on the TSX-V.
-- In respect of Tim Hunt: 25 per cent. of such holdings being
released on the listing date of the New Hunt Shares on the TSX-V
with the remaining 75 per cent. of such Hunt Shares remaining held
in escrow, until being released in equal 25 per cent. tranches at
the end of every six month period thereafter, with the final
tranche being released 18 months following the listing date of the
New Hunt Shares on the TSX-V.
17. Disclosure of interests in Patagonia Gold relevant securities
Save for the irrevocable undertakings referred to in section 6
above, as at the close of business on 30 May 2019 (being the latest
practicable date prior to the date of this Announcement), neither
Hunt nor any of the directors of Hunt or any member of the Hunt
Group, nor, so far as the directors of Hunt are aware, any person
acting in concert with Hunt for the purposes of the Offer, had any
interest in, right to subscribe for, or had borrowed or lent any
Patagonia Gold Shares or securities convertible or exchangeable
into Patagonia Gold Shares, nor did any such person have any short
position (whether conditional or absolute and whether in the money
or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require
another person to take delivery, or any dealing arrangement of the
kind referred to in Note 11 of the definition of acting in concert
in the Code, in relation to Patagonia Gold Shares or in relation to
any securities convertible or exchangeable into Patagonia Gold
Shares.
Furthermore, save for the irrevocable undertakings described in
section 6 above, no arrangement exists between Hunt or Patagonia
Gold or a person acting in concert with Hunt or Patagonia Gold in
relation to Patagonia Gold Shares. For these purposes, an
"arrangement" includes any indemnity or option arrangement, any
agreement or any understanding, formal or informal, of whatever
nature, relating to Patagonia Gold Shares which may be an
inducement to deal or refrain from dealing in such securities.
18. General
The Offer will be made on the terms and subject to the
Conditions and certain further terms set out in Appendix I to this
Announcement and to the full terms and conditions which will be set
out in the Scheme Document. The sources of information and bases of
calculations contained in this Announcement are set out in Appendix
II to this Announcement. A summary of the irrevocable undertakings
is set out in Appendix III to this Announcement. Certain terms used
in this Announcement are defined in Appendix IV to this
Announcement.
This Announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR"). Market soundings, as defined in MAR, were taken in respect
of the Offer, with the result that certain persons became aware of
inside information, as permitted by MAR. That inside information is
set out in this Announcement. Therefore, those persons that
received inside information in a market sounding are no longer in
possession of inside information relating to Patagonia Gold and its
securities.
19. Consent
Strand Hanson has given and not withdrawn its consent to the
publication of this Announcement with the inclusion in it of the
references to its name and (where applicable) advice in the form
and context in which they appear.
20. Documents available on a website
Copies of the following documents will be made available on Hunt
and Patagonia Gold's websites at www.huntmining.com and
www.patagoniagold.com, respectively from no later than 12 noon
(London time) on 3 June 2019 up to and including the Effective Date
or the date the Scheme lapses or is withdrawn, whichever is
earlier:
-- a copy of this Announcement;
-- the irrevocable undertakings referred to in section 6 above
and summarised in Appendix III to this Announcement;
-- the Confidentiality Agreement;
-- the audited final results of Hunt for the 12 months ended 2017 and 2018;
-- the Filing Statement;
-- Tim Hunt's irrevocable written consent approving Hunt's reverse takeover; and
-- the written consent provided by Strand Hanson referred to in
section 19 of this Announcement.
Neither the contents of Patagonia Gold's nor Hunt's websites,
nor the content of any other website accessible from hyperlinks on
such websites, is incorporated into or forms part of this
Announcement.
Enquiries:
Hunt Mining Corp.
Tim Hunt, Chairman and Chief Executive Tel: +1 509 290 5659
Officer
Patagonia Gold Plc
Carlos Miguens, Non-Executive Chairman Tel: +54 11 5278 6950
Christopher van Tienhoven, Chief Executive
Officer
Strand Hanson Limited
(Financial Adviser to Patagonia Gold) Tel: +44 (0)207 409 3494
Stuart Faulkner
Matthew Chandler
James Dance
Jack Botros
Important Notice
Strand Hanson Limited, which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting
exclusively as financial adviser to Patagonia Gold in connection
with the Offer and other matters set out in this Announcement and
for no-one else and will not be responsible to anyone other than
Patagonia Gold for providing the protections afforded to its
clients or for providing advice in relation to the Offer and other
matters set out in this Announcement. Neither Strand Hanson Limited
nor any of its subsidiaries, branches or affiliates owes or accepts
any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Strand Hanson Limited in
connection with this Announcement, any statement contained herein
or otherwise.
Further information
This Announcement is made pursuant to Rule 2.7 of the Code and
is for information purposes only and is not intended to, and does
not, constitute or form part of any offer or invitation, or the
solicitation of an offer, to purchase, otherwise acquire, subscribe
for, sell or otherwise dispose of, any securities or the
solicitation of any vote or approval in any jurisdiction pursuant
to the Offer or otherwise nor will there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law.
The Offer will be made solely pursuant to the disclosures and
information contained in the Scheme Document which, together with
the Forms of Proxy, will contain the full terms and conditions of
the Offer, including details of how Patagonia Gold Shareholders may
vote at the Meetings in respect of the Offer.
Patagonia Gold will prepare the Scheme Document to be
distributed to Patagonia Gold Shareholders (with input from Hunt,
including with respect to information about the New Hunt Shares and
the Combined Group). Patagonia Gold urges Patagonia Gold
Shareholders to read the Scheme Document when it becomes available
because it will contain important information in relation to the
Offer, the New Hunt Shares and the Combined Group. Any vote in
respect of the Scheme or other response in relation to the Offer
should be made only on the basis of the information contained in
the Scheme Document.
This Announcement does not constitute a prospectus or prospectus
equivalent document.
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or other independent financial
adviser duly authorised under the Financial Services and Markets
Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial
adviser.
Overseas jurisdictions
The release, publication or distribution of this Announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with the applicable requirements may constitute a violation
of the securities laws of any such jurisdiction. In particular, the
ability of persons who are not resident in the United Kingdom to
participate in the Offer may be affected by the laws of the
relevant jurisdictions in which they are located. This Announcement
has been prepared for the purposes of complying with English law
and with the Code and the information disclosed may not be the same
as that which would have been disclosed if this Announcement had
been prepared in accordance with the laws and regulations of
jurisdictions outside the United Kingdom.
The Offer will be implemented in accordance with applicable
English law and will be subject to the applicable requirements of
the Code, the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the Panel and the rules of the London
Stock Exchange (including the AIM Rules) and also, as a result of
Hunt being a Canadian company, listed on the TSX-V, with the
applicable requirements of Canadian laws and the policies of the
TSX-V.
The Offer may not be made directly or indirectly, in or into, or
by the use of (electronic) mail or any means or instrumentality
(including, but not limited to, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or
foreign commerce of, or of any facility of a national, state or
other securities exchange of any Restricted Jurisdiction and no
person may vote in favour of the Scheme by any such use, means,
instrumentality or facilities. Accordingly, copies of this
Announcement, the Scheme Document, the notices of Court Meeting and
General Meeting, the Forms of Proxy and all other documents
relating to the Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in
or into or from any Restricted Jurisdiction and persons receiving
such documents (including custodians, nominees and trustees) must
not mail or otherwise forward, distribute or send them in or into
or from any Restricted Jurisdiction. All persons receiving this
Announcement (including, without limitation, custodians, nominees
and trustees) should observe these restrictions and any applicable
legal or regulatory requirements of their jurisdiction and must not
mail or otherwise forward, send or distribute this Announcement in,
into or from any Restricted Jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons involved in
the Offer disclaim any responsibility or liability for the
violation of such restrictions by any person.
The receipt of securities pursuant to the Offer by Overseas
Shareholders may be a taxable transaction under applicable
national, state and local, as well as foreign and other tax laws.
Each Overseas Shareholder is urged to consult their independent
professional adviser regarding the tax consequences of the
Offer.
Further details in relation to Overseas Shareholders will be
contained in the Scheme Document.
Additional information for US investors
These materials are not for distribution, directly or
indirectly, in or into the United States (including its territories
and possessions, any State of the United States and the District of
Columbia). These materials do not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in
the United States.
The New Hunt Shares have not been and will not be registered
under the US Securities Act of 1933 (the "US Securities Act") or
under the securities laws of any State or other jurisdiction of the
United States. Accordingly, the New Hunt Shares may not be offered,
sold, resold, delivered, distributed or otherwise transferred,
directly or indirectly, in or into the United States absent
registration under the US Securities Act or an exemption therefrom.
The New Hunt Shares to be issued pursuant to the Offer are expected
to be issued in reliance upon the exemption from the registration
requirements of the US Securities Act provided by Section 3(a)(10)
thereof. There will be no public offer of New Hunt Shares in the
United States.
Patagonia Gold is incorporated under the laws of England and
Wales and Hunt is incorporated under the laws of British Columbia.
All of the officers and directors of Patagonia Gold are residents
of countries other than the United States. Whilst a majority of the
officers and directors of Hunt are residents of the United States,
it may not be possible to sue Patagonia Gold and Hunt in a non-US
court for violations of US securities laws. It may also be
difficult to compel Patagonia Gold, Hunt and their respective
affiliates to subject themselves to the jurisdiction and judgment
of a US court.
The Offer, to be implemented by way of the Scheme, is being made
to acquire the entire issued and to be issued share capital of a
company incorporated in England and Wales by way of a scheme of
arrangement provided for under Part 26 of the Companies Act. A
transaction effected by way of a scheme of arrangement is not
subject to the proxy solicitation or tender offer rules under the
US Securities Exchange Act of 1934 (the "US Exchange Act").
Accordingly, the Scheme is subject to the disclosure requirements,
rules and practices applicable in the UK to schemes of arrangement
and takeover offers, which differ from the disclosure requirements,
style and format of US tender offer and proxy solicitation rules.
If Hunt determines to extend the offer into the US, the Offer will
be made in compliance with applicable US laws and regulations.
Financial information included in this Announcement and the Scheme
Document has been or will have been prepared in accordance with
non-US accounting standards that may not be comparable to financial
information of US companies or companies whose financial statements
are prepared in accordance with generally accepted accounting
principles in the US. However, if Hunt were to elect to implement
the Offer by means of a contractual offer, rather than the Scheme,
such offer will be made in compliance with all applicable laws and
regulations, including Section 14(e) of the US Exchange Act and
Regulation 14E thereunder. Such offer would be made in the US by
Hunt and no one else.
Neither the US Securities and Exchange Commission nor any
securities commission of any state of the United States has
approved or disapproved the Offer, nor have such authorities passed
upon or determined the fairness of the Offer or the adequacy or
accuracy of the information contained in this Announcement. Any
representation to the contrary is a criminal offence in the United
States.
If the Offer is required to be made in the US, it will be done
in compliance with the applicable tender offer rules under the US
Exchange Act.
Cautionary note regarding forward-looking statements
This Announcement contains certain statements that are, or may
be deemed to be, forward-looking statements with respect to the
financial condition, results of operations and business of Hunt
and/or Patagonia Gold and/or the Combined Group and certain plans
and objectives of Hunt with respect thereto. These forward-looking
statements can be identified by the fact that they do not relate to
historical or current facts. Forward-looking statements also often
use words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "hope", "aims", "continue",
"will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments
made by Hunt and/or Patagonia Gold (as applicable) in light of
their experience and perception of historical trends, current
conditions, future developments and other factors they believe
appropriate. By their nature, forward-looking statements involve
risk and uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this
Announcement could cause actual results and developments to differ
materially from those expressed in or implied by such
forward-looking statements. Although it is believed that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct and you are therefore cautioned not to place
undue reliance on these forward-looking statements which speak only
as at the date of this Announcement. Hunt does not assume any
obligation to update or correct the information contained in this
Announcement (whether as a result of new information, future events
or otherwise), except as required by the Panel, the Code or by
applicable law.
Forward-looking statements are not guarantees of future
performance. Such forward-looking statements involve known and
unknown risks and uncertainties that could significantly affect
expected results and are based on certain key assumptions. Many
factors could cause actual results to differ materially from those
projected or implied in any forward-looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of
the date of this Announcement. Neither Hunt nor Patagonia Gold
undertakes any obligation to update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except to the extent legally required.
There are several factors which could cause actual results to
differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are changes in the global, political,
economic, business and competitive environments, market and
regulatory forces, future exchange and interest rates, changes in
tax rates and future business combinations or dispositions.
For a discussion of important factors which could cause actual
results to differ from forward-looking statements in relation to
the Hunt Group or the Patagonia Gold Group, refer to the Filing
Statement and the annual report and accounts of the Patagonia Gold
Group for its financial year ended 31 December 2018,
respectively.
No member of the Hunt Group or the Patagonia Gold Group nor any
of their respective associates, directors, officers, employees or
advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any
forward-looking statements in this Announcement will actually
occur.
Except as expressly provided in this Announcement, no
forward-looking or other statements have been reviewed by the
auditors of the Hunt Group or the Patagonia Gold Group. All
subsequent oral or written forward-looking statements attributable
to any member of the Hunt Group or the Patagonia Gold Group, or any
of their respective associates, directors, officers, employees or
advisers, are expressly qualified in their entirety by the
cautionary statement above.
No profit forecasts, quantified financial benefit statements or
estimates
No statement in this Announcement is intended, or is to be
construed, as a profit forecast, profit estimate or quantified
financial benefit statement for any period. No statement in this
Announcement should be interpreted to mean that earnings per
Patagonia Gold Share or earnings per Hunt Share for the current or
future financial years would necessarily match or exceed the
historical published earnings per Patagonia Gold Share or earnings
per Hunt Share.
Dealing and Opening Position Disclosure requirements of the
Code
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 p.m. (London time) on the 10th Business Day in London
following the commencement of the offer period and, if appropriate,
by no later than 3.30 p.m. (London time) on the 10th Business Day
in London following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in
the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 p.m.
(London time) on the Business Day in London following the date of
the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of the offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on websites and availability of hard copies
This Announcement and the documents required to be published
pursuant to Rule 26.1 of the Code will be available free of charge,
subject to certain restrictions relating to persons resident in
Restricted Jurisdictions, on Hunt's website at www.huntmining.com
and on Patagonia Gold's website at www.patagoniagold.com by no
later than 12.00 p.m. (London time) on the Business Day in London
following this Announcement.
Neither the content of any website referred to in this
Announcement nor the content of any website accessible from
hyperlinks is incorporated into, or forms part of, this
Announcement.
A hard copy of this Announcement will be sent to Patagonia Gold
Shareholders (other than Patagonia Gold Shareholders who have
elected to receive electronic communications) in the near future.
Patagonia Gold Shareholders may request a hard copy of this
Announcement by contacting Computershare on +44 (0) 370 873 5856
between 8.30 a.m. to 5.30 p.m., Monday to Friday (except public
holidays in England and Wales) or by submitting a request in
writing to Computershare at Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS13 8AE. Patagonia Gold
Shareholders may also request that all future documents,
announcements and information to be sent to them in relation to the
Offer should be in hard copy form. If you have received this
Announcement in electronic form, copies of this Announcement and
any document or information incorporated by reference into this
Announcement will not be provided unless such a request is
made.
Electronic Communications
Please be aware that addresses, electronic addresses and certain
other information provided by Patagonia Gold Shareholders, persons
with information rights and other relevant persons for the receipt
of communications from Patagonia Gold may be provided to Hunt
during the Offer Period as required under Section 4 of Appendix 4
of the Code to comply with Rule 2.11(c) of the Code.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
Time
All times shown in this Announcement are London times, unless
otherwise stated.
APPIX I
CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER
Part A: Conditions of the Scheme and the Offer
1. The Offer is conditional upon the Scheme becoming
unconditional and becoming Effective by no later than the Longstop
Date or such later date (if any) as Hunt and Patagonia Gold may
agree and (if required) the Court and the Panel may allow.
2. The Scheme is subject to the following conditions:
2.1 the approval of the Scheme by a majority in number
representing not less than 75 per cent. in value of Scheme
Shareholders who are on the register of members of Patagonia Gold
at the Voting Record Time, (or the relevant class or classes
thereof, if applicable) present and voting, whether in person or by
proxy, at the Court Meeting and at any separate class meeting which
may be required by the Court (or at any adjournment thereof) and
such meeting (or at any adjournment thereof) being held on or
before the 22nd day after the expected date of the Court Meeting as
set out in the Scheme Document (or such later date, if any, as may
be agreed by Hunt and Patagonia Gold and which the Court may
allow);
2.2 all resolutions necessary to approve and implement the
Scheme being duly passed at the Patagonia Gold General Meeting (or
any adjournment thereof) and such Patagonia Gold General Meeting
being held on or before the 22nd day after the expected date of the
Patagonia Gold General Meeting as set out in the Scheme Document
(or such later date, if any, as may be agreed by Hunt and Patagonia
Gold and which the Court may allow); and
2.3 the sanction of the Scheme by the Court (with or without
modification but subject to any modification being on terms
acceptable to Hunt and Patagonia Gold) and the delivery of a copy
of the Court Order to the Registrar of Companies and the Court
hearing to sanction the Scheme being held on or before the 22nd day
after the expected date of the Court sanction hearing as set out in
the Scheme Document (or such later date, if any, as may be agreed
by Hunt and Patagonia Gold and the Court may allow).
3. In addition, subject as stated in Part B below and to the
requirements of the Panel in accordance with the Code, the Offer is
conditional upon the following Conditions and, accordingly, the
sanction of the Scheme by the Court will not be sought and the
Court Order will not be delivered to the Registrar of Companies
unless such Conditions (as amended, if appropriate) have been
satisfied or, where relevant, waived:
Admission of the New Hunt Shares
3.1 Hunt having taken all necessary actions (i.e. submission of
an application for listing of the New Hunt Shares to the TSX-V by
not later than three weeks prior to the Effective Date) so that the
New Hunt Shares begin trading, and the existing Hunt Shares resume
trading, on the TSX-V by not later than 14 days after the Effective
Date;
Notifications, waiting periods and Authorisations
3.2 other than in relation to the matters referred to in
Conditions 1, 2 and 3.1, all material notifications, filings or
applications which are necessary under any applicable legislation
or regulation of any relevant jurisdiction in connection with the
Offer having been made or will be made and all necessary waiting
periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired,
lapsed or been terminated (as appropriate), and all statutory and
regulatory obligations in any jurisdiction having been complied
with in each case in respect of the Offer and all Authorisations
necessary in any jurisdiction for or in respect of the Offer or the
control or management of Patagonia Gold by any member of the Wider
Hunt Group, having been obtained from all appropriate Third Parties
or (without prejudice to the generality of the foregoing) from any
person or bodies with whom any member of the Wider Patagonia Gold
Group or the Wider Hunt Group has entered into contractual
arrangements and all such Authorisations necessary to carry on the
business of any member of the Wider Patagonia Gold Group in any
relevant jurisdiction which is material in the context of the Wider
Patagonia Gold Group taken as a whole having been obtained and all
such Authorisations remaining in full force and effect at the time
at which the Offer becomes otherwise Effective and there being no
notice or intimation of an intention to revoke, suspend, restrict,
modify or not to renew such Authorisations;
General antitrust and regulatory
3.3 other than in relation to the matters referred to in
Conditions 1, 2 and 3.1, no antitrust regulator or Third Party
having given notice of a decision to take, institute, implement or
threaten any action, proceeding, suit, investigation, enquiry or
reference, or having required any action to be taken or otherwise
having done anything, or having enacted, made or proposed any
statute, regulation, decision, order or change to published
practice (and in each case, not having withdrawn the same) which
would or might reasonably be expected to:
3.3.1 require, prevent or materially delay the divestiture or
alter the terms envisaged for such divestiture by any member of the
Wider Hunt Group or by any member of the Wider Patagonia Gold Group
of all or any part of its businesses, assets or property or impose
any limitation on the ability of all or any of them to conduct
their businesses (or any part thereof) or to own, control or manage
any of their assets or properties (or any part thereof) which, in
any such case, is material in the context of the Wider Patagonia
Gold Group or the Wider Hunt Group, as the case may be, in either
case, taken as a whole;
3.3.2 require any member of the Wider Hunt Group or the Wider
Patagonia Gold Group to acquire or offer to acquire a material
number of shares, other securities (or the equivalent) or interest
in any member of the Wider Patagonia Gold Group or any asset owned
by any Third Party (other than in the implementation of the Offer),
where such acquisition would be material in the context of the
Wider Patagonia Gold Group taken as a whole;
3.3.3 impose any material limitation on, or result in a material
delay in, the ability of any member of the Wider Hunt Group
directly or indirectly to acquire, hold or to exercise effectively
all or any rights of ownership in respect of shares or other
securities in Patagonia Gold or on the ability of any member of the
Wider Patagonia Gold Group or any member of the Wider Hunt Group
directly or indirectly to hold or exercise effectively all or any
rights of ownership in respect of shares or other securities (or
the equivalent) in, or to exercise voting or management control
over, any member of the Wider Patagonia Gold Group to an extent
which is material in the context of the Wider Patagonia Gold Group
or the Wider Hunt Group, in either case, taken as a whole;
3.3.4 make the Offer, its implementation or the acquisition or
proposed acquisition of any shares or other securities in, or
control or management of, Patagonia Gold by any member of the Wider
Hunt Group void, unenforceable and/or illegal under the laws of any
relevant jurisdiction, or otherwise prevent or prohibit, restrict,
restrain, or delay or otherwise interfere with the implementation
of, or impose additional conditions or obligations with respect to,
or otherwise challenge, impede, interfere with the Offer or the
acquisition or proposed acquisition of any shares or other
securities in, or control or management of, Patagonia Gold by any
member of the Wider Hunt Group; or
3.3.5 impose any material limitation on the ability of any
member of the Wider Hunt Group or any member of the Wider Patagonia
Gold Group to conduct, integrate or co-ordinate all or any part of
its business with all or any part of the business of any other
member of the Wider Hunt Group and/or the Wider Patagonia Gold
Group in a manner which is materially adverse to the Wider
Patagonia Gold Group or the Wider Hunt Group, as the case may be,
in either case, taken as a whole,
and all applicable waiting and other time periods (including any
extensions thereof) during which any such antitrust regulator or
Third Party could decide to take, institute, implement or threaten
any such action, proceeding, suit, investigation, enquiry or
reference or take any other step under the laws of any jurisdiction
in respect of the Offer or the acquisition or proposed acquisition
of any Patagonia Gold Shares or otherwise intervene having expired,
lapsed or been terminated;
Certain matters arising as a result of any arrangement,
agreement, etc.
3.4 except as Disclosed, there being no provision of any
arrangement, agreement, licence, permit or other instrument to
which any member of the Wider Patagonia Gold Group is a party or by
or to which any such member or any of its assets is or may be
bound, entitled or be subject or any event of circumstance which,
in consequence of the Offer or the acquisition or proposed
acquisition by any member of the Wider Hunt Group of any shares or
other securities (or the equivalent) in Patagonia Gold or
otherwise, would or might reasonably be expected to result in (in
each case to an extent which is material in the context of the
Wider Patagonia Gold Group taken as a whole):
3.4.1 any monies borrowed by, or other indebtedness actual or
contingent of, any such member of the Wider Patagonia Gold Group
being or becoming repayable or being capable of being declared
repayable immediately or prior to its or their stated maturity or
the ability of any such member to borrow monies or incur any
indebtedness being inhibited or becoming capable of being
withdrawn;
3.4.2 save in the ordinary course of business, the creation or
enforcement of any mortgage, charge or other security interest over
the whole or any part of the business, property or assets of any
member of the Wider Patagonia Gold Group or any such security
(whenever arising or having arisen) being enforced or becoming
enforceable;
3.4.3 any such arrangement, agreement, licence or other
instrument being terminated or adversely modified or any action
being taken of an adverse nature or any obligation or liability
arising thereunder;
3.4.4 the rights, liabilities, obligations or interests of any
member of the Wider Patagonia Gold Group in the business of any
such member under any such arrangement, agreement, permit or
instrument with any other person or body or firm or company (or any
arrangement or agreement relating to any such interests or
business) being terminated, or adversely modified or affected;
3.4.5 any member of the Wider Patagonia Gold Group ceasing to be
able to carry on business under any name under which it presently
carries on business;
3.4.6 the value of, or the financial or trading position or
prospects of, any member of the Wider Patagonia Gold Group being
prejudiced or adversely affected; or
3.4.7 the creation or acceleration of any liability (actual or
contingent) by any member of the Wider Patagonia Gold Group other
than trade creditors or other liabilities incurred in the ordinary
course of business,
and no event having occurred which, under any provision of any
arrangement, agreement, licence or other instrument to which any
member of the Wider Patagonia Gold Group is a party, or to which
any such member or any of its assets may be bound, entitled or
subject, could result in any of the events or circumstances as are
referred to in Conditions 3.4.1 to 3.4.7 (inclusive) of this
condition;
Certain events occurring since 31 December 2018
3.5 except as Disclosed, no member of the Wider Patagonia Gold
Group having since 31 December 2018:
3.5.1 issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue of
additional shares of any class, or securities convertible into, or
exchangeable for, or rights, warrants or options to subscribe for
or acquire, any such shares, securities or convertible securities
or transferred or sold or agreed to transfer or sell or authorised
or proposed the transfer or sale of Patagonia Gold Shares out of
treasury (except, where relevant, as between Patagonia Gold and the
wholly owned subsidiaries of Patagonia Gold or between the wholly
owned subsidiaries of Patagonia Gold); -
3.5.2 recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus, dividend or other
distribution (whether payable in cash or otherwise) other than
dividends (or other distributions whether payable in cash or
otherwise) lawfully paid or made by any wholly owned subsidiary of
Patagonia Gold to Patagonia Gold or any of its wholly owned
subsidiaries;
3.5.3 other than pursuant to the Offer (and except for
transactions between Patagonia Gold and its wholly owned
subsidiaries or between the wholly owned subsidiaries of Patagonia
Gold and transactions in the ordinary course of business),
implemented, effected, authorised or proposed or announced its
intention to implement, effect, authorise or propose any merger,
demerger, reconstruction, amalgamation, scheme, commitment or
acquisition or disposal of assets or shares or loan capital;
3.5.4 (except for transactions between Patagonia Gold and its
wholly owned subsidiaries or between the wholly owned subsidiaries
of Patagonia Gold) disposed of, or transferred, mortgaged or
created any security interest over any material asset or any right,
title or interest in any material asset or authorised, proposed or
announced any intention to do so, in each case other than in the
ordinary course of business and to an extent which is material in
the context of the Wider Patagonia Gold Group taken as a whole;
3.5.5 (except for transactions between Patagonia Gold and its
wholly owned subsidiaries or between the wholly owned subsidiaries
of Patagonia Gold and transactions in the ordinary course of
business) issued, authorised or proposed or announced an intention
to authorise or propose, the issue of or made any change in or to
the terms of any debentures or become subject to any contingent
liability or incurred or increased any indebtedness;
3.5.6 entered into or varied or authorised, proposed or
announced its intention, other than in the ordinary course of
business, to enter into or vary any material contract, arrangement,
agreement, transaction or commitment (whether in respect of capital
expenditure or otherwise) which is of a long term, unusual or
onerous nature or magnitude or which is or which involves an
obligation of a nature or magnitude which is reasonably likely to
be restrictive on the business of any member of the Wider Patagonia
Gold Group, in either case to an extent which is material in the
context of the Wider Patagonia Gold Group taken as a whole;
3.5.7 entered into or varied the terms of, or made any offer
(which remains open for acceptance) to enter into or vary the terms
of any contract, service agreement, commitment or arrangement with
any director of any member of the Wider Patagonia Gold Group, other
than in the ordinary course of business;
3.5.8 purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities
or reduced or, except in respect of the matters mentioned in
Condition 3.5.1 above, made any other change to any part of its
share capital;
3.5.9 waived, compromised or settled any claim, other than in
the ordinary course of business, which is material in the context
of the Wider Patagonia Gold Group taken as a whole;
3.5.10 terminated or varied the terms of any agreement or
arrangement between any member of the Wider Patagonia Gold Group
and any other person in a manner which would or could have a
material adverse effect on the financial position of the Wider
Patagonia Gold Group taken as a whole;
3.5.11 made any alteration to its memorandum or articles of
association or other incorporation documents;
3.5.12 been unable, or admitted in writing that it is unable, to
pay its debts or commenced negotiations with one or more of its
creditors with a view to rescheduling or restructuring any of its
indebtedness, or having stopped or suspended (or threatened to stop
or suspend) payment of its debts generally or ceased or threatened
to cease carrying on all or a substantial part of its business;
or
3.5.13 (other than in respect of a member of the Wider Patagonia
Gold Group which is dormant and was solvent at the relevant time)
taken or proposed any steps, corporate action or had any legal
proceedings instituted or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness, its
winding-up (voluntary or otherwise), dissolution, reorganisation or
for the appointment of a receiver, administrator, manager,
administrative receiver, trustee or similar officer of all or any
material part of its assets or revenues or any analogous or
equivalent steps or proceedings in any jurisdiction or appointed
any analogous person in any jurisdiction or had any such person
appointed;
No adverse change, litigation, regulatory enquiry or similar
3.6 except as Disclosed, since 31 December 2018 there having been:
3.6.1 no adverse change in the business, assets, financial or
trading position or profits or prospects of any member of the Wider
Patagonia Gold Group to an extent which is material in the context
of the Wider Patagonia Gold Group taken as a whole;
3.6.2 no litigation, arbitration proceedings, prosecution or
other legal proceedings having been announced or instituted by or
against or remaining outstanding against or in respect of, any
member of the Wider Patagonia Gold Group, in each case to an extent
which is material in the context of the Wider Patagonia Gold Group
taken as a whole;
3.6.3 no enquiry, review or investigation by, or complaint or
reference to, any Third Party against or in respect of any member
of the Wider Patagonia Gold Group having been threatened, announced
or instituted or remaining outstanding by, against or in respect of
any member of the Wider Patagonia Gold Group, in each case to an
extent which is material in the context of the Wider Patagonia Gold
Group taken as a whole; and
3.6.4 no contingent or other liability having arisen or been
incurred which might reasonably be expected to adversely affect any
member of the Wider Patagonia Gold Group to an extent which is
material in the context of the Wider Patagonia Gold Group taken as
a whole; and
Other matters
3.7 except as Disclosed, Hunt not having discovered in relation
to the Wider Patagonia Gold Group:
3.7.1 that any financial or business or other information
concerning the Wider Patagonia Gold Group disclosed at any time,
whether publicly or otherwise, by or on behalf of any member of the
Wider Patagonia Gold Group, to Hunt or its advisers is misleading
or contains a material misrepresentation of fact or omits to state
a fact necessary to make the information contained therein not
misleading which is, or might reasonably be expected to be,
material in the context of the Wider Patagonia Gold Group taken as
a whole;
3.7.2 any member of the Wider Patagonia Gold Group or any person
that performs or has performed services for or on behalf of any
such company is or has engaged in any activity, practice or conduct
which would constitute an offence under the Bribery Act 2010 or any
other applicable anti-corruption legislation in any jurisdiction;
or
3.7.3 any asset of any member of the Wider Patagonia Gold Group
constitutes criminal property as defined by section 340(3) of the
Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that
definition).
Part B: Certain further terms of the Offer
4. Hunt reserves the right, subject to the prior consent of the
Panel, to elect to implement the Offer by way of a Takeover Offer.
In such event, such offer will be implemented on the same terms and
conditions subject to appropriate amendments to reflect the change
in method of effecting the Offer, which will include an acceptance
condition set at 90 per cent. (or such lesser percentage, being
more than 50 per cent., as Hunt may decide) of the voting rights
then exercisable at a general meeting of Patagonia Gold, including,
for this purpose, any such voting rights attaching to Patagonia
Gold Shares that are unconditionally allotted or issued by
Patagonia Gold, before the Offer becomes or is declared
unconditional as to acceptances, whether pursuant to the exercise
of any outstanding subscription or conversion rights or
otherwise.
5. To the extent permitted by law and subject to the
requirements of the Panel, Hunt reserves the right to waive in
whole or in part, but subject to the provisions of the Code, all or
any of the above Conditions 3.2 to 3.7 (inclusive).
6. The Offer will lapse and the Scheme will not proceed if,
insofar as the Offer or any matter arising from or relating to the
Offer or Scheme constitutes a concentration with a Community
dimension within the scope of the EC Merger Regulation, the
European Commission either initiates proceedings under Article
6(1)(c) of the EC Merger Regulation or makes a referral to a
competent authority in the United Kingdom under Article 9(1) of the
EC Merger Regulation and there is then a CMA Phase 2 Reference
before the date of the Court Meeting.
7. The Offer will lapse if the Scheme does not become Effective
by the Longstop Date or such later date (if any) as Hunt and
Patagonia Gold may agree and (if required) the Court and the Panel
may allow.
8. If Hunt is required by the Panel to make an offer for
Patagonia Gold Shares under the provisions of Rule 9 of the Code,
Hunt may make such alterations to any of the above Conditions and
terms of the Offer as are necessary to comply with the provisions
of that Rule.
9. The Scheme and any dispute or claim arising out of, or in
connection with it (whether contractual or non-contractual in
nature) will be governed by English law and will be subject to the
jurisdiction of the Courts of England. The Scheme will be
implemented in accordance with applicable English law and will be
subject to the applicable requirements of the Code, the Disclosure
Guidance and Transparency Rules of the FCA, the Panel and the rules
of the London Stock Exchange (including the AIM Rules) and also
with the applicable requirements of Canadian laws and the policies
of the TSX-V as a result of Hunt being a Canadian company, listed
on the TSX-V.
10. The Scheme Shares acquired under the Offer shall be acquired
fully paid and free from all liens, equities, charges,
encumbrances, options, rights of pre-emption and any other third
party rights and interests of any nature and together with all
rights attaching or accruing to them, including voting rights and
the right to receive and retain in full all dividends and other
distributions (if any) declared, made or paid on or after the
Effective Date.
11. Hunt will be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled any of Conditions 3.2 to 3.7 (inclusive) by a date
earlier than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Offer may at such
earlier date have been waived or fulfilled and that there are at
such earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
12. The availability of the New Hunt Shares to persons not
resident in the UK may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the UK should inform
themselves about and observe any applicable requirements. The New
Hunt Shares to be issued pursuant to the Offer have not been and
will not be registered under the US Securities Act, nor under any
of the relevant securities laws of any other Restricted
Jurisdiction. Accordingly, the New Hunt Shares may not be offered,
sold or delivered, directly or indirectly, in any Restricted
Jurisdiction, except pursuant to exemptions from the applicable
requirements of any such jurisdiction.
13. The Offer is to be implemented by means of a
Court-sanctioned scheme of arrangement between Patagonia Gold and
the Scheme Shareholders under Part 26 of the Companies Act and the
Scheme is subject to the jurisdiction of the Court and is subject
to the Conditions and additional further terms in this Appendix
I.
14. If any dividend or other distribution or return of capital
is proposed, declared, made, paid or becomes payable by Patagonia
Gold in respect of a Scheme Share on or after the date of this
Announcement and prior to the Scheme becoming Effective, Hunt
reserves the right to reduce the number of New Hunt Shares to be
issued as consideration by up to the amount per Scheme Share of
such dividend, distribution or return of capital except where the
Scheme Share is or will be acquired pursuant to the Scheme on a
basis which entitles Hunt to receive the dividend, distribution or
return of capital and to retain it. If Hunt exercises such right to
reduce the value of the consideration payable for each Scheme Share
by the amount per Scheme Share of any dividend that has not been
paid, the Scheme Shareholders shall be entitled to receive and
retain such dividend when paid.
15. If any such dividend or distribution is paid or made after
the date of the Announcement and Hunt exercises its rights
described above, any reference in this Announcement to the
consideration payable under the Scheme shall be deemed to be a
reference to the consideration as so reduced. Any exercise by Hunt
of its rights referred to in this section shall be the subject of
an announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the terms of
the Scheme.
16. The New Hunt Shares will be issued credited as fully paid
and will rank pari passu in all respects with the existing Hunt
Shares at the time the New Hunt Shares are issued, including the
right to receive and retain dividends and other distributions
declared, made or paid by reference to a record date falling after
the date on which the Scheme becomes Effective.
17. Fractional entitlements to New Hunt Shares for each Scheme
Shareholder will be rounded down to an integral number and will not
be allotted or issued to holders of Scheme Shares pursuant to the
Scheme. These fractional entitlements will be aggregated and shall,
on a reasonable basis, be sold for the benefit of the Scheme
Shareholders. The equivalent of the net proceeds of such sale of
New Hunt Shares (after deduction of brokerage charges and
associated expenses) will be paid to the Scheme Shareholders
pro-rated to their holdings of Patagonia Gold Shares at the Scheme
Record Time as soon as practicable after receipt, except that if
the aggregate amount due to any Scheme Shareholder in respect of
the amounts due to him/it in respect of fractional entitlements to
New Hunt Shares is less than GBP5.00 such sum will not be
distributed but will instead be aggregated and accrued to the
benefit of Hunt. Neither Hunt nor any other person shall be
responsible or have any liability whatsoever for any loss or damage
(actual or alleged) arising from the terms or the timing of the
sales or the sales or any failure to sell fractional entitlements
to New Hunt Shares.
18. Under Rule 13.5 of the Code, Hunt may not invoke a condition
to the Offer so as to cause the Offer not to proceed, to lapse or
to be withdrawn unless the circumstances which give rise to the
right to invoke the condition are of material significance to Hunt
in the context of the Offer. Conditions 1, 2 and 3.1 are not
subject to this provision of the Code.
19. Each of the Conditions will be regarded as a separate
condition and will not be limited by reference to any other
Condition.
APPIX II
SOURCES OF INFORMATION AND BASES OF CALCULATIONS
In this Announcement, unless otherwise stated or the context
otherwise requires, the following bases and sources have been
used:
1. The value attributed to the Offer is based on:
(a) The value of C$0.115 per Hunt Share, being the closing price
on the TSX-V on 30 May 2019 (being the last dealing day in Canada
prior to the date of this Announcement) and applying an exchange
rate of C$0.5874/GBP1;
(b) multiplying by the number of Patagonia Gold Shares in issue, being 23,634,749; and
(c) multiplying by the Exchange Ratio.
2. Unless otherwise stated, all prices for Patagonia Gold Shares
are closing middle market quotations derived from the AIM Appendix
to the London Stock Exchange's Daily Official List for the
particular date(s) concerned.
3. Unless otherwise stated all prices for Hunt Shares are
closing prices derived from Bloomberg.
4. Unless otherwise stated all exchange rates are the average of
the "best ask" and "best bid" C$/GBP or US$/GBP cross rate sourced
from Bloomberg on 30 May 2019 (being the last Business Day in
Canada or the United States prior to this Announcement).
5. Volume weighted average prices are derived from Bloomberg for
the time periods stipulated.
6. Hunt's market capitalisation is calculated by multiplying the
Existing Hunt Share Capital by C$0.115 per Hunt Share, being the
closing price on the TSX-V on 30 May 2019 (being the last Business
Day in Canada prior to the date of this Announcement) and applying
an exchange rate of C$0.5874/GBP1).
7. The 80:20 proportionate ownership of the Combined Group
between the Scheme Shareholders and the Hunt Shareholders
respectively is based on the existing issued Patagonia Gold Shares,
as set out in 1(b) above, and the Existing Hunt Share Capital and
assumes that no outstanding Patagonia Gold share options are
exercised prior to the Effective Date.
8. Unless otherwise stated, the financial information relating
to Patagonia Gold has been extracted or derived (without any
adjustment) from the audited consolidated accounts of the Patagonia
Gold Group for the financial year ended 31 December 2018, prepared
in accordance with IFRS.
9. Unless otherwise stated, the financial information relating
to Hunt has been extracted or derived (without any adjustment) from
the audited consolidated financial information of the Hunt Group
for the financial year ended 31 December 2018 and the quarterly
unaudited consolidated financial information to 31 March 2019
prepared in accordance with generally accepted accounting
principles of the United States of America (US GAAP) and available
on Hunt's website at www.huntmining.com.
10. All information relating to Patagonia Gold and Hunt has been
provided by persons duly authorised by the Patagonia Gold Board and
Hunt Board respectively.
APPIX III
DETAILS OF IRREVOCABLE UNDERTAKINGS
Patagonia Gold Directors' Irrevocable Undertakings
Each of the following Patagonia Gold Directors have entered into
irrevocable undertakings with Hunt to vote in favour of the Scheme
at the Court Meeting and the special resolution to be proposed at
the General Meeting, as follows:
Number of Patagonia
Gold Shares in respect Percentage of Patagonia
Name of Patagonia of which undertaking Gold's issued share
Gold Director is given capital
Carlos Miguens* 12,741,212 53.91%
------------------------ ------------------------
Christopher van Tienhoven 23,290 0.10%
------------------------ ------------------------
Gonzalo Tanoira** 174,028 0.74%
------------------------ ------------------------
Manuel de Prado 40,357 0.17%
------------------------ ------------------------
Total: 12,978,887 54.91%
------------------------ ------------------------
* Separate irrevocable undertakings have been provided by Mr
Miguens in respect of the 170,775 Patagonia Gold Shares held
directly by him and by Cantomi (a company owned and controlled by
Mr Miguens) in respect of the 12,570,437 Patagonia Gold Shares
registered in its name.
** Separate irrevocable undertakings have been provided by Mr
Tanoira in respect of the 106,916 Patagonia Gold Shares held
directly by him and by Capifox S.A. (a company owned and controlled
by Mr Tanoira) in respect of the 67,112 Patagonia Gold Shares
registered in its name.
These irrevocable undertakings cease to be binding and will
lapse if:
-- the Scheme is withdrawn or lapses in accordance with its
terms; or
-- the Scheme Document is not despatched to Scheme Shareholders
within twenty eight days (or such longer period as the Panel may
agree, being not more than six weeks) after the date of this
Announcement; or
-- if the Scheme has not become Effective by 30 November
2019.
APPIX IV
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context requires otherwise:
"Ag" silver;
"AIM" AIM, a market operated by the London
Stock Exchange;
"AIM Rules" the AIM Rules for Companies published
by the London Stock Exchange (as amended
from time to time);
"Announcement" this announcement including its appendices
made pursuant to Rule 2.7 of the Code
dated 31 May 2019;
"Appendices" the appendices to this Announcement;
"Au" gold;
"AuEq" gold equivalent;
"Authorisations" regulatory authorisations, orders,
recognitions, grants, consents, clearances,
confirmations, certificates, licences,
permissions or approvals;
"Bloomberg" Bloomberg L.P., a financial software
services, news and data company;
"Board" the board of directors of Hunt or
Patagonia Gold (as applicable) with
the terms "Hunt Board" and "Patagonia
Gold Board" being construed accordingly;
"Business Day" a day (other than Saturdays, Sundays
and public holidays in London and/or
Canada, as applicable) on which banks
are open for general commercial business;
"Cantomi" Cantomi Uruguay S.A., a company owned
and controlled by Carlos Miguens;
"Cantomi Loan Facility" the loan facility between Cantomi
and the Company, pursuant to which
Patagonia Gold can draw down up to
US$15 million, further details of
which are set out in the Company's
announcement of 1 March 2019;
"Cap-Oeste Underground the development of an underground
Mine" mining facility beneath the current
open pit at Patagonia Gold's Cap-Oeste
property;
"CCSA" Cerro Cazador SA;
"CDS" The Canadian Depository for Securities
Limited;
"certificated" or "in the description of a share or other
certificated form" security which is not in uncertificated
form (that is, not in CREST);
"Code" the City Code on Takeovers and Mergers
in the UK;
"Combined Group" the combined Patagonia Gold Group
and Hunt Group following completion
of the Offer;
"Companies Act" the Companies Act 2006, as amended
from time to time;
"Computershare" Computershare Investor Services PLC;
"Computershare Canada" Computershare Trust Company of Canada;
"Conditions" the conditions to the implementation
of the Offer, as set out in Appendix
I to this Announcement and to be set
out in the Scheme Document;
"Court" the High Court of Justice of England
and Wales;
"Court Meeting" the meeting of Scheme Shareholders
(or any relevant class or classes
thereof) to be convened pursuant to
an order of the Court pursuant to
section 896 of the Companies Act,
notice of which will be set out in
the Scheme Document, for the purpose
of considering and, if thought fit,
approving the Scheme (with or without
modifications), including any adjournment
thereof;
"Court Order(s)" the order(s) of the Court sanctioning
the Scheme;
"CREST" the computerised settlement system
(as defined in the Uncertificated
Securities Regulations 2001 (SI 2001/3755)
operated by Euroclear UK & Ireland
Limited which facilitates the transfer
of title to shares in uncertificated
form;
"Daily Official List" the Daily Official List published
by the London Stock Exchange;
"Dealing Disclosure" has the same meaning as in Rule 8
of the Code;
"Depositary" the depositary to be appointed pursuant
to the Depositary Agreement, being
Computershare;
"Depositary Agreement" the depositary agreement relating
to the issue of the Depositary Interests
and to be entered into between Hunt
and the Depositary;
"Depositary Deed Poll" the deed poll relating to the holding
of Hunt Shares and the issue of the
Depositary Interests made by the Depositary
in favour of the DI Holders;
"DI" or "Depositary Interest" means a depositary interest issued
by Computershare whereby Computershare
Company Nominees Limited, as the nominated
custodian, will hold overseas securities
on trust for the CREST member to whom
it has issued a depositary interest;
"DI Holder(s)" the holder(s) of a Depositary Interest,
from time to time, pursuant to the
Depositary Deed Poll;
"Disclosed" the information disclosed by, or on
behalf of Patagonia Gold, (i) in the
audited results of the Patagonia Gold
Group for the financial year ended
31 December 2018; (ii) in the annual
report and accounts of the Patagonia
Gold Group for the financial year
ended 31 December 2018; (iii) in this
Announcement; (iv) in any other announcement
to a Regulatory Information Service
by, or on behalf of, Patagonia Gold
prior to the publication of this Announcement;
or (v) as otherwise fairly disclosed
to Hunt (or its respective officers,
employees, agents or advisers) prior
to the date of this Announcement;
"Disclosure Table" details of offeree companies and offerors
currently in an offer period published
by the Panel under Rule 8 of the Code;
"DRS" the Canadian Direct Registration System,
whereby securities are held in "book-entry"
(registered) form without having a
physical security certificate issued
as evidence of ownership;
"DRS Advice" a direct registration system advice
evidencing the electronic registration
of ownership of the Hunt Shares;
"Effective" in the context of the Offer:
(i) if the Offer is implemented by
way of the Scheme, means the Scheme
having become Effective pursuant to
its terms; or
(ii) if the Offer is implemented by
way of a Takeover Offer, such offer
having become or been declared unconditional
in all respects in accordance with
its terms;
"Effective Date" the date on which the Scheme becomes
Effective in accordance with its terms
or, if Hunt elects and the Panel consents
to implement the Offer by way of a
Takeover Offer, the date on which
the Takeover Offer is declared or
becomes unconditional in all respects
in accordance with the requirements
of the Code;
"Euroclear" Euroclear UK & Ireland Limited;
"Exchange Ratio" 10.7619163630636 New Hunt Shares for
each Scheme Share;
"Excluded Share" any Patagonia Gold Share which is
controlled by or registered in the
name of or beneficially owned by any
member of the Hunt Group at the Scheme
Record Time;
"Existing Hunt Share Capital" the existing issued share capital
in Hunt, excluding those shares held
in treasury by Hunt, comprising 63,588,798
common shares as at 30 May 2019 (being
the latest practicable date prior
to the publication of this Announcement);
"FCA" or "Financial Conduct the Financial Conduct Authority acting
Authority" in its capacity as the competent authority
for the purposes of Part VI of the
UK Financial Services and Markets
Act 2000 (as amended);
"Filing Statement" means the Filing Statement of Hunt
prepared in accordance with Form 3D1
of the TSX-V in respect of the Offer;
"Forms of Proxy" the forms of proxy in connection with
each of the Court Meeting and the
General Meeting, which will accompany
the Scheme Document;
"General Meeting" the general meeting of Patagonia Gold
Shareholders (including any adjournment
thereof) to be convened in connection
with the Scheme, notice of which will
be set out in the Scheme Document;
"holder" a registered holder and includes any
person entitled by transmission;
"Hunt" Hunt Mining Corp.;
"Hunt Directors" the directors of Hunt;
"Hunt Group" Hunt and its subsidiaries and, where
the context permits, each of them;
"Hunt Shareholders" the holders of Hunt Shares;
"Hunt Shares" the allotted and issued and fully
paid common shares in the capital
of Hunt;
"IFRS" International Financial Reporting
Standards as adopted by the European
Union;
"Indicated Resource" that part of a Mineral Resource for
which quantity, grade (or quality),
densities, shape and physical characteristics
are estimated with sufficient confidence
to allow the application of modifying
factors in sufficient detail to support
mine planning and evaluation of the
economic viability of the deposit.
Geological evidence is derived from
adequately detailed and reliable exploration,
sampling and testing gathered through
appropriate techniques from locations
such as outcrops, trenches, pits,
workings and drill holes, and is sufficient
to assume geological and grade (or
quality) continuity between points
of observation where data and samples
are gathered;
"Inferred Resource" that part of a Mineral Resource for
which quantity and grade (or quality)
are estimated on the basis of limited
geological evidence and sampling.
Geological evidence is sufficient
to imply but not verify geological
and grade (or quality) continuity.
It is based on exploration, sampling
and testing information gathered through
appropriate techniques from locations
such as outcrops, trenches, pits,
workings and drill holes;
"London Stock Exchange" London Stock Exchange plc;
"Longstop Date" means 30 November 2019, or such later
date (if any) as Hunt and Patagonia
Gold may agree and (if required) the
Panel and Court may allow;
"Martha mine" Martha mine, which is located in the
province of Santa Cruz, Argentina
and which is owned by Hunt;
"Martha Processing Plant" the processing facilities located
at the Martha mine owned by Hunt;
"Meetings" together, the Court Meeting and the
General Meeting;
"Mineral Resource" a concentration or occurrence of material
of economic interest in or on the
earth's crust in such form and quantity
that there are reasonable and realistic
prospects for eventual economic extraction.
The location, quantity, grade, continuity
and other geological characteristics
of a Mineral Resource are known, estimated
from specific geological evidence
and knowledge, or interpreted from
a well-constrained and portrayed geological
model;
"Moz" million ounces;
"New Hunt Shares" the new Hunt Shares proposed to be
allotted and issued to Scheme Shareholders
in connection with the Offer, being
254,355,192 Hunt Shares;
"Offer" the recommended share for share exchange
offer being made by Hunt to acquire
the entire issued and to be issued
ordinary share capital of Patagonia
Gold to be implemented by means of
the Scheme and, where the context
admits, any subsequent revision, variation,
extension or renewal thereof;
"Offer Period" the offer period (as defined by the
Code) relating to Patagonia Gold,
which commenced on 31 May 2019 and
which will end on the Effective Date;
"Opening Position Disclosure" an announcement pursuant to Rule 8
of the Code containing details of
interests or short positions in, or
rights to subscribe for, any relevant
securities of a party to an offer
if the person concerned has such a
position;
"Overseas Shareholders" Patagonia Gold Shareholders (or nominees
of, or custodians or trustees for
Patagonia Gold Shareholders) not resident
in, or nationals or citizens of, the
UK;
"Panel" the Panel on Takeovers and Mergers
in the UK;
"Patagonia Gold" or the Patagonia Gold Plc;
"Company"
"Patagonia Gold Directors" the board of directors of Patagonia
Gold, as at the date of this Announcement;
"Patagonia Gold Group" Patagonia Gold and its subsidiaries
and, where the context permits, each
of them;
"Patagonia Gold Shareholders" the holders of Patagonia Gold Shares;
or "Shareholders"
"Patagonia Gold Share the Share Option Plan and any deed
Plans" or agreement, pursuant to which a
right to acquire ordinary shares in
the capital of the Company has been
granted by the Company to any individual
or entity other than under the terms
of the Share Option Plan;
"Patagonia Gold Shares" the existing unconditionally allotted
or "Ordinary Shares" and issued and fully paid ordinary
shares of 1 penny each in the capital
of Patagonia Gold and any further
such ordinary shares which are unconditionally
allotted or issued before the Scheme
becomes Effective;
"Principals" those persons deemed by TSX-V Policy
1.1 to be "Principals" in relation
to the Combined Group, being: (i)
Tim Hunt; (ii) Carlos Miguens; and
(iii) Cantomi;
"Registrar of Companies" the Registrar of Companies in England
and Wales within the meaning of the
Companies Act;
"Regulatory Information a primary information provider which
Service" has been approved by the FCA to disseminate
regulated information;
"Restricted Jurisdiction" any jurisdiction where the extension
or availability of the Offer to Patagonia
Gold Shareholders generally in such
jurisdiction would contravene any
applicable law, including, without
limitation, Australia, Japan, the
Republic of South Africa and the United
States;
"Restricted Overseas Person" Patagonia Gold Shareholders resident
in, or nationals or citizens of, Restricted
Jurisdictions or who are nominees
or custodians, trustees or guardians
for, citizens, residents or nationals
of such Restricted Jurisdictions;
"Resulting Issuer Escrow the agreement to be entered into amongst
Agreement" Hunt, Computershare Canada and the
Principals pursuant to which New Hunt
Shares owned by such shareholders
will initially be held in escrow in
accordance with the requirements of
the TSX-V;
"Scheme" the proposed scheme of arrangement
under Part 26 of the Companies Act
(as amended) between Patagonia Gold
and the Scheme Shareholders in connection
with the Offer, with or subject to
any modification, addition or condition
approved or imposed by the Court and
agreed by Patagonia Gold and Hunt;
"Scheme Document" the document to be sent to Patagonia
Gold Shareholders containing, among
other things, the Scheme, an explanatory
statement in compliance with Part
26 of the Companies Act and the notices
convening the Court Meeting and the
General Meeting;
"Scheme Record Time" the date and time to be specified
in the Scheme Document by reference
to which the Scheme will be binding
on the holders of Patagonia Gold Shares
expected to be 6.00 p.m. on the Business
Day in London immediately prior to
the Effective Date;
"Scheme Shareholders" the holders of Scheme Shares;
"Scheme Shares" the Patagonia Gold Shares:
(i) in issue at the date of the Scheme
Document and which remain in issue
at the Scheme Record Time;
(ii) if any, issued after the date
of the Scheme Document but before
the Scheme Voting Record Time and
which remain in issue at the Scheme
Record Time; and
(iii) if any, issued at or after the
Scheme Voting Record Time but at or
before the Scheme Record Time on terms
that the original or any subsequent
holders thereof are, or shall have
agreed in writing, to be bound by
the Scheme and, in each case, which
remain in issue at the Scheme Record
Time,
in each case, other than any Excluded
Shares or any Patagonia Gold Share
held in treasury;
"Scheme Voting Record the date and time to be specified
Time" in the Scheme Document by reference
to which entitlement to vote at the
Court Meeting will be determined,
expected to be 6.00 p.m. (London time)
on the day which is two days before
the Court Meeting or, if the Court
Meeting is adjourned, 6.00 p.m. (London
time) on the day which is two days
before the date of such adjourned
Court Meeting;
"SEDAR" The System for Electronic Document
Analysis and Retrieval, an electronic
filing system for Canadian listed
companies;
"Share Option Plan" the Patagonia Gold Plc Unapproved
Executive Share Option Scheme, adopted
by the Board on 1 December 2011;
"Significant Interest" in relation to an undertaking, a direct
or indirect interest of 20 per cent.
or more of the total voting rights
conferred by the equity share capital
of such undertaking;
"Strand Hanson" Strand Hanson Limited;
"Takeover Offer" as defined in section 974 of the Companies
Act;
"Third Party" each of a central bank, government
or governmental, quasi-governmental,
supranational, statutory, regulatory,
environmental, administrative, fiscal
or investigative body, court, trade
agency, association, institution,
environmental body or any other body
or person whatsoever in any jurisdiction;
"tpd" tonnes per day;
"TSX-V" the TSX Venture Exchange;
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland;
"United States" or "US" the United States of America, its
territories and possessions, any state
of the United States of America, the
District of Columbia and all other
areas subject to its jurisdiction
and any political sub-division thereof;
"US Exchange Act" the US Securities Exchange Act of
1934, as amended, and the rules and
regulations promulgated thereunder;
"US Securities Act" the US Securities Act of 1933;
"Wider Hunt Group" the Hunt Group and its associated
companies and any other body corporate,
partnership, joint venture or person
in which any member of the Hunt Group
and such associated companies (aggregating
their interests) have a Significant
Interest; and
"Wider Patagonia Gold the Patagonia Gold Group and its associated
Group" companies and any other body corporate,
partnership, joint venture or person
in which any member of the Patagonia
Gold Group and such associated companies
(aggregating their interests) have
a Significant Interest.
For the purposes of this Announcement "subsidiary" and
"associates" have the meanings given by the Companies Act.
All references to "GBP", "pounds", "pounds Sterling",
"Sterling", "GBP", "pence", "penny" and "p" are to the lawful
currency of the United Kingdom.
All references to "CAD", "Canadian Dollar" and "C$" are to the
lawful currency of Canada.
All references to "US$" and "$" are to the lawful currency of
the United States.
References to an enactment include references to that enactment
as amended, replaced, consolidated or re-enacted by or under any
other enactment before or after the date of this Announcement.
All the times referred to in this Announcement are London times
unless otherwise stated.
References to the singular include the plural and vice versa
unless the context requires otherwise and words imparting the
masculine gender shall include the feminine or neutral gender.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
OFFGSGDUIGXBGCB
(END) Dow Jones Newswires
May 31, 2019 02:00 ET (06:00 GMT)
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