Avino Silver & Gold Mines Ltd. to Acquire Bralorne Gold Mines
Ltd.
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jun 30, 2014) -
Avino Silver & Gold Mines Ltd. ("Avino")
(TSX-VENTURE:ASM)(NYSEMKT:ASM)(FRANKFURT:GV6) and Bralorne Gold
Mines Ltd. ("Bralorne") (TSX-VENTURE:BPM)
(OTCQX:BPMSF)(BERLIN:GV7)(FRANKFURT:GV7)(WKN:A0B75M) are pleased to
announce that they have entered into a letter of intent (the "LOI")
pursuant to which it is contemplated that Avino will acquire all of
the outstanding common shares of Bralorne which Avino does not
already own by way of a plan of arrangement (the "Transaction").
Upon completion of the Transaction, it is anticipated that
approximately 2,636,857 common shares of Avino will be issued to
former Bralorne shareholders to acquire Bralorne which holds an
undivided 100% legal and beneficial interest in the operating
Bralorne gold mine in British Columbia.
David Wolfin, Avino President and CEO, stated, "Avino intends to
make the Bralorne gold mine our second production center in North
America. Our team has a good technical understanding and knowledge
base of the Bralorne gold mine and we see an opportunity to finance
the expansion of this mine and substantially increase its
production profile over time. By utilizing Avino's balance sheet
and access to capital along with the strengths of the combined
Avino and Bralorne operational teams, I believe that we can create
value for both Avino and Bralorne shareholders by realizing the
full potential of this quality asset. Avino has a strong track
record of financing production growth at our flagship Avino mine in
Mexico to create shareholder value as demonstrated by our strong
financial performance thus far in 2014 and I look forward to
working with the Bralorne team and continuing this type of
success."
William Kocken, Bralorne President and CEO, stated, "Since
mid-2011, funding junior resource companies has been a very
challenging task. The current market valuation of Bralorne required
Bralorne's Board of Directors to evaluate various financing
opportunities in the best interests of our shareholders. This
transaction with Avino allows for our project to advance.
Importantly, it also offers Bralorne shareholders an attractive
premium, minimizes near-term going concern risk by providing an
immediate cash injection and protects our shareholders from a
financing which, if available at all, would be highly dilutive and
in the Board's view punitive to Bralorne shareholders. Avino is a
recognized, profitable precious metals producer with a management
team that has an established record of accretively financing the
expansion of producing mines in North America and we look forward
to working with them."
Summary Terms of the LOI
Under the terms of the LOI, the Transaction will be effected by
a plan of arrangement under the Business Corporations Act
(British Columbia) whereby Avino will acquire from the shareholders
of Bralorne, 100% of the outstanding common shares of Bralorne
which Avino does not already own in exchange for common shares of
Avino, and Bralorne will as a result become a wholly-owned
subsidiary of Avino. Previously Avino agreed to purchase 9,500,000
common shares of Bralorne from a third party and following the
closing of this purchase, Avino will own 9,679,149 common shares of
Bralorne representing approximately 34% of Bralorne's outstanding
common shares. The proposed Transaction structure remains to be
finalized by the parties pursuant to the LOI.
Avino will issue to each shareholder of Bralorne 0.14 of a
common share in the capital of Avino in exchange for each Bralorne
common share held by such shareholder (the "Share Exchange Ratio").
The Share Exchange Ratio represents a 25.2% offer premium to
Bralorne shareholders based on the closing prices of Avino and
Bralorne on the TSX Venture Exchange as of June 27, 2014. No
fractional shares of Avino will be issued, and fractions will be
rounded down to the nearest lower whole share. Based on the
28,513,844 common shares of Bralorne outstanding on the date
hereof, Bralorne shareholders (not including Avino) would receive
approximately 2,636,857 common shares of Avino under the
Transaction, representing approximately 7.6% of Avino's outstanding
shares on completion of the Transaction (based on Avino's
32,241,760 outstanding common shares on the date hereof). It will
be a condition to the Transaction that all stock options of
Bralorne are exercised or terminated prior to the effective time of
the plan of arrangement.
The LOI also provides, subject to the acceptance of the TSX
Venture Exchange, for Avino to advance a bridge loan to Bralorne of
up to CAD$1.25 million, consisting of an initial advance of
$500,000 immediately, and the balance of $750,000 upon the
execution of a definitive agreement and any related support
agreements. All advances will bear interest at 12% per annum
payable on maturity, and will mature on the earlier of the closing
of the Transaction and September 30, 2014. The principal amount and
any accrued interest will be secured by a general security interest
against all of the assets of Bralorne.
The LOI provides for customary deal protection mechanisms,
including non-solicitation and right to match, in favour of Avino.
Until August 8, 2014, Bralorne and Avino will negotiate exclusively
with one another and work together to finalize definitive
agreements as soon as reasonably possible and Bralorne will not
issue any debt, equity or equity like securities without the prior
written consent of Avino.
Closing Conditions
The closing of the Transaction will be subject to completion of
several conditions, including:
- completion of due diligence satisfactory to each party by
August 8, 2014;
- execution of a formal definitive agreement based on the terms
of the LOI and containing other customary terms for a transaction
of this nature by August 8, 2014;
- the Transaction and plan of arrangement will be subject to
approval by the shareholders of Bralorne at an annual and special
meeting of shareholders; and
- receipt of all necessary approvals to the Transaction,
including from the TSX Venture Exchange, and the approval of the
Supreme Court of British Columbia after a hearing upon the fairness
of the Transaction.
No assurance can be given at this time that the proposed
Transaction will be completed, that the conditions to closing will
be satisfied or that the terms of the Transaction will not change
materially from those described in this news release.
Appointment of Special Committees
The board of directors of each of Avino and Bralorne has
appointed an independent special committee to review, negotiate and
recommend for approval (if appropriate) the proposed Transaction to
their respective boards of directors. Avino and Bralorne have two
directors in common, David Wolfin and Gary Robertson. Jasman Yee, a
director of Avino has performed consulting services for Bralorne in
the past. David Wolfin is also a director and officer of Oniva
International Services Corp., a private resource management company
which provides administrative and other services and facilities to
Avino and Bralorne, among other companies. The special committee of
Bralorne is comprised of Patrick Kinsella and William Glasier, and
the special committee of Avino is comprised of Andrew Kaplan and
Michael Baybak. The Transaction is considered to be a "related
party transaction" or "business combination" under Multilateral
Instrument 61-101 Protection of Minority Security Holders in
Special Transactions, invoking the requirement for approval of the
Transaction by a majority of the minority shareholders of Bralorne
at the Bralorne Meeting.
Cantor Fitzgerald Canada Corporation is acting as financial
advisor to Avino in connection with the Transaction.
Bralorne
Bralorne is a Canadian junior mining and exploration company,
whose current project is a 100% interest in the Bralorne Gold Mine,
BC. The Bralorne mining camp has a history of past production of 4
million ounces of gold from three mines (Bralorne, Pioneer and
King) that fed two mills with a combined capacity of 875 tons per
day with gold grades that averaged half an ounce per ton until
1971. Historically, the focus was on mining high grade material
delineated by driving drifts on the veins at successively lower
levels in the mines. Minimal exploration work was conducted beyond
the known veins, and the areas between the historical mines were
left undeveloped. Under Bralorne's management, new mill facilities
have been developed, permitted, and are fully operational, and new
discoveries have been made within the gap areas between the old
mines, using geochemical surveys followed by diamond drilling. On
November 21, 2012, Bralorne filed on SEDAR a preliminary economic
assessment report on the Bralorne Mine property prepared by Beacon
Hill Consultants (1988) Ltd., which reported as at August 31, 2012
measured and indicated mineral resources of 170,583 tons grading
0.266 oz gold/ton, and inferred mineral resources of 272,089 tons
grading 0.256 oz gold/ton (mineral resources are not mineral
reserves and do not have demonstrated economic viability).
In 2011, Bralorne began limited production at 100 tons per day
and has sustained the operation since that time. Despite the
limited production, the mine property is still considered in the
exploration and evaluation stage. During fiscal year 2013, Bralorne
produced an estimated 3,842 ounces of gold.
For more information, please feel free to visit Bralorne's
website at: www.bralorne.com.
Avino
Founded in 1968, Avino's mission is to create shareholder value
through profitable organic growth at the historic Avino property
near Durango, Mexico, and the strategic acquisition of mineral
exploration and mining properties. We are committed to managing all
business activities in an environmentally responsible and
cost-effective manner, while contributing to the well-being of the
communities in which we operate.
The securities of Avino referred to in this news release have
not been, nor will they be, registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons absent U.S. registration or
an applicable exemption from the U.S. registration requirements.
Accordingly, to the extent required, it is anticipated that the
Transaction will be effected in reliance upon the exemption from
registration provided by section 3(a)(10) of the U.S. Securities
Act. This news release does not constitute an offer of securities,
nor a solicitation for offers to buy any securities.
On Behalf of Avino's Board
Malcolm Davidson, CA Chief Financial Officer
On Behalf of Bralorne's Board
William Kocken, Chief Executive Officer
Safe Harbor Statement - This news release may contain
"forward-looking information" and "forward-looking statements"
(together, the "forward looking statements") within the meaning of
applicable securities laws and the United States Private Securities
Litigation Reform Act of 1995, including our belief as to the
extent and timing of various studies and exploration results, the
potential tonnage, grades and content of deposits, timing and
establishment and extent of resources estimates. These
forward-looking statements are made as of the date of this news
release and the dates of technical reports, as applicable. Readers
are cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the future
circumstances, outcomes or results anticipated in or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur. While we have based these
forward-looking statements on our expectations about future events
as at the date that such statements were prepared, the statements
are not a guarantee that such future events will occur and are
subject to risks, uncertainties, assumptions and other factors
which could cause events or outcomes to differ materially from
those expressed or implied by such forward-looking statements.
Such factors and assumptions include, among others, the effects
of general economic conditions, the price of gold, silver and
copper, changing foreign exchange rates and actions by government
authorities, uncertainties associated with legal proceedings and
negotiations and misjudgments in the course of preparing
forward-looking information. In addition, there are known and
unknown risk factors which could cause our actual results,
performance or achievements to differ materially from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Known risk factors include risks
associated with project development; the need for additional
financing; operational risks associated with mining and mineral
processing; fluctuations in metal prices; title matters;
uncertainties and risks related to carrying on business in foreign
countries; environmental liability claims and insurance; reliance
on key personnel; the potential for conflicts of interest among
certain of our officers, directors or promoters of with certain
other projects; the absence of dividends; currency fluctuations;
competition; dilution; the volatility of the our common share price
and volume; tax consequences to U.S. investors; and other risks and
uncertainties. Although we have attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results not to be as anticipated, estimated or intended. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. We are under no obligation to update or alter any
forward-looking statements except as required under applicable
securities laws.
Cautionary Note to United States Investors - The information
contained herein and incorporated by reference herein has been
prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of United States
securities laws. In particular, the term "resource" does not equate
to the term "reserve". The Securities Exchange Commission's (the
"SEC") disclosure standards normally do not permit the inclusion of
information concerning "measured mineral resources", "indicated
mineral resources" or "inferred mineral resources" or other
descriptions of the amount of mineralization in mineral deposits
that do not constitute "reserves" by SEC standards, unless such
information is required to be disclosed by the law of the Company's
jurisdiction of incorporation or of a jurisdiction in which its
securities are traded. U.S. investors should also understand that
"inferred mineral resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. Disclosure of "contained ounces" is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Avino Silver & Gold Mines Ltd.Malcolm
Davidson604.682.3701ir@avino.com604.682.3600www.avino.comBralorne
Gold Mines Ltd.William
Kocken604.682.3701r@bralorne.com604.682.3600www.bralorne.com