Spur Ventures and Atlantic Gold Announce Merger Proposal
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 7, 2014) - Spur
Ventures Inc. (TSX-VENTURE:SVU) ("Spur") is pleased to announce the
signing of a Heads of Agreement (the "HOA") with Atlantic Gold NL
("Atlantic") pursuant to which the companies have agreed to create
a new well-financed and development-focused gold group with a
primary focus on the advancement of Atlantic's Touquoy and Cochrane
Hill gold projects located in the Meguma Terrane of Nova Scotia
(the "Transaction").
Transaction Highlights
- Combination of Atlantic's advanced project portfolio with
Spur's complementary technical experience and strong cash position,
which, as at the date of this announcement, is approximately C$28.7
million;
- Creation of a well-financed, growth-oriented gold development
group to aggressively drive development of the Touquoy gold project
in Nova Scotia towards production, while simultaneously evaluating
the co-development potential of the nearby Cochrane Hill
deposit;
- Additional opportunities to evaluate the underexplored but
prolific Meguma Terrane gold region, including 250 km2 of
claims;
- Canadian management base for project operations as well as
capital markets interface;
- Issue of Spur warrants to allow Atlantic shareholders and new
investors to gain additional leverage to the significant potential
of the advanced stage Touquoy and Cochrane Hill gold projects as
well as the additional potential opportunities in the Meguma
Terrane gold region;
- Ongoing involvement of Wally Bucknell, Atlantic's managing
director, who will be invited to join the board of Spur as a
non-executive director upon the completion of the Transaction.
Steven Dean, Chairman of Spur noted: "The proposed acquisition
of Atlantic is the first step in our strategy to create a mid-tier
gold production group which focuses on manageable, executable
projects in mining friendly jurisdictions. We have reviewed a
considerable number of projects and investment opportunities, few
of which have compared to the quality of Atlantic's projects, with
potential near-term upside offered through the Touquoy and Cochrane
Hill gold projects. Our plan is to focus on the initial development
of Touquoy, combining our own development views with the extensive
technical work that has already been commendably completed by the
Atlantic team. We are well funded and have a team in place with
expertise in financing, capital markets, project management,
operations and exploration."
As disclosed in Atlantic's press release dated April 7, 2014 and
filed with the ASX in respect of the Transaction, Au Mining Limited
has advised the Directors of Atlantic that Au Mining Limited
intends to vote all the fully paid ordinary shares in Atlantic held
by Au Mining Limited, in favour of the Transaction and in favour of
the alternative to the Scheme (as outlined in this announcement),
in the absence of a superior proposal. Au Mining Limited holds
approximately 17% of the fully paid ordinary shares in
Atlantic.
About Atlantic
Atlantic is an Australian Securities Exchange ("ASX") listed
company focused on the exploration and development of the Touquoy
project (which is at an advanced stage and has all major permits in
place) and the Cochrane Hill project (which is at an earlier stage
of development) located within the Meguma Terrane in the province
of Nova Scotia. The Meguma Terrane is host to a historic gold
region which has been largely underexplored using modern
exploration techniques over the last 20 years and remains highly
prospective for new discoveries, in particular in respect of larger
shale hosted disseminated, near surface mineable deposits,
characteristics shown in work done to date on the Touquoy
project.
A number of deposits at various stages of development are
located in this region of Nova Scotia, outlined on the map
below:
http://media3.marketwire.com/docs/AtlanticGoldMap.JPG
The Touquoy project is located 70 kilometers north-east of
Halifax and boasts favourable infrastructure, with access to paved
roads and grid power in close proximity.
The Touquoy project hosts Mineral Resources prepared in
accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101") and JORC (2012)
as disclosed in the tables below for the two main mineral
deposits.
|
Touquoy Mineral Resource Estimate (0.5 g/t cut-off) - Effective as
at February 28, 2014* |
|
Category |
|
Tonnes (Mt) |
|
Grade (g/t Au) |
|
Au Ounces (oz) |
Measured Resources |
|
2.8 |
|
1.5 |
|
130,000 |
Indicated Resources |
|
7.3 |
|
1.5 |
|
350,000 |
Resources (M + I) |
|
10.1 |
|
1.5 |
|
480,000 |
Inferred Resources |
|
1.6 |
|
1.5 |
|
77,000 |
|
Touquoy West Mineral Resource Estimate (1.0 g/t cut-off) -
Effective as at February 28, 2014* |
|
Category |
|
Tonnes (Mt) |
|
Grade (g/t Au) |
|
Au Ounces (oz) |
Indicated |
|
0.9 |
|
1.9 |
|
54,000 |
Inferred |
|
0.6 |
|
2.2 |
|
45,000 |
* |
|
Key assumptions used to estimate the Mineral Resources include
the following: |
1. |
|
There are two main styles of gold mineralization, which are
reflected in the geological domaining used in the resource
modeling |
2. |
|
Drill hole sampling has provided a reasonably representative
set of samples of the gold mineralization |
3. |
|
Multiple Indicator Kriging (MIK) is an appropriate method for
estimating the Mineral Resources in these deposits |
Mineral Resources that are not mineral reserves do not have
demonstrated economic viability.
The Touquoy Mineral Resources are based on a technical report
entitled "Mineral Resource Estimate for the Touquoy Gold Project,
Nova Scotia" prepared by Hellman & Schofield Pty. Ltd. and
dated March 2011, prepared in accordance with NI 43-101 and JORC
(2012) and filed with the ASX on March 8, 2011. This report has
been updated by FSSI Consultants (Aust) Pty. Ltd. to current JORC
standards and used as the basis of announcement by Atlantic to the
ASX on February 28, 2014.
The Touquoy deposits are expected to have a low strip ratio of
the order of 2.5:1, implying a relatively low all in sustaining
cost of production.
Atlantic has a joint venture ownership interest of 63.5% in the
Touquoy project and is the operator and manager of the project,
responsible for funding all capital and operating expenditures.
Under the Touquoy joint venture agreement, on commencement of
production at the Touquoy project, Atlantic will receive 100% of
the Touquoy cashflow until all capital and operating expenditures,
in addition to interest expenditures, have been recouped. A private
net smelter return royalty of 3% is also payable in respect of the
Touquoy project, two-thirds of which can be purchased for C$2.5
million.
The Cochrane Hill project is an earlier stage development
project, owned 100% by Atlantic, located approximately 80 km from
the Touquoy project. The Cochrane Hill deposit currently hosts
Mineral Resources prepared in accordance with NI 43-101 and JORC
(2012) as shown in the table below.
|
Cochrane Hill Mineral Resource Estimate (0.5 g/t cut-off) -
Effective as at February 28, 2014* |
|
Category |
|
Tonnes (Mt) |
|
Grade (g/t Au) |
|
Au Ounces (oz) |
Indicated |
|
4.5 |
|
1.8 |
|
251,000 |
Inferred |
|
5.6 |
|
1.6 |
|
298,000 |
* |
|
Key assumptions used to estimate the Mineral Resources include
the following: |
4. |
|
There are two main styles of gold mineralization, which are
reflected in the geological domaining used in the resource
modeling |
5. |
|
Drill hole sampling has provided a reasonably representative
set of samples of the gold mineralization |
6. |
|
Multiple Indicator Kriging (MIK) is an appropriate method for
estimating the Mineral Resources in these deposits |
The Cochrane Hill Mineral Resources are based on a technical
report entitled "Technical Report of the Cochrane Hill Gold
Project, Nova Scotia, Mineral Resource Estimate" prepared by
Hellman & Schofield Pty. Ltd. and dated March 4, 2011, prepared
in accordance with NI 43-101 and JORC (2012) and filed with the ASX
on March 8, 2011. This report has been updated by FSSI Consultants
(Aust) Pty. Ltd. to current JORC standards and used as the basis of
announcement by Atlantic to the ASX on February 28, 2014.
The development of Touquoy represents the first stage in a
conceptual plan for resource exploration and expansion and combined
development and operation of Atlantic's properties, as well as
potential consolidation of additional Meguma Terrane deposits.
Transaction Summary
Under the terms of the HOA, Spur would acquire, subject to the
requisite approvals and the satisfaction of conditions, all of the
fully paid and partly paid ordinary shares on issue in Atlantic by
way of a scheme of arrangement ("Scheme") under Part 5.1 of the
Australian Corporations Act 2001 (Cth) between Atlantic
and its shareholders.
Under the Scheme, Atlantic shareholders holding fully paid
ordinary shares would receive 0.05564 of a common share of Spur and
0.02782 of a share purchase warrant (each whole warrant a "Spur
Warrant") for each fully paid ordinary share of Atlantic held (the
"Consideration"). Each Spur Warrant would be exercisable to acquire
one Spur share for a period of four years following the date of
implementation of the Transaction at a price of C$0.60 per share.
Atlantic shareholders holding partly paid ordinary shares would
receive for each partly paid share held 10% of the consideration
otherwise payable to a holder of fully paid ordinary shares for
each fully paid share held.
Atlantic shareholders will also be asked to approve resolutions
for an alternative to the Scheme, if the Scheme is not approved by
Atlantic's shareholders or the court, pursuant to which Spur would
acquire all of the issued securities in DDV Gold Limited ("DDV
Gold"), the wholly-owned Canadian subsidiary of Atlantic which
holds all of Atlantic's Canadian assets, including the Touquoy and
Cochrane Hill gold projects, in exchange for the same number of (i)
Spur Series A Preferred Shares and (ii) warrants to purchase Spur
Series A Preferred Shares (the "Preferred Share Warrants") as would
have comprised the Consideration under the Scheme (the "Alternative
Transaction").
If the Alternative Transaction proceeds, Atlantic would offer to
buyback all the Atlantic fully paid and partly paid ordinary shares
by means of an equal access share buy-back with Spur Series A
Preferred Shares and Preferred Share Warrants received by Atlantic
for the sale of DDV Gold offered pro-rata to Atlantic shareholders
as consideration for the buy-back. If issued, the Spur Series A
Preferred Shares shall have the special rights and restrictions
contained in Spur's Articles and which are summarized in Schedule
A.
On completion of the Transaction, Atlantic shareholders will
collectively own approximately 43% of the combined group, or
approximately 53% assuming exercise of the Spur Warrants (or the
Preferred Share Warrants into common shares of Spur, if
applicable). Arrangements are to be made for the exchange of
existing Atlantic employee stock options for Spur options having
the same expiry date as the original expiry date of the relevant
Atlantic employee stock options.
The Transaction is conditional upon a number of items,
including, without limitation, the completion of due diligence to
the satisfaction of both parties, the approval of the board of
directors of each party and the entering into of a Scheme
Implementation Agreement.
The HOA provides for a period of exclusivity of at least 30
days, during which time both parties expect to complete their
respective due diligence reviews and, subject to the completion of
the above-noted matters, enter into a Scheme Implementation
Agreement. The Scheme Implementation Agreement will contain, among
other things, the full terms and conditions of the Scheme.
The HOA contains customary deal protection mechanisms, including
an expense reimbursement fee of A$750,000 payable by Atlantic to
Spur in certain circumstances, including: (i) if a third party
acquires control of Atlantic or any of its subsidiaries, or all or
any material part of the business or assets of Atlantic or any of
its subsidiaries or (ii) if Atlantic or its board enters into any
agreement requiring Atlantic to abandon the Transaction, or
requiring any Atlantic director to recommend against the
Transaction. The HOA contemplates that the Scheme Implementation
Agreement will contain similar deal protection mechanisms,
including also (i) an expense reimbursement fee of A$750,000
payable by Atlantic to Spur if the Atlantic directors change their
recommendation in favour of the Transaction or recommend that
Atlantic shareholders accept or vote in favour of any competing
proposal, unless the independent expert concludes that the Scheme
is not in the best interest of Atlantic shareholders and (ii) a
break fee of A$250,000 payable by Atlantic to Spur if Atlantic
shareholders do not approve the Transaction or the Alternative
Transaction.
In addition, the HOA includes customary exclusivity arrangements
in Spur's favour, including no-shop, no-talk, notification right
and matching right provisions, subject to certain customary
exemptions to the no-talk to permit Atlantic's board of directors
to exercise their fiduciary duties (the other exclusivity
provisions are not subject to a fiduciary out). The HOA also
contemplates that the Scheme Implementation Agreement will contain
similar exclusivity arrangements.
Spur has agreed to pursue a listing of Chess Depositary
Instruments on the ASX in respect of the Spur common shares and
Spur Warrants issued under the Transaction, subject to the listing
and admission requirements of the ASX (including those in the ASX
Listing Rules) being satisfied in respect of those Spur common
shares and Spur Warrants.
Full details of the terms and conditions of the Transaction will
be included in a Scheme Booklet to be prepared by Atlantic and
mailed to Atlantic shareholders in accordance with applicable
securities laws. The Scheme will be subject to the approval of
Atlantic shareholders. The applicable shareholder approval
requirement under Australian law for the Scheme is that it be
approved at a shareholder meeting (a) by a majority in number of
the shareholders present and voting (either in person or by proxy)
and (b) by at least 75% of the votes cast at that meeting by
shareholders present and voting (either in person or by proxy). In
addition, the Scheme must also be approved by an Australian court.
All Atlantic shareholders are urged to read the Scheme Booklet once
it becomes available as it will contain additional important
information regarding the Transaction.
As mentioned above, Atlantic shareholders will also be asked to
approve resolutions in relation to the Alternative Transaction. The
applicable shareholder approval requirement for the Alternative
Transaction is that it be approved at a shareholder meeting by a
majority of the votes cast at that meeting by shareholders present
and voting (either in person or by proxy). The Alternative
Transaction is not required to be approved by an Australian
court.
Short Term Loan
Spur has agreed, conditional upon the execution of the Scheme
Implementation Agreement in respect of the Transaction, and such
Implementation Agreement not having been terminated, to provide a
C$1 million loan facility to DDV Gold, guaranteed by Atlantic,
which can be drawn in July 2014 and will mature December 31, 2014.
The loan facility is expected to have first priority security over
the assets of DDV Gold and will accrue interest at 14 percent per
annum.
Scientific and Technical Information
The Touquoy Mineral Resource estimates are based on sample data
generated by a number of different sampling programs that have
spanned several decades including the most recent drilling
undertaken by Atlantic. All assays obtained prior to Atlantic's
involvement have been verified against paper documents by a
contractor specifically retained for that purpose. Atlantic's
assays have been merged from digital files and the intervals and
assays verified by Atlantic personnel. A master database is
maintained with access limited to key company personnel and copies
of this database are used for technical purposes. The trial grade
control program was undertaken to assess an area largely defined by
KMS-15 assays. The results suggested an overestimation of grade by
the KMS-15 assays of 22%. Accordingly, the KMS assays used for
resource estimation have been reduced by 22% prior to compositing.
All other assays are used as original values, arithmetically
averaged where duplicates are available. A recent (November 2013)
independent analysis of check assay data by sampling specialist, D.
Francois-Bongarcon has concluded that the KMS data are not biased
and should not be reduced. However a conservative approach has been
maintained and the 22% downgrade of the KMS assays is retained and
the former resource estimate remains unchanged. There have been no
instances in which sample grades could not be reasonable
verified.
The Cochrane Hill Mineral Resource estimates are based on
drill-hole sample data generated by a number of mining and
exploration companies over several decades dating back to 1974. Of
the 128 holes used for resource estimation, 64 holes were drilled
in NQ standard tube diameter and the remainder in BQ or AQ standard
tube diameter. Core drilled by Atlantic Gold and historic core
holes that have been re-logged have been oriented effectively by
reference to bedding orientations. Core recoveries have been
defined on a 1m interval basis for holes drilled by Atlantic Gold
and recoveries are good, averaging 97%. A large proportion of the
holes (59 of 89) drilled by previous explorers have been re-logged
and core recoveries measured for those holes average 95%. All
assays obtained prior to Atlantic Gold have been verified against
paper documents by Atlantic Gold personnel and any errors
corrected. Atlantic Gold assays have been merged from digital files
and the intervals and assays verified by company personnel. A
master database is maintained with access limited to key company
personnel and copies of this database are used for validation.
There has been no adjustment of assay data.
Neil Schofield, MS - Applied Earth Sciences, MAusIMM, MAIG, and
a Qualified Person as defined by NI 43-101, has verified the data
disclosed above, including the sampling, analytical and test data
underlying the information contained in this news release.
There are no known legal, political, environmental or other
risks that could materially affect the potential development of
these resources that have been identified.
Neil Schofield, MS - Applied Earth Sciences, MAusIMM, MAIG,
consultant to both Spur and Atlantic, and a Qualified Person as
defined by NI 43-101, has reviewed and approved the technical
information contained in this news release.
About Spur Ventures Inc.
Spur is listed on the TSX Venture Exchange, and has a registered
office at Suite 3083, Three Bentall Centre, 595 Burrard Street,
Vancouver, B.C. Canada. Spur is focused on potential acquisitions
in gold, base metals or other mineral related assets advanced
stages of development where the balance of technical and
geopolitical risk will result in increased value to Spur's
shareholders.
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.
Forward-Looking Statements:
This release contains certain "forward looking statements"
and certain "forward-looking information" as defined under
applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans"
or similar terminology. Forward-looking statements and information
are not historical facts, are made as of the date of this press
release, and include, but are not limited to, statements regarding
discussions of future plans, guidance, projections, objectives,
estimates and forecasts and statements as to management's
expectations with respect to, among other things, the transactions
contemplated under the HOA, the Scheme, the Alternative
Transaction, the share purchase program recently announced by
Atlantic and otherwise in connection with the proposed Transaction,
any benefits to any shareholder of either Spur or Atlantic that may
result from the proposed Transaction, the listing of common shares
and Spur Warrants issued under the Transaction on the ASX, and the
timing and receipt of requisite regulatory, court and shareholder
approvals in respect thereof. These forward looking statements
involve numerous risks and uncertainties and actual results may
vary. Important factors that may cause actual results to vary
include without limitation, certain transactions, the successful
completion of the Transaction, the timing and receipt of certain
approvals, changes in commodity and power prices, changes in
interest and currency exchange rates, risks inherent in exploration
results, timing and success, inaccurate geological and
metallurgical assumptions (including with respect to the size,
grade and recoverability of mineral reserves and resources),
unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with
specifications, cost escalation, unavailability of materials,
equipment and third party contractors, delays in the receipt of
government approvals, industrial disturbances or other job action,
and unanticipated events related to health, safety and
environmental matters), political risk, social unrest, and changes
in general economic conditions or conditions in the financial
markets. In making the forward-looking statements in this press
release, Spur has applied several material assumptions, including
without limitation, the assumptions that: (1) the receipt of
necessary consents and approvals and satisfaction of all conditions
precedent for the completion of the Transaction in a timely manner;
(2) market fundamentals will result in sustained gold demand and
prices; (3) the receipt of any necessary approvals and consents in
connection with the development of any new properties; (4) the
availability of financing on suitable terms for the development,
construction and continued operation of any mineral properties; and
(5) sustained commodity prices such that any properties in or put
into operation remain economically viable. Information concerning
mineral reserve and mineral resource estimates also may be
considered forward-looking statements, as such information
constitutes a prediction of what mineralization might be found to
be present if and when a project is actually developed. Certain of
the risks and assumptions are described in more detail in the
Spur's audited financial statements and MD&A for the year ended
December 31, 2012 and the quarter ended September 30, 2013 on the
SEDAR website at www.sedar.com. The actual results or performance
by Spur could differ materially from those expressed in, or implied
by, any forward-looking statements relating to those matters.
Accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they will have on the
results of operations or financial condition of Spur. Except as
required by law, we are under no obligation, and expressly disclaim
any obligation, to update, alter or otherwise revise any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Schedule A
Summary Description of Spur Series A Preferred Shares
The description below assumes that the Spur Series A Preferred
Shares are issued (and no other preferred shares are issued) by
Spur as contemplated under paragraph (b) on the first page of this
news release.
|
|
|
Description |
|
Spur Series A Preferred Shares |
|
|
|
Special Rights and Restrictions |
|
Subject to regulatory approvals including the TSX Venture Exchange,
the Spur Series A Preferred Shares shall have attached thereto
special rights and restrictions upon issuance, a summary of which
follows: |
Conversion by Atlantic |
|
Atlantic may, at its election and at any time, convert Spur Series
A Preferred Shares held by Atlantic into Spur common shares
provided that the number of Spur Series A Preferred Shares to be
converted, when aggregated with the total number of Spur Series A
Preferred Shares previously converted by Atlantic, does not exceed
10% of the total number of Spur Series A Preferred Shares issued to
Atlantic upon the acquisition of DDV Gold Limited. |
Conversion upon Distribution to Atlantic Shareholders |
|
Any Spur Series A Preferred Shares distributed or transferred by
Atlantic to its shareholders, subject to any requisite Atlantic
shareholder approval, will automatically convert into Spur common
shares upon such distribution or transfer. |
10% Holding Limitation |
|
Atlantic shall not distribute or transfer the Series A Preferred
Shares (and, hence, such shares shall not be converted), until and
unless the board of directors of Spur is satisfied that: (a) no
person, or combination of persons acting jointly or in concert (as
such concept is defined by applicable Canadian securities
legislation) shall, taking into account the conversion of such Spur
Series A Preferred Shares into Spur common shares and all other
Spur common shares held by such person(s), hold 10% or more of the
total number of Spur common shares then outstanding; and (b) such
distribution or transfer by Atlantic will not otherwise cause a
change of control of Spur as such concept is defined by the
policies of the TSX Venture Exchange. |
Dividends |
|
No dividends will be paid or payable to any holder of the Spur
Series A Preferred Shares. |
Voting |
|
The holders of the Spur Series A Preferred Shares shall not as such
be entitled to vote at any meetings of the common shareholders of
Spur but shall be entitled to notice of meetings of shareholders
called for the purpose of authorizing the dissolution of Spur or
the sale of its undertaking or a substantial part thereof or the
creation of any class or classes of shares ranking in priority to
the Spur Series A Preferred Shares. |
Distribution of Assets or Property Upon Wind Up or Dissolution
(Priority) |
|
In the event of any distribution of the assets or property of Spur
among its shareholders as such other than by way of dividend or by
way of redemption or purchase for cancellation of the Spur Series A
Preferred Shares or upon the winding-up or other liquidation or
dissolution of Spur, no assets or property of Spur shall be
distributed to the holders of Spur ranking junior to the Spur
Series A Preferred Shares until there has been paid to the holders
of the Spur Series A Preferred Shares, an amount equal to the
redemption price of such Spur Series A Preferred Shares. The
redemption price of the Spur Series A Preferred Shares shall mean
the amount paid up thereon. |
Purchase by Spur for Cancellation |
|
Spur may at any time and from time to time purchase the Spur Series
A Preferred Shares for cancellation: (a) on the open market; (b)
with the consent of the holders of the Spur Series A Preferred
Shares; or (c) pursuant to tenders received by Spur upon request
for tenders addressed to all of the holders of the Spur Series A
Preferred Shares, the whole or any part of the Spur Series A
Preferred Shares at the lowest price which, in the opinion of the
directors of Spur, such shares are obtainable. |
Amendment |
|
Any amendment to the Articles of Spur to delete or vary any
preference, right, condition, restriction, limitation or
prohibition attaching to the Spur Series A Preferred Shares or to
create any special shares ranking in priority to or on a parity
with the Spur Series A Preferred Shares, in addition to the
authorization by a special resolution, shall be authorized by at
least three-quarters (3/4) of the votes cast at a meeting of the
holders of Spur Series A Preferred Shares duly called for that
purpose. |
Spur Ventures Inc.John MorganPresident and CEO1 (604)
689-5564questions@spur-ventures.comSpur Ventures Inc.Irfan
ShariffCFO and Corporate Secretary1 (604)
689-5564www.spur-ventures.com