Recommended takeover offer of Azimuth Resources by Troy Resources
Canada NewsWire
PERTH, Western Australia, March 27, 2013
Highlights:
-
Transaction will create a leading ASX/TSX listed South American focussed
gold company - Offer values Azimuth at A$0.437 per share1:
-
a 78% premium to the closing price of Azimuth shares on ASX on 27 March
2013 - a 62% premium to the 3 month VWAP2 of Azimuth shares
offer in the absence of a superior proposal
-
combined measured and indicated gold equivalent resources of 0.76 Moz,
gold equivalent inferred resources of 1.92 Moz and gold equivalent
reserves of 0.64 Moz; - production and development assets providing growth;
- significant exploration potential;
-
a board and management team with a track record in developing cost
effective and profitable projects in South America and Australia; -
balance sheet and operational cashflow to assist in funding the
development of Azimuth’s West Omai project; and - increased scale, market relevance and trading liquidity
-
retaining material exposure to future upside of Azimuth’s Guyana
portfolio; -
mitigating and diversifying current development risks, gaining exposure
to Troy assets, balance sheet and development expertise
- substantial increase in resource base;
- near term development of high grade open pit resource;
-
significant boost in exploration upside potential given major land
position in Guyana; and - significant in country experience and expertise in Guyana
million through a convertible note facility:
-
proceeds will be used by Azimuth to advance infill drilling and provide
working capital to progress engineering and other studies
PERTH, Western Australia, March 27, 2013 /CNW/ – Troy Resources Limited
(ASX: TRY) (TSX: TRY) and Azimuth Resources Limited (ASX: AZH) (TSX:
AZH) are pleased to announce the signing of a Takeover Bid
Implementation Deed (“Implementation Deed”) under which it is proposed
that Troy will acquire all of the issued shares of Azimuth in a share
based transaction by way of an off-market takeover offer.
Under the offer, Azimuth shareholders will receive 1 new Troy share for
every 5.695 Azimuth shares held. Based on Troy’s closing share price of
A$2.49 on the ASX on 27 March 2013, the offer values Azimuth at A$188
million or A$0.437 per share.
The Troy offer is unanimously recommended by the directors and the CEO
of Azimuth who have also agreed to accept Troy’s offer in respect of
all shares they control, in each case in the absence of a superior
offer.
Troy Chairman, David Dix said:
“We are delighted to have secured the support of the Azimuth board. This
is one of the relatively rare situations in resources M&A where a
takeover can generate material value for both sets of shareholders. We
have the technical team, the balance sheet and the South American
project development expertise to quickly and cost effectively bring
West Omai into production. In addition to the upside at our flagship
project Casposo, we can see substantial exploration upside in Azimuth’s
ground position. We are very excited about the opportunity to implement
this deal and get on with project development.”
Azimuth Chairman, Michael Hunt, said:
“After careful consideration, and having consulted our major
shareholder, the board of Azimuth is pleased to recommend this
transaction to shareholders. By accepting the offer Azimuth
shareholders will gain all the benefits of being part of a profitable
multi mine producer whilst retaining significant exposure to the upside
that our assets offer. Furthermore, the board strongly believes that
Troy is the ideal party to continue development of West Omai as the
project moves into an exciting stage of its development. For these
reasons, we are unanimously of the view that the deal makes sense for
all of our shareholders and we are excited by the potential of the
combined business.”
Transaction Details
The offer will be implemented by way of an off market takeover offer
under the Australian Corporations Act.
The offer extends to any Azimuth shares that are issued as a result of
the exercise of Azimuth options during the offer. In addition, Troy
intends to enter into private treaty arrangements with Azimuth’s option
holders to acquire their options in exchange for new Troy options or
shares.
Following implementation of the offer, Azimuth is expected to become a
wholly-owned subsidiary of Troy, with current Troy and Azimuth
shareholders holding 55% and 45% respectively of the enlarged Troy.
Existing Azimuth directors, Richard Monti and Sean Harvey will be
invited to join the Troy board which will continue to be chaired by
David Dix. Paul Benson will continue as Managing Director of Troy.
Troy will remain headquartered in Perth, Western Australia and will
maintain its listing on the Australian Stock Exchange and secondary
listing on the Toronto Stock Exchange.
Funding
As part of the transaction, Troy has agreed to provide Azimuth with
funding of A$10 million by way of a convertible note facility. Key
terms of the facility are summarised in the annexure to this
announcement.
The provision of funding by Troy means that Azimuth will not need to
raise additional equity in the short term. Absent the Troy offer, it is
likely that any capital raising by Azimuth in the short term would have
been undertaken at a discount to the current market price of Azimuth
shares leading to dilution for Azimuth’s current shareholders.
Timetable and conditions
The offer is subject to a number of conditions including:
- 90% minimum acceptance condition;
-
no Target Material Adverse Change (as defined in the Implementation
Deed) occurring to Azimuth; and -
no Target Prescribed Occurrence (as defined in the Implementation Deed)
occurs in relation to Azimuth.
Azimuth and Troy have agreed to give deal protection to each other
including payment of a mutual break fee of A$1.85 million in agreed
circumstances.
The Implementation Deed also provides Troy with a right to match any
superior offer that may emerge. If Troy chooses not to match, then
Azimuth’s Board may, in accordance with its fiduciary duties, recommend
that alternate offer to shareholders, subject to first paying the
agreed break fee to Troy.
Further details about the offer and proposed timetable are set out in
the Implementation Deed, a copy of which is being concurrently released
to the market.
It is expected that Troy’s bidder’s statement and Azimuth’s target’s
statement, containing further information about the offer will be
posted to Azimuth shareholders on or around the end of April 2013.
Advisers
Macquarie Capital is acting as financial adviser to Troy, Gilbert +
Tobin is acting as Australian legal adviser to Troy, and Cassels Brock
& Blackwell is acting as Canadian legal adviser to Troy.
Standard Chartered Bank is acting as financial adviser to Azimuth,
Steinepreis Paganin is acting as Australian legal adviser to Azimuth
and Blake, Cassels & Graydon LLP is acting as Canadian legal adviser to
Azimuth.
About Troy
Troy Resources (TSX, ASX: TRY) is a dividend-paying junior gold
producer, with a clear growth strategy. Troy has two producing gold
operations: the Casposo gold and silver mine, in San Juan province,
Argentina and the Andorinhas mine in Para State, Brazil.
Troy has an experienced Board and management team with a track record of
successful, fast-track mine development and low-cost operations.
Troy has an annual exploration budget in excess of A$15 million and a
proven track record in exploration discoveries and strategic
acquisitions.
Following the development of the Casposo project in Argentina, Troy has
entered a renewed growth phase which has lifted Troy’s annual gold
production above 100,000oz of gold per annum.
Troy is well positioned to continue its path of strong growth and
profitable operations, and on track to achieve its vision of becoming a
highly profitable mid-tier gold producer with a portfolio of quality
long-life assets.
Troy maintains a robust balance sheet and forecasts continued strong
cash flow from its current assets. Troy’s gold production is unhedged;
allowing its shareholders access to the full benefit of current and
future gold price upside.
Troy is a responsible corporate citizen, committed to the best practice
of health and safety, environmental stewardship and social
responsibility.
Au_Eq grade calculated using gold to silver ratio of 1:60. The gold:
silver ratio is determined using metal price and recovery factors and
determined according to the parameters below:
- Au Price US$1500/oz
- Ag Price US$28/oz
- Au processing recovery 90%
- Ag processing recovery 80%
-
Metal prices approximate three year averages for each of gold and
silver. -
Processing recoveries were determined from updated metallurgical
testwork carried out by independent consultants on diamond drill core
from Casposo.
The equivalency factor is calculated by the formula:
Gold to Silver ratio = (gold price ÷ silver price) x (gold recovery ÷
silver recovery)
= (1500 ÷ 28) x (.90 ÷ .80)
= 60
Gold equivalency (Au_Eq) is calculated by the formula: Au_Eq g/t = Au
g/t + (Ag g/t ÷ 60.00)
Information of a scientific or technical nature that relates to Troy
exploration results, Mineral Resources or ore Reserves was prepared
under the supervision of Peter J. Doyle, Vice President Exploration and
Business Development of Troy, a “qualified person” under National
Instrument 43-101 – “Standards of Disclosure for Mineral Projects”, a
Fellow of the Australasian Institute of Mining and Metallurgy. Mr Doyle
has sufficient experience, which is relevant to the style of
mineralisation and type of deposit under consideration, and to the
activity he is undertaking, to qualify as a “competent person” as
defined under the Australian JORC Code as per the 2004 edition of the
“Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”. Mr Doyle has reviewed and approved the
information contained in this announcement. Mr Doyle is:
- Is a full time employee of Troy Resources Limited
-
Has sufficient experience which is relevant to the type of deposit under
consideration and to the activity which he is undertaking to qualify as
a Competent Person as defined in the 2004 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’ - Is a Fellow of the Australasian Institute of Mining and Metallurgy
- Has consented in writing to the inclusion of this data
For further information regarding the Company’s projects in Brazil,
Australia and Argentina, including a description of Troy’s quality
assurance program, quality control measures, the geology, sample
collection and testing procedures in respect of the Company’s projects
please refer to the technical reports filed which are available under
the Company’s profile at www.sedar.com or on the company’s website.
About Azimuth
Azimuth is a gold focused exploration company with over 8,700km2 of gold exploration permits and licenses located in Guyana, South
America. Broadly, the areas of interest in Guyana are split into two
projects, the West Omai Gold Project and the East Omai Gold Project.
Having an inferred gold resource for the West Omai Project of 1.65Moz
(see Technical Report dated March 18, 2013) with an average grade in
excess of 3 g/t Au, and comforted by preliminary metallurgical test
work showing good recoveries, Azimuth plans to infill drill this
resource to indicated status whilst continuing engineering studies to
pre-feasibility stage by the end of the year.
The information in this announcement that relates to Azimuth exploration
results is based on information compiled by Mr. Richard Monti who is a
member of the Australasian Institute of Mining and Metallurgy. Mr.
Monti is a Director of Azimuth Resources Limited. Mr. Monti has
sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’ and a qualified person as defined
in National Instrument 43-101. Mr. Monti consents to the inclusion in
this announcement of the matters based on his information in the form
and context in which it appears.
The information in this announcement that relates to mineral resources
is based on information compiled by Mr. Aaron Green who is a member of
the Australian Institute of Geoscientists (MAIG). Mr. Green is a full
time employee of RungePincockMinarco Limited. Mr. Green has sufficient
experience which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking
to qualify as a Competent Person as defined in the 2004 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’ and a qualified person as defined in
National Instrument 43-101. Mr. Green consents to the inclusion in this
announcement of the matters based on his information in the form and
context in which it appears.
Please see Azimuth’s technical report titled “Technical Report, West
Omai Project, Guyana” dated March 18, 2013 for further information
regarding the West Omai Gold Project. The technical report is available
at www.sedar.com.
Forward Looking Statements
This announcement contains “forward-looking statements” and
“forward-looking information”, including statements with respect to the
completion of the offer, the benefit of the offer, the timing of the
offer and the bridge funding. Such information is based on assumptions
and judgements of management regarding future events and results.
Often, but not always, forward-looking information can be identified by
the use of words such as “plans”, “expects”, “is expected”, “is
expecting”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates”, or “believes”, or variations (including negative
variations) of such words and phrases, or state that certain actions,
events or results “may”, “could”, “would”, “might”, or “will” be taken,
occur or be achieved. The purpose of forward-looking information is to
provide the audience with information about management’s expectations
and plans. Readers are cautioned that forward-looking information
involves known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of Troy,
Azimuth and/or their subsidiaries to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking information. Such factors include, among others,
inability to complete the offer, including due to the inability to
satisfy conditions to the offer, changes in market conditions, future
prices of gold and silver, the actual results of current production,
development and/or exploration activities, changes in project
parameters as plans continue to be refined, variations in grade or
recovery rates, plant and/or equipment failure, the possibility of cost
overruns, as well as those factors disclosed in Azimuth and Troy’s
filed documents. There can be no assurance that the offer or either
Azimuth or Troy’s plans will proceed as planned or that they will be
successfully completed within expected time limits and budgets or that,
when completed, expected production levels will be achieved.
Forward-looking information and statements are based on the reasonable
assumptions, estimates, analysis and opinions of management made in
light of its experience and its perception of trends, current
conditions and expected developments, as well as other factors that
management believes to be relevant and reasonable in the circumstances
at the date such statements are made, but which may prove to be
incorrect. Troy and Azimuth believe that the assumptions and
expectations reflected in such forward-looking statements and
information are reasonable. Readers are cautioned that the foregoing
list is not exhaustive of all factors and assumptions which may have
been used. Troy and Azimuth do not undertake to update any
forward-looking information or statements, except in accordance with
applicable securities laws.
ANNEXURE
CONVERTIBLE NOTE SUMMARY
Troy has agreed to provide a A$10 million unsecured convertible note
facility to Azimuth.
The convertible notes have a face value of $1 each, a maturity date of
12 months and convert at A$0.30 per Azimuth share (Notes).
Interest on the Notes will accrue at a fixed rate of 8% calculated
quarterly in arrears.
Azimuth has agreed that proceeds received from the issue of the Notes
will be used to fund Azimuth’s working capital requirements and for
general corporate purposes (which must not exceed A$4,000,000) and to
fund approved exploration activities (which must not exceed
A$6,000,000), in accordance with the Azimuth budget.
Azimuth must redeem all Notes on the earlier of:
(a) the maturity date;
(b) an event of default which has not been remedied within 10 business
days; or
(c) in the event that shareholder approval is required for the
conversion, the date on which the Azimuth shareholders do not approve
conversion.
If there is a change in control in Azimuth (being an announcement of a
competing transaction by Azimuth (recommended by a majority of the
board) or a person (other than Troy) acquires 30% or more of Azimuth,
then Troy may elect to:
(a) declare the amount outstanding (plus accrued interest) payable on
demand; or
(b) require Azimuth to redeem the Notes; or
(c) require Azimuth to convert the Notes.
It will be an event of default under the Note terms if any of the
following occur:
(a) Azimuth does not pay an amount due under the Notes for more than 3
business days after the due date;
(b) a material breach of a representation or warranty given by Azimuth;
(c) Azimuth fails to comply with the terms of the Notes and such breach
remains unremedied for 10 business days;
(d) Azimuth uses the proceeds of the Notes for other than an approved
purpose;
(e) a material adverse change occurs to Azimuth;
(f) the Takeover Bid Implementation Deed is terminated in certain
circumstances;
(g) Azimuth, its affiliates or its subsidiaries are in cross default
under a material document; and
(h) an insolvency event occurs in relation to Azimuth, its affiliates or
its subsidiaries.
The Convertible Note Deed has a matching right similar to that in the
Takeover Bid Implementation Deed which is being released with this
announcement.
If the matching right is not exercised, and the Azimuth board recommends
a competing transaction, then, subject to any required approvals, the
Noteholder will convert the Notes and use any of the shares issued on
conversion which it holds at the relevant time to support the competing
transaction.
Azimuth has given representations and warranties customary for
agreements of this kind.
1 Based on Troy’s closing price on ASX on 27 March 2013 of A$2.49
2 Volume Weighted Average price of Azimuth shares in the period up to the
close of trading on the ASX on 27 March 2013.
SOURCE Azimuth Resources
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