Bonterra Resources Inc. (TSX-V:BTR) (US:BONXF) (FSE:9BR1) and Metanor Resources Inc. (TSX-V:MTO) are pleased to announce that they have entered into a binding letter of intent dated June 17, 2018 to combine Bonterra and Metanor to create an exciting new advanced Canadian gold exploration and development company focused on becoming the leader in the building out and future mining development of the Urban Barry Quebec Gold Camp.
The Transaction contemplates that Bonterra will acquire all of the issued and outstanding common shares of Metanor for C$0.73 in equity consideration, at an exchange ratio of 1.6039 Bonterra shares, for each Metanor share. Immediately prior to the completion of the Metanor acquisition, Bonterra will spin out its Larder Lake assets in Ontario, Canada, and a specified amount of cash (the “Spin-Out”), in order to create a well-capitalized and exciting new exploration opportunity for its shareholders.
Highlights of the Transaction:
Nav Dhaliwal, President and CEO of Bonterra, said, “Bonterra has been an extremely successful exploration company and must continue to evolve and participate in growth opportunities. We have quickly and efficiently discovered and developed the Gladiator deposit over the past two years, and now look to put our exploration skills and experience to work on the larger combined land package. We believe we will be able to develop a much larger and more significant resource profile within the Urban Barry Camp. The availability and ownership of a permitted and expandable processing facility certainly places Bonterra in an excellent position to rapidly and cost effectively become a significant Quebec based gold producer.”
Greg Gibson, Chairman and Interim CEO of Metanor, commented, “Putting together two, arguably, undervalued companies like Metanor and Bonterra is extremely beneficial and logical in a number of ways. Resource growth, exploration synergies and de-risking the path to production are all considerations, as well as potential to access different and larger markets and shareholders. I look forward to working with the Bonterra team, as the combined effort provides the opportunity to create significant shareholder value.”
Benefits to Bonterra
Benefits to Metanor
Under the terms of the LOI, Bonterra will acquire all of the issued and outstanding common shares of Metanor for C$0.73 in equity consideration per share at an exchange ratio of 1.6039 Bonterra shares for each Metanor share representing an aggregate transaction value of C$78 million on a fully diluted in-the-money basis.
The Purchase Price represents a 40% premium to the VWAP of Metanor’s common shares on the TSXV on June 15, 2018 and a premium of 30% to the closing price as of such date.
Upon completion of the Transaction, existing Bonterra and Metanor shareholders will own approximately 58% and 42% of the pro forma company, respectively.
Immediately prior to the completion of the proposed Transaction, Bonterra will complete the Spin-Out of its Larder Lake, Ontario project to current shareholders of Bonterra in order to create a new exploration company Spinco focused on the growth of this multi-deposit high grade project. Spinco will be well capitalized with C$7 million of cash. Further details of the Spin-Out will be included as part of an information circular to be distributed prior to a Bonterra shareholder meeting to approve the Transaction and the Spin-Out.
Wexford Capital LP, Kirkland Lake Gold Ltd., Eric Sprott, Van Eck Associates Corp. and other shareholders controlling greater than 50% of Metanor’s voting securities as of June 18, 2018, have provided their support for the proposed Transaction.
Transaction Summary and Timing
Metanor and Bonterra expect the Transaction will take place by way of a plan of arrangement whereby Bonterra, and/or a wholly owned subsidiary, will enter into an arrangement agreement with Metanor in accordance with the terms of the LOI.
Pursuant to the terms of the LOI, the completion of the Transaction is conditional upon a number of items, including, without limitation: (a) approval by the shareholders of Bonterra and Metanor, such approval to be the affirmative vote of the holders of 66 2/3% of the issued and outstanding plus any minority approvals if so required pursuant to Multilateral Instrument 61-101; (b) each party shall have performed and complied in all material respects with all of the covenants and obligations thereof required to be performed by them prior to the completion of the Transaction; (c) the representations and warranties of each party set out in the LOI being true and accurate, in all material respects; (d) the receipt of all regulatory and other required approvals; (e) other normal conditions precedent, including the absence of a material adverse effect in Bonterra or Metanor; (f) all material third party consents shall have been obtained; (g) holders of no more than 5% of the outstanding shares of Bonterra and no more than 5% of the outstanding shares of Metanor shall have exercised their rights of dissent in respect of the Transaction; (h) the execution, delivery and continued enforceability of required support agreements; (i) completion of satisfactory due diligence by Bonterra and Metanor; and, (j) receipt of all necessary regulatory approvals by the regulatory authorities.
The LOI contains customary deal support provisions, including a reciprocal break fee of C$3.75 million, payable if the proposed Transaction is not completed in certain circumstances. In addition, the LOI includes mutual customary non-solicitation covenants together with customary exemptions to permit each party’s board of directors to exercise its fiduciary duties, as well as a right to match any superior proposal that may arise.
Full details of the Transaction will be included in the formal definitive agreement and management information circulars to be filed with the regulatory authorities and mailed to Metanor’s and Bonterra’s shareholders in accordance with applicable securities laws. All shareholders are urged to read the information circulars once they become available as they will contain additional important information about the Transaction.
The Transaction is expected to be completed in the third quarter of 2018 or such later date as the parties may agree. A special meeting of the shareholders of each of Bonterra and Metanor will be held at a time yet to be determined to approve the proposed transaction.
Advisors and Counsel
Sprott Capital Partners acted as financial advisor to Bonterra and Miller Thomson LLP acted as Bonterra’s legal advisors.
Irwin Lowy LLP acted as Metanor’s legal advisor.
Disclosure of Historical Mineral Resource Estimates:
The Larder Lake project contains a historic estimate. In August 15, 2011, P&E Mining Consultants prepared for Kerr Mines a resource estimate as reported in a technical report titled “43-101 Technical Report and Updated Resource Estimates on the Larder Lake Property, Larder Lake, Ontario for Bear Lake Gold Ltd.” Bonterra considers the historical estimate to be relevant and reliable given that it was prepared under NI 43-101 standards. Bonterra considers this resource estimate to be historical; it has not independently verified it. A qualified person of Bonterra has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves, and Bonterra is not treating the historical estimate as current mineral resources.
*2011 Total Resource Estimate @ 2.5 g/t Au Cut-Off Utilizing Gold Price of US$1,207/oz(1)(2), dated August 15, 2011 by P&E Mining Consultants
|Bear Lake Deposit and Cheminis Deposit|
|Classification||Tonnes||Grade (Au g/t)||Contained Ounces (Au)|
|(1) Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.|
|(2) The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.|
Dale Ginn, P.Geo. has approved the technical information contained in this release. Mr. Ginn is a Director and Vice President of Exploration of Bonterra and is a Qualified Person as defined by National Instrument 43-101.
Metanor Resources Inc. is an emerging gold producer having its main assets, the Bachelor Mine and the Barry project, in addition to over 15,000 ha of exploration property, located in the mining-friendly jurisdiction of Quebec in the heart of the Urban-Barry Camp.
The Bachelor mine extracts gold from a series of sub-vertical narrow veins using an underground long-hole mining method with access through conventional track drifts from a vertical shaft, and the new sector below level 14 is accessed from a ramp system. The ore is processed on site in a mill using carbon in pulp to separate the gold from the ore. All the lodging facilities are on site, connected to the power grid, and accessible from a paved highway. Metanor is in the permitting process, to increase the daily capacity of the mill from 800 tonnes per day to 2,400 tonnes per day.
The Barry project is located in the Urban-Barry camp, 110 km east from the city of Lebel-sur-Quévillon, and 110 km south of the Bachelor mill. 624,414 tonnes of ore grading 2.2 g/t Au for 43,970 ounces were extracted from three small pits between 2008 and 2010. The gold mineralization at the Barry project is structurally controlled and is hosted in a sheared basalt containing quartz-carbonate-albite veins with pyrite. Metanor has identified three main sub-vertical shear zones and approximately ten secondary lower dipping tension veins. These structures are open in all directions. The Company completed construction of a new camp in May, to accommodate the additional workers required to proceed with the 50,000 underground bulk sample scheduled to be completed by the Q4 in 2018.
Pascal Hamelin, P. Eng., President of Metanor, is the Qualified Person of Metanor as defined under National Instrument 43-101 and has reviewed and approved the technical information relating to Metanor contained in this news release.
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