ALBUQUERQUE, N.M. and
VANCOUVER, British Columbia,
July 15, 2014 /PRNewswire/
-- Santa Fe Gold Corporation ("Santa
Fe", OTCQB: SFEG) and Canarc Resource Corp. ("Canarc", CCM:
TSX and CRCUF: OTC-BB) are pleased to announce the execution of a
strategic share exchange agreement (the "Agreement") pursuant to
which Santa Fe will issue
66,000,000 shares of its common stock to Canarc and Canarc will
issue 33,000,000 of its common shares to Santa Fe (the "Share Exchange"). Upon
consummation of the Share Exchange, Santa
Fe will own approximately 17 percent of Canarc's outstanding
shares and Canarc will own approximately 34 percent of Santa Fe's outstanding common
shares.
The purpose of the Share Exchange is to facilitate a significant
turnaround for Santa Fe and a
material new opportunity for Canarc driven by the appointment of
Canarc nominees to the Santa Fe
management team and Board of Directors, the re-capitalization of
Santa Fe, the re-structuring of
Santa Fe secured debt and
re-development of its Summit gold-silver mine in New Mexico to production while preserving
Santa Fe's net operating loss
carry-forwards totaling in excess of $78
million. The Agreement contains representations,
warranties, conditions and covenants of the parties customary for
transactions of this type.
In connection with the strategic Share Exchange:
- Santa Fe's senior secured
creditors, Waterton Global Value, L.P. ("Waterton"), Sandstorm Gold
Ltd. and Sandstorm Gold (Barbados)
Ltd. ("Sandstorm") have entered into respective agreements that
demonstrate that they are supportive of the share exchange
transaction and that they are amenable to restructuring
collectively approximately $20
million of Santa Fe
indebtedness.
- Santa Fe has entered into a
"best-efforts" Placement Agreement with an investment bank with
which Canarc and Endeavour Silver have enjoyed a long standing
relationship, pursuant to which will place an estimated
$22 million of 8% Gold Bonds Due in
2018 that are redeemable in cash or gold ETF.
- Effective today, Mr. Bradford
Cooke, Chairman and Founder of Canarc and Founder and CEO of
Endeavour Silver Corp. (NYSE:EXK and TSX:EDR) has been appointed as
Chairman of Santa Fe and
Santa Fe's board will consist of
three current Santa Fe directors:
Jakes Jordan, Michael Heeley and
Erich Hofer, and two Canarc
nominees: Bradford Cooke and Catalin
Chiloflischi. To facilitate the appointment of Mr. Bradford Cooke and Catalin Chiloflischi to the
Santa Fe Board, Pierce Carson and Glenn
Henricksen, have resigned as Directors of Santa Fe effective today.
- Also today, Canarc CEO, Catalin
Chiloflischi has been appointed President and Chief
Executive Officer and Director of Santa
Fe and Canarc Chief Operating Officer, Garry Biles has been appointed Chief Operating
Officer of Santa Fe.
Jakes Jordaan, Santa Fe's
departing Chairman and Interim CEO, noted five key reasons
underlying Santa Fe's Independent
Special Committee and the Board opinion that the strategic Share
Exchange is expected to significantly increase Santa Fe's long-term stockholder
value:
- "WE STRENGTHEN OUR MANAGEMENT TEAM AND BOARD OF DIRECTORS WITH
WORLD-CLASS TALENT: Canarc's Chairman and Founder, Mr.
Bradford Cooke, is also the founder
and CEO of Endeavour Silver, a successful silver mining company
with three operating mines in Mexico. Mr. Cooke has grown Endeavour
Silver from start-up into a significant mid-tier silver and gold
producer in 10 years and listed Endeavour on the TSX and NYSE with a market
cap of over $600 million today.
We believe that under his leadership, Canarc's seasoned management
team of mine finders, builders and operators have the experience
and capabilities to turn our Summit mine into a near-term
profitable producing asset and execute a well-defined and focused
growth strategy in Steeplerock mining district;
- WE BENEFIT FROM THE RESTRUCTURING OF OUR SENIOR DEBT. The
Canarc team successfully sought the cooperation of Waterton and
Sandstorm and their proven operating record and ability to attract
capital was a fundamental driver in these discussions;
- WE BENEFIT FROM THE NON-DILUTIVE GOLD BOND
FINANCING. Canarc introduced us to an investment bank to which
Canarc and Endeavour Silver have enjoyed a long standing
relationship and successfully negotiated the gold bond financing.
Their operating experience and expertise were necessary elements
for the investment bank agreeing to act as the lead placement agent
for the gold bond financing - a major financing structure with
almost no equity dilution to our stockholders;
- WE BENEFIT FROM CANARC'S HIGH-GRADE NEW POLARIS GOLD MINE
PROPERTY. Canarc has spent over $28
million on the discovery and delineation of a high grade
gold deposit on its New Polaris Gold Mine Property in British Columbia, Canada. An NI 43-101
compliant resource for Canarc's New Polaris Project consists of
approximately 1.4 million tons grading 0.36 oz per ton (opt) Au of
measured and indicated resources, and about 2.0 million tons of
inferred resources grading also about 0.36 opt Au. Through
our 17 percent interest in Canarc, we anticipate future benefits as
this project advances toward feasibility and production.
- WE MAXIMIZE THE FUTURE AVAILABILITY OF OUR NET OPERATING LOSS
CARRY-FORWARDS. At March 30,
2014, Santa Fe had net
operating loss carry-forwards of approximately $78 million. A primary driver underlying
the share exchange structure was the desire to preserve this
substantial off-balance sheet asset. Should the Summit mine
reach its anticipated potential, these NOL carry-forwards should
add significant future stockholder value."
Bradford Cooke, Chairman and
Founder of Canarc and incoming Chairman of Santa Fe commented: "Today's announcement
marks an important step forward that will provide Canarc with
significant exposure to and management of a growing gold-silver
producer in the near term. The proposed transaction represents a
great opportunity for both Canarc and Santa Fe shareholders to benefit from the
combination of Santa Fe's Summit
mine and Lordsburg mill and
Canarc's seasoned management team of mine finders, builders and
operators."
Mr. Catalin Chiloflischi, CEO of
Canarc and incoming CEO of Santa
Fe, highlighted the main reasons why the strategic Share
Exchange with Santa Fe could
significantly enhance Canarc's long-term shareholder
value:
- "WE SEE AN OPPORTUNITY TO REPLICATE THE SUCCESS OF THE ENDEAVOUR BUSINESS MODEL. Endeavour grew into a strong mid-tier
silver-gold mining company through strategic acquisitions of
distressed mines in historic districts that held the potential for
operational turn-arounds to return the mines to profitability, and
new discoveries that could be fast-tracked to production to drive
annual organic growth and unfold the full mineral potential of each
district. Canarc sees a similar opportunity to create value
out of Santa Fe's Summit mine and
other properties by following Endeavour's successful business model;
- WE GAIN EXPOSURE TO AND MANAGEMENT OF A NEAR-TERM PRODUCING
GOLD-SILVER MINE WITH SIGNIFICANT TURNAROUND POTENTIAL.
Santa Fe plans to redevelop its
high grade Summit gold-silver mine and Lordsburg mill into a near-term profitable
producing asset which if successful would positively impact
Santa Fe's share value and
therefore Canarc's share value;
- WE SEE AN OPPORTUNITY TO ACQUIRE OTHER OLD MINES IN THE
STEEPLEROCK DISTRICT WITH GOOD POTENTIAL FOR NEW DISCOVERIES TO
DRIVE ORGANIC GROWTH. One of the keys to the Endeavour business model is acquiring
additional properties and making new discoveries in order to drive
organic growth. Canarc's management team is also intimately
familiar with the low sulfidation epithermal, high grade vein mines
that Endeavour operates. The
Summit mine and Steeplerock district are prime examples of such
mines, and Canarc sees a similar opportunity to acquire and explore
other properties within the Steeplerock district;
- WE GAIN EXPOSURE TO AND MANAGEMENT OF SANTA FE'S OTHER ASSETS WITHOUT EXPOSURE TO
THEIR DEBTS. Santa Fe holds
an option to purchase the Mogollon
gold-silver district and a lease on the Ortiz gold mine properties in New
Mexico. Canarc intends to more fully evaluate these assets
for potential value creation, but does not have any liability for
Santa Fe's debts.
- WE CAN REDUCE OUR G&A COSTS BY SHARING MANAGEMENT AND STAFF
WITH SANTA FE. By sharing certain management members and
office staff between Canarc and Santa
Fe, we should be able to reduce G&A costs for both
companies;
- CANARC WILL CONTINUE TO EVALUATE OTHER STRATEGIC OPPORTUNITIES
AND ADVANCE ITS ASSETS IN AN EFFORT TO CREATE SHAREHOLDER VALUE.
This is just the next step forward for Canarc in our drive to build
a successful company. We view the junior gold mining sector as ripe
for consolidation"
The foregoing description of the Share Exchange does not purport
to be complete, and is qualified in its entirety by reference to
the Agreement, which is included as Exhibit 2.1 to Santa Fe's Current Report on Form 8-K, dated
July 15, 2014, which has been filed with the SEC and is be
available at www.sec.gov.
Completion of the Share Exchange is subject to certain standard
conditions, including the approval of Toronto Stock Exchange (TSX)
and British Columbia Securities Commission (BCSC).
Mr. Garry Biles, President
& COO of Canarc, is the Qualified Person pursuant to NI 43-101
who reviewed and approved the scientific and technical information
included in this news release.
A joint conference call to discuss this transaction with
shareholders and investors has been scheduled for Wednesday July 16, 2014 at 9.00am PST (12.00pm
EST). Please see dialing instructions below.
Conference Call Numbers
Canada & USA Toll Free Dial In: 1 800 319 4610
Outside of Canada &
USA call: +1 604 638 5340
ABOUT SANTA FE GOLD
Santa Fe Gold is a U.S.-based mining and exploration enterprise
focused on acquiring and developing gold, silver, copper and
industrial mineral properties. Santa
Fe controls: (i) the Summit mine and Lordsburg mill in southwestern New Mexico; (ii) a substantial land position
near the Lordsburg mill,
comprising the core of the Lordsburg Mining District; (iii) the
Mogollon gold-silver project,
within trucking distance of the Lordsburg mill; (iv) the Ortiz gold property in north-central
New Mexico; (v) the Black Canyon
mica deposit near Phoenix,
Arizona; and (vi) a deposit of micaceous iron oxide (MIO) in
Western Arizona. Santa Fe Gold
intends to build a portfolio of high-quality, diversified mineral
assets with an emphasis on precious metals.
To learn more about Santa Fe Gold, visit
www.santafegoldcorp.com.
ABOUT CANARC RESOURCE CORP.
Canarc is a growth-oriented, gold exploration and mining company
listed on the TSX (CCM) and the OTC-BB (CRCUF). Canarc is currently
seeking a partner to advance its 1.1 million oz, high grade,
underground, New Polaris gold mine project in British Columbia to feasibility and is
preparing to drill its Windfall Hills gold properties in
central B.C. Canarc is also seeking to acquire interests in
operating or pre-production gold mines in the Americas.
CONTACT:
Catalin Chiloflischi, CEO
Toll Free: 1-877-684-9700 Tel: (604)
685-9700 Fax: (604) 685-9744
Email: info@canarc.net Website: www.canarc.net
FORWARD-LOOKING AND CAUTIONARY STATEMENTS – SAFE HARBOR
This press release contains forward-looking statements. Those
statements constitute forward-looking statements within the meaning
of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995 and forward-looking information under Canadian
securities law. Forward-looking statements can be identified by the
use of words such as "expects," "projects," "plans," "will," "may,"
"anticipates," believes," "should," "intend," "estimates," and
other words of similar meaning. These statements include, among
others, the anticipated purpose of the Share Exchange to facilitate
a turn-around of Santa Fee,
recapitalization of Santa Fe,
restructuring of Santa Fe debt,
redevelopment of the Summit Gold-Silver Mine, preserving net
operations less carry forwards, anticipated best efforts placement
of gold bonds, expectations of replicating the Endeavor business
model, expectations related to creating shareholder value and other
statements that are not historical fact. These statements are
subject to risks and uncertainties that cannot be predicted or
quantified, and our actual results may differ materially from those
expressed or implied by such forward-looking statements, including
the following risks and uncertainties: financing risks, exploration
and development risks, gold-silver commodity price risks, risks
related to obtaining consents, permits and licenses, regulatory and
governmental risks, currency fluctuation risks, TSX and BCSC
approval, uncertainty of the outcomes of litigation and risks
associated with the inherent uncertainty of future litigation
results, adverse outcomes in litigation may result in significant
monetary damages or injunctive relief that could adversely affect
our ability to conduct our business. All forward-looking statements
included in this release are made as of the date of this press
release, and the parties assume no obligation to update any such
forward-looking statements.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the gold bonds, and shall not
constitute an offer, solicitation or sale of any gold bonds in any
jurisdiction in which such offer, solicitation or sale would be
unlawful. This press release is being issued pursuant to and
in accordance with Rule 135c under the Act.
CONTACT:
Santa Fe Gold Corp
Catalin Chiloflischi, President and Chief Executive Officer
Toll Free: 1-877-684-9700; Tel: (604) 685-9700
SOURCE Santa Fe Gold Corporation