TORONTO,
The combined company will be a well-financed precious metals producer with established silver production in
Transaction Highlights
- Enhanced portfolio of projects for the new precious metals bull market: Combines Platosa's high-grade silver production with high return and low risk
Kilgore development project, creating a pipeline for growth. - Significant exploration upside: Active exploration on four key mineral trends including the CRD and
Fresnillo epithermal silver trends inMexico , the re-emergingIdaho gold region, and the historic Freiberg district in Saxony, all known for multi-million ounce precious metal discoveries. - Geographic diversification: Diverse, well-established mining jurisdictions across two continents, reducing single asset risk.
- Enhanced capital market profile: The combined company will be well financed with
US$10 million in cash and available funds and is expected to have a market capitalization of approximatelyC$124 million and will be listed on theToronto Stock Exchange ("TSX") inCanada . Excellon also intends to apply for a listing on theNYSE American LLC ("NYSE American") inthe United States . - Proven board and management: Integrates board and management that can discover, permit, finance, develop and operate mining assets to industry leading standards, with proven experience in
North America . - Unanimous board approval and shareholder support: The Board of Directors of both companies have unanimously recommended support for the Transaction. Additionally, 25% of Otis Gold and 20% (including
Eric Sprott ) of Excellon shareholders have entered into voting support agreements.
Excellon President & CEO
Otis Gold President & CEO
Benefits to Excellon Shareholders
- Adds two significantly undervalued gold assets: the
Kilgore Project hosting an Indicated resource of 825,000 oz Au @ 0.58 g/t and an Inferred resource of 136,000 oz Au @ 0.45 g/t, and theOakley Project hosting an Inferred resource of 163,000 oz Au @ 0.51 g/t; - Amplifies exposure to precious metals in the early stages of a bull market by increasing measured and indicated resources by 450% and precious metal exposure from 50% to over 90%;
- Enhances growth profile with the addition of
Kilgore , an advanced-stage gold development asset, with PEA highlights including a post-tax NPV5% ofUS$185M and an IRR of 54% (@US$1,500 Au), with initial capital ofUS$81 million ; - Affords significant exploration upside to expand the existing
Kilgore resource, follow-up on high-grade results including 85.4 m of 2.50 g/t Au in 16OKR-338 near surface and 30.5 m of 5.37 g/t Au in 16OKR-315; - Diversifies asset base into the favourable mining jurisdiction of
Idaho and positions Excellon for further growth inthe United States ; - Increases capital markets presence, trading liquidity and shareholder base through the proposed listing of the combined company on the NYSE American exchange; and
- Provides re-rating potential in-line with larger precious metal peers.
Benefits to Otis Gold Shareholders
- Delivers immediate and significant premiums of 47% and 55% based on the spot and 20-day VWAP of Otis Gold shares on the TSX-V;
- Accesses a proven team with the ability to discover, permit, finance, develop and operate to industry leading standards;
- Diversifies existing "single asset development" risk through exposure to Excellon's producing asset and additional exploration properties;
- Provides continued exposure to the
Kilgore Project and the anticipated benefits of the transaction through the ownership of Excellon shares; - Positions the combined company for a rising precious metal price environment through ownership of a larger combined entity with existing silver production and a robust gold development pipeline in top jurisdictions;
- Increases trading liquidity significantly through receiving Excellon shares and through the proposed listing of the combined company on the NYSE American exchange; and
- Provides re-rating potential in-line with larger precious metal peers.
Transaction Particulars
Under the terms of the Transaction, Excellon will acquire all outstanding shares of Otis at a share exchange ratio of 0.23 Excellon shares for each Otis share (the "Exchange Ratio"). Each Otis warrant will become exercisable for Excellon common shares, as adjusted in accordance with the Exchange Ratio. Each Otis option outstanding will be exchanged for an Excellon option to acquire Excellon common shares as adjusted in accordance with the Exchange Ratio. Based on the Exchange Ratio, upon completion of the Transaction, existing Excellon shareholders will own 74% and former Otis shareholders will own 26% of the combined company.
Upon completion of the Transaction, Excellon as the combined company will have approximately 154 million common shares issued and outstanding prior to the Proposed Consolidation (as defined below).
The Transaction is expected to be structured as a plan of arrangement under the Business Corporations Act (
Officers, directors and certain shareholders of Otis Gold, who collectively hold 25% of Otis Gold's issued common shares, have entered into voting support agreements in favour of the Transaction. Officers, directors and certain shareholders of Excellon, who collectively hold 20% of Excellon's issued common shares, have entered into voting support agreements in favour of the Transaction.
The special meetings of Otis Gold and Excellon are expected to be held in
The Agreement includes customary deal-protection provisions, including non-solicitation of alternative transactions and a reciprocal break fee of
Combined Company Asset Portfolio
On completion of the Transaction, Excellon will continue to own and operate the high-grade, silver-lead-zinc
Excellon will also own 100% of the development stage
In 2019, Otis Gold completed a preliminary economic assessment that supports the potential for a low capital intensity, low operating cost, open-pit, heap-leach mining operation, which projects an initial capital cost of
The
- 56.4 m of 2.05 g/t Au in 15OKR 304;
- 59.5 m of 3.79 g/t Au in 15OKR-305;
- 50.3 m of 4.24 g/t Au in 15OKR-308;
- 94.5 m of 4.21 g/t Au in 15OKR-309; and
- 30.5 m of 5.37 g/t Au in 16OKR-315.
Drilling at the
Excellon will also own a portfolio of precious metals exploration projects in
Board & Management
Excellon will be managed by a combination of individuals from the two companies to ensure continuity with the core assets and current work programs. The proposed Board will comprise seven individuals including
Key members of the continuing management team will be
NYSE American Listing Application and Share Consolidation
In connection with the Transaction, Excellon is seeking to make an application to list the common shares of the combined company on the NYSE American. A listing on the NYSE American is expected to materially increase Excellon's exposure to a larger and more diverse group of institutional and retail investors which the board and management believe will improve trading liquidity and expand Excellon's shareholder base.
To meet the minimum share price requirements of listing on the NYSE America (
Sprott Lending Bridge Facility to Excellon
Excellon has signed a non-binding term sheet in respect of a
The Facility bears interest at 10% per annum, compounded and payable monthly, and due and payable in full on or before
Excellon has agreed to advance Otis Gold a bridge loan in the principal amount of up to
Advisors and Counsel
Board of Directors Recommendation
PI Financial has provided a fairness opinion to the Board of Directors of Excellon that, subject to the assumptions, limitations and qualifications set out in such fairness opinion, the consideration to be paid by Excellon pursuant to the Transaction is fair, from a financial point of view, to Excellon shareholders.
Cormark has provided an opinion to the Special Committee of the Board of Directors of Otis Gold stating that, based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration offered to Otis Gold shareholders pursuant to the Transaction is fair, from a financial point of view, to Otis Gold shareholders.
Conference Call and Webcast
Excellon and Otis Gold will host a joint conference call and webcast on
North American Toll Free: 1-800-319-4610
Webcast link: http://services.choruscall.ca/links/excellon20200224.html
The webcast will be archived on both the Excellon and Otis Gold websites until the Transaction closes.
Qualified Persons
Mr. Ben Pullinger,
Mr.
About Excellon
Excellon's 100%-owned
Additional details on Excellon's properties are available at www.excellonresources.com.
About Otis Gold
Otis Gold is a resource company focused on the acquisition, exploration, and development of precious metal deposits in
Additional details on Otis Gold's properties are available at www.otisgold.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Canadian securities laws. Such statements in this press release include, without limitation, statements regarding the timing of the completion of the Transaction, synergies of the Transaction; the anticipated benefits of the Transaction to shareholders of Excellon and Otis Gold; the third-party approvals required to complete the Transaction; the conditions required to be satisfied to complete the Transaction; the ability of the companies to complete the Transaction on terms announced; the future results of operations of the combined company following the completion of the Transaction, the timing of the companies to hold their respective shareholders' meetings; the expected timing to finalize and mail the joint management information circular; the Proposed Consolidation and listing on the NYSE American; the intentions, plans and future actions of the companies participating in the transactions described herein; the board and management of the combined company; timing to list the common shares of Excellon on the NYSE American, performance and achievements of the combined company, including potential property acquisitions, the timing, content, cost and results of proposed work programs, the continued availability of the Loan, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, proposed production rates, potential mineral recovery processes and rates, business and financing plans, business and market trends and future operating revenues. Although the companies believe that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The companies caution investors that any forward-looking statements are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, the inability to satisfy the conditions required to complete the Transaction; the companies not being able to obtain third-party approvals; the Agreement being terminated; variations in the nature, quality and quantity of any mineral deposits that may be located, significant downward variations in the market price of any minerals produced, the inability to obtain any necessary permits, consents or authorizations required for its activities, to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies. The companies do not undertake, and assumes no obligation, to update or revise any such forward-looking statements or forward-looking information contained herein to reflect new events or circumstances, except as may be required by law.
The public disclosure filings of Excellon and Otis Gold may be accessed via www.sedar.com and readers are urged to review these materials, including the technical reports filed with respect to the mineral properties of the combined companies, and particularly the
This press release is not and is not to be construed in any way as, an offer to buy or sell securities in
Neither the
SOURCE
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