JDL Gold Corp. (TSXV:JDL) entered into an arrangement agreement to acquire Luna Gold Corp. (TSX:LGC) from Pacific Road Capital Management Pty Ltd., Sandstorm Gold Ltd. (TSX:SSL) and other shareholders for approximately CAD 100 million on February 1, 2017. Under the transaction, LGC shareholders will receive 1.105 shares of JDL for each common share held. Each LGC warrant, option and restricted share unit will become exercisable for JDL common shares, as adjusted in accordance with exchange ratio. JDL will pay Pacific Road debt immediately after the closing of transaction and Sandstorm debt facility will be settled in exchange of equity or combination of equity and cash of Trek Mining Inc. Sandstorm will continue to hold the CAD 30 million convertible debt facility that is due from Luna Gold. All of Luna's indebtedness to Pacific Road Resources Fund II and Pacific Road Resources Fund II L.P. will be repaid. Concurrent with the transaction, JDL intends to raise approximately CAD 27 million in a non-brokered private placement financing of subscription receipts. As of February 14, 2017, JDL and Luna Gold announced a bought deal private placement of subscription receipts for gross proceeds of CAD 15 million. In addition, due to substantial demand, the previously announced non-brokered private placement of subscription receipts has been increased to up to CAD 50 million. As of February 27, 2017, JDL and Luna Gold announced that the non-brokered private placement financing has been increased to CAD 80 million.

Following completion of the arrangement and the private Placements, and assuming that Sandstorm acquires 19,459,538 JDL shares pursuant to the Sandstorm Debt Exchange and that Pacific Road does not acquire any shares pursuant to the non-brokered private placement, new investors will own approximately 22.8%, former JDL shareholders will own approximately 38.5% and former Luna shareholders will own approximately 38.7% of the common shares of the combined company. Proceeds from the financing will be used to repay all outstanding debt payable by LGC to Pacific Road. After completion of the transaction, Luna will merge into JDL and JDL will change its name to Trek Mining Inc. and expects to trade on TSK Venture Exchange under the ticker symbol “TREK”. The transaction includes customary deal-protection provisions and a CAD 6.5 million reciprocal termination fee payable under certain circumstances. LGC's executive team will remain in place with Christian Milau as Chief Executive Officer and Executive Director, Greg Smith joining as President and Executive Director, David Laing as Chief Operating Officer, Peter Hardie as Chief Financial Officer, Scott Heffernan as Executive Vice President Exploration, Sebastian D'Amici as Senior Vice President Finance and Rhylin Bailie as Vice President Investor Relations. The new Board of Trek will consist of Christian Milau, Greg Smith, Rob Pease, Dan Wilton, Marcel de Groot, Felipe Alves, James O'Rourke and David Lowell.


The transaction is subject to shareholder approval of JDL Gold and LGC, regulatory approval, completion of concurrent financing and court approvals. The transaction is also subject to Luna shareholders approving the Luna debt settlement resolution and debt exchange resolution, holders of no more than 5% of the outstanding Luna common shares and holders of no more than 5% of the outstanding JDL common shares shall have dissented to the transaction, JDL shall have entered into the Sandstorm debt exchange agreement, JDL common shares to be issued to Luna shareholders in connection with the transaction shall have been approved for listing on the TSX-V, the Board of Directors of JDL shall be comprised of Rob Pease, Christian Milau, Greg Smith, Dan Wilton, Felipe Alves, Marcel de Groot, David Lowell and Jim O'Rourke, the executive officers of JDL shall be comprised of Christian Milau, Greg Smith, David Laing, Peter Hardie, Scott Heffernan, Sebastian D'Amici, Rhylin Bailie and Cesar Torresini. The independent Directors of LGC and JDL have unanimously approved the arrangement and will write recommendation to respective shareholders in favor of the transaction. Sandstorm and Pacific Road have entered into support agreements with Lorito Holdings (Guernsey) Ltd. and Zebra Holdings and Investments (Guernsey) Ltd. the largest shareholders of JDL to vote in favor of transaction. LGC officers, directors and certain shareholders with 68% shareholding of LGC have entered into lock-up agreement with JDL in favor of transaction. As of March 24, 2017, the shareholders of LGC and JDL Gold approved the transaction. As of March 29, 2017, Luna Gold has been granted a final order by the Supreme Court approving the transaction. LGC's Board formed a special committee of independent directors to consider the transaction.

The transaction is expected by the end of March 2017. The deal is expected to close on March 31, 2017. National Bank Financial, Inc. acted as financial advisor and fairness opinion provider and Bob Wooder of Blake, Cassels & Graydon LLP as legal advisor for Luna Gold Corp. Haywood Securities Inc. acted as financial advisor and fairness opinion provider while C. Warren Beil of Gowling WLG (Canada) LLP acted as legal advisor for JDL Gold Corp. Computershare Investor Services Inc. acted as depository for JDL and Luna. Dorsey & Whitney LLP acted as legal advisor in the deal.