Seabridge Gold and SnipGold are pleased to announce that they have entered into a definitive agreement dated April 18, 2016 (the "Arrangement Agreement") pursuant to which Seabridge has agreed to acquire all of the issued and outstanding common shares of SnipGold (the "SnipGold Shares") by way of a statutory Plan of Arrangement under the Business Corporations Act (British Columbia) (the "Arrangement").
Rudi Fronk, Seabridge’s CEO and Chairman, said: "The board of directors of Seabridge believes the proposed transaction will enhance our exploration potential in an area where our technical team has built up significant expertise.
This proposal also meets our transaction test of immediately increasing our gold resource ownership per share. Our KSM Project has geological similarities to SnipGold’s Iskut Project and the two properties are near enough to each other to offer synergies in terms of personnel and infrastructure.
"This business combination offers SnipGold shareholders the opportunity to maximize the potential value of their Iskut property by accessing the technical and financial resources needed to explore, engineer and permit their project.
"SnipGold shareholders will also benefit from Seabridge’s more senior exchange listings and greater liquidity. In our view, the proposal offers shareholders of the combined company the potential for enhanced capital appreciation with exposure to a larger asset base in B.C.’s prolific Golden Triangle."
John Zbeetnoff, President and CEO of SnipGold said: "I am pleased the SnipGold project will pass to a mid-tier company that has the funding capacity to build upon our technical efforts that advanced the understanding of the area. Our project offers Seabridge excellent high grade gold and bulk tonnage resource expansion and discovery potential at several drill ready targets.
Pursuant to the Arrangement Agreement, holders of SnipGold Shares will be entitled to receive 1/63rd of a common share of Seabridge in exchange for 1 SnipGold Share held (the "Exchange Ratio"), representing an implied offer price of CDN$0.291 per SnipGold share, a premium of 124% based on yesterday’s closing prices for both companies on the TSX/TSX.V and a premium of 115% based on the trailing 30-day volume weighted average trading price of SnipGold and Seabridge shares on the TSX/TSX.V, calculated from the date of the Arrangement Agreement.
Based on the foregoing, the Arrangement represents total consideration to SnipGold shareholders of CDN$9.9 million.
In connection with the Arrangement, approximately 600,000 Seabridge shares are expected to be issued to existing SnipGold shareholders (not including shares which might be issued on exercise of convertible securities), which would result in SnipGold shareholders owning approximately 1.14% of the combined company (based on the Exchange Ratio and the number of issued and outstanding SnipGold Shares and Seabridge shares as of the date of the Arrangement Agreement).
To be effective, the Arrangement will require approval by a majority of at least 66 2/3% of the votes cast by SnipGold Shareholders at a special meeting expected to take place in June, 2016 (the "SnipGold Meeting").
The board of directors of SnipGold has unanimously approved the Arrangement and recommends that SnipGold shareholders vote in favour of the Arrangement. The SnipGold board of directors acted in accordance with the recommendation of its independent special committee (the "SnipGold Special Committee") which received advice from Primary Capital Inc. ("Primary Capital"), its independent financial advisor.
All directors and officers of SnipGold, who hold approximately 24% of the issued and outstanding SnipGold Shares, have entered into voting and support agreements with Seabridge in support of the Arrangement.
The Arrangement Agreement includes covenants typical of transactions of this nature, including with respect to non-solicitation, a right granted to Seabridge to match superior proposals for SnipGold and a provision entitling SnipGold to a fiduciary-out under certain conditions. In addition, SnipGold has agreed to pay a termination fee to Seabridge upon the occurrence of certain events.
In connection with the Arrangement, Seabridge will provide SnipGold with interim debt financing of up to $400,000, to be repaid 90 days following the termination of the Arrangement Agreement, should termination occur.
It is anticipated that the transaction will close in the second quarter of 2016.
SnipGold Corp. (formerly Skyline Gold Corporation) is a Canadian exploration company focused on exploration in the Golden Triangle Area of northwestern B.C. SnipGold’s primary asset is a contiguous block of ground in excess of 286 sq km in size which has been consolidated through a series of transactions that began in 2005.
The consolidated land package has undergone intermittent exploration with the majority of the work carried out in the late 1980s and early 1990s. This early work was undertaken by over 30 independent operators and their efforts have highlighted numerous targets which have seen little to no follow up work in the past 20 years.