The combined entity will have a strong balance sheet, with no debt and a cash position of around $5.5m, to target expansion of the current NI 43-101 resources
Southern Empire Resources and MAS Gold are pleased to announce that they have entered into a binding agreement dated July 11, 2020 whereby Southern Empire has agreed to acquire all of the issued and outstanding common shares of MAS Gold.
The combined entity will have a strong balance sheet, with no debt and a cash position of approximately $5.5million, which will be used to target expansion of the current NI 43-101 resources as well as exploration and development on all of Southern Empire’s projects.
Chief Executive Officer of Southern Empire, Dale Wallster, stated: “With this transaction, Southern Empire will emerge as a company having NI 43-101 gold resources in Saskatchewan, annually ranked as one of the best mining jurisdictions in the world, which we will target to expand and enhance. Together with our Oro Cruz and Eastgate gold projects in the southwestern U.S.A. we will be a multi-asset, advanced stage gold exploration and development company with holdings in some of the best mining jurisdictions in the world. Southern Empire has a strong treasury, an award-winning technical team and management with strong track records in the capital markets.”
The Transaction will be effected by way of a court approved plan of arrangement under the Business Corporations Act (British Columbia). Under the terms of the Agreement, each shareholder of MAS Gold will receive 1 common share of Southern Empire (“Southern Empire Share”) for every 8.5 common shares of MAS Gold. Assuming completion, and none of the options or share purchase warrants of MAS Gold being exercised prior to closing of the Transaction, Southern Empire will issue a total of 5,828,090 Southern Empire Shares to the shareholders of MAS Gold.
Based on a price of $1.19 per Southern Empire Share, being the closing price of Southern Empire on July 10, 2020, the 8.5 to 1 conversion ratio represents an offer price of $0.145 per MAS Share, being a premium of 21% of MAS Gold’s closing price on July 10, 2020.
Following the completion of the Transaction, Southern Empire will have 56,734,890 issued and outstanding shares, of which the former shareholders of MAS Gold will hold approximately 10.3%.
All outstanding options and warrants of MAS Gold will remain outstanding (if not exercised prior to closing of the Transaction) and will be adjusted to give effect to the Transaction in accordance with their respective terms or pursuant to the Agreement.
After taking into consideration, among other things, the terms of the Transaction, the recommendation of the special committee of independent MAS Gold directors established to review the Transaction and discussions with its advisors, MAS Gold’s board of directors has concluded that the Transaction is in the best interests of MAS Gold and has approved the Agreement. MAS Gold’s board of directors intends to recommend in the management information circular to be mailed in connection with the MAS Gold shareholder meeting that the MAS Gold shareholders vote in favour of the Transaction.
Similarly, after taking into consideration, among other things, the terms of the Transaction, the Southern Empire board of directors has concluded that the Transaction is in the best interests of Southern Empire and has approved the Agreement.
The Transaction will require the approval by at least 66 2/3% of the votes cast on the special resolution by MAS Gold shareholders and, if required, Southern Empire shareholders present in person or represented by proxy at the shareholder meetings. The Transaction may also require the approval of a majority of the votes cast by minority shareholders of MAS Gold for the purposes of Multilateral Instrument 61-101.
Mr. Netolitzky is Chairman and director of Southern Empire and Chief Executive Officer, President and a director of MAS Gold and Andrew Davidson is Chief Financial Officer of each of Southern Empire and MAS Gold.
The Transaction is subject to due diligence by each party, shareholder approval, applicable regulatory and TSX Venture Exchange approvals and satisfaction of customary provisions. The Transaction is expected to close in the second half of 2020.
The Agreement includes customary deal protection provisions, including a break fee of $250,000 payable by a breaching party, and a right to match and a non-solicitation provision in favour of Southern Empire.
Details of the Transaction, including a summary of the terms and conditions of the Agreement, will be disclosed in the management information circular of MAS Gold which will be mailed to the securityholders of MAS Gold and will also be available on SEDAR at www.sedar.com.
None of the securities to be issued have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issued in the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Source: Company Press Release