VANCOUVER, May 15, 2018 /CNW/ - Golden Reign Resources
Ltd. (TSX-V: GRR) ("Golden Reign"), Marlin Gold Mining
Ltd. (TSX-V: MLN) ("Marlin") and Sailfish Royalty
Corp. (TSX-V: FISH) ("Sailfish") are pleased to announce
that they have entered into a non-binding letter of intent (the
"LOI"), together with Wexford Capital LP ("Wexford"), whereby
Golden Reign and Marlin will pursue a business combination of
Golden Reign's wholly-owned San Albino-Murra Property ("San
Albino") in Nueva Segovia,
Nicaragua and Marlin's La Trinidad
Mine ("La Trinidad") in Sinaloa,
Mexico. Pursuant to the proposed transaction, Golden Reign
plans to acquire all of the issued and outstanding shares of Marlin
(following completion of the Marlin Reorganization as defined
below) by way of plan of arrangement (the "Proposed Transaction").
Upon completion of the Proposed Transaction it is expected that the
current shareholders and option holders of Marlin will own in
aggregate approximately 45% of the shares of Golden Reign (after
distributing any Golden Reign shares already owned by Marlin to its
shareholders as discussed below) and current non-Marlin Golden
Reign shareholders will own approximately 55% of the shares. It is
expected that the name of the parent company will be changed in
connection with the completion of the Proposed Transaction from
Golden Reign to "Mako Mining Corp." or such other name as may be
mutually determined by Golden Reign and Marlin. In connection with
the Proposed Transaction, Sailfish will restructure its existing
gold stream on San Albino, as further discussed below.
"This transaction will be beneficial for existing Golden Reign
shareholders and stakeholders. The combined entity creates a
focussed precious metals exploration and development company with
an unencumbered high margin asset in Nicaragua, immediate production and cash flow
from La Trinidad, cash flow growth, no debt, geographic
diversification and significant exploration potential", stated
Kevin Bullock, Golden Reign's Chief
Executive Officer and director. "We are excited to shortly be
able to begin construction of a 500tpd mine at San Albino and grow
production and cash flow to fund exploration of the highly
prospective 138km2 high-grade gold camp in Nicaragua."
Akiba Leisman, Executive Chairman
of Marlin and Chief Executive Officer of Sailfish states that "this
transaction is the culmination of over four years of work to
provide Marlin shareholders access to one of the most attractive
development assets in the Americas. Additionally, the restructuring
of the San Albino stream will provide mutual benefits to Golden
Reign and Sailfish, which will now have exposure to a highly
prospective gold district in Nicaragua, as well as a more diversified suite
of assets."
Upon Completion of the Business Combination Kevin Bullock is
expected to continue as CEO of the company resulting from the
business combination of Golden Reign and Marlin. The board of
directors of the newly named company is expected to be comprised of
seven members, consisting initially of three directors as
determined by Golden Reign (which will include Kevin Bullock) and three directors as determined
by Marlin which shall include at least one independent director.
Golden Reign and Marlin will jointly determine one additional
independent board member who will serve as non-executive
chairman.
Golden Reign Bridge Loan
Golden Reign and Marlin have entered into a definitive bridge
loan agreement for a bridge loan from Marlin to Golden Reign of
C$4,000,000, having a term of one
year and bearing interest at 8% per annum (the "Bridge Loan"). Upon
completion of the Proposed Transaction, the Bridge Loan will become
intercompany debt and terminated. In the event that (a) Golden
Reign shareholders vote not to approve the Proposed Transaction, or
(b) either the LOI or the Definitive Agreement (as defined
below) is terminated in accordance with its terms, then all accrued
interest under the Bridge Loan will become immediately due and the
maturity date of the Bridge Loan will accelerate to the earlier of
the original maturity date or the date that is four months from the
negative shareholder vote or termination of the LOI or Definitive
Agreement, as applicable.
Marlin Reorganization
In connection with the Proposed Transaction, Marlin has engaged
Red Cloud Klondike Strike Inc., as financial advisor and to arrange
a sale of its Commonwealth silver and gold property in Cochise County, Arizona, which will extinguish
certain of Marlin's debts and liabilities (including all loans from
its controlling shareholder, Wexford); in addition, Marlin will
distribute any additional proceeds from this sale as well as its
current shareholdings in Golden Reign to Marlin's shareholders
(collectively, the "Marlin Reorganization"). As a result of the
Marlin Reorganization, Golden Reign will acquire Marlin on a debt
free basis.
Proposed Transaction
The acquisition by Golden Reign of 100% of the issued and
outstanding common shares of Marlin (following the Marlin
Reorganization) in exchange for the issuance of common shares of
Golden Reign would result in Marlin and certain of its
subsidiaries, namely Oro Gold de Mexico and Marlin Gold Trading, becoming
wholly-owned subsidiaries of Golden Reign. The final share exchange
ratio will be determined by Golden Reign and Marlin, together with
their respective financial advisers, in connection with entering
into definitive documentation.
The boards of directors of Golden Reign, Marlin and Sailfish,
respectively, have each appointed a special committee to consider
the Proposed Transaction, as well as any strategic alternatives,
and the boards of directors of each of Golden Reign, Marlin and
Sailfish, respectively, have unanimously approved the entering into
of the LOI described in this news release. The companies have
agreed to an exclusivity period ending on the earlier of
June 15, 2018 and the entering into
of a Definitive Agreement, or such other date as the parties may
mutual agree, with a view to negotiating and settling a definitive
agreement as soon as possible.
The principal terms and conditions to the completion of the
Proposed Transaction include, among other things, Golden Reign,
Marlin and Sailfish entering into a mutually acceptable agreement
to restructure the existing gold stream on San Albino and enter
into a new agreement (the "Revised Stream Agreement") on the
following basis:
- the Revised Stream Agreement will have the equivalent
effect of a 3% net smelter royalty ("NSR") over the existing area
of interest, and a 2% NSR on the rest of the 138 sq. km area
surrounding the existing area of interest, with no security
interests granted;
- Sailfish will extinguish Golden Reign's prepayment liability
associated with the existing gold stream on San Albino;
- Sailfish's existing funding obligation of approximately
US$13.9 million will be
eliminated;
- all covenants associated with the existing gold stream will be
renegotiated on terms consistent with an arm's length royalty;
and
- as partial consideration for entering into the Revised Stream
Agreement, Marlin will assign to Sailfish, for no additional
consideration, the El Compas (1.5%
NSR) and La Cigarra (1% NSR) royalties in Mexico, the right to option the Gavilanes property in Mexico for nominal consideration, which is
expected to be converted to a royalty upon entering into an
exploration agreement with an operating partner and approximately
50 million MXP of Mexican value add
tax ("IVA") receivables (not including interest and other
adjustments), which are part of ongoing litigation with the Mexican
tax authorities. A portion of these IVA receivables have already
been received by Marlin.
The LOI is non-binding and there is no assurance that the
Proposed transaction will be completed as proposed or at all.
The completion of the Proposed Transaction (including the
restructuring of the existing gold stream on San Albino) is subject
to, among other things: (i) completion of satisfactory due
diligence by each of Golden Reign, Marlin and Sailfish; (ii)
negotiation of a definitive agreement and the entering into of a
binding definitive agreement in connection with the Proposed
Transaction (the "Definitive Agreement"), following receipt by the
respective boards of directors of each of Golden Reign, Marlin and
Sailfish of a fairness opinion in connection with the Proposed
Transaction and the respective board of directors of each company
resolving to unanimously recommend that shareholders vote in favour
of the Proposed Transaction; (iii) the entering into by the
directors and officers of Golden Reign and Marlin, respectively, of
support and lock-up agreements on terms satisfactory to Golden
Reign and Marlin to vote in favour of the transaction; (iv) receipt
of all required corporate approvals from the board of directors,
upon the recommendation of the special committee, of Golden Reign,
Marlin and Sailfish, respectively, and all regulatory and
shareholder approvals, as applicable, by each of Golden Reign,
Marlin and Sailfish, including "majority of the minority"
shareholder approvals, as applicable, any competition or foreign
investment approvals and the approval of the TSX Venture Exchange
and any required third-party consents; (v) the completion of the
Marlin Reorganization; and (vi) entering into the Revised Stream
Agreement on terms acceptable to Golden Reign, Marlin and
Sailfish.
PI Financial Corp. is acting as financial advisor to Golden
Reign, Red Cloud Kondike Strike Inc. is acting as financial advisor
to Marlin and Sailfish plans to retain a financial advisor in
connection with the Proposed Transaction.
About Golden Reign
Golden Reign Resources Ltd. is a publicly listed (TSX-V: GRR)
mineral exploration company engaged in exploring the San
Albino-Murra Property and the El Jicaro Property, both of which are
located in Nueva Segovia,
Nicaragua. The company's
prime objective is to bring its San Albino Gold Deposit into
production quickly and efficiently, building cash flow to further
advance a number of its other prospective exploration targets.
The Company's land package comprises 13,771 hectares (138
km2) of prospective ground for gold and silver mineralization.
Hundreds of historical mines and workings exist within the Corona
de Oro Gold Belt, which is approximately 3 kilometres wide by 20
kilometres long and is spanned by the company's land package. For
additional information please visit our website at
www.goldenreign.com and SEDAR www.sedar.com.
About Marlin Gold
Marlin is a growth-oriented gold and silver mining company
focused on the Americas. The company owns three properties located
in Mexico and the USA and a portfolio of royalties. Marlin's
priority is to profitably operate its La Trinidad Mine, conduct
further exploration on its other projects and enhance shareholder
value through a strategic relationship with Sailfish Royalty Corp.
(TSX-V:FISH). Marlin is backed by a well-funded investor with a
successful track record in the resources sector. The La Trinidad
Mine in Sinaloa, Mexico declared
commercial production on November 1,
2014 and is one of the highest grade open pit heap leach
gold mines in Mexico.
About Sailfish Royalty
Sailfish is a yield-focussed royalty company. Sailfish
owns the TZ Royalty, which is a 3.5% royalty on revenues derived
from the sale of gold on Eldorado Gold Corp.'s advanced stage
Tocantinzinho gold project, and also holds a gold stream agreement
on the San Albino gold project in Northern Nicaragua.
Forward-Looking Statements: Some of the
statements contained herein may be considered "forward-looking
information" within the meaning of applicable securities laws.
Forward-looking information is based on certain expectations and
assumption that are considered reasonable at the time, however
undue reliance should not be placed on the forward looking
information as the companies can give no assurance that they will
provide to be correct. As forward-looking statements address
anticipated future events and conditions, such forward-looking
information is subject to a variety of risks and uncertainties
which could cause actual events or results to differ materially
from those reflected in the forward-looking information, including,
without limitation, the risk that a Definitive Agreement is not
reached and the LOI is terminated, that the Marlin Reorganization
is not completed as contemplated, that requisite regulatory and/or
shareholder approval is not obtained, that the repayment of the
bridge loan is accelerated, that any party is unable to satisfy all
closing conditions to completion of the Proposed Transaction
(including extinguishing or amending the existing gold stream
agreement with Sailfish),that any anticipated reconstitution of the
board of directors and management of Golden Reign is not as
anticipated, and other risks and uncertainties including those
discussed in each company's disclosure documents which can be found
under each company's profile at www.sedar.com. None of Golden
Reign, Marlin or Sailfish undertakes any obligation to revise or
update any forward-looking information set forth herein, except as
may be required by law.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Marlin Gold Mining Ltd.