VANCOUVER, June 16, 2015 /PRNewswire/ - Red Eagle
Mining Corporation (TSX-V: RD, OTCQX: RDEMF, SSE-V: RDCL) today
announced that it intends to make a takeover bid (the
"Offer") to acquire all of the issued and outstanding shares
of CB Gold Inc. ("CB Gold") in exchange for shares of Red
Eagle Mining. Under the terms of the Offer, each CB Gold
common share will be exchanged for 0.162 of a Red Eagle Mining
common share with an implied value of $0.051 per CB Gold common share and an implied
total offer value for all outstanding CB Gold shares of
approximately $8.4 million.
The Offer represents a premium of 46% to CB Gold's 20-day volume
weighted average share price ("VWAP") of $0.035 and to CB Gold's closing share price of
$0.035 on June
12, 2015, the last trading day prior to CB Gold's
announcement of Red Eagle Mining's proposal.
"Following the announcement of the OM.L Transaction, Red Eagle
Mining was contacted by several of CB Gold's largest shareholders
who were unhappy with the proposed sale of CB Gold's principal
asset. Red Eagle Mining submitted an indicative term sheet to
CB Gold on June 4, 2015 and a binding
proposal on June 10, 2015, in good
faith. All overtures were rebuffed with the only response
being CB Gold's press release dated June
12, 2015. As a result, we are presenting our proposal
directly to CB Gold shareholders." comments Ian Slater, Chief Executive Officer. "We
believe that the Offer represents a clearly superior alternative
for CB Gold shareholders."
Reasons to Accept the Red Eagle Mining Offer
- Significant Premium - The Offer represents a premium of
46% to CB Gold's 20-day VWAP of $0.035 and CB's closing share price of
$0.035 on June
12, 2015, the last trading day prior to CB Gold's
announcement of Red Eagle Mining's proposal;
- Premium to OM.L Transaction - $8.4 million in measurable market value to CB
Gold shareholders versus $2 million
and a royalty with uncertain value;
- Major Shareholder Rejection of the OM.L Transaction –
Red Eagle Mining has been advised by shareholders holding
approximately 30% of the CB Gold shares outstanding that they
currently intend to vote against the proposed transaction between
CB Gold and OM.L Trading Inc. for the proposed sale of Leyhat
Corporation (the "OM.L Transaction") that was announced on
May 19, 2015;
- Market Rejection of the OM.L Transaction – CB Gold's
closing share price on May 19, 2015
(prior to the announcement of the OM.L Transaction) was
$0.050 with the shares subsequently
trading as low as $0.025 before
closing at $0.035 on June 12, 2015 (prior to CB Gold's announcement of
Red Eagle Mining's proposal). CB Gold's VWAP was $0.051 for the 20-day period prior to the
announcement of the OM.L Transaction and $0.035 for the 20-day period post
announcement;
- Gold Development Company Exposure - Participation in the
fully permitted Santa Rosa Gold Project in Colombia which is expected to be in production
during 2016;
- Vetas Exposure - Continued participation in CB Gold's
Vetas Project;
- Colombian Experience - Red Eagle Mining's proven
experience in permitting, financing and developing underground gold
projects in Colombia; and
- Superior Financial Capacity - Red Eagle Mining's
stronger financial capacity and institutional shareholder base,
including 19.9% shareholders Liberty Metals & Mining Holdings
LLC and Orion Mine Finance.
Proposed OM.L Trading Transaction
The OM.L Transaction as announced on May
19, 2015 proposes the sale of the Vetas Project for
$2 million, advance royalty payments
of $30,000 per month (assuming
$1,200 per ounce gold) commencing in
24 months, increasing to $60,000 per
month commencing in 36 months, and a 3% royalty capped at
$15 million. This is not a
fully funded royalty company as presented. Moreover, this
cash flow will just cover the amount required to pay CB Gold's
aggregate annual management salaries of approximately $521,290 (based on the disclosed NEO payments for
CB Gold's 2014 fiscal year).
In CB Gold's disclosure regarding the proposed OM.L Transaction,
CB Gold has consistently described the transaction as having a
"combined value" to CB Gold shareholders in excess of $20 million. This disclosure is misleading
as it either (i) adds the full price of the potential $15 million buy-back of the 3% NSR being granted
to OM.L Trading into the value of the transaction without also
clearly stating that there is no requirement for OM.L Trading to
exercise the buy-back or that the buy-back can be exercised in
whole or in part, meaning that potentially none of or only a
portion of the $15 million would ever
be received by CB Gold; or (ii) adds the full value of the royalty
capped at $15 million without taking
into consideration discounting future cash flows to current net
present value and that the amount of royalty payments and their
timing remain uncertain.
About the Red Eagle Mining Offer
The Offer will be made for all of the issued and outstanding
common shares of CB Gold and will be open for acceptance for at
least 35 days following commencement of the Offer. The Offer will
be subject to the rejection of the proposed OM.L Transaction by CB
Gold shareholders at CB Gold's Annual General and Special Meeting
to be held June 23, 2015, as well as
certain customary conditions including the deposit under the Offer
of CB Gold common shares representing not less than 51% of CB Gold
shares, receipt of all necessary regulatory approvals, no material
adverse change in CB Gold and CB Gold's shareholder rights plan
being waived, invalidated, or cease-traded. The Offer will not be
subject to the approval of Red Eagle Mining's shareholders and is
not subject to any financing or due diligence conditions.
The full details of the Offer will be set out in a takeover bid
circular and accompanying offer documents (collectively the "Offer
Documents"), which Red Eagle Mining will file with Canadian
securities regulatory authorities upon formally making the
Offer. Red Eagle Mining has requested a shareholders list
from CB Gold and, when received, will send the Offer Documents to
CB Gold's shareholders.
Advisors and Information Agent
Red Eagle Mining has engaged National Bank Financial as its
financial advisor and Farris Vaughan
Wills & Murphy LLP as its legal counsel in respect of
the Offer. Questions and requests for assistance may be
directed to Laurel Hill Advisory Group, the Information Agent for
the Offer, at the contacts set out below.
About Red Eagle Mining
Red Eagle Mining is a well-financed gold exploration and
development company with an experienced mine-development
team. Management is focused on building shareholder value
through discovering and developing gold projects with low costs and
low technical risks in Colombia, a
jurisdiction with prolific historic production but until recently
limited modern exploration. Red Eagle Mining is developing
the 100 km² historic Santa Rosa Gold Project located in the
Antioquia Batholith. Development will initially commence with
the fully permitted San Ramon Gold Mine where a positive
Feasibility Study supports project development. Construction
is scheduled to commence in 2015 with production in 2016.
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. This news release includes
forward-looking statements that are subject to risks and
uncertainties. All statements within, other than statements
of historical fact, are to be considered forward looking.
Although the Company believes the expectations expressed in
such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions.
There can be no assurances that such statements will prove
accurate and, therefore, readers are advised to rely on their own
evaluation of such uncertainties. We do not assume any
obligation to update any forward-looking statements. This news
release does not constitute an offer to sell or a solicitation of
an offer to sell any securities in the United States. The
securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and may not be
offered or sold within the United
States or to U.S. Persons unless registered under the U.S.
Securities Act and applicable state securities laws or an exemption
from such registration is available.
SOURCE Red Eagle Mining Corporation
