GEO MINERALS LTD. ("GEO" or the "Company") (TSX
VENTURE:GM)(FRANKFURT:8G3) announced today that it has entered into
a definitive business combination agreement with New Gold Inc.
("New Gold") (TSX:NGD)(NYSE Amex:NGD), under which New Gold will
acquire 100% of the outstanding common shares of Geo by way of plan
of arrangement.
Under the plan of arrangement, Geo shareholders will receive
$0.16 per share, and 1/15th of a common share in a new exploration
company ("SpinCo") for each Geo common share held. Excluding the
SpinCo consideration, the cash consideration offered represents a
premium of approximately 33% based on the closing price of the Geo
shares on October 14, 2011.
New Gold will also subscribe for 9.9% of the outstanding SpinCo
common shares for consideration of $250,000. On completion of the
transaction, current Geo shareholders will hold approximately 90.1%
of the outstanding SpinCo shares, and SpinCo will own all of Geo's
assets and liabilities, except for cash retained by Geo and Geo's
West Blackwater mineral interests, located in central British
Columbia.
The board of directors of Geo unanimously approved the
transaction and all directors and senior officers of Geo, as well
as certain other Geo shareholders, collectively holding
approximately 29% of the number of Geo securities anticipated to be
entitled to vote at a meeting of the Geo securityholders (including
holders of Geo shares, stock options, and share purchase warrants),
have agreed to vote their securities in favour of the
transaction.
"The proposed transaction is an exciting opportunity for Geo and
its securityholders," said Michael England, Geo's President and
Chief Executive Officer. "This transaction provides Geo
shareholders with both an immediate meaningful premium reflecting
the progress we have made with the Company and, participation in an
exploration SpinCo with a portfolio of prospective assets located
in British Columbia, Quebec and Arizona. We believe this unbundling
of the West Blackwater project and Geo's other exploration assets
will ultimately create the greatest value for our
securityholders."
Transaction Details
The transaction will be carried out by way of a court-approved
plan of arrangement, and will require the approval of at least 2/3
of the votes cast by shareholders, optionholders and warrantholders
voting as a single class at Geo's special meeting of shareholders,
expected to take place in December 2011. The transaction is also
subject to applicable regulatory approvals, including approval of
the TSX Venture Exchange, and the satisfaction of certain closing
conditions customary in transactions of this nature.
Geo has engaged PI Financial Corp. to deliver a fairness opinion
in connection with the transaction.
If the transaction is completed, Geo shareholders will receive
$0.16 for every Geo share, and one SpinCo share for every 15 Geo
shares. Options and warrants not exercised prior to the completion
of the arrangement will be deemed to have been exercised on a
cashless basis for Geo shares, but the holders will receive that
number of Geo shares obtained by dividing: (1) the amount, if any,
by which (A) the product obtained by multiplying the number of
underlying shares by $0.16 exceeds (B) the aggregate total exercise
price payable under such option or warrant, by (2) $0.16.
Upon the recommendation of a special committee established to
review the transaction, Geo directors have determined that the
transaction is in the best interest of Geo and its securityholders,
and have unanimously approved the transaction. The directors intend
to recommend, in the information circular for the securityholder
meeting, that Geo securityholders vote in favour of the
transaction.
Subject to New Gold's right to match, the board of Geo may
terminate the business combination agreement in favour of an
unsolicited superior proposal upon payment of a $230,000 break fee
to New Gold. The special meeting of securityholders of Geo and the
closing of the transaction are targeted to occur in December 2011.
The completion deadline is February 15, 2012.
Geo Minerals is a junior mineral exploration company actively
seeking mineral opportunities for the benefit of all our
stakeholders. For further information we invite you to visit us at
www.geominerals.ca.
ON BEHALF OF THE BOARD
Michael England, President and Director
Geo Minerals Ltd.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including
certain information relating to the proposed transaction between
Geo and New Gold, may be deemed "forward-looking". All statements
in this news release, other than statements of historical fact,
that address events or developments that Geo expects to occur, are
"forward-looking statements." Forward-looking statements are
statements that are not historical facts and are generally, but not
always, identified by the words "expects", "anticipate", "intends",
"estimates" and similar expressions, or that events or conditions
"will", "would", "may", "could", "should" or "might" occur. All
such forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made and
are subject to important risk factors and uncertainties, many of
which are beyond Geo's ability to control or predict.
Forward-looking statements are necessarily based on estimates and
assumptions (including that the proposed transaction will be
completed successfully on the terms agreed upon by the parties)
that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results,
level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
statements.
Such risks include, without limitation: the ability to obtain
all necessary approvals and court orders to complete the proposed
transaction; changes in legislation in British Columbia and Canada
or in other jurisdictions that Geo may operate in that may affect
the proposed transaction or its operations; controls, regulations
and political or economic developments in British Columbia and
Canada; the speculative nature of mineral exploration and
development, including the risks of obtaining and maintaining the
validity and enforceability of the necessary licenses and permits
and complying with the permitting requirements in British Columbia;
competition; loss of key employees; additional funding
requirements; actual results of current exploration or reclamation
activities; changes in project parameters as plans continue to be
refined; accidents; labour disputes; defective title to mineral
claims or property or contests over claims to mineral properties.
In addition, there are risks and hazards associated with the
business of mineral exploration, development and mining, including
environmental hazards, industrial accidents, and unusual or
unexpected formations. Forward-looking statements are not
guarantees of future performance, and actual results and future
events could materially differ from those anticipated in such
statements. All of the forward-looking statements contained in this
news release are qualified by these cautionary statements. Geo
expressly disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, events or otherwise, except in accordance with
applicable securities laws.
Neither 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.
Contacts: Geo Minerals Ltd. Michael England President and
Director 1-604-683-3995 or Toll Free: 1-888-945-4770
1-604-683-3988www.geominerals.ca
Geo Minerals Ltd (TSXV:GM)
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