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Mega Uranium and Rockgate Capital Announce Proposed Merger to Create Diversified Uranium Company

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Mega Uranium and Rockgate Capital Announce Proposed Merger to Create Diversified Uranium Company






Mega Uranium Ltd. (TSX:MGA) and Rockgate Capital Corp. (TSX:RGT) are pleased to announce that they have entered into a binding letter of intent to combine the two companies and create a diversified uranium company with advanced uranium assets in Australia and Mali, a pro forma cash balance of approximately $22 million and a uranium-focused investment portfolio valued at approximately $12 million. Completion of the Merger is subject to the satisfaction of certain conditions discussed below.
Under the terms of the Merger, Rockgate shareholders will receive 2.2 Mega Shares for each one (1) common share of Rockgate held (subject to rounding and without giving effect to the proposed share consolidation of the Mega Shares discussed below). The exchange ratio represents an implied price of C$0.25 per Rockgate share, based on the closing price of the Mega Shares on the Toronto Stock Exchange (“TSX”) on June 5, 2013, and a 36% premium to Rockgate’s 20-day volume-weighted average price (“VWAP”) for the period ending June 5, 2013. Upon completion of the Merger, Rockgate and Mega shareholders will own approximately 49% and 51% of the combined company, respectively.
Sheldon Inwentash, Chairman and Chief Executive Officer of Mega, commented “This transaction represents the opportunity to combine one of Africa’s most promising undeveloped uranium assets with our significant Australian portfolio, to create an international uranium developer. We are confident about the combined team’s ability to unlock significant value from our collective assets for our shareholders.”
Commenting on the transaction, Karl Kottmeier, President of Rockgate, said “By combining Rockgate and Mega, we are creating a truly unique new company. Our experienced team will be dedicated to building value by advancing our diversified asset base of uranium-focused projects and prudently managing our portfolio of equity investments and cash. We believe this new company will provide investors with an ideal way to gain exposure to the junior uranium sector.”


--  A pipeline of advanced stage and exploration projects in Africa and
    Australia with a sizable global resource base
--  Larger entity with superior capital markets presence and trading
--  Strong combined management team with complementary market and
    operational expertise
--  A portfolio of equity investments in quality junior uranium explorers
    and developers providing access to future growth
--  Potential synergies and cost savings via back-office consolidation,
    sharing of facilities / resources and overall economies of scale




--  Increased resource diversification and access to a growing poly-metallic
    deposit in Falea
--  Accretive on a resource per share basis
--  Bolsters company treasury
--  Access to experienced technical team




--  Resource diversification geographically and with varying stages of
--  Advanced projects in a leading uranium mining jurisdiction
--  Further diversification through exposure to a global equity portfolio
--  Significant premium on both a spot and 20-day VWAP basis
--  Management team additions with extensive uranium market transactional



Post-Merger, the combined company’s management and board will reflect the collective strengths of both companies, having years of experience in the global resource sector and strong expertise in western Africa and Australian uranium landscape. Karl Kottmeier will become Chief Executive Officer, Douglas Ford will become Chief Financial Officer, Richard Patricio will become Chief Operating Officer and Bryan Hyde will become Chief Technical Officer of the company. Richard Homsany will remain Executive Vice President, Australia. Subject to the approval of the shareholders of Mega, the nine member board will be led by Sheldon Inwentash as Chairman and include Karl Kottmeier, Richard Patricio, Edward Ford, Allen Ambrose, Anthony Grey, Michael Sweatman, Phil Williams and Douglas Reeson.
The combined company will have a portfolio of strategic assets which will be the key drivers of growth and value creation and include:
The 100%-owned, flagship Falea project comprises three permits, totalling 225 km2 in southwestern Mali and is a polymetallic, flat-lying deposit containing potentially viable quantities of uranium, silver and copper. Rockgate commenced a pre-feasibility study on the Falea project in 4Q 2012 which is anticipated to be completed by the end of 2013.
Australian Assets
Three, resource-compliant uranium projects with additional interests in exploration properties covering approx. 5,800 km2 throughout Queensland, South Australia, Northern Territory and Western Australia. Lake Maitland (100%-owned(1), W. Australia) hosts 20.7 Mlbs U3O8 Indicated at a grade of 0.05% and 1.6 Mlbs U3O8 Inferred at a grade of 0.04% and is currently in the feasibility stage. Ben Lomond (100%-owned, Queensland) hosts 7.9 Mlbs U3O8 Indicated at a grade of 0.27% and 2.8 Mlbs U3O8 Inferred at a grade of 0.21% and is currently in pre-feasibility while Maureen (100%-owned, Queensland) hosts 5.9 Mlbs U3O8 Indicated at a grade of 0.09% and 0.4 Mlbs U3O8 Inferred at a grade of 0.11%.
Balance Sheet
The combined company will have approximately $22 million of cash at closing of the transaction. In the current uranium market, the combined company’s mining assets will require minimal investment and, as such, the cash on hand is anticipated to be more than sufficient to advance both Falea through PFS and Lake Maitland DFS and predevelopment and maintain the other Australian assets while remaining able to undertake investment in new opportunities.
Investment Portfolio
Shareholders can expect to benefit from a portfolio of advanced resource equity positions (approx. $12 million) which management believes are currently significantly undervalued in the market and potentially represent a strong sample of the next stage of uranium development assets globally.

Posted June 6, 2013

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