Sailfish Royalty Corp. (TSX-V: FISH) and Terraco Gold Corp. (TSX-V: TEN) are pleased to announce that on June 19, 2019, they have entered into a definitive arrangement agreement pursuant to which Sailfish has agreed to acquire all of the issued and outstanding shares of Terraco in exchange for consideration of 0.12 of a common share of Sailfish for each Terraco Share, by way of a plan of arrangement under the Business Corporations Act (British Columbia).
The consideration offered by Sailfish for the Terraco Shares represents a premium of approximately 53% to the trailing 20-day volume weighted average price of the Terraco Shares as at June 19, 2019.
Highlights of the Combined Company
Akiba Leisman, CEO of Sailfish, commented: “We are very pleased to announce this exciting transaction which brings together our combined royalty portfolios into a new, growth-oriented royalty vehicle. Terraco’s royalty holdings on the development-stage Spring Valley Gold Project in Nevada will give our shareholders exposure to one of the best known undeveloped mining properties in the region.”
Todd Hilditch, President & CEO of Terraco, further added: “This transaction presents a unique opportunity for Terraco shareholders to gain exposure to a diverse portfolio of royalties, with exposure to a multi-million ounce gold project portfolio, while also benefiting from a strong financial backing and an increased capital markets profile. We look forward to working with the Sailfish team towards a successful transaction closing.”
Under the terms of the Arrangement Agreement, each Terraco shareholder shall receive 0.12 of a Sailfish Share for each Terraco Share (the “Exchange Ratio”). Existing options and warrants to acquire Terraco shares will be converted into options and warrants to acquire Sailfish Shares, each in accordance with their terms.
Upon closing of the Arrangement, Todd Hilditch will be appointed to the board of directors of Sailfish.
The Arrangement will be carried out by way of a court-approved plan of arrangement and will require the approval of at least 66⅔% of the votes cast by Terraco shareholders at a special meeting expected to take place in August 2019. Closing of the Arrangement remains subject to applicable regulatory and court approvals and the satisfaction of certain other closing conditions.
The Arrangement Agreement includes customary provisions, including non-solicitation, right to match, and fiduciary out provisions, as well as other representations, covenants and conditions customary for transactions of this nature. A termination fee of $500,000 shall be payable upon the occurrence of certain terminating events.
The board of directors of Terraco, after receiving the unanimous recommendation of the special committee of independent directors of Terraco, has approved the entering into of the Arrangement Agreement by Terraco and recommends that Terraco shareholders vote in favour of the Arrangement at the Meeting.
Each of the directors and officers of Terraco, representing a total of approximately 13.33% of the issued and outstanding shares of Terraco, have entered into a voting support agreement with Sailfish wherein they have agreed, among other matters, to vote in favour of the Arrangement at the Meeting. Full details of the Arrangement will be contained in a management information circular (the “Circular”) to be filed with regulatory authorities and mailed to Terraco shareholders in accordance with applicable securities laws prior to the Meeting.
Sailfish is also pleased to announce that the Wexford Funds, which are collectively the largest shareholders of Sailfish, have agreed to complete a private placement into Terraco at a price of $0.13 per Terraco Share for gross proceeds of approximately $4,717,183. The use of proceeds includes working capital, corporate expenses and potential royalty acquisitions. Upon closing of the private placement, it is expected that the Wexford Funds will hold approximately 19.9% of the outstanding Terraco Shares on a non-diluted basis, subject to a third-party pre-emptive right to maintain its pro-rata interest. The private placement is not conditional on completion of the Arrangement, but is subject to TSX Venture Exchange approval.
Proposed Exploration Asset Spinoff or Monetization
Sailfish currently owns the Gavilanes property, a low sulphidation epithermal deposit located in the San Dimas mining district of Durango, Mexico, approximately 25 kilometers east of the San Dimas mine owned by First Majestic Silver Corp. Terraco additionally owns the Almaden-Nutmeg Mountain epithermal gold deposit located in western Idaho. These two properties hold substantial value for the combined shareholders of both companies, and management will look to spinoff these assets or monetize them for shareholders after the merger is complete.
Normal Course-Issuer Bid
Sailfish has received conditional approval by the TSX Venture Exchange to commence a normal course issuer bid of up to 1,918,678 Sailfish Shares. Given Sailfish’s low general and administrative expenses, no current capital commitments, and substantial working capital balance, Sailfish expects to complete the purchase of these shares expeditiously.
Advisors and Counsel
Red Cloud Klondike Strike Inc. is acting as financial advisor to Sailfish. DuMoulin Black LLP is acting as legal counsel to Sailfish.
Haywood Securities Inc. is acting as financial advisor to the Terraco Special Committee. Haywood has provided an opinion to the Terraco Special Committee that, based upon and subject to certain assumptions, limitations and qualifications outlined in the opinion and such other matters as were considered relevant, the consideration to be received by the shareholders of Terraco in respect of the Arrangement is fair, from a financial point of view, to the shareholders of Terraco, excluding Sailfish, the Wexford Funds and their affiliates. Gowling WLG is acting as legal counsel to Terraco.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities of Terraco. The securities will not be sold in any state or jurisdiction where the offer, solicitation or sale is unlawful. The offer and sale of securities have not been registered under the U.S. Securities Act, or applicable state securities laws, and the securities will not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Sailfish Royalty Corp. is a precious metals royalty and streaming company. Within Sailfish’s portfolio are two cornerstone assets on advanced stage projects in the Americas: a 3.5% NSR on the Tocantinzinho gold project in the prolific Tapajos district of northern Brazil; and a gold stream equivalent to a 3% NSR on the San Albino gold project (~3.5 km2) and a 2% NSR on the rest of the 138 km2 area surrounding San Albino in northern Nicaragua.
Sailfish intends to aggressively grow its portfolio and become a yield focused company by paying dividends to its shareholders.
Terraco is a gold royalty company with a royalty portfolio of up to 3% NSR on the multi-million ounce Spring Valley Gold Project located in Pershing County, Nevada.
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