GREAT PANTHER SILVER LIMITED (TSX:GPR) (NYSE MKT:GPL) and Cangold Limited (TSX-V:CLD) are pleased to announce that they have entered into a binding letter agreement dated February 25, 2015 pursuant to which Great Panther will, subject to the terms and conditions of the Letter Agreement, acquire all of the issued and outstanding common shares of Cangold by way of a statutory plan of arrangement. This transaction will result in Great Panther adding the option to acquire more than 6,000 hectares of the Guadalupe de los Reyes gold-silver Project in Sinaloa State, Mexico to its existing silver and gold producing properties in Mexico at Guanajuato and Topia. The transaction also adds Cangold’s Plomo gold project in Mexico, and its Argosy Project in the Red Lake Mining Division of northeastern Ontario, Canada.
Under the terms of the Arrangement, Cangold shareholders will receive 0.05 common shares of Great Panther for each common share of Cangold resulting in the issuance of approximately 2,139,000 Great Panther Shares in exchange for 42,780,600 Cangold Shares. The shares of Great Panther to be issued represent approximately 3% of its current issued and outstanding shares. Total share consideration is valued at approximately $1.7 million.
R.W. (Bob) Garnett, Chairman of Great Panther, stated “Guadalupe de los Reyes is a strong fit with Great Panther’s current producing mines and projects in Mexico. Our team has proven success in developing producing mines in Mexico, and has the expertise and resources to advance Guadalupe de los Reyes. The proposed acquisition will also realize cost synergies in terms of management, administration, and overhead.”
Kaare G. Foy, Executive Chairman of Cangold, stated: “Through this proposed acquisition, Cangold shareholders not only maintain their exposure to the success of Guadalupe de los Reyes, but now also have exposure to the growth of a producing company that is leveraged to the price of silver and gold. Great Panther is an experienced operator in Mexico with a strong balance sheet, no debt, and has access to capital to advance Guadalupe de los Reyes. In addition, Great Panther has a highly liquid stock and is listed on two major exchanges. Cangold’s management strongly recommends shareholder approval of the proposed transaction.”
Terms of the Arrangement
Pursuant to the Letter Agreement:
-- Cangold shareholders will receive 0.05 Great Panther Shares for each
Cangold Share held. Upon completion of the transaction, Cangold
shareholders will own approximately 2,139,030 Great Panther Shares or
approximately 3% of the resulting 141,680,070 Great Panther Shares
-- Each outstanding option and warrant to acquire Cangold Shares will
entitle the holder thereof to receive, upon the exercise thereof, 0.05
Great Panther Shares in lieu of each Cangold Share, at a price adjusted
in accordance with the exchange ratio, and otherwise on the same terms
and conditions as the original option or warrant.
-- Completion of the transaction is subject to customary conditions,
including support of the transaction by directors, officers and
significant shareholders of Cangold, and receipt of applicable
regulatory, shareholder and third party approvals and consents by
Cangold and Great Panther as may be required to effect and complete the
transaction. Completion of the transaction is also subject to Great
Panther being satisfied with the results of its due diligence
investigations, receipt by Great Panther of an opinion of Mexican legal
counsel relating to the option Cangold holds in respect of the GDLR
project in Sinaloa, Mexico.
-- Great Panther and Cangold have agreed to negotiate in good faith and
enter into a definitive agreement relating to the Arrangement (the
"Definitive Agreement") incorporating the terms of the Letter Agreement
together with additional representations, warranties, covenants,
conditions and agreements as are customary for a transaction of this
nature on or before April 25, 2015, or such later date as the parties
-- Cangold has agreed to an exclusivity period until April 25, 2015, during
which time Cangold will work exclusively and in good faith with Great
Panther toward the satisfactory completion of confirmatory due diligence
and negotiation of the Definitive Agreement. During the exclusivity
period, Cangold will not, among other things, solicit, initiate,
facilitate, continue, respond to or encourage any third party proposal
in respect of an alternative transaction. Cangold is obligated to pay
Great Panther a termination fee should Cangold terminate the exclusivity
period in certain circumstances or in the event that Great Panther
terminates the Letter Agreement due to a breach of certain
representations and warranties.
-- Concurrent with the execution of the Letter Agreement, Great Panther,
Cangold and a Mexican subsidiary of Cangold, entered into a suite of
loan documents pursuant to which Great Panther has (i) agreed to
continue to provide technical, administrative and management services to
Cangold and (ii) to provide discretionary credit advances (each an
"Advance"), in the maximum aggregate amount of up to $1,500,000 (the
"Loan") inclusive of a prior debt already owing from Cangold to Great
Panther in the approximate amount of $155,000 (the "Prior Debt").
Pursuant to the Loan principal owing thereunder will bear interest at
the rate of 15%, will be secured by a general security agreement and
share pledge agreement, and, subject to regulatory approval, Great
Panther will be entitled to bonus common shares in the capital of
Cangold in the amount of 20% of the Prior Debt divided by the Market
Price (as such term is defined in TSX Venture Exchange policies) and a
further 20% of the value of any Advance, divided by the Market Price.
Great Panther currently has three directors and/or officers that are also directors and/or officers of Cangold, including the same President and Chief Executive Officer, rendering such directors and officers related parties for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Great Panther will issue a Material Change Report containing the required information in compliance with MI 61-101 with respect to this transaction. Great Panther is relying on exemptions from formal valuation (subsection 5.5(a) of MI 61-101) and the minority shareholder approval requirements (subsection 5.7(1)(a) of MI 61-101) because at the time of the transaction under the Letter Agreement, neither the fair market value of the subject matter nor the fair market value of the consideration to be paid to the related parties exceeds 25% of Great Panther’s market capitalization.
The Letter Agreement and the Loan were reviewed and approved by special committees consisting of independent directors of both Great Panther and Cangold.
Cangold will hold a shareholder meeting to consider and approve the Arrangement no later than May 12, 2015 and such shareholders’ meeting will require approval of the majority of the minority of Cangold’s shareholders. The terms of the Arrangement will be described in further detail in the Management Information Circular of Cangold to be filed with regulatory authorities and mailed to Cangold shareholders in accordance with applicable securities laws.
Cangold security holders and other interested parties are advised to read the materials relating to the proposed Arrangement, including the Letter Agreement, that will be filed by Cangold with securities regulatory authorities in Canada when they become available. Anyone may obtain copies of these documents when available free of charge at the Canadian Securities Administrators’ website at www.sedar.com. The Arrangement is subject to approval of the Toronto Stock Exchange and applicable filings with the NYSE MKT (in respect of Great Panther) and the TSX Venture Exchange (in respect of Cangold).
Assuming that all requisite approvals are received, the parties expect to close the proposed acquisition prior to the end of May 2015.
This announcement is for informational purposes only and does not constitute a solicitation or a proxy.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold within the United States or to, or for the account or the benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
About Great Panther
Great Panther Silver Limited is a primary silver mining and exploration company listed on the Toronto Stock Exchange trading under the symbol GPR, and on the NYSE MKT trading under the symbol GPL. Great Panther’s current activities are focused on the mining of precious metals from its two wholly-owned operating mines in Mexico: the Guanajuato Mine Complex, which includes the San Ignacio satellite mine, and the Topia Mine in Durango. Great Panther also has two exploration projects in Mexico, El Horcon and Santa Rosa, and is pursuing additional mining opportunities in the Americas.
Cangold Limited is a junior exploration company engaged in the exploration and development of gold projects in Mexico and Canada. Cangold’s primary focus is advancing the Guadalupe de los Reyes Gold-Silver Project in Sinaloa, Mexico towards the pre-feasibility stage. Cangold also owns a 100% interest in the past-producing Argosy Gold Mine in northwestern Ontario and the prospective Plomo Gold Project in Sonora State, Mexico.
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