TORONTO and VANCOUVER, March 2,
2020 /CNW/ - Wallbridge Mining Company Limited (TSX:WM)
("Wallbridge" or the "Company") and Balmoral
Resources Ltd. (TSX:BAR) ("Balmoral") announce today that they have
entered into a definitive agreement (the "Arrangement
Agreement") following the signing of a Letter of Intent on
February 14, 2020, whereby Wallbridge
will, among other things, acquire all of the issued and outstanding
shares of Balmoral, in an all-stock transaction, pursuant to a plan
of arrangement as further described below (the
"Transaction").
Under the terms of the Transaction, all of the issued and
outstanding shares of Balmoral will be exchanged at a ratio of 0.71
of a Wallbridge common share for each Balmoral common share. Upon completion
of the Transaction, existing Wallbridge and Balmoral shareholders will own approximately
82% and 18% of the Company's pro forma issued and outstanding
shares, respectively.
The exchange ratio implies consideration of C$0.62 per Balmoral common share based on the volume
weighted average price of Wallbridge common shares on the Toronto
Stock Exchange ("TSX") for the 20 trading days ending
February 28, 2020, representing a 46%
premium to the volume weighted average price of Balmoral common shares on the TSX over that
period and implying an equity value of the Transaction equal to
C$110 million.
Transaction Benefits to Wallbridge Shareholders
- Combines complementary, highly prospective properties located
in the mining-friendly Nord-du-Québec region of western Québec,
creating opportunity for synergies given close proximity of the
properties
- Significantly expands Wallbridge's land holdings in
Quebec (from 10.5 km2
to 739.0 km2) along the Detour Gold Trend, improving the
Company's potential for further discoveries in the district as well
as additional mine development flexibility
- In addition to Fenelon, adds multiple gold-focused properties,
including the resource stage Martiniere gold deposit, within the
prolific Abitibi Greenstone Belt that have exploration upside, and
a resource Ni-Cu-Co-PGE project that has option value
- Support of Wallbridge and Balmoral's largest shareholder, Eric Sprott, who owns approximately 23% of
Wallbridge and 9% of Balmoral
- Increased market capitalization which has the potential to
attract greater support from new investors seeking to participate
in funding the potential future growth of Wallbridge
Transaction Benefits to Balmoral Shareholders
- An immediate and significant premium of 46% based on the volume
weighted average price of the shares of both companies for the
20-trading day period ending February 28,
2020, and 60% to the closing price of the Balmoral common shares on the TSX on
February 28, 2020.
- Exposure to Wallbridge's existing Fenelon property, which hosts
the highly prospective Area 51 and Tabasco zones, multiple
exploration targets and significant underground infrastructure
- Participation in the potential upside of Wallbridge's shares
from any exploration and development success at Fenelon, as well as
the pro forma company's other properties
- Significantly enhanced trading liquidity
- The combined entity will have an enhanced capital markets
profile and a pro forma cash balance of approximately C$67 million, which takes on particular
importance given the extreme market volatility experienced over the
past trading week, to advance the combined assets and pursue
further growth opportunities
"This strategic transaction makes sense for the shareholders of
both Wallbridge and Balmoral,"
said Marz Kord, President, CEO &
Director of Wallbridge. "The combination of our two companies
creates an entity with a solid balance sheet; a diverse yet focused
project portfolio; a motivated management group experienced in
exploration, development and production; and the scale, resource
growth potential and discovery upside that gives us the opportunity
to build on the strengths of both companies".
Darin Wagner, President, CEO
& Director of Balmoral,
stated, "The recent exploration success at Tabasco, Ripley and
throughout Area 51 speak to a large gold system which we are just
beginning to unlock and which is combined in its entirety through
this transaction. Today's announcement creates one of best funded
exploration companies in Canada
which has enjoyed tremendous support from Mr. Eric Sprott and a solid shareholder base which
includes gold producer Kirkland Lake
Gold who operate along the Detour Gold Trend".
Transaction Details
The Transaction will be affected by way of a court-approved plan
of arrangement under the Business Corporations Act
(British Columbia) and will be
subject to the approval of two thirds of the votes cast at a
special meeting of Balmoral
shareholders to be held on or about May 7,
2020. The transaction is subject to approvals from the
Toronto Stock Exchange, as well as other conditions. The
Arrangement Agreement provides for, among other things, customary
reciprocal board support and non-solicitation covenants, with
"fiduciary out" provisions that allow Balmoral to accept a superior proposal in
certain circumstances and "right to match period" in favour of
Wallbridge. The Arrangement Agreement also provides for a
termination fee of C$2.5 million to
be paid by Balmoral to Wallbridge
if the Arrangement Agreement is terminated by Balmoral in certain specified circumstances
and reimbursement of expenses for either party if the Arrangement
Agreement is terminated in certain other specified
circumstances.
Eric Sprott, who currently holds
approximately 9% of Balmoral's
common shares, has entered into a voting and support agreement
pursuant to which, among other things, he has agreed to vote his
Balmoral common shares in favour
of the transaction.
The directors and senior officers of Balmoral have also entered into customary
support and voting agreements to vote their shares in favour of the
combination. The Arrangement Agreement will be filed under each of
Wallbridge's and Balmoral's
profiles on SEDAR (www.sedar.com). The terms of the transaction and
related matters will also be described in detail in a management
information circular of Balmoral
to be filed with the regulatory authorities and mailed to
Balmoral shareholders in
accordance with applicable securities laws.
Board Recommendations and Fairness Opinion
Balmoral's Board of Directors
(the "Balmoral Board"), based on
the recommendation of a committee of independent directors (the
"Balmoral Special Committee"), has determined that the combination
is in the best interests of Balmoral and has unanimously recommended that
Balmoral shareholders vote in
favour of the transaction. The Balmoral Special Committee has
obtained an independent opinion from PI Financial Corp. that the
consideration to be received by Balmoral shareholders pursuant to the
Transaction is fair, from a financial point of view, to
Balmoral shareholders. A special
committee of the board of directors of Wallbridge obtained an
opinion from Canaccord Genuity Corp. that the consideration to be
paid by Wallbridge in connection with the Transaction, is fair,
from a financial point of view, to Wallbridge.
Advisors and Counsel
Canaccord Genuity Corp. is acting as financial advisor and Irwin
Lowy LLP is acting as legal counsel to Wallbridge. INFOR Financial
Inc. is acting as financial advisor and Blake, Cassels &
Graydon LLP is acting as legal counsel to the Balmoral Special
Committee. Gowling WLG (Canada)
LLP is acting as legal counsel to Balmoral.
About Wallbridge Mining Company Limited
Wallbridge is establishing a pipeline of projects that will
support sustainable 100,000 ounce-plus annual gold production as
well as organic growth through exploration and scalability.
The Company is currently developing its 100%-owned Fenelon Gold
Property, which is located proximal to the Sunday Lake Deformation
Zone, an emerging gold belt in northwestern Quebec with an ongoing 100,000 to 120,000
metre exploration drill program in 2020 and a 33,500-tonne bulk
sample and 75,000 metres of drilling completed in 2019. Wallbridge
is also pursuing additional advanced-stage projects which would add
to the Company's near-term project pipeline. Wallbridge is also the
operator of, and an 18% shareholder in, Loncan Canada Inc., a
privately-held company with a large portfolio of nickel, copper,
and PGM projects in Ontario's
Sudbury Basin.
About Balmoral Resources Ltd.
Balmoral is a multi-award
winning Canadian-focused exploration company actively exploring a
portfolio of gold and base metal properties located within the
prolific Abitibi greenstone belt. The Company's flagship, Detour
Gold Trend Project hosts the resource-stage Bug and Martiniere West
gold deposits and the Grasset nickel-copper-cobalt-PGE deposit.
Employing a drill-focused exploration style in one of the world's
preeminent mining jurisdictions, Balmoral is following an established formula
with a goal of maximizing shareholder value through the discovery
and definition of high-grade, Canadian gold and base metal
assets.
Disclaimers
This press release contains statements which constitute
"forward-looking information" within the meaning of applicable
securities laws, including statements regarding the plans,
intentions, beliefs and current expectations of Wallbridge and
Balmoral with respect to future
business activities and operating performance. Forward-looking
information is often identified by the words "may", "would",
"could", "should", "will", "intend", "plan", "anticipate",
"believe", "estimate", "expect" or similar expressions and include
information regarding: (i) expectations regarding whether the
proposed Transaction will be consummated, including whether
conditions to the consummation of the Transaction will be
satisfied, or the timing for completing the Transaction, (ii)
expectations regarding the potential benefits and synergies of the
Transaction and the ability of the combined company to successfully
achieve business objectives, including integrating the companies or
the effects of unexpected costs, liabilities or delays, (iii)
expectations regarding additions to mineral resources and reserves
and future production, (iv) expectations regarding financial
strength, free cash flow generation, trading liquidity, and capital
markets profile, (v) expectations regarding future exploration and
development, growth potential for Wallbridge's and Balmoral's operations, (vi) the availability
of the exemption under Section 3(a)(10) of the U.S. Securities Act
to the securities issuable in the Transaction, and (viii)
expectations for other economic, business, and/or competitive
factors.
Investors are cautioned that forward-looking information is
not based on historical facts but instead reflect Wallbridge's and
Balmoral's respective management's
expectations, estimates or projections concerning future results or
events based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are
made. Although Wallbridge and Balmoral each believe that the expectations
reflected in such forward-looking information are reasonable, such
information involves risks and uncertainties, and undue reliance
should not be placed on such information, as unknown or
unpredictable factors could have material adverse effects on future
results, performance or achievements of the combined company. Among
the key factors that could cause actual results to differ
materially from those projected in the forward-looking information
are the following: the ability to consummate the Transaction; the
ability to obtain requisite court, regulatory and shareholder
approvals and the satisfaction of other conditions to the
consummation of the Transaction on the proposed terms and schedule;
the ability of Wallbridge and Balmoral to successfully integrate their
respective operations and employees and realize synergies and cost
savings at the times, and to the extent, anticipated; the potential
impact on exploration activities; the potential impact of the
announcement or consummation of the Transaction on relationships,
including with regulatory bodies, employees, suppliers, customers
and competitors; the re-rating potential following the consummation
of the Transaction; changes in general economic, business and
political conditions, including changes in the financial markets;
changes in applicable laws; compliance with extensive government
regulation; and the diversion of management time on the
Transaction. This forward-looking information may be affected by
risks and uncertainties in the business of Wallbridge and
Balmoral and market conditions.
This information is qualified in its entirety by cautionary
statements and risk factor disclosure contained in filings made by
Wallbridge and Balmoral with the
Canadian securities regulators, including Wallbridge's and
Balmoral's respective annual
information form, financial statements and related MD&A for the
financial year ended December 31,
2018 and their respective interim financial reports and
related MD&A for the period ended September 30, 2019 filed with the securities
regulatory authorities in certain provinces of Canada and available at www.sedar.com.
This press release also contains Future Oriented Financial
Information and financial outlooks (collectively, "FOFI") within
the meaning of applicable Canadian securities laws. The FOFI has
been prepared by management of Wallbridge and Balmoral as at the date hereof, to demonstrate
the potential benefits of the Transaction to shareholders. The FOFI
has been prepared based on a number of assumptions that management
of Wallbridge and Balmoral believe
are reasonable. However, because this information is highly
subjective and subject to numerous risks, including the risks
discussed above, it should not be relied on as necessarily
indicative of future results.
Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking
information prove incorrect, actual results may vary materially
from those described herein as intended, planned, anticipated,
believed, estimated or expected. Although Wallbridge and
Balmoral have attempted to
identify important risks, uncertainties and factors which could
cause actual results to differ materially, there may be others that
cause results not to be as anticipated, estimated or intended.
Wallbridge and Balmoral do not
intend, and do not assume any obligation, to update this
forward-looking information except as otherwise required by
applicable law.
The Toronto Stock Exchange has neither reviewed nor accepts
responsibility for the adequacy or accuracy of this news
release.
SOURCE Wallbridge Mining Company Limited