Mr. Brett Heath of Metalla reports
METALLA ANNOUNCES FRIENDLY ACQUISITION OF VALGOLD AND ROYALTY ON THE GARRISON PROJECT
Metalla Royalty and Streaming Ltd.and Valgold Resources Ltd. have entered into a definitive arrangement agreement whereby Metalla will acquire all of the issued and outstanding common shares of Valgold. Under the terms of the arrangement agreement, all of Valgold's issued and outstanding common shares will be exchanged for Metalla common shares on the basis of 0.1667 Metalla common share for each Valgold common share.
The exchange ratio implies a consideration of 13 cents per Valgold common share, based on the 40-day volume-weighted average price of the Metalla common shares on the TSX Venture Exchange for the period ending May 9, 2018. This represents a 79-per-cent premium to the 40-day VWAP of Valgold common shares and a 62.5-per-cent premium as of market close on May 9, 2018, on the TSX Venture Exchange. The undiluted equity value of the transaction is approximately $7.2-million.
Benefits to Metalla shareholders:
Acquisition of a 2-per-cent net smelter returns royalty on the Garrison project in a world-class mining district in Ontario, Canada;Addition of a proven mine builder and high-quality counterparty Osisko Mining Inc., the management team largely responsible for the discovery, development, financing and commissioning of the Canadian Malartic mine;Enhances and expands growth profile with a royalty on a gold development asset with approximately 1.2 million ounces ofmeasured and indicated resources and an 800,000-ounce inferred resource;Maintains cash balance through an all-share transaction;Accretive to existing Metalla shareholders on a per share basis.
Benefits to Valgold shareholders:
An immediate premium of 79 per cent to Valgold's 40-day VWAP;Enhanced market liquidity;Access to Metalla's dividend stream and policy on closing;Significant asset diversification from Metalla's portfolio of producing, development and exploration royalties, and streams with top-tier operators;Maintains upside exposure to the Garrison project through a Metalla ownership position and expected revaluation of the related royalty through enhanced price discovery reflected in Metalla shares.
Brett Heath, president and chief executive officer of Metalla, stated: "The acquisition of Valgold is an exciting transaction that strengthens Metalla's development pipeline of royalties and adds a top-tier operator in a world-class mining jurisdiction with significant potential upside. This acquisition is consistent with our long-term strategy of executing accretive deals in known mining camps with strong counterparties."
Kevin Snook, chairman and chief executive officer of Valgold, stated: "Metalla's management team and board has built an impressive and diversified royalty and streaming portfolio in only 20 months.Valgold shareholders can look forward to seeing the full value of the Garrison royalty recognized in Metalla's share price as well as improved market liquidity and exposure to Metalla's dividend and diversified royalty and streaming assets."
Garrison royalty
Valgold holds a 2-per-cent net smelter returns royalty on certain claims of the Garrison project, which covers the Garrcon and Jonpol properties, and the eastern portion of the 903 zone. The Garrison project is located approximately 100 kilometres east of Timmins Ont., and 40 km north of Kirkland Lake. It resides along the famous Golden Highway in the Timmins and Kirkland Lake region which has historically produced more than 100 million ounces of gold.
The Garrison project is 100-per-cent-owned by Osisko Mining and consists of a portfolio of properties spanning a 50 km distance along the Destor-Porcupine fault zone, encompassing 16 non-contiguous properties, including the Garrcon and Jonpol properties, the 903 zone, and the Buffonta and Golden Pike advanced exploration properties.
The Garrison royalty covers 35 patented mining claims and three deposits known as the Garrcon and Jonpol properties, and the eastern portion of the 903 zone. These claims were the subject of a National Instrument 43-101 resource estimate dated March, 2014, by ACA Howe International Inc., which estimated the mineral resource according to Canadian Institute of Mining and Metallurgy standards at the Garrcon and Jonpol properties as presented in the associated table.
Domain Category Tonnes GoldGold (g/t) (troy ounces)GarrconMeasured 15,100,000 1.07 521,000Garrcon and JonpolTotal indicated 14,972,000 1.40 676,000Garrcon and Jonpol Total measured and indicated 30,072,000 1.24 1,197,000Garrcon and Jonpol Total inferred7,873,000 3.19 808,000
For further details, see technical report entitled, "Technical Report on the Golden Bear Project -- Garrison Property Larder Lake Mining Division Garrison Township, Ontario, Canada for Northern Gold Mining Inc.," dated March 3, 2014, filed by Northern Gold Mining Inc. on May 2, 2014, and available under Northern Gold Mining's profile on SEDAR.The associated table is a summary table for the Garrison property (Garrcon and Jonpol deposits). These mineral resources were estimated using gold cut-off grades of0.4 g/t for open-pit resources and 1.5 g/t for underground resources.Moreover, all raw assays were top cut to 112 g/t Au and 114 g/t Au for higher-grade and lower-grade domains, respectively. Mineral resources are not mineral reserves and by definition do not demonstrate economic viability. This mineral resource estimate includes inferred mineral resources which are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves.There is also no certainty that these inferred mineral resources will be converted to the measured and indicated resource categories through further drilling, or into mineral reserves once economic considerations are applied. Readers are cautioned that inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically.
As of the end of January, 2018, Osisko had completed 85,000 m of new drilling since the 2014 resource update to complement the 108,000 m drilled at Garrison by previous operators. Osisko expects to release an updated resource estimate in July, 2018.
Board of directors recommendation
The arrangement agreement has been unanimously approved by the boards of directors of each of Metalla and Valgold. The Valgold board of directors recommends that Valgold shareholders vote in favour of the arrangement at the special meeting of shareholders to be called to approve the arrangement.Evans & Evans Inc. has provided an opinion to the board of directors of Valgold, stating that as of the date of the opinion and based upon and subject to the assumptions, limitations, and qualifications set forth therein, the consideration to be received by the holders of Valgold common shares pursuant to the arrangement is fair, from a financial point of view, to such holders.
Certain executive officers and directors of Valgold have entered into lockup agreements and have agreed to vote their Valgold securities in favour of the arrangement.
Transaction summary
Under the terms of the arrangement agreement, Valgold shareholders will receive 0.1667 common share of Metalla for each Valgold common share held as of the effective date of the arrangement. Holders of options to purchase Valgold shares outstanding at closing will receive Metalla common shares on the basis of the in-the-money value of their Valgold options. Pursuant to the transaction, Metalla will issue an aggregate of approximately 9.5 million common shares to Valgold shareholders and optionholders. Upon completion of the arrangement, current Valgold shareholders and optionholders will own approximately 11.2 per cent of the issued and outstanding common shares of Metalla.Under the arrangement, all existing warrants of Valgold will become exercisable to acquire Metalla common shares at exercise prices adjusted by the exchange ratio.
The arrangement will be effected by way of a plan of arrangement under the Business Corporations Act (British Columbia). The arrangement will require approval by 66-2/3rds per cent of the votes cast at the special meeting and any additional shareholder approvals which may be required under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. In addition to shareholder and court approvals, the arrangement is subject to applicable regulatory approvals (including approval of the TSX Venture Exchange) and the satisfaction of certain other closing conditions customary in transactions of this nature.
The arrangement agreement includes customary provisions including non-solicitation of alternative transactions, right to match superior proposals and fiduciary out provisions. In addition, Valgold has agreed to pay a termination fee to Metalla of $600,000 in the event of a termination of the arrangement agreement due to the occurrence of certain events. Metalla and Valgold have each agreed to pay a $150,000 expense-reimbursement fee to the other party as reimbursement for certain expenses upon termination of the arrangement agreement due to the occurrence of certain other specified events.
Timing
Full details of the proposed transaction will be included in Valgold's management information circular, which is expected to be mailed to shareholders in early June, 2018. It is anticipated that the special meeting and the closing of the proposed transactions will take place in mid-July, 2018.
Qualified person
The technical information contained in this news release has been reviewed and approved by Charles Beaudry, geologist, MSc, member of the Association of Professional Geoscientists of Ontario and of the Ordre des Geologues du Quebec, a consultant to Metalla. Mr. Beaudry is a qualified person as defined in National Instrument 43-101 (Standards of Disclosure for Mineral Projects).
About Metalla Royalty and Streaming Ltd.
Metalla is a precious metal royalty and streaming company. Metalla provides shareholders with leveraged precious metal exposure through a diversified and growing portfolio of royalties and streams. Its strong foundation of a current and future cash-generating asset base, combined with an experienced team, gives Metalla a path to become one of the leading gold and silver companies for the next commodity cycle.
About Valgold Resources Ltd.
Valgold is a royalty and mineral exploration and development company based in Ontario, which holds a 2-per-cent net smelter returns royalty on the Garrison gold project on the Golden Highway, east of Timmins, Ont., a 100-per-cent interest in the Tower Mountain gold project near Thunder Bay, Ont., and exploration properties in Venezuela.
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