Cadiscor Resources Inc. (TSX VENTURE: CAO)(FRANKFURT:
DQN)('Cadiscor') and Tiomin Resources Inc. (TSX: TIO) ('Tiomin')
announce that they have agreed to a transaction whereby Cadiscor
and Tiomin will combine to form a new company ('Newco'). Existing
Tiomin and Cadiscor shareholders will own approximately 53% and 47%
of Newco respectively. In addition, Tiomin has agreed to lend
Cadiscor Cdn$7.5 million, via a debt facility, to finance the
immediate refurbishment and subsequent restart of the Sleeping
Giant mine.
Under the proposed terms of the transaction, Tiomin will
consolidate its currently outstanding 480.8 million common shares
ten-for-one and then combine with Cadiscor, which has 43.3 million
common shares outstanding, on a one-for-one basis.
Post-transaction, Newco, which will be named Cadiscor, will have
approximately 91.4 million shares outstanding.
Tiomin and Cadiscor have agreed not to solicit alternative
transactions to the proposed transaction and have agreed to pay a
break fee of Cdn.$1.0 million in certain circumstances.
Completion of the transaction is subject to the completion of
definitive documentation and due diligence reviews and to
regulatory, stock exchange, corporate and shareholder approval.
Michel Bouchard, President and Chief Executive Officer of
Cadiscor, stated: "We believe this transaction will greatly improve
our financial strength allowing Cadiscor to fast-track the
resumption of gold production at the Sleeping Giant mine in
northern Quebec in 2009. This business combination will diversify
our asset base with a diversified portfolio of copper-gold assets
which includes Cadiscor's Discovery Project and other highly
prospective gold exploration properties in Quebec, a 49%
contributing interest in the Pukaqaqa copper-gold deposit in Peru,
a 100% interest in the Kwale titanium mineral sands project in
Kenya and a 17.2% interest in Kivu Gold Corp, which owns an
extensive portfolio of gold exploration properties in sub-Saharan
Africa. Newco plans to pursue an aggressive growth strategy around
its core gold-producing asset, the Sleeping Giant mine".
Robert Jackson, President and Chief Executive Officer of Tiomin,
said: "This accretive merger benefits the shareholders of both
companies, creating a well-capitalized platform on which to build
the next intermediate gold producer. Newco has near-term,
profitable gold production, a strong project pipeline, a solid
balance sheet and an experienced team of operating managers and
directors. Cadiscor's NI 43-101 technical report on the Sleeping
Giant mine, dated September 23, 2008, stated that current mineral
reserves could generate a profit of $16 million in the first 16
months of operation at a gold price of Cdn.$850/oz and an annual
production rate of 52,000 oz/year. The current gold price is
Cdn.$1,100/oz and the increased revenue largely flows to the bottom
line. We are evaluating deepening the 1,000m deep shaft by 300m to
access additional resources, which have historically occurred at
about 1,000 oz per vertical meter. Sleeping Giant has operated for
20 years and produced about one million ounces of gold with
approximately the same resources in hand as the mine has today.
This strong new company will be well positioned to leverage
continued strength in the price of gold in 2009 and we strongly
encourage our shareholders to support the transaction".
JC Potvin, is a director and Chairman of Tiomin and a director
of Cadiscor and as such Mr. Potvin excused himself from the voting
to approve this proposed transaction by each of the boards of
directors of Tiomin and Cadiscor
Highlights of the transaction
Upon completion of the transaction, Newco will have:
- Approximately $15-million in cash and cash equivalents;
- Annual production of approximately 50,000 oz/year of gold when
production restarts at the Sleeping Giant Mine in Q3 2009;
- Future potential production growth of 44,000 oz/year at the
Discovery Project, based on the NI 43-101 compliant Scoping Study
filed on September 29, 2008;
- Cadiscor 's previously disclosed gold reserves and resources
at Sleeping Giant and the Discovery Project;
- Tiomin's previously disclosed resources in Kenya, where
Jinchuan Group Limited is in advanced discussions to finance and
develop the Kwale project, and Peru;
- Promising gold and base metal exploration potential at the
Dormex and Flordin gold projects in Quebec and through Tiomin's
copper and gold properties in Peru and Africa;
- Management and Board of Directors with experience in
operating, developing and financing international mining
companies;
- Strategic regional positioning of the Sleeping Giant mine and
mill;
- Exposure to the expected consolidation in the gold industry;
and
- Exposure to international exploration potential.
Management and Board of Directors of Newco
The board of directors of Newco will comprise three
representatives of Cadiscor and four representatives of Tiomin. Mr.
Jean-Charles Potvin will be appointed as Chairman of the Board and
Mr. Michel Bouchard will be President and Chief Executive Officer.
Mr. Robert Jackson will be Vice President, Corporate
Development.
Update on Freegold Ventures Limited
Separately, Tiomin announces that Freegold Ventures Limited
(TSX: ITF, OTCBB: FGOVF, Frankfurt: FR4) has defaulted on the debt
repayment to Tiomin of US$2.0 million due February 10, 2009. Tiomin
is reviewing its legal response.
Certain of the information contained in this news release
constitutes 'forward-looking statements' within the meaning of
securities laws. Such forward-looking statements, including but not
limited to those with respect to the prices of metals and minerals,
estimated future production and estimated costs of future
production involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements to be materially different from any forecast results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
actual prices of copper and gold, the actual results of current
exploration, development and mining activities, changes in project
parameters as plans continue to be evaluated, as well as those
factors disclosed in the documents of Tiomin and Cadiscor filed
from time to time with the Ontario Securities Commission.
Contacts: Cadiscor Resources Inc. Michel Bouchard President
450-449-0066 mbouchard@cadiscor.com Cadiscor Resources Inc. Linda
Plante Investor Relations 450-449-0066 lplante@cadiscor.com
www.cadiscor.com Tiomin Resources Inc. Jim O'Neill VP Corporate
Controller and Investor Relations 416-350-3779, ext. 231
joneill@tiomin.com www.tiomin.com
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