Canyon Resources Corp-Filing of certain prospectuses & communications in connection with business combination transactions (425)
November 26 2007 - 5:01PM
Edgar (US Regulatory)
Filed by Atna Resources Ltd.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Canyon Resources Corporation
Commission File Number: 001-11887
The following documents are filed with the Securities and Exchange Commission pursuant to Rule 425
in connection with the proposed merger transaction between Atna Resources Ltd. and Canyon Resources
Corporation:
Description of Documents
Press release dated November 19, 2007 announcing proposed merger
Transcript
of conference call
Exhibit 99.1
CANYON RESOURCES CORP
Moderator: James Hesketh
November 19, 2007
12:00 pm CT
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Operator:
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Good afternoon, my name is (Heather) and I will be your
conference facilitator today. At this time, I would like
to welcome everyone to the Atna Resources and Canyon
Resources Informational Conference Call regarding the
recently announced merger.
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All lines have been placed on mute to prevent any
background noise. After the speaker’s remarks, there will
be a question and answer period. If you would like to ask
a question during that time, simply press star then the
Number 1 on your telephone keypad.
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Should anyone need assistance at any time during this
conference, please press star then 0 and an operator will
assist you. As a reminder, ladies and gentlemen, this
conference is being recorded today, November 19, 2007.
Thank you.
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Discussing the proposed merger today, there will be
included some forward-looking statements within the
meaning of the Private Securities Litigation Reform Act
of 1995. Such statements related to future events and
expectation involves known and unknown risk and
uncertainty.
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Canyon Resources results or actions may differ materially
than those projected in the forward-looking statements.
For a summary of the specific risks that could cause
results to differ materially than those expressed in the
forward-looking statements, see Canyon Resources Form 10K
for the year ended December 31, 2006 filed with the SEC.
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I would now like to turn the conference over to Valerie
Kimball, Investor Relations for Canyon Resources. Please
go ahead.
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Valerie Kimball:
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Thank you.
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I have an additional cautionary note to US investors.
Atna uses the terms resources, measured resources,
indicated resources and inferred resources. United States
investors are advised that while such terms are
recognized and required by Canadian Securities Laws, the
SEC does not recognize them.
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Before beginning the call, the management of Atna and
Canyon would like to inform everyone that this conference
call is not an offer to sell securities or the
solicitation of an offer to buy securities.
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I’d now like to turn the call over to Mr. David Watkins,
CEO of Atna Resources.
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David Watkins:
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Good morning ladies and gentlemen, we’re very pleased to
have you all in attendance. I’m David Watkins, the
President of Atna Resources Limited and I’m here with Jim
Hesketh, who is the President of Canyon Resources.
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We’re very excited to have consummated an agreement
between the two companies to carry forward with a plan of
merger to put the two companies together. We have the
approval of both boards to proceed with this transaction.
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The main features of the transaction are that — as I
said, an Atna-Canyon merger, Canyon shareholders will
receive .32 shares of Atna for each Canyon share
representing a premium to the market and we’re quite
excited to give opportunity to everyone to participate
with both these companies. Warrants, options, convertible
debt and so on will become Atna’s obligations as a part
of the transaction.
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We feel there are quite a few positive benefits to all
the shareholders of both companies through this
combination. The highlight is the creation of a
multi-million ounce gold company. There are close to four
million ounces of gold in-situ on company projects.
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The highlight of the gold that we have is that we
perceive there’s good probability for near term
production and cash flow that will come from these
opportunities.
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We reckon by pushing Canyon’s projects forward we look at
somewhere between 60,000 to 80,000 ounces of production
while Pinson is worked on by Barrick presently at the
development stage, one of Atna’s projects. Jim will talk
about those in a little more detail in a few moments.
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They have a pipeline of gold projects and there’s a real
focus on the Western United States and on gold. We’re on
a politically-secured area, as politically-secured as it
gets.
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Another great advantage of the merger we feel is the
synergies between the management teams. We have a good
fit of talents with experienced people on both sides and
good financial strength that will ensure the long-term
growth of the company.
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The combined entity will have about 82 million shares
outstanding. We’ll have cash on hand in the order of $16
million and a small amount of debt that comes over as
$825,000 of convertible debentures.
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The combined company trades at a pretty low enterprise
value multiple per ounce of gold mineralization relative
to its peer group. One of our goals in the combined
company will be to increase the enterprise value to bring
it up to the level that we perceive in that peer group.
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As we bring projects forward through the completion of
feasibility, through the permitting, and advance them to
production in the near term, we reckon that we might even
approach the valuation of junior producers — that’s about
$140 per ounce as compared to roughly $37 an ounce that
we see in the combined companies, as of today’s market
prices.
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In other words, we think there’s a significant
opportunity to see the stock re-rated as these projects
advance towards production. And that gives us a chance
for some good accretion to value for shareholders as we
do the work programs that we’re talking about.
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Presently, we’re at about $37 per ounce as I mentioned,
if we can achieve $50 an ounce, that would equate to a
share price on the order of $2.40. And as I said before,
if we move to the junior producer rating, that’s $140 and
that really will be a significant multiple of the share
price that we see today.
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The management team includes — will include myself as
Chairman of the Board and Chief Executive Officer. I’ve
got 40 years of experience in the mining industry and a
successful track record in finding, developing and
operating mines.
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I’ll be joined by Jim Hesketh who will be the President
and Chief Operating Officer of the company. Jim has 30
years in the business and is a mining engineer by
background. He’s built mines, he’s run mines, he’s
engineered mines and has five years of experience in the
banking side of the business as well, mainly with
Rothschild’s bank.
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Joining us as Chief Financial Officer, we’ll have Dave
Suleski. Dave has got 25 years of mining finance and
accounting experience and has on-site mining experience
and really brings good depth to round out the team. Bill
Stanley will continue as Vice President Exploration. Bill
has a successful track record of finding deposits that
have been developed to production in Nevada and
elsewhere. And Bonnie Whelan will continue as our
Corporate Secretary. Bonnie brings 25 years of experience
in public company administration.
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On that note, I’m going to hand the conversation over to
Jim who will talk a little more about the gold
development and other properties.
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James Hesketh:
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Good afternoon ladies and gentlemen.
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This combination pulls together an impressive suite of
development properties. So starting off with Atna’s
Pinson property, at this time Atna controls approximately
70% equity interest in that property but Barrick is
clawing back their position to a 30% interest, they’re
the partner, in order to earn that position, their equity
would become 70%, they must spend $30 million on the
project between now and April of 2009. That requires
quite a high activity level to continue to move forward.
So there’s a very nice opportunity there to create cash
flow in the future on a fairly substantial project with
Barrick Gold as the partner.
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In the short term, Canyon is currently in the process of
completing its feasibility study on the Reward project,
near Beatty Nevada. That will be an open pit, heap leach
operation.
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We have completed feasibility work on open pits at the
Briggs mine in California and we’re doing additional work
on the underground structure, the Gold Tooth structure at
Briggs.
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So in combination, those two properties, with proper
financing should produce around 60,000 to 80,000 ounces a
year. Briggs is currently fully permitted so it’s a
matter of moving ahead rapidly on that one as the funding
becomes available, as a result of this merger.
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And then on Reward, we’re in the final stages of
permitting there. That’s moving ahead nicely and then as
a longer term project we have the Seven-Up Pete deposit
in Montana, that’s a large deposit, it is amenable to
non-cyanide gold recovery. So we do have a solid pipeline
of development opportunities.
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In terms of mineralized material, we have several
different measures, Atna is a Canadian company quoting
measured and indicated inferred resource of over 2
million ounces on the Pinson project.
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At Canyon, at the mines we have proven and probable
reserves at Briggs right now and have declared of about
130,000 ounces. And then we have mineralized material,
some 61 million tons of material in-situ, at an .031
ounce per ton grade. Just doing the math, that would
roughly translate out to over 1.8 million ounces in place
at varying cut off grades.
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So those are the key assets in the combination, over 4
million potential ounces in place on various different
projects. In addition, we have a plethora of gold
exploration properties, across Nevada on the Walker Lane
Trend, in the Battle
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Mountain-Eureka Trend, the Getchell Trend as well as two others that are off
trend.
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But these properties — a number of them are currently farmed out Atna’s Clover
and Triple Junction properties are currently farmed out with other people
working on them.
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Other properties include Jarbidge and Searchlight in Atna. In Canyon, Adelaide,
Tuscarora, Mt. Edna and Tram, so very solid presence of everything from
grassroots to near resource properties in Nevada.
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Moving forward, other assets include the Wolverine Royalty. It’s a royalty on
the Wolverine poly-metallic property in the Yukon. Yukon Zinc is currently
financing this property for development but Atna controls a 9.4% net smelter
return royalty on the precious metals from that project.
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In addition, Canyon has a number of royalties — in other locations. We still
hold our 900,000 acres of mineral rights in the state of Montana and we have our
Wyoming Uranium joint ventures. So the combined companies will be very property
rich with a lot of opportunities for growth in the future.
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Now coming back to the transaction, the process is that now that we’ve announced
this, we are currently in preparation of a Form F-4 registration statement. This
is to register Atna’s stock that will be used in the transaction, that
registration statement must be filed and reviewed by the SEC.
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And then once that is completed and we have approvals; we will be mailing a
proxy statement to Canyon shareholders for their approval of this transaction.
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We anticipate that we could close depending on the SEC review some time in
February. We do not control this timeline, that is controlled by the SEC and
their review process.
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So coming back to the summary, you know, we believe that this is a very strong
transaction to both our shareholders. We create a multimillion ounce gold
company with near term production and cash flow opportunity, a solid pipeline of
gold development projects, a good focus on the Western US, politically-stable
area. We have a highly synergistic management team, and the combined company
with over $130 million in market cap, just doing the addition, creates the
financial strength and mass that will allow the combined entity to grow, raise
funds, and that’s a platform for future growth and future transaction.
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In conclusion, our goal here — it’s a golden combination and we’re creating a
platform for growth. So with that said, I’d like to open this meeting for
questions. (Heather), do you have any questions on the line?
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Operator:
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At this time, if you would like to ask a question, press
star then the Number 1 on your telephone keypad. We’ll
pause for just a moment to compile the Q&A roster.
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David Watkins:
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Before any questions are fielded, if I may just add that
both Atna and Canyon will have the presentation posted on
their Web sites. If it’s not already there, it will be up
shortly and you’re invited to take a look at more detail.
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Okay (Heather)?
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Operator:
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One moment, sir, we’re going over the queue.
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Your first question comes from (Damon Wells) with Damon
Wells Investments.
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(Damon Wells):
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Good morning and I have two brief questions. First how will the merger affect
Canyon’s share of any damages it might receive from this state of Montana should Canyon
prevail ultimately in the court.
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James Hesketh:
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Yeah. Hi Damon, this is Jim.
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(Damon Wells):
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Hi Jim.
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James Hesketh:
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Yeah, go ahead with your second question.
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(Damon Wells):
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Second question is I didn’t hear anything about Uranium, does the new company intend
to pursue Uranium exploration vigorously?
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James Hesketh:
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Okay. Let’s go to the court question first. In terms of the
courts, the McDonald taking case was heard by the 9th
circuit court of appeals about three weeks ago.
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(Damon Wells):
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Uh-huh.
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James Hesketh:
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The Justices appeared interested. We had good oral
arguments, and we will be waiting on their decision and
should we prevail there the decision would be to remand the
case back to district court for hearing on its merits.
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(Damon Wells):
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Okay.
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James Hesketh:
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We do not control the timeline of that decision. It’s up to
the mercy of the court there. But does the case continue?
Yes, it does. Canyon will become a
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wholly-owned subsidiary of Atna Resources in this transaction and then the
rights thereby would convey also.
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So the case would not stop unless we see a business rationale for either not
pursuing it i.e. we’re not being successful or this court shoots it down where
it sits.
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And in terms of uranium, we do have our joint ventures. We’re currently a
carried partner on that JV until the underlying partners meet their commitment.
So the exploration of those properties is up to our partners and they have
financial commitments to meet on their spending, so, any other question?
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Operator:
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Your next question comes from (Andrew Mikitchook) with Westwind Partners.
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(Andrew Mikitchook):
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Hi, good afternoon gentlemen, good morning depending what time zone you’re on.
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Conceptually, can you walk us through your combined expertise? You know, from my
side I’m familiar with the Atna side but what kind of combined expertise do you
have on the exploration team on your — call it mining or operational team for
these two advance projects that are coming from Canyon?
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James Hesketh:
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Okay. Do you want to answer that David?
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David Watkins:
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Yes. Sure I’ll start anyway.
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And thank you Andrew. I was going to say, you know well our
side of the business and so I will continue as the Chief
Executive Officer. Bill Stanley, a
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very experienced exploration geologist will continue as the Vice President
Exploration.
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And what we’re bringing with Canyon is rounded team far more oriented to the
operation side. I think I might just turn it over to Jim to speak a little bit
about his background and experience and to David Suleski who’s here with us to
perhaps briefly summarize his background.
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James Hesketh:
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Yeah. I am a Mining Engineer, I’ve got a degree from the Colorado School of Mines. I’m also a Mineral
Economist. I have a Master of Science in that.
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I’ve got about 30 years of experience in operations with everything from industry minerals to major copper
mines. I’ve had positions — I was head of business development for Cyprus Amax. I was a Vice President and
Principal Mining Engineer for NM Rothschild & Sons in their mining finance business. I’ve been a
consultant with Pincock, Allen & Holt and I’ve run companies.
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So I’ve got a very strong background in operations and project management, project development and
operations. I have a team behind me in Canyon who’s also quite strong. We have — still at the Briggs mine,
we’re circulating solutions and still recovering gold. I’ve got a plant manager there, I’ve got a general
manager at the site and I do have my own exploration team who have been involved for years in exploration,
drilling, some of them very senior and — some of those individuals have worked with David and Bill Stanley
in the past. So it’s a very synergistic fit.
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I’ve been working with David for 14 years now including our time together at Cyprus Amax. And Dave Suleski
is here. Do you want to explain your background David?
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David Suleski:
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Well, I’ve started my career in public accounting for about six years. And when I move to Colorado, I was
in charge of many mining audits and that led me to Cyprus Amax Mineral Company where I met Jim and worked
eight years in various operations in the accounting departments of several operating mines including the
very large and complex Miami Complex for Cyprus.
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And from there I’ve held various positions in controller type positions for various mining companies,
primarily gold mining companies over the last several years. And also worked in mining finance at NM
Rothschild & Sons.
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David Watkins:
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As you can see, we’ve got a good team pulled together. Many of us have worked in the past together and
it’s good synergistic fit and we basically fill all the niches- in terms of experience and backgrounds.
This gives us a very strong platform for the growth that we’re talking about all the way from exploration
through production.
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Operator:
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Your next question comes from (Catherine Gignac) with Wellington West.
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(Catherine Gignac):
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Thank you very much.
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You talked briefly about the takings lawsuit, Jim and I wonder if you can talk briefly about any potential
liabilities that would be carried on through and if Canyon has anything residual after that transaction
that was done where you retain the interest in Seven-Up.
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James Hesketh:
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Yeah. In terms of the Seven-Up transaction, we did do a transaction with Newmont mining. And in that we
eliminated the royalty that Newmont owned on the Briggs mine in California. So right now, the Briggs mine
is royalty free.
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We do have closure liabilities at Briggs for ultimately closing that mine, but we do have some 4.3 million
dollars in surety and cash backed CDs to support that.
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We do have, you know at Briggs very strong ounces in the ground. We’ve developed over 800,000 ounces of
contained in mineralized material plus reserves.
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And so the goal at Briggs is not to go to a closure. It’s to go in the back into operation and as I said
earlier, we — at this time, we are circulating solutions through the heap leach so the plant is currently
operational. We do have some remaining truck fleet there and we’ve got the primary crusher in place.
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We do have in the state of Montana, a closure property that’s in very advanced stage of final closure,
that’s called the Kendall Mine. We’ve spent over $10 million closing that now and there is approximately
$2 million in a cash escrow account with the state of Montana to support the financial assurance on that
one.
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So those are the primary liabilities that we bring here. And then, again, you know, on the up side, we’ve
got very substantial property positions including 900,000 acres mineral rights in the state of Montana.
Outside of Montana, probably over 50,000 acres combined in Nevada, California and Wyoming.
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So, that does that answer your question?
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(Catherine Gignac):
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(Unintelligible) on a combined basis. And I know you can’t give projections in
terms of what new Company is going to do or the new Atna is going to do but maybe you can give
us a sense in terms of what was most interesting or exciting in terms of exploration outside
and maybe putting some money towards the project that hasn’t seen it for a while.
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James Hesketh:
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Yeah, I missed the first part of your statement — of your question.
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(Catherine Gignac):
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Yeah, in terms of exploration up-side on a combined basis, what the new company
will be able to do as opposed to two separate smaller companies — on exploration and development.
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David Watkins:
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I think that’s actually one of the exciting features of the
company. This is David speaking from the Atna side.
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We have a — if you put together the resource on our Pinson
project, it’s about 2.2 million ounces that we’ve got in a
43-101 category right now. However, the Pinson property in
its own right, that resource remain significantly open to
increase in size and a number of other exploration targets
exist on the property so there’s significant potential for
a major exploration blow out and part of what Barrick is
doing as they work on this program is evaluating the
possibility of making it a larger scale operation and
looking at other exploration targets.
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Now, we’ve looked at the Canyon Properties and we think
some of them certainly have good up-side potential in terms
of the ounces that may be available on all of their — on
all of the ones that we see as development stage projects.
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And then with the land position that we have in the state
of Nevada in particular, many of these properties have well
known gold occurrences that have significant potential to
lead us to discovery.
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I could give you as example the Clover property where we
have a partner on it spending money on the 12,000-foot
drill program now, where past drill
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intercepts were as high as almost 10 meters of 25 grams and so we’re really
excited about it.
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Coming back to the Canyon side of the properties, we see on the Briggs property
in particular, the relatively new discovery of some meso thermal veins if you
allow some technical jargon, modestly high grade intersections that may be
exploitable either underground or from a surface pit depending on the
optimization work that has to be done yet.
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But at depth, there is a lot of potential to expand that. You know, there’s a
six-mile structure, that’s got a whole host of known mineral occurrences on it
that are relatively under explored and we’ll be certainly carrying on, looking
at those with interest too.
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We also look at Seven-Up Pete where there’s a 595,000 ounces — sorry I’m trying
to be careful here to use US terms. I think.
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(Catherine Gignac)::
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Uh-huh.
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David Watkins:
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...mineralized material as opposed to anything that a Canadian would say about a resource.
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Man:
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Yeah.
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David Watkins:
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The — there looks like some — it’s quite clear that there’s additional mineralization that we can acquire. But
it also — appears to be open to increasing size. And we see the possibility of operating that as a non-cyanide
operation so that it’s not subject to many of the issues that Montana has become notorious for.
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So really trying to not talk along too much but we see a good deal of upside exploration and Blue Sky potential
in the combined entities.
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(Catherine Gignac):
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Uh-huh.
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James Hesketh:
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That’s just the existing property.
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Now, we’ve got — in the state of Montana, deeded mineralized rights almost 1500 square miles in size that really
hasn’t seen what I’d call any type of modern exploration so, we’ve got a land position in the combined company
that’s exceptionally strong for a company of our size.
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David Watkins:
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I’d even go as so far as to say that we know that some major companies are carrying out exploration adjacent to
some of those mineral rights in Montana and — which creates some obvious upside opportunity in its own right.
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James Hesketh:
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Yeah.
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Operator:
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As a reminder, if you would like to ask a question, press star-1.
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One moment, please, for your next question.
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Your next question comes from Jonathan Schwartz with Deerfield.
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(Jonathan):
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Hi Jim.
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James Hesketh:
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Hi (Jonathan), how are you?
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(Jonathan):
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Fine, thanks. Sounds like an exciting prospect.
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16
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Can you give me some idea of what the combined G&A will look like and what the combined total burn might be with
the contemplated exploration on top of the G&A.
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Man:
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Okay. Well, in terms of that we’re still working quite closely on trying to define that.
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(Jonathan):
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Right.
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Man:
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But, you know, Canyon — we’ve been reducing our G&A burns and basically through David’s good work reducing a lot
of our cost centers.
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And our goal here, on the combined companies is probably to cut the G&A and hopefully down to around 2 million
to 2-1/2 million combined per annum. And then from there we would — the exploration — the burn there really is
project specific.
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As we see the merit and we see the success coming, that will define our exploration budgets and moving forth
that way at, you know, if we see the strong success, we’ll try to move more money on to the exploration side on
the projects that merit it.
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Or we do plan to continue a solid exploration effort. But focus very much on the development of mineralization
and the moving the projects forward to a state where they can ultimately be developed.
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Operator:
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Your next question comes from (Ken Ing), a private investor.
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(Ken Ing):
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Yeah, I have two top questions. One is for Jim. And just (unintelligible) Atna
shareholder, California has not always been viewed as a stable area for mining and especially
you are using cyanide, can you elaborate on the — what kind of
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17
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issues or challenges you are facing when you’re dealing with cyanide in
California?
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James Hesketh:
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We have been operating in California. We’ve been operating
in Briggs mine since 1996. We’ve been operating the
cyanide heap leach and have been in complete compliance
with all regulatory and legal requirements.
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So in terms of do we see any issues and continuing that,
the answer is not really. We are, you know, the real goal
is we work with our regulators hand in hand, they know what
we’re doing, we’re very open about it and the site is well
structured and set up to accommodate the requirements of
the regulatory environment. We’re very keen on protecting
the environment as a whole and that’s a strong goal of ours
in all operations.
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(Ken Ing):
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So I gather you don’t have any NGO or environmental group breathing down your neck.
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James Hesketh:
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Anywhere you operate in the world today, you have some
degree of NGOs breathing down your neck. It’s an industry,
people make a living off it and they’re going to make a
living of it any way they can. And it doesn’t matter where
you are, whether you’re in Canada, whether you’re in
Nevada, California, Timbuktu, it doesn’t matter. You’re
going to have that type of activity going on. It is a very
large business today.
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David Watkins:
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I think it’s fair to say though (Ken) that there is nothing
out of the ordinary or unusual happening on that front at
this point in time.
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Operator:
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Your next question as a follow-up question from (Catherine
Gignac) with Wellington West.
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18
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(Catherine Gignac):
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Hi there, I just wanted to finish up with the fact that this will be — Atna
will continue to be a Canadian Incorporated company with a US wholly owned subsidiary in
Canyon, is that correct?
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Man:
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That’s correct. Correct, yeah.
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(Catherine Gignac):
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And you’ll maintain the US listing then, and.
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Man:
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Plan is not to maintain it in the short
term or reconsider it as we move forward
and — reconsider as we move forward.
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(Catherine Gignac):
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Okay, thank you.
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Operator:
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Your next question is a follow-up
question from (Andrew Mikitchook) with
Westwind Partners.
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(Andrew Mikitchook):
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Yeah, David, if you could just give us an update on what’s the most recent
level of activity is that Pinson the last stuff that you guys published this what, September,
we had that bit of an update on mobilization. What exactly are they actually doing there?
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David Watkins:
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Andrew, they’re presently — they have four drills working
on surface. They have a 50,000 foot surface drill program
plan. They have planned 35,000 feet of underground. They
have been pulling down the water table and dewatering the
mine and they tendered contracts recently, we understand to
initiate the underground work picking up from the
underground that we had established there. It’s all
ventilated and ready to go. They’re just waiting for the
contractors to come on site, I believe.
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And there is a good team of people in charge of it, a
gentleman named (John Porterfield) as the project manager
and he has — he specializes in project
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19
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development and mining engineer by background. And a geologist, a fellow named
Dave Arbonies, who is an experienced geologist, who did South Arturo and Bald
Mountain as well as other development stage projects. They have engaged a
contract manager so they’re moving forward full speed right now, Andrew, as fast
as they can.
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That said, at this point in time, they’re still not spending (at rates that)
unless they accelerate quite significantly they will complete the $30 million
expenditure, but the project is so attractive I think they will make every
effort to do so.
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The objective of their program is several tiered. They’ve been doing some
in-fill drilling mainly to test the resource estimate and the interpretation
that we had ourselves.
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They are doing step outs around the resource to try and increase it and they are
evaluating the possibilities to increase the rate of production either by an
expanded underground or in fact they’re evaluating the possibility of making it
much larger to see if they can do it as an open pit.
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And in addition to that, some of the drilling that they’re doing is focused on a
few of the other step out exploration targets. They are drilling up towards the
north boundary and I don’t know if you noticed but on their Web cast recently,
they mentioned a new zone that they’ve discovered from Turquoise Ridge which is
just a little further north of our boundary. That’s pretty much where they are
right now.
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Operator:
|
|
Your next question comes from (Sam Robotsky) with (SER)
Asset Management.
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(Sam Robotski):
|
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Yeah. Good afternoon, good morning.
|
20
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Will you be — your trade — Atna is currently traded on
Toronto. So will it trade in the NASDAQ, there’s a
bulletin board or some kind of thing or you will wait till
you’re up for that.
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Man:
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Yeah. Right now, Atna does have a — you can trade on Atna
through (ATNAF) I believe is the US call sign
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(Sam Robotski):
|
|
Okay. Now, what is the — I’m not sure if I understood that you addressed. What
your expect — what’s the time frame you can expect the gold out of the ground. How soon do you
expect to get gold out of the ground?
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Man:
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Well, we need to close this transaction. But the cash in the
combined corporation once we’ve closed is fairly substantial,
that will — over — it will — right now it’s over 14 million.
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That will give us enough funding to commence a lot of the
preoperational works. You know, Briggs currently is — we do have
permits in hand there so really it’s a matter pulling this
funding in then it’s getting the proper people and contracts in
place — contractors in place and, you know, that’s the main lag
time and then we do have about a six-month period for leach pad
expansion on construction. So potentially we could be in
operation within a year with that sort of tasking.
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Operator:
|
|
Your next question is a follow-up question from (Ken Ing), a
private investor.
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(Ken Ing):
|
|
David, you alluded to the fact that Yukon Zinc is currently doing some financing to
bring (more filling) into production. What sort of upside should they become production and
from the (silver) royalty that we actually have.
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21
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David Watkins:
|
|
I’ve been — in the last couple of days, I’ve talked to the President of Yukon Zinc about the status of their
financing and he is fairly confident that they’re on track to close that.
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You’ll recall that they have a credit facility organized from Barclay’s bank contingent upon completing the
equity portion of the financing and what they’re stating publicly is that they anticipate completing the equity
financing on November 29.
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Based on the feasibility studies that they have, they would produce copper, zinc and lead but of significance to
Atna is the silver and the gold and the projected production of silver is 4.9 million ounces per year and 20,000
ounces of gold per year, for a 12-year life — again, based on their feasibility study.
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So if they’re successful in completing that financing, then I think there are about two years to complete
construction and enter into production at which time the cash flow stream would come to Atna from that.
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However, I think that an asset that will increase tremendously in value as the confidence in completing their
financing and construction starts to build and I think we got very little credit in the share price now but that
should build significantly over the next short period of time particularly if they successfully close that
financing.
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|
Does that answer your question (Ken)?
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(Ken Ing):
|
|
Thank you.
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|
Operator:
|
|
As a reminder, if you would like to ask a question, press star-1.
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22
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|
|
There are no further questions at this time. Mr. Hesketh, are there any closing remarks?
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James Hesketh:
|
|
Yes, I would like to thank everybody for attending this call. You know, that David and myself believe strongly
that this combination is going to be a solid — what we’re creating here is a very solid platform to build from
and continue to do project developments, transactions and to grow the next mid level mining company. We’ve got a
great management team and I’m very excited about where all of this is going. But I would like to thank you for
all attending and please feel free to contact us at our various offices and we can answer any questions in the
future. David, do you have any remarks there?
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David Watkins:
|
|
No, I just endorse what Jim says. We’re very excited about the combination moving forward. I think it will be a
good ride for all our shareholders and thank you very much for attending today.
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Operator:
|
|
Thank you. This does conclude today’s conference call. You may now disconnect.
|
END
23
Exhibit 99.2
ATNA AND CANYON AGREE TO MERGE
VANCOUVER, BC and Golden, CO, November 19, 2007 –
Atna Resources Ltd. (“Atna”) (TSX:ATN) and Canyon
Resources Corporation (“Canyon”) (AMEX:CAU) jointly announced today a transaction whereby Atna will
acquire all of the issued and outstanding shares of common stock of Canyon for a total value of
approximately C$25.3 (US$25.9) million.
Atna and Canyon believe that the combination will benefit shareholders of both companies by
creating a strong platform for growth with the following characteristics and synergies:
|
•
|
|
A multi-million ounce gold company highly leveraged to gold price.
|
|
|
•
|
|
Near term gold production from Briggs and Reward projects to complement development at
Pinson.
|
|
|
•
|
|
Upside opportunity from complementary pipeline of gold exploration and development
projects.
|
|
|
•
|
|
Focus on gold in the western U.S.
|
|
|
•
|
|
Exceptional management team with complementary skills and experience.
|
|
|
•
|
|
Size and financial strength to ensure continued growth
|
|
|
•
|
|
More than C$13.7 (US$14) million cash in hand
|
Under the proposed transaction, Canyon shareholders will receive 0.32 common shares of Atna for
each share of common stock of Canyon. Based on Friday’s closing price of C$1.68 for Atna, the
consideration is valued at C$0.54 (US$0.55) per Canyon common share. The consideration represents a
premium of 44.9% to Canyon’s closing share price on November 16, 2007, or a 42.1% premium based on
the 20-day volume weighted average share prices for both companies from that date.
Atna and Canyon have entered into an Agreement and Plan of Merger. The Board of Directors of Canyon
has agreed to support the proposed transaction and recommends that Canyon shareholders vote in
favor of it. Management and Directors of Canyon have entered into support agreements with Atna
under which they have agreed to vote in favor of the transaction.
David Watkins, President and CEO of Atna, said, “The transaction complements Atna’s exciting
development opportunity at the Pinson gold mine in Nevada with Canyon’s near-term production
projects at the Briggs Gold Mine in California and the Reward Project in Nevada. Canyon also
brings a number of complementary exploration and development properties, which combined with Atna’s
portfolio of prospects, creates an impressive pipeline of opportunities in the merged entity.”
“Another key benefit to both Atna and Canyon shareholders is the creation of a powerful and
balanced team of experienced mining professionals, which results from combining the
1
complementary skill sets of the people in both companies. Jim Hesketh and I worked together for 14
years dating back to our days at Cyprus Amax in the 1990s. Jim has been a director of Atna for six
years and is in a unique position to understand and appreciate the value of our assets and the
growth platform we are creating.”
Jim Hesketh, President and CEO of Canyon, added, “This transaction provides an attractive premium
to Canyon’s shareholders, while affording them the opportunity to participate in a growth-focused
gold company through their investment in Atna. The combined company will have the financial
strength and access to capital markets to advance Briggs and Reward into production. I am also
excited about working with David Watkins again. I know him to be a superb individual who has a high
level of integrity. I feel this is an excellent opportunity for Canyon.”
Atna intends to advance the Briggs and Reward projects into production in 2008-2009. Canyon is
forecasting production from the projects to reach 60,000 - 80,000 oz per year at a cash cost of
US$400 - 450 per ounce.
The gold mineralization in the two companies is reported in accordance with Canadian (Atna) and US
(Canyon) regulatory requirements:
|
|
|
Atna
|
|
Table of Mineral Resources
(1)
|
NI43-101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cut-off
(2)
|
|
Tons
|
|
Grade oz/t
|
|
Ounces Au
|
Measured + Indicated
|
|
|
2,505,000
|
|
|
|
0.421
|
|
|
|
1,063,000
|
|
Inferred
|
|
|
3,374,000
|
|
|
|
0.340
|
|
|
|
1,146,600
|
|
|
|
|
(1)
|
|
Project basis: Atna owns 70%, Barrick 30%: Barrick may reverse interest to 30:70
by spending US$30M by April 2009
|
|
(2)
|
|
Cut-off 0.20 oz/ton
|
|
(3)
|
|
Although “Measured Resources”, “Indicated Resources” and “Inferred Resources” are
categories of mineralization that are recognized and required to be disclosed by Canadian
regulations, the United States Securities and Exchange Commission (the “SEC”) does not
recognize them. Disclosure of contained ounces is permitted under Canadian regulations,
however, the SEC generally permits resources to be reported only as in place tonnage and
grade. See “Cautionary Note to US Investors.”
|
|
|
|
Canyon
|
|
Table of Proven, Probable, and Mineralized Material
|
SEC Guide 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cut-off
(1)
|
|
Tons
|
|
Grade
oz/t
|
|
Ounces Au
(3)
|
Proven & Probable Reserves
|
|
|
4,338,000
|
|
|
|
0.030
|
|
|
|
130,000
|
|
Mineralized Material
(2)
|
|
|
61,782,000
|
|
|
|
0.031
|
|
|
|
|
|
|
|
|
(1)
|
|
Cut-off 0.01 – 0.08 oz/ton function of open pit or underground
|
|
(2)
|
|
Mineralized material DOES NOT include proven and probable
|
|
(3)
|
|
Equity share of in-situ ounces
|
2
Summary of the Transaction
The transaction will be completed by way of a merger whereby each share of Canyon common stock will
be exchanged for 0.32 of an Atna common share. All outstanding Canyon employee stock options will
be cancelled and all outstanding warrants and convertible debentures of Canyon will be assumed by
Atna and will be exercisable to acquire that number of common shares of Atna determined by
reference to the share exchange ratio. Atna will grant options to Canyon’s employees at the time of
closing. Atna will continue to trade on the Toronto Stock Exchange, under the symbol “ATN”.
David Watkins will continue to be the Chief Executive Officer and Chairman of the combined company,
while Jim Hesketh will join the management team in the role of President and Chief Operating
Officer. David Suleski, Canyon’s Vice President and Chief Financial Officer, will assume the same
role at Atna. Bill Stanley and Bonnie Whelan of Atna will continue in their roles respectively as
Vice President, Exploration and Corporate Secretary.
The Board of Directors of Canyon, having received the unanimous recommendation of a Special
Committee of independent Directors, is recommending that holders of Canyon shareholders vote in
favor of the transaction. Canyon’s financial advisors have provided an opinion to the Special
Committee that the consideration to be received by Canyon shareholders pursuant to the transaction
is fair, from a financial point of view, to Canyon shareholders. Atna’s financial advisors have
provided an opinion to the Board of Directors of Atna that the consideration being offered is fair,
from a financial point of view, to Atna shareholders.
The transaction is subject to all requisite regulatory and court approvals and other conditions
customary to transactions of this nature. The transaction must be approved by the holders of a
majority of the outstanding shares of common stock of Canyon at a special meeting of Canyon
stockholders.
Atna has engaged National Bank Financial Inc. as its financial advisor. Canyon’s financial advisor
is Wellington West Capital Markets Inc.
Conference Call
Management from both Atna and Canyon will host a joint conference call on November 19, 2007 at
10:00 a.m. (PST) / 1:00pm (EST). Shareholders are invited to participate in the conference call
as follows:
Toll
Free# (877) 576 - 0177
International
# (706) 679 - 4128
Callers should reference Conference # 24901016.
A replay of the conference call will be available two hours following the call until midnight,
Wednesday, November 21; by dialing (800) 642-1687 or (706) 645-9291
3
About Atna
Atna is building a successful gold exploration, development and mining enterprise in Nevada. Atna
presently holds a 70% interest in the high grade Pinson gold deposit in Nevada, which is being
developed by Pinson Mining Company, a wholly owned affiliate of Barrick Gold. Barrick has the right
to increase its’ interest in the project to 70% (and reduce Atna’s share to 30%) by spending
US$30,000,000 on the project prior to April 2009. Atna also holds a portfolio of exploration
projects in Nevada, Canada, and Chile. Many of these projects are joint ventured to quality
partners, spreading Atna’s risk and leveraging its opportunities. In addition, Atna holds a 9.45%
royalty interest on silver and gold that may be produced from the Wolverine deposit, presently
under development in the Yukon Territory, Canada. The company has an experienced well rounded,
management team and Board, committed to the success and growth of the company through the
exploration and development of its projects and with new acquisitions. Atna trades on the Toronto
Stock Exchange under the symbol ATN.
About Canyon
Canyon owns the Briggs Gold Mine and four satellite deposits in California; the Reward Gold deposit
near Beatty, Nevada; the Seven-Up Pete Gold deposit near Lincoln, Montana; and a portfolio of
Nevada gold exploration properties. To date, the Company has developed in-place mineralized
material on its properties containing over 1.9 million ounces of gold and recognizes substantial
additional exploration potential. Canyon has developed re-start and underground test mining plans
for its permitted Briggs Mine and is completing permitting and feasibility study work at the Reward
Project.
In addition to the Nevada and California gold assets, Canyon owns over 900,000 acres of fee mineral
rights in the State of Montana with identified industrial mineral and copper potential. Canyon
also owns “carried” uranium interests in the Sand Creek-Converse uranium exploration joint venture
in the Southern Powder River Basin of Wyoming. Canyon trades on the American Stock Exchange under
the symbol CAU.
Additional Information and Where to Find it
This press release is not an offer to sell securities or the solicitation of an offer to buy
securities. In connection with the proposed transaction, Atna and Canyon intend to file relevant
materials with the SEC, including the filing by Atna with the SEC of a Registration Statement on
Form F-4 (the “Registration Statement”), which will include a preliminary prospectus and related
materials to register the common shares of Atna to be issued in exchange for Canyon common
stock. The Registration Statement will incorporate a proxy statement/ prospectus (the “Proxy
Statement/Prospectus”) that Canyon plans to mail to its stockholders in connection with
obtaining approval to the proposed merger. The Registration Statement and the Proxy
Statement/Prospectus will contain important information about Canyon, Atna, the transaction and
related matters. Investors and security holders are urged to read the Registration Statement and
the Proxy Statement/Prospectus carefully when they are available. Investors and security holders
will be able to obtain free copies of the Registration Statement and the Proxy
Statement/Prospectus and other documents filed with the SEC by Canyon and Atna through the web
site maintained by the SEC at www.sec.gov.
Canyon and its directors and executive officers also may be deemed to be participants in the
solicitation of proxies from the stockholders of Canyon in connection with the
4
transaction described herein. Information regarding the special interests of these directors and
executive officers in the transaction described herein will be included in the Proxy
Statement/Prospectus described above. Additional information regarding these directors and
executive officers is also included in Canyon’s annual report on Form 10-K, which was filed with
the SEC on March 2, 2007. This document is available free of charge at the SEC’s web site at
www.sec.gov. Atna and its directors and executive officers may be deemed to be participants in
the solicitation of proxies from the stockholders of Canyon in connection with the transaction
described herein. Information regarding the special interests of these directors and executive
officers in the transaction described herein will be included in the Proxy Statement/Prospectus
described above. Additional information regarding these directors and executive officers is also
included in Atna’s Form 20-F filed with the SEC on June 30, 2005. This document is available
free of charge at the SEC’s web site at www.sec.gov. Copies of Atna’s filings may also be
obtained without charge from Atna at its web site (www.atna.com) or by directing a request to
Atna Resources Ltd., Attn.: Investor Relations, 510 – 510 Burrard Street, Vancouver, BC V6C 3A8.
Atna’s Mineral Resource Estimates
This press release and the mineral resources calculation were prepared under the supervision and
review of William Stanley, V.P. Exploration of Atna, a Licensed Geologist and Qualified Person
with the ability and authority to verify the authenticity and validity of information contained
within this news release. The original resource estimate, which was prepared by Rob Sim, an
independent consulting resource geologist, was first published in February 2005, supported by
Technical Reports filed on SEDAR in March 2005, subsequently revised and re-filed in December
2005 and subsequently revised by Atna and re-filed in July 2007.
Forward-looking Statements
Certain forward-looking statements are included in this release, including statements relating to a
proposed transaction between Canyon Resources Corporation and Atna Resources Ltd., reserve and
resource amounts and anticipated production schedules. These statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect Canyon’s and Atna’s current expectations regarding the proposed
transaction, and speak only as of the date of this release. Investors are cautioned that all
forward-looking statements in this release involve risks and uncertainties that could cause actual
results to differ materially from those referred to in the forward-looking statements. Such risks
and uncertainties include, among other things: (1) that Canyon stockholders will not support or
approve the transaction in a timely manner, if at all; (2) that the closing of the transaction
could be materially delayed or more costly and difficult than expected; (3) that the final value of
the transaction could be adversely affected by changes in stock price of Atna Resources; (4) that
the transaction will not be consummated; (5) that, if closed, the anticipated benefits of the
transaction will not materialize; and (6) risks relating to the ability to obtain permits and
commence production and generate material revenues or obtain adequate financing for planned
exploration and development activities. A full discussion of other known risks and
uncertainties regarding Canyon Resources, its business and operations are included in its Annual
Report on Form 10-K, for the year ended December 31, 2006, as filed with the SEC, copies of which
are available without charge from Canyon Resources. A full discussion of other known risks and
uncertainties regarding Atna Resources, its business and operations are included in its
5
Annual Report on Form 20-F, for the year ended December 31, 2006, as filed with the SEC, copies of
which are available without charge from Atna Resources. These filings are also available
electronically from the SEC Web site at
www.sec.gov.
If any of the events described in those
filings were to occur, either alone or in combination, it is likely that Canyon’s or Atna’s ability
to reach the results described in the forward-looking statements could be impaired and Canyon’s
and/or Atna’s stock price could be adversely affected. Neither Canyon Resources or Atna Resources
undertake any obligation to update or correct any forward-looking statements included in
this presentation to reflect events or circumstances occurring after the date of this presentation.
For further information please contact:
|
|
|
Atna Resources Ltd.
|
|
Canyon Resources Corp.
|
David Watkins
|
|
James Hesketh
|
President & CEO
|
|
President & CEO
|
Tel: 604-684-2285
|
|
Tel: 303-278-8464
|
dwatkins@atna.com
|
|
jhesketh@canyonresources.com
|
|
|
|
Kendra Johnston
|
|
Valerie Kimball
|
Investor Relations Manager
|
|
Investor Relations Manager
|
Tel: 604-684-2285
|
|
Tel: 303-278-8464
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kjohnston@atna.com
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vkimball@canyonresources.com
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Cautionary Note to US Investors
This press release and other information released by Atna uses the terms “resources”, “measured
resources”, “indicated resources” and “inferred resources”. United States investors are advised
that, while such terms are recognized and required by Canadian securities laws, the SEC does not
recognize them. Under United States standards, mineralization may not be classified as a “reserve”
unless the determination has been made that the mineralization could be economically and legally
produced or extracted at the time the reserve determination is made. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. United States investors are cautioned
not to assume that all or any part of measured or indicated resources will ever be converted into
reserves. Inferred resources are in addition to measured and indicated resources. Further, inferred
resources have a great amount of uncertainty as to their existence and as to whether they can be
mined legally or economically. It cannot be assumed that all or any part of the inferred resources
will ever be upgraded to a higher category. Therefore, United States investors are also cautioned
not to assume that all or any part of the inferred resources exist, or that they can be mined
legally or economically.
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