TORONTO, ON and VANCOUVER, BC - June 6, 2013. Mega Uranium Ltd. ("Mega") (TSX:MGA) and Rockgate Capital Corp. ("Rockgate")(TSX:RGT) are pleased to announce that they have entered into a binding letterof intent (the "LOI") to combine the two companies (the "Merger") and create a diversifieduranium company with advanced uranium assets in Australia and Mali, a pro formacash balance of approximately $22 million and a uranium-focused investmentportfolio valued at approximately $12 million. Completion of the Merger is subject to the satisfaction of certainconditions discussed below.
Under theterms of the Merger, Rockgate shareholders will receive 2.2 Mega Shares foreach one (1) common shareof Rockgate held (subject to rounding and without giving effect to the proposedshare consolidation of the Mega Shares discussed below). The exchange ratiorepresents an implied price of C$0.25 per Rockgate share, based on the closingprice of the Mega Shares on the Toronto Stock Exchange ("TSX") on June5, 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 andMega shareholders will own approximately 49% and 51% of the combined company,respectively.
SheldonInwentash, Chairman and Chief Executive Officer of Mega, commented "This transactionrepresents the opportunity to combine one of Africa's most promising undevelopeduranium assets with our significant Australian portfolio, to create aninternational uranium developer. We are confident about the combined team'sability to unlock significant value from our collective assets for ourshareholders."
Commenting onthe transaction, Karl Kottmeier, President of Rockgate, said "By combiningRockgate and Mega, we are creating a truly unique new company. Our experiencedteam will be dedicated to building value by advancing our diversified assetbase of uranium-focused projects and prudently managing our portfolio of equityinvestments and cash. We believe this new company will provide investors withan ideal way to gain exposure to the junior uranium sector."
TRANSACTION RATIONALE
A pipeline of advanced stage and exploration projects in Africa and Australia with a sizable global resource baseLarger entity with superior capital markets presence and trading liquidityStrong combined management team with complementary market and operational expertiseA portfolio of equity investments in quality junior uranium explorers and developers providing access to future growthPotential synergies and cost savings via back-office consolidation, sharing of facilities / resources and overall economies of scaleBENEFITS TO MEGA SHAREHOLDERS
Increased resource diversification and access to a growing poly-metallic deposit in FaleaAccretive on a resource per share basisBolsters company treasuryAccess to experienced technical teamBENEFITSTO ROCKGATE SHAREHOLDERS
Resource diversification geographically and with varying stages of developmentAdvanced projects in a leading uranium mining jurisdictionFurther diversification through exposure to a global equity portfolioSignificant premium on both a spot and 20-day VWAP basisManagement team additions with extensive uranium market transactional expertiseMANAGEMENT AND BOARDPost-Merger, thecombined company's management and board will reflect the collective strengthsof both companies, having years of experience in the global resource sector andstrong expertise in western Africa and Australian uranium landscape. Karl Kottmeierwill become Chief Executive Officer, Douglas Ford will become Chief FinancialOfficer, Richard Patricio will become Chief Operating Officer and Bryan Hydewill become Chief Technical Officer of the company. Richard Homsany will remainExecutive Vice President, Australia. Subject to the approval of the shareholders of Mega, the nine member board will be led by SheldonInwentash as Chairman and include Karl Kottmeier, Richard Patricio, EdwardFord, Allen Ambrose, Anthony Grey, Michael Sweatman, Phil Williams and DouglasReeson.
OVERVIEW OF PORTFOLIOThe combinedcompany will have a portfolio of strategic assets which will be the key driversof growth and value creation and include:
FaleaThe 100%-owned,flagship Falea project comprises three permits, totalling 225 km2 insouthwestern Mali and is a polymetallic, flat-lying deposit containingpotentially viable quantities of uranium, silver and copper. Rockgate commenceda pre-feasibility study on the Falea project in 4Q 2012 which is anticipated tobe completed by the end of 2013.
AustralianAssetsThree,resource-compliant uranium projects with additional interests in explorationproperties covering ~5,800 km2 throughout Queensland, SouthAustralia, Northern Territory and Western Australia. Lake Maitland (100%-owned(1),W. Australia) hosts 20.7 Mlbs U3O8 Indicated at a gradeof 0.05% and 1.6 Mlbs U3O8 Inferred at a grade of 0.04% andis currently in the feasibility stage. Ben Lomond (100%-owned, Queensland)hosts 7.9 Mlbs U3O8 Indicated at a grade of 0.27% and 2.8Mlbs U3O8 Inferred at a grade of 0.21% and is currentlyin pre-feasibility while Maureen (100%-owned, Queensland) hosts 5.9 Mlbs U3O8Indicated at a grade of 0.09% and 0.4 Mlbs U3O8 Inferredat a grade of 0.11%.
Balance SheetThe combinedcompany will have approximately $22 million of cash at closing of thetransaction. In the current uranium market, the combined company's miningassets will require minimal investment and, as such, the cash on hand is anticipated to be more thansufficient to advance both Falea through PFS and Lake Maitland DFS andpredevelopment and maintain the other Australian assets while remaining able toundertake investment in new opportunities.
InvestmentPortfolioShareholderscan expect to benefit from a portfolio of advanced resource equity positions(~$12 million) which management believes are currently significantlyundervalued in the market and potentially represent a strong sample of the nextstage of uranium development assets globally.
SUMMARYOF THE TRANSACTIONIt is anticipated that the Mergerwill be completed by way of a three-cornered amalgamation, or a plan of arrangement,resulting in Rockgate becoming a wholly-owned subsidiary of Mega atclosing. As part of the transaction, it isalso proposed that Mega will effect a 10-for-1 consolidation of the Mega Sharesprior to the Merger. Subject to completionof the prior consolidation of the Mega Shares (the "Mega Consolidated Shares"), Rockgate shareholders will receive 2.2Mega Consolidated Shares for each ten (10) common shares of Rockgate held(subject to rounding).
Thetransaction is subject to completion of due diligence, the execution of adefinitive agreement substantially on the terms set out in the LOI, and theapproval of Rockgate shareholders and Mega Shareholders (as to the issuance ofthe Mega Shares under the Merger and the 10-for-1 share consolidation), atmeetings to be held as soon as practicable following execution of thedefinitive agreement, in addition to other customary closing conditions,including receipt of all regulatory and stock exchange approvals. Mega and Rockgate have also agreed to reciprocalnon-solicitation restrictions, including rights to match any superior proposals,and for the payment of a C$1 million reciprocal break fee under certaincircumstances.
Certain members ofmanagement, directors and key shareholders of Mega and Rockgate, includingPinetree Capital Ltd. (in respect of Mega), have expressed their willingness toenter into support agreements with the companies to, among other things, votetheir common shares of the companies in favour of the matters relating to theMerger.
Subject to theexecution of the definitive agreement and satisfaction of all closingconditions, the Merger is expected to be completed in September 2013.
ADVISORS AND LEGAL COUNSELDundee CapitalMarkets is acting as financial advisor and Blake, Cassels & Graydon LLP isacting as legal counsel to Rockgate and its Board of Directors.
Additionalinformation about Mega Uranium Ltd. and Rockgate Capital Corp. is available byvisiting Mega's website at www.megauranium.com or Rockgate's website atwww.rockgatecapital.com or under their profiles on SEDAR at www.sedar.com.
NationalInstrument 43-101 - Standards for Disclosure for Mineral Projects StewartTaylor, B.Sc., Mega's President, is Mega's Qualified Person for the purposes ofNational Instrument 43-101 and has reviewed and approved the technical contentsof this release under the heading "Australian Assets". Bryan Hyde, C.Eng.,B.Sc., MIMMM, a Director of Rockgate, is Rockgate's Qualified Person for thepurposes of National Instrument 43-101 and has reviewed and approved thetechnical contents of this release under the heading "Falea".
This newsrelease may use the terms "measured", "indicated" and"inferred" as these terms are defined under Canada's NationalInstrument 43-101. U.S. investors are advised that, while such terms arerecognized and required by Canadian regulations, they are not recognized by theUnited States Securities and Exchange Commission ("SEC") and may notbe comparable to similar information for United States mining or explorationcompanies. As such, certain information contained on this news releaseconcerning descriptions of mineralization and resources under Canadianstandards is not comparable to similar information made public by United Statescompanies subject to the reporting and disclosure requirements of the SEC. U.S.investors are cautioned not to assume that any part or all of the mineraldeposits described in these categorieswill ever be converted into proven or probable reserves, as defined in theSEC's Industry Guide No. 7.
Forward-LookingStatements CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains"forward-looking statements" within the meaning of the United StatesPrivate Securities Litigation Reform Act of 1995 and "forward-looking information" as such term isdefined in applicable Canadian securities laws (together referred to herein as"forward-looking statements"). Except for statements of historical factrelating to Mega or Rockgate, information contained herein constitutesforward-looking statements. Forward-looking statements are characterized bywords such as "plan," "expect", "budget","target", "project", "intend,""believe", "anticipate", "estimate" and othersimilar words, or statements that certain events or conditions "may"or "will" occur. Forward-looking statements in this news releaseinclude, but are not limited to, statements relating to completion of thecombination of Mega and Rockgate and the expected timing of completion,statements regarding the anticipated completion date of a pre-feasibility studyregarding the Falea project, statements regarding the cash balance of thecombined company at closing, statements regarding the expected benefits to Megashareholders and Rockgate shareholders of the proposed transaction andstatements regarding the sufficiency of the combined company's capital toadvance the Falea project through its pre-feasibility study. Forward-lookingstatements are based on the opinions, assumptions and estimates of managementconsidered reasonable at the date the statements are made, and are inherentlysubject to a variety of risks and uncertainties and other known and unknownfactors that could cause actual events or results to differ materially fromthose projected in the forward-looking statements. These factors include (i)that Mega and Rockgate will complete the proposed transaction described herein,(ii) political developments, whether generally or in respect of the miningindustry specifically, in western Africa and Australia not consistent with Megaand Rockgate's current expectations, (iii) Mega's and Rockgate's expectationsin connection with the projects discussed herein being met, (iv) the impact ofgeneral business and economic conditions, global liquidity and creditavailability on the timing of cash flows and the values of assets andliabilities based on projected future conditions, fluctuating metal prices andcurrency exchange rates, (v) the value that the combined company will realizefrom its portfolio of advanced resource equity positions, (vi) changes inproject parameters as plans continue to be refined,(vii) the continued employmentof key Mega and Rockgate employees, as well as those risk factors discussed orreferred to in Mega's and Rockgate's respective annual Management's Discussionand Analysis and Annual Information Form for their respective most recentlycompleted year ends filed with the applicable securities regulatory authoritiesand available at www.sedar.com. Although Mega and Rockgate have attempted toidentify important factors that could cause actual actions, events or resultsto differ materially from those described in forward-looking statements, theremay be other factors that cause actions, events or results not to beanticipated, estimated or intended.
There can beno assurance that forward-looking statements will prove to be accurate, asactual results and future events could differ materially from those anticipatedin such statements. Neither Mega nor Rockgate undertakes any obligation toupdate forward-looking statements if circumstances or management's estimates,assumptions or opinions should change, except as required by applicable law.The reader is cautioned not to place undue reliance on forward-lookingstatements. The forward-looking information contained herein is presented forthe purpose of assisting investors in understanding Mega's and Rockgate's expectedfinancial and operational performance and results as at and for the periodsended on the dates presented in their respective plans and objectives and maynot be appropriate for other purposes.
For furtherinformation please contact:
Mega Uranium Ltd.
Richard PatricioExecutive Vice-President,Corporate AffairsTel. (416) 643-7630www.megauranium.com
RockgateCapital Corp.KarlKottmeierPresidentTel.(604) 678-8941www.rockgatecapital.com