The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

Anatolia Minerals and Avoca Resources Announce Merger of Equals To Create a New Leading Intermediate Global Gold Producer

Wednesday, September 08, 2010

Anatolia Minerals and Avoca Resources Announce Merger of Equals To Create a New Leading Intermediate Global Gold Producer06:53 EDT Wednesday, September 08, 2010TORONTO and PERTH Australia, Sept. 8 /CNW/ - Anatolia Minerals Development Limited (TSX-ANO) ("Anatolia") and Avoca Resources Limited (ASX-AVO) ("Avoca") are pleased to announce that they have entered into a Merger Implementation Deed ("MID") to combine the two companies to create a new leading intermediate global gold producer. The combined company will be called Alacer Gold Corp. ("Alacer Gold"), bringing together two of the leading junior resource companies in the world. Based on the latest closing share prices of Anatolia and Avoca, Alacer Gold would have a combined market capitalization of approximately US$2 billion(1). All directors of Anatolia and Avoca are in unanimous support of the proposed merger of equals, and both boards will be recommending the proposed merger to their shareholders, in the absence of a superior proposal.Under the terms of the merger, which is to be structured as a scheme of arrangement under Australian law between Avoca and its shareholders (the "Scheme"), each Avoca shareholder will receive 0.4453 Anatolia common shares for each Avoca ordinary share they hold(2) in consideration for the transfer of those Avoca shares to Anatolia (the "Merger"). Unless an Avoca shareholder otherwise elects, the Anatolia consideration shares will take the form of CHESS depositary interests ("CDIs") which Anatolia will apply to have listed on the ASX. Upon completion of the Merger, existing Anatolia and Avoca shareholders will own approximately 50% and 50% of Alacer Gold, respectively.The Avoca board of directors unanimously supports the Merger and will, in the absence of a superior proposal and subject to an Independent Expert's Report concluding that the Scheme is in the best interests of Avoca shareholders, unanimously recommend that all Avoca shareholders vote in favor of the Scheme at a meeting of shareholders to be scheduled for later this year. On the same basis, each member of the Avoca board of directors intends to vote in favor of the Scheme at the scheme meeting in relation to all Avoca shares held or controlled by them.Pala Investments Holdings Limited ("Pala"), which is the largest shareholder of Avoca and Anatolia, has indicated that it intends to support the Merger in the absence of a superior proposal.Highlights of the Merger: << - Combines highly attractive portfolios of large, long-life operating mines with strong growth prospects underpinned by sound development projects and exploration prospects - extensive diversification benefits generated through future production from four operations, multiple cash flow streams, and geographic diversification - Alacer Gold is expected to become a leading global intermediate gold producer - forecast production of 600koz in CY2013 and 800koz in CY2015(3) - combined gold reserves of 3.5moz and gold resources approaching 15.0moz(3) - Alacer Gold will enjoy an enhanced capital markets presence - listed on both the TSX and ASX - increased market capitalization - potential expansion of broker research coverage - increased access to global capital markets to assist growth ambitions - Complementary management teams with proven successful track records of exploration, project management and mining of open pit and underground operations - Merger supported by major shareholder of both companies, Pala, and the board of directors of each company - Anatolia is listed on the TSX and will seek a secondary listing on the ASX to facilitate trading of Anatolia CDIs on the ASX >> Mr. Ed Dowling, President and CEO of Anatolia, stated: "The merger of these two companies presents a great opportunity for both Anatolia and Avoca shareholders. It provides both groups with exposure to a highly attractive portfolio of world class projects with a best in class growth profile. The Alacer Gold platform represents an exciting opportunity for shareholders to participate in a compelling global growth story. Specifically, this merger represents a great transaction combining great resources and great teams to enhance shareholder value through diversification, growth and scale."Mr. Rohan Williams, Managing Director of Avoca, stated "This combination represents a true merger of equals and provides the shareholders of both companies an opportunity to participate in a uniquely positioned global intermediate gold producer. Shareholders will benefit from an enhanced capital markets position through increased scale, which will facilitate greater access to capital and increased liquidity. Avoca and Anatolia's asset portfolios are highly complementary and also provide both companies with greater optionality to take advantage of the extensive exploration portfolios in both Australia and Turkey respectively. This merger clearly offers value creation and return potential exceeding that offered by Avoca and Anatolia as individual companies."Merger DetailsThe Merger is subject to both Australian and Canadian regulatory approvals. In Australia (as required pursuant to the statutory scheme of arrangement process) this will involve Avoca shareholder and Australian court approval. In Canada this will require majority approval (including a disinterested shareholder majority, if required by the TSX, whereby Pala will not participate in the vote to approve the issuance of Anatolia shares as they are a significant shareholder of Avoca) at a special meeting of the shareholders of Anatolia. The issuance of Anatolia common shares to Avoca shareholders (as consideration under the Scheme) and other matters in connection with the Merger is subject to TSX approval.Under the terms of the Merger, shareholders of Avoca will receive 0.4453 common shares of Anatolia (either directly, or in the form of CDIs) for each ordinary share of Avoca held (the "Exchange Ratio").The Exchange Ratio represents a premium of approximately 9% to Avoca shareholders based on the last closing share price prior to this announcement, and a premium of 19% based on the 20 (trading) day volume weighted average trading price of Avoca's ordinary shares on ASX4. Based on a 20 (trading) day volume weighted average trading price of each of Anatolia's common shares and Avoca's ordinary shares, the Exchange Ratio represents a premium of approximately 6% to Avoca shareholders.Upon completion of the Merger, Anatolia shareholders and Avoca shareholders will hold approximately 50% and 50% of Alacer Gold respectively.Avoca will also propose a scheme of arrangement with the holders of its options (the "Option Scheme") pursuant to which existing Avoca options will be transferred to Anatolia in return for an issue of new Anatolia options (on substantially equivalent terms). However, the Scheme with shareholders will not be conditional upon the Option Scheme proceeding.The MID includes a commitment by each of Anatolia and Avoca not to solicit alternative transactions to the Merger. Each company has agreed to pay a break fee to the other party of A$10 million upon the occurrence of certain events. In addition, each company has granted the other party a right to match any competing proposal. Each of the directors of Avoca has indicated that they intend to vote in favor of the Scheme, in the absence of a superior proposal or if the Independent Expert concludes that the Scheme is not in the best interests of members. Each of the directors of Anatolia have indicated they intend to vote in favor of the issuance of shares pursuant to the merger and any other Merger related matters to be considered at the Anatolia shareholders' meeting, in the absence of a superior proposal.A full copy of the MID will be filed in accordance with applicable securities laws and will be found on the Anatolia profile on SEDAR at www.sedar.com. A copy will also be released to ASX (and will therefore be available at www.asx.com.au).Management Team and Board of DirectorsFollowing completion of the Merger, it is intended that Alacer Gold's board of directors will have nine members, being four from each of the current Anatolia and Avoca boards of directors plus one representative from Pala. Mr. Rob Reynolds (the current Avoca Chairman) will assume the role of non-executive chairman of Alacer Gold, Mr. Ed Dowling (the current Anatolia President and CEO) will serve as CEO and director and Mr. Rohan Williams (the current Avoca Managing Director) will serve as Chief Strategic Officer and director.The company will continue to operate corporate and administration offices in Denver USA, Ankara Turkey and Perth Australia.Next StepsIn addition to other customary conditions and regulatory approvals, the Merger is conditional upon approval by a simple majority of Avoca shareholders present in person or by proxy at the scheme meeting and also by at least 75% of the votes cast at that scheme meeting. Pursuant to the TSX Rules, Anatolia shareholders must approve the issuance of shares and related matters by a simple majority of voting shareholders (including, if required, a disinterested shareholder vote) with a 66 2/3% vote for the name change resolution under applicable law. Special shareholder meetings for each company to vote on the Merger are expected to be held in mid December 2010 with the completion of the Merger expected at the end of that month, or early 2011.Further information regarding the Merger for holders of Anatolia common shares will be contained in a management information circular that Anatolia will prepare, file and mail in due course to its shareholders in connection with the special meeting of Anatolia shareholders to be held to consider matters in connection with the Merger. All shareholders are urged to read the information circular once it becomes available as it will contain additional important information concerning the Merger.In due course, Avoca's shareholders will receive a comprehensive Scheme Booklet that will contain full details of the proposed Scheme, including the basis for the Avoca board's recommendation that Avoca shareholders approve the proposed Scheme. Avoca will shortly appoint an Independent Expert to prepare a report on whether the proposed Scheme is in the best interests of Avoca's shareholders. A copy of the Independent Expert's Report will be included in the Scheme Booklet.The Anatolia circular and Avoca Scheme Booklet are expected to be mailed to shareholders in November 2010, with shareholder meetings expected to be held in mid December 2010.The Scheme is expected to be implemented by the end of December 2010 or early 2011.Advisors and CounselAnatolia's financial advisor is BMO Capital Markets and is being advised on legal matters by Stikeman Elliott LLP. Clayton Utz is advising Anatolia on Australian legal matters. BMO Capital Markets has provided an opinion to the Anatolia board of directors that, subject to the assumptions, limitations, and qualifications set out therein, the Exchange Ratio is fair, from a financial point of view, to Anatolia shareholders.Avoca's financial advisor is Goldman Sachs & Partners Australia Pty Ltd. and is being advised on Australian legal matters by Cochrane Lishman Carson Luscombe. Avoca's Canadian legal advisor is Borden Ladner Gervais LLP. Avoca's Turkish legal advisor is Akol.Conference Call and Webcast InformationTwo joint conference calls hosted by Avoca and Anatolia will be held, one today at 8:30 am (EDT) (Wednesday 8 September, 10:30 pm Australian Eastern Standard Time) and another one at 6:00pm (EDT) (Thursday 9 September, 10:00am Australian Eastern Standard Time) to discuss this Merger. Participants may join the call by using the following telephone dial-in numbers:Australia: 1800 857 029Canada: 1866 617 8166US: 1866 814 5210Other: +61 3 8779 7440The conference passcode to be used is: 95955330 followed by the number sign.The Anatolia and Avoca business combination presentation is available on the homepage of both companies' websites. A copy will also be released to ASX. The webcasts will be available for replay in due course. For further information on Anatolia, please visit our website at www.anatoliaminerals.com. For further information on Avoca, please visit our website at www.avocaresources.com.au.About AnatoliaAnatolia is an emerging gold producer and leading minerals explorer in Turkey. The Company discovered and is developing the Çöpler Gold Project, which hosts gold reserves and resources in excess of 6moz and remains open. Construction for the initial oxide phase at Çöpler is fully permitted and funded. First gold pour is slated for the 4th quarter of 2010.Growth opportunities for Anatolia drive from a pipeline of precious and base metals properties and a strategic alliance with Çalik Holding through its subsidiary Lidya Mining - a member company of a leading Turkish conglomerate. Near term expansion of both oxide and sulfide potential at Çöpler is being advanced with a sulfide preliminary economic analysis study. Longer-term prospects include two nearby copper/gold porphyry deposits - Cevizlidere and Karakartal - and numerous grassroots prospects throughout Turkey.About AvocaAvoca is an S&P / ASX 200 gold mining and exploration company based in Perth, Western Australia. Avoca has grown rapidly since its listing in 2002 as a junior explorer, and this year (FY2011) is forecasting gold production of 280,000 ounces. Avoca is targeting 400,000 ounces of production by FY2013.Avoca's 100% owned Higginsville Gold Operation has grown into a large gold production centre with a forecast production level for FY2011 of 190,000 ounces. The majority of the Higginsville production is sourced from the high grade Trident underground gold mine which was discovered by Avoca in late 2004.In early 2010, Avoca completed its takeover of Dioro Exploration NL. Forecast production from South Kalgoorlie for FY2011 is 90,000 ounces which includes its 49% share of the Frog's Leg underground gold mine.Following the acquisition of Dioro, Avoca now has the dominant position on Australia's richest gold belt: the Kalgoorlie to Norseman gold belt. Avoca owns two 1.2 million tonne per annum treatment plants, has reserves of over 1.3 million ounces of gold and a resource base of 6.7 million ounces; as well as over 3,800km(2) of very highly prospective exploration ground.Cautionary Statement on Forward-looking InformationAll statements, other than statements of historical fact, contained in this news release, including any information as to the future financial or operating performance of Anatolia, Avoca or Alacer Gold, constitute (or may constitute) "forward-looking information" or "forward-looking statements" within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the "safe harbour" provisions under the United States Private Securities Litigation Reform Act of 1995 and are based on the expectations, estimates and projections of management as of the date of this news release unless otherwise stated.Forward-looking statements are necessarily based upon a number of estimates, assumptions and current expectations that, while considered reasonable by Anatolia or Avoca (as appropriate) as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies that could cause actual results, performance or achievements of any of Anatolia, Avoca or Alacer Gold to differ from any express or implied statement. The estimates, assumptions and current expectations of Anatolia and Avoca (as appropriate) contained in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein, or in any of Anatolia and Avoca's public filings, as well as: (1) that Anatolia and Avoca will complete the proposed merger in accordance with the terms and conditions of the Merger Implementation Deed (including the satisfaction of the requisite conditions contained in that deed); (2) the accuracy of management's assessment of the effects of the successful completion of the proposed merger; (3) the accuracy of Anatolia and Avoca's mineral reserve and mineral resource estimates; (4) that production at the Higginsville Gold Project will continue as forecast; (5) the successful integration of Dioro Exploration NL with Avoca consistent with Avoca's current expectations; (6) that production at Çöpler Gold Project will commence in the fourth quarter of 2010, consistent with Anatolia's current expectations; (7) the viability of the Cevizlidere and Karakartal projects and the expansion of the Çöpler Gold Project mines on a basis consistent with Anatolia's current expectations; (8) the trading price of Anatolia and Avoca's common or ordinary shares; (9) there being no significant political developments, whether generally or in respect of the mining industry specifically, in either Turkey or Australia not consistent with Anatolia and Avoca's current expectations; (10) there being no significant disruptions affecting Anatolia or Avoca's operations, whether due to labour disruptions, social issues, supply disruptions, power disruptions, damage to equipment or otherwise; (11) that the exchange rate between the Canadian dollar, US dollar, Turkish Lira and Australian dollar will be approximately consistent with current levels or as set out in this news release; (12) certain price assumptions for gold; (13) prices for energy inputs and other key supplies remaining consistent with current levels; (14) production forecasts meet expectations; (15) labour and materials costs increasing on a basis consistent with Anatolia and Avoca's current expectations; (16) permitting, development and expansion at Anatolia and Avoca's existing properties, including the preparation of any feasibility studies, on a basis consistent with current expectations; (17) cash costs remain consistent with management expectations; and (18) Alacer Gold's ability to have its CHESS Depositary Interests admitted to the Official List of the ASX.The forward-looking information set forth in this news release is subject to various risks and other factors which could cause actual results to differ materially from those expressed or implied in the forward looking information, including the risk that the proposed business combination transaction (that is, the Merger) between Anatolia and Avoca will not be completed for any reason. Certain of these risks, factors, estimates and assumptions are described in more detail in Anatolia's most recently filed Annual Information Form in the section entitled "Risk Factors" and the "Risk Factors" section of Anatolia's most recently filed Management's Discussion and Analysis, to which readers are referred and which are incorporated by reference in this news release. In addition, all forward-looking statements made in this news release are qualified by the full "Note Regarding Forward-Looking Statements" in such Annual Information Form and the "Cautionary Statements" in such Management's Discussion and Analysis. These risks, factors, estimates and assumptions are not exhaustive. Statements and information in this announcement reflect views held as at the date of this announcement and Anatolia and Avoca disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. Anatolia and Avoca shareholders should note that historical performance of Anatolia or Avoca is no assurance of their or Alacer Gold's future financial performance.THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. << ----------------------- (1) Based on an Avoca closing price on ASX of A$3.34 on 8-Sep-2010 and an Anatolia closing price on TSX of C$7.81 on 7-Sep-2010 and assuming an A$:US$ exchange rate of 0.9152 and C$:US$ exchange rate of 0.9555 on 8-Sep-2010. (2) With the exception of certain foreign shareholders, whose Anatolia shares will be sold by a nominee and who will receive the net proceeds of such sale. (3) Reserves, resources and production forecasts shown on a 100% basis. Anatolia's ownership interest is currently at 95% for Çöpler, its principal asset (Calik Holding (Anatolia's strategic Turkish partner) has the option to increase its ownership interest in Çöpler to 20% from its current level of 5% for US$37.8 million) (4) Being an Avoca closing price on ASX of A$3.34 on 8-Sep-2010 and an Anatolia closing price on TSX of C$7.81 on 7-Sep-2010; and 20 day VWAPs of A$3.07 over the period of 12-Aug-2010 to 8-Sep-2010 for Avoca and C$7.00 over the period of 10-Aug-2010 to 7-Sep-2010 for Anatolia. >> For further information: Anatolia, Ed Dowling, President and CEO, Tel: +1 303 292 1299, Website: www.anatoliaminerals.com; Avoca, Rohan Williams, Managing Director and CEO, Tel: +61 8 9226 0625, Website: www.avocaresources.com.au