The CNNC offer represents a premium of approximately 118% to the closing share price prior to the Atomredmetzoloto (ARMZ) unsolicited bid, and a 48% premium to the unsolicited CAD0.65 per share bid.
Based on the recommendation of the special committee and advice from its advisors, Khan’s board of directors unanimously recommend that shareholders accept the CNNC offer. Haywood Securities (Haywood), the financial advisor to Khan, has provided an oral opinion that the consideration to be offered under the CNNC offer is fair, from a financial point of view, to Khan’s shareholders.
The board has extensively considered the various alternatives and has determined that the CNNC offer is in the best interests of Khan and is the most attractive option for its shareholders. The CNNC offer contains far fewer conditions than the ARMZ bid and is clearly more advantageous to Khan in this regard.
The CNNC offer will be in the form of a take-over bid. The company said that CNNC has the right to match any superior offer made by another bidder. A termination fee of CAD1.6m will be payable to CNNC if the acquisition is not completed in certain circumstances. An equally valued reverse-termination fee is payable to Khan if the transaction is not completed in certain circumstances.
Martin Quick, president and chief executive officer of Khan Resources, “The CNNC Offer is far superior to the unsolicited ARMZ bid. We look forward to working with CNNC to build upon the progress we have made in Mongolia towards establishing a stable platform for developing the Dornod uranium project and bringing it into operation. CNNC brings a lot to the table, with its deep expertise in nuclear energy, financial strength and strong political ties with Mongolia.”
