Gran Colombia Gold Corp. (TSX: GCM; OTCQX: TPRFF) (“
Gran
Colombia”) and Gold X Mining Corp. (TSXV: GLDX; OTCQX:
GLDXF) (“
Gold X”) are pleased to announce that
they have entered into a definitive arrangement
agreement dated March 14th, 2021 (the
“
Agreement”) pursuant to which Gran Colombia will
acquire all of the issued and outstanding common shares of Gold X
(the “
Gold X Shares”) not already owned by Gran
Colombia by way of a statutory plan of arrangement (the
“
Arrangement”) under the Business Corporations Act
(British Columbia). Gran Colombia currently owns 9,571,158
shares of Gold X, or approximately 18% of the Gold X Shares
outstanding.
Under the terms of the Agreement, all of the
issued and outstanding Gold X Shares will be acquired by Gran
Colombia in exchange for Gran Colombia common shares (the
“Gran Colombia Shares”) on the basis of 0.6948 of
a Gran Colombia Share for each Gold X Share (the “Exchange
Ratio”). The Exchange Ratio implies consideration of
CA$4.10 per Gold X Share based on the 20-day volume weighted
average price of the Gran Colombia Shares on the Toronto Stock
Exchange as of the market close on March 12, 2021 (the
“Value Date”) for total consideration of
approximately CA$315 million on a 100% and fully diluted
in-the-money basis. The Exchange Ratio represents a premium of 39%
based on the closing price of the Gold X Shares on the TSX Venture
Exchange (the “TSXV”) on the Value Date and a 44%
premium based on the 20-day volume weighted average price of the
Gold X Shares ending on the Value Date.
Transaction Highlights
- Creation of a New, Latin
American-Focused Growth Platform – the combined company
will consist of a complementary asset portfolio including the
world-class, free cash flow generating Segovia Operations located
in Colombia, as well as the large, high-growth and substantially
de-risked Toroparu Gold Project in Guyana that boasts 4.5 million
ounces of LOM gold production over a 24-year mine life.1
- Latin American Operating
& Mine Building Expertise – unlocking the value of the
Toroparu Gold Project through development and achieving production
will be supported by Gran Colombia’s proven track-record of mine
building and operating in Latin America.
- Significant Resource Growth
& Exploration Potential – significant potential to
grow mineable ounces from 24 largely untested, highly prospective
veins in close proximity to the Segovia Operations, as well as
delineate additional large gold deposits and discover high-priority
targets within the 538 km2 Toroparu Gold Project land package,
which predominately remains unexplored.
- Enhanced Balance Sheet
& Access to Capital – the combined company will have
approximately US$100 million in cash, greater access to equity and
debt capital markets, financing support from Wheaton Precious
Metals as well as robust free cash flow from Gran Colombia’s
Segovia Operations.
- Enhanced Capital Markets
Profile – combining Gran Colombia and Gold X has the
potential to result in increased critical mass for further
consolidation, improved trading liquidity and attracting greater
support from institutional investors.
Serafino Iacono, Executive Chairman of Gran
Colombia, commented: “We are pleased to present this arrangement to
the shareholders of Gran Colombia and Gold X. Creating long-term
value for our shareholders is at the core of our strategy. The
contemplated acquisition will provide Gran Colombia with an
opportunity to add a large-scale, long-life Latin American gold
development project to its portfolio. When this transaction is
consummated, the Toroparu Gold Project will join our Segovia
Operations as cornerstones of our long-term growth strategy.”
Paul Matysek, Chief Executive Officer &
Director of Gold X, stated: "Gold X has delivered on its commitment
to maximize value for its shareholders through its disciplined
approach to risk mitigation, exploration and project development.
This transaction provides Gold X shareholders with an immediate and
significant upfront premium, exposure to an established Latin
American gold producer and re-rating potential. With a strong
operating history, solid balance sheet and track-record of
developing assets within the Guiana Shield, we believe that Gran
Colombia is an ideal partner to bring Toroparu into
production.”
Benefits to Gran Colombia
Shareholders
- Adds a large, substantially
de-risked growth project to Gran Colombia’s portfolio
- 7.35 million gold ounces added to
Gran Colombia’s Measured and Indicated mineral resource
profile2
- Significant potential to upgrade
inferred resources into mineable ounces
- Exploration and incremental
resource growth within a highly prospective 538 km2 land
package
- Geographic and asset
diversification
- Alignment with Gran Colombia’s
geographic, development and operational competencies
- Capital markets re-rating
opportunity
Benefits to Gold X
Shareholders
- Significant premium (44% based on
Gold X’s 20-day VWAP as of March 12, 2021 on the TSXV)
- Increased balance sheet strength,
access to capital and free cash flow to fund development
- Continued exposure to upside at the
Toroparu Gold Project
- Diversified ownership in Gran
Colombia’s world-class Segovia Gold Mine
- Access to Gran Colombia’s in-house
development and operational capabilities
- Gran Colombia’s monthly
dividend
- Significant improvement in trading
liquidity and greater capital markets exposure
Transaction Conditions & Timing
Gold X intends to call a meeting of shareholders
to be held in May 2021 to seek shareholder approval for the
Arrangement (the “Gold X Meeting”). Completion of
the Arrangement will require:
- approval of at least 66 2/3% of the
votes cast by Gold X shareholders at the Gold X Meeting, and
- approval of a simple majority of
the votes cast by Gold X shareholders at the Gold X Meeting,
excluding votes from certain shareholders, including Gran Colombia,
as required under Multilateral Instrument 61-101.
Completion of the Arrangement is also subject to
the receipt of court and stock exchange approvals, the approval of
a simple majority of the shareholders of Gran Colombia to the
issuance of the Gran Colombia Shares and other customary closing
conditions for transactions of this nature. Gran Colombia intends
to hold its shareholder meeting on or around the date of the Gold X
Meeting.
The Agreement provides for, among other things,
non-solicitation covenants, with “fiduciary out” provisions that
allow Gold X to consider and accept a superior proposal, subject to
a “right to match period” in favour of Gran Colombia. The Agreement
also provides for a termination fee of CA$5.5 million to be paid by
Gold X to Gran Colombia if the Agreement is terminated in certain
specified circumstances and a reverse termination fee of CA$5.5
million to be paid by Gran Colombia to Gold X if the Agreement is
terminated in certain specified circumstances. Gran Colombia and
Gold X have also agreed to a reciprocal expense reimbursement of
CA$1 million payable if the Agreement is terminated in certain
circumstances.
The directors and senior officers of Gold X,
holding in aggregate over 2.5% of the issued and outstanding common
shares of Gold X, have entered into voting support agreements with
Gran Colombia, pursuant to which they have agreed to vote their
shares in favour of the Arrangement. Together with shares already
owned or held by Gran Colombia, approximately 20.6% of Gold X’s
issued and outstanding shares would be voted in support of the
Arrangement at the Gold X Meeting.
The directors and senior officers of Gran
Colombia, holding in aggregate over 4.3% of the issued and
outstanding common shares of Gran Colombia, have entered into
voting support agreements with Gold X, pursuant to which they have
agreed to vote their shares in favour of the Arrangement at the
Gran Colombia shareholder meeting.
The companies are working towards closing the transaction in
late May/ early June 2021.
Board Approval and Recommendation
The special committee of independent directors
of Gold X (the “Special Committee”) has received
an opinion from BMO Capital Markets that, based upon and subject to
the limitations, assumptions and qualifications of and other
matters considered in connection with the preparation of such
opinion, the consideration to be received by Gold X shareholders
(other than Gran Colombia) pursuant to the Arrangement is fair,
from a financial point of view, to the Gold X shareholders (other
than Gran Colombia) (the “Fairness Opinion”).
Following its review and in consideration of,
amongst other things, the Fairness Opinion, the Special Committee
has unanimously recommended that the board of directors of Gold X
approve the Arrangement. The Gold X board (with any interested
directors having abstained from voting), following the receipt and
review of recommendations from the Special Committee, has
unanimously approved the Agreement and the Arrangement and has
determined that the Arrangement is fair to shareholders of Gold X
(other than Gran Colombia) and is in the best interests of Gold X,
and recommends to shareholders that they vote in favour of the
Arrangement.
The Agreement has also been unanimously approved
by the board of directors of Gran Colombia.
Additional Information
Full details of the Arrangement are set out in
the Agreement, which will be filed by Gold X under its profile on
SEDAR at www.sedar.com. In addition, further information
regarding the Arrangement will be contained in management
information circulars to be prepared in connection with the
shareholder meetings and filed on each company’s profile
on www.sedar.com at the time that each is mailed to
shareholders. All shareholders of each company are urged to read
the management information circular once it becomes available as it
will contain additional important information concerning the
Arrangement.
Gran Colombia currently owns 9,571,158 Gold X
Shares, representing approximately 18% of the issued and
outstanding Gold X Shares on a non-diluted basis. Gran Colombia
also holds warrants to acquire up to 4,625,000 additional Gold X
Shares at a weighted average exercise price of CA$2.33 (subject to
adjustment in certain events) expiring at various dates within the
next 42 months. Assuming exercise in full of the warrants, Gran
Colombia would own 14,196,158 Gold X Shares, representing
approximately 25% of the issued and outstanding Gold X Shares on a
partially diluted basis.
If the Arrangement is not consummated for any
reason, Gran Colombia intends to continue to review Gold X’s
business affairs, capital needs and general industry and economic
conditions, and, based on such review, Gran Colombia may, from time
to time, depending on market and other conditions, increase or
decrease its ownership, control or direction over the shares or
other securities of Gold X, through market transactions, private
agreements, public offerings or otherwise, or approve a corporate
transaction with regard to Gold X. A copy of Gran Colombia's
related amended early warning report will be filed with the
applicable securities commissions and will be made available on
SEDAR at www.sedar.com.
Advisors and Counsel
Gran Colombia has engaged Canaccord Genuity Corp. as its
financial advisor and Wildeboer Dellelce LLP as its legal advisor
in connection with the transaction.
BMO Capital Markets is acting as financial
advisor to the Gold X Special Committee and Stikeman Elliott LLP is
acting as legal advisor to Gold X and the Special Committee in
connection with the transaction.
About Gran Colombia Gold
Corp.
Gran Colombia is a Canadian-based mid-tier gold
producer with its primary focus in Colombia where it is currently
the largest underground gold and silver producer with several mines
in operation at its high-grade Segovia Operations. Gran Colombia
owns approximately 44% of Aris Gold Corporation, a Canadian mining
company currently advancing a major expansion and modernization of
its underground mining operations at its Marmato Project in
Colombia. Gran Colombia’s project pipeline also includes an
approximately 18% equity interest in Gold X Mining Corp. (TSXV:
GLDX) (Guyana – Toroparu), an approximately 36% equity interest in
Denarius Silver Corp. (TSX-V: DSLV) (Colombia – Guia Antigua and
Zancudo) and an approximately 26% equity interest in Western Atlas
Resources Inc. (TSX-V: WA) (Nunavut – Meadowbank).
Additional information on Gran Colombia can be
found on its website at www.grancolombiagold.com and by reviewing
its profile on SEDAR at www.sedar.com.
About Gold X Mining Corp.
Gold X Mining Corp. is a Canadian junior mining
company developing the Toroparu Gold Project in Guyana, South
America. Gold X has spent more than US$150 million on the Project
to date to classify 7.35 million ounces of Measured and Indicated
and 3.15 million ounces of Inferred gold resources, develop
engineering studies for use in a feasibility study, and define a
number of exploration targets around the Toroparu Project on its
53,844 hectare (538 km2) 100% owned Upper Puruni Concession.3 Gold
X has 53,032,452 issued and outstanding common shares with more
than 40% of the shares closely held by insiders and Gold X’s
executive management team.
Additional information on Gold X can be found on
its website at www.goldxmining.com and by reviewing its profile on
SEDAR at www.sedar.com.
Contact Gold X Mining Corp.Investor Relations+1
(604) 609-6132Email: investors@goldxmining.com
Cautionary Statement on Forward-Looking
Information:
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 statements relating to: the
transaction and the proposed Arrangement as proposed to be effected
pursuant to the Agreement; the ability of the parties to satisfy
the conditions to closing of the Arrangement; the mailing of the
management information circular in connection with the Gold X
Meeting and Gran Colombia’s shareholder meeting and the anticipated
timing thereof; and the anticipated timing and effects of the
completion of the Arrangement, involve risks, uncertainties
and other factors which may cause the actual results to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, among others,
obtaining required shareholder and regulatory approvals, exercise
of any termination rights under the Agreement, meeting other
conditions in the Agreement, material adverse effects on the
business, properties and assets of Gold X, and whether any superior
proposal will be made. Although each of Gold X and Gran Colombia
has attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such 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. Neither Gold X
nor Gran Colombia undertakes to update any forward-looking
statements, except in accordance with applicable securities
laws.
The forward-looking statements in this press
release involve known and unknown risks, uncertainties and other
factors that may cause Gold X’s actual results, performance and
achievements to be materially different from the results,
performance or achievements expressed or implied therein. Neither
TSX nor its Regulation Services Provider (as that term is defined
in the policies of the TSX) accepts responsibility for the adequacy
or accuracy of this press release.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
None of the securities to be issued pursuant to
the transaction have been or will be registered under the United
States Securities Act of 1933, as amended (the “U.S.
Securities Act”), or any state securities laws, and any
securities issuable in the transaction are anticipated to be issued
in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. This
press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities.
____________________1,2,3 The latest mineral
resource estimate for the Toroparu Project in the Preliminary
Economic Assessment Technical Report (the “PEA”), published on July
23, 2019 can be found under Gold X filings on www.sedar.com or
at www.goldxmining.com. Highlights of the results published in the
Sept. 4, 2019 information release are available at
https://goldxmining.com/wp-content/uploads/2019/11/ssp-20190723-PR.pdf
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