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San Gold Corporation (TSX:SGR)(OTCQX:SGRCF) ("San Gold") and Kerr Mines Inc. (TSX:KER) ("Kerr Mines") are pleased to announce that, further to their joint press release of July 21, 2014, the companies have entered into a definitive agreement (the "Arrangement Agreement") to merge their respective businesses pursuant to a plan of arrangement (the "Transaction").
"I am very pleased with the deal we have structured. We've fixed a lot of problems over the past few months at Rice Lake. We're looking forward to continuing improvement as well as leveraging the entire team at the Copperstone opportunity and at other projects," said San Gold's President, Gestur Kristjansson.
"Combining the Rice Lake and Copperstone assets is an important step in creating the next North American mid-tier gold producer. Once this transaction has been completed, the combined entity will have a much stronger market presence than either company could achieve on its own," said Kerr Mines' Chairman, Stephen McIntyre.
Under the terms of the Arrangement Agreement between San Gold and Kerr Mines, each Kerr Mines shareholder will be entitled to an exchange ratio (the "Exchange Ratio") of three (3) common shares of San Gold (each, a "San Gold Share") for every one (1) common share of Kerr Mines (each, a "Kerr Mines Share") held by such Kerr Mines shareholder. The Board of Directors of both companies have each been provided with separate fairness opinions.
Currently, San Gold and Kerr Mines have approximately 373 million and 95 million shares outstanding, respectively. Closing share prices on Monday, August 18, 2014, were $0.125 for San Gold Shares and $0.345 for Kerr Mines Shares.
In addition, each holder of outstanding stock options and common share purchase warrants of Kerr Mines will receive such number of replacement options or warrants of San Gold based upon the Exchange Ratio. A break fee of $1,000,000 is payable by either San Gold or Kerr Mines in the event that either party proceeds with an alternative transaction during a specified period while the parties pursue completion of the Transaction.
The Transaction remains subject to certain conditions including, without limitation: (a) receipt of shareholder approval of the Transaction by the shareholders of San Gold and Kerr Mines; and (b) receipt of all necessary consents, waivers, permits, exemptions, orders and approvals, including court approval of the plan of arrangement and the approval of the Toronto Stock Exchange (the "TSX").
About San Gold
San Gold is an established Canadian gold producer, explorer, and developer that owns and operates the Rice Lake Mining Complex near Bissett, Manitoba. San Gold is on the Toronto Stock Exchange under the symbol "SGR" and on the OTCQX under the symbol "SGRCF".
For further information on San Gold, please visit www.sangold.ca.
About Kerr Mines
Kerr Mines is a Canadian mineral exploration and development company based in Toronto, Canada. Kerr Mines' focus is the acquisition, exploration and development of prospective mineral properties in North America. With a proven track record of making discoveries and managing mines, Kerr Mines' team seeks assets in low risk jurisdictions to increase its existing resource base, from the exploration drill bit or through strategic acquisitions.
Kerr Mines has established a sizeable footprint of contiguous gold properties near Virginiatown, Ontario on the prolific 200-km long Cadillac-Larder Lake Break that straddles the Ontario-Quebec border. Mining properties along the Break have historically produced over 95 million ounces of gold. Kerr Mines controls a 26-km long section of the Break with properties extending into Quebec. Kerr Mines' Ontario assets include the McGarry and Cheminis gold mines in the Kirkland Lake area as well as a five-year option to purchase the Kerr-Addison property, adjacent to McGarry. The Kerr-Addison Gold Mine was one of Canada's largest gold producers, producing more than 11 million ounces of gold during a 58-year operating life from 1938 to 1996.
Kerr Mines' recently acquired Larder Lake gold project from Bear Lake Gold, located west of the McGarry Mine, is under an option and joint venture agreement with Gold Fields Abitibi Exploration Corporation (a subsidiary of Gold Fields Limited) entitling Gold Fields to acquire up to 60% of the Larder Lake project by spending up to C$40 million over 5 years. Kerr Mines also recently acquired the Copperstone gold mine from American Bonanza in Arizona. The mine is fully permitted with significant mining and processing infrastructure in place.
For further information on Kerr Mines, please visit www.kerrmines.com.
Cautionary Notes
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