Vancouver, British Columbia -- Odin Mining and Exploration Ltd. ("Odin") (TSXV: ODN) and Ecuador Gold and Copper Corp. ("EGX") (TSXV: EGX) are pleased to announce that Odin and EGX have entered into a definitive arrangement agreement (the "Arrangement Agreement") dated August 2, 2016 whereby Odin will acquire all of the outstanding securities of EGX. The resulting entity will be an emerging gold exploration company with a post-deal market capitalization of approximately C$198million (based on the closing price of Odin's shares on August 2, 2016).
Pursuant to the Arrangement Agreement, Odin has agreed to acquire EGX by
way of a statutory plan of arrangement. The plan of arrangement will
result in Odin being owned approximately 65% and 35% by Odin and EGX's
existing shareholders, respectively. The Arrangement Agreement calls
for the conversion of EGX's outstanding debentures and warrants prior to
the effective time of the plan of arrangement such that EGX will have
approximately 82.9M shares issued and outstanding at that time. On a
fully-diluted basis for EGX, the transaction represents a premium to EGX
shareholders of approximately 89% over EGX's 20 day volume weighted
average share price on the TSX Venture Exchange utilizing Odin's 20 day
volume weighted average share price on the TSX Venture Exchange, both as
at August 2, 2016. At the conclusion of the arrangement there will be
approximately 204.6 million shares of Odin issued and outstanding, and
211.2 million shares of Odin on a fully diluted basis.
"We are excited about the highly prospective gold and copper exploration
and development opportunities this deal represents. With an
established multi-million ounce indicated gold resource as a platform to
build on, combined with an experienced management team with strong
finance capabilities this deal represents a unique investment
opportunity for Odin and EGX shareholders." said Marshall Koval, Odin's
Chief Executive Officer.
Heye Daun, EGX's Chief Executive Officer commented "We believe that this
arrangement will deliver significant value to EGX's shareholders over
the medium to long term. Odin's management team and key shareholders
have a proven track record of value creation. The combination of our
Ecuadorean assets and shareholders, coupled with Odin's financial and
project development expertise represents an excellent fit that will
enable us to develop our projects in Ecuador."
About EGX
EGX is a Canadian exploration and mining company focused on the Condor
Project located in the Province of Zamora-Chinchipe in southern Ecuador.
The Condor Project contains an Indicated Mineral Resource of 8.0
million ounces gold (within 447.3 million tonnes grading 0.56
grams/tonne gold). Additional Inferred Mineral Resources contain 2.6
million ounces gold (within 197.6 million tonnes grading 0.40
grams/tonne gold). A complete resource table and drill results on the
Condor Project are published in the Company's NI-43-101 Technical Report
dated March 24, 2014 and are available for review on SEDAR and on the
EGX web site at
www.ecuadorgoldandcopper.com.
EGX's Qualified Person, Mit Tilkov, P.Geo., Vice-President Exploration
of Ecuador Gold and Copper Corp. and a qualified person as defined by NI
43-101, has reviewed and verified the technical information contained
in this news release.
About the Transaction
The proposed acquisition will be effected by way of a statutory plan of arrangement under the Business Corporations Act
(British Columbia), and must be approved by the Supreme Court of
British Columbia and the affirmative vote of 66 2/3 % of EGX
shareholders. A special meeting of EGX's shareholders is expected to be
convened as soon as commercially practicable in accordance with
applicable securities laws. In addition, pursuant to the rules of the
TSX Venture Exchange, a simple majority of Odin shareholders will
approve the transaction by way of written consent resolution. Each
debenture or warrant to acquire EGX shares that is not converted into an
EGX share prior to the effective date of the arrangement will be
terminated. Holders of stock options of EGX will receive replacement
stock options of Odin.
Completion of the arrangement is conditional on, in addition to the
shareholder approval of EGX and Odin, voting agreements representing an
aggregate of 60% of the outstanding EGX shares and satisfaction of other
customary approvals, including regulatory, stock exchange and court
approvals. As of today's date certain directors, officers and
shareholders of EGX representing an aggregate 59.4% of the issued and
outstanding shares of EGX have entered into voting agreements to vote in
support of the proposed acquisition.
The Boards of Directors of each of Odin and EGX have unanimously approved the transaction.
The Board of Directors of EGX, after consultation with its financial
advisor and legal counsel, has determined unanimously that the
arrangement is fair to the EGX shareholders and is in the best interests
of EGX. EGX's Board of Directors unanimously recommends that the EGX
shareholders vote in favour of the arrangement. M Partners Inc. is
acting as the financial advisor to the Special Committee and Board of
Directors of EGX. M Partners has provided an opinion that the
consideration being offered by Odin in respect of the plan of
arrangement is fair from a financial point of view to EGX's
shareholders.
The Board of Directors of Odin, after consultation with its financial
advisor and legal advisor, has determined unanimously that the issuance
of Odin shares pursuant to the plan of arrangement is fair to the Odin
shareholders and is in the best interests of Odin. Salman Capital Inc.
has been engaged to provide an opinion that the issuance of the Odin
shares pursuant to the plan of arrangement is fair, from a financial
point of view, to Odin's shareholders.
The Arrangement Agreement contains standard deal protections, including a
commitment by EGX not to solicit alternative transactions, a right for
Odin to match any superior proposal received by EGX and payment by EGX
of a termination fee of $500,000 if the transaction is not completed,
under certain circumstances.
The Arrangement Agreement was negotiated at arm's length between EGX and
Odin. No finder's fees are payable in connection with the arrangement.
A full copy of the Arrangement Agreement will be filed by each of Odin and EGX with Canadian securities regulatory authorities and will be available at www.sedar.com. In addition, a detailed description of the Arrangement Agreement will be included in EGX's management information circular which will be mailed to EGX shareholders in accordance with applicable securities laws. The Transaction is expected to close in October 2016. All EGX shareholders are urged to read the information circular once it becomes available as it will contain additional information regarding the transaction.
Cautionary Note Regarding Forward-Looking Information
Certain statements and information herein, including all
statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. Such forward-looking statements or
information include but are not limited to statements or information
with respect to the completion of the arrangement, the anticipated
benefits from the arrangement, the timing for completion of the
arrangement, Odin's post-deal market capitalization, the number of
shares (diluted and non-diluted) of Odin following the arrangement, the
timing for the special meeting of EGX shareholders and the timing for
closing of the transaction. Often, but not always, forward-looking
statements or information can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or "does
not anticipate" or "believes" or variations of such words and phrases
or statements that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
With respect to forward-looking statements and information contained
herein, Odin and EGX have made numerous assumptions including among
other things, assumptions about general business and economic
conditions, the price of copper, interest rates, anticipated costs and
expenditures, production and productivity levels, market competition,
receipt of necessary permits and approvals, the availability of suitable
future targets and Odin's and EGX's ability to achieve their goals.
The foregoing list of assumptions is not exhaustive. Although
management of Odin and EGX believe that the assumptions made and the
expectations represented by such statements or information are
reasonable, there can be no assurance that a forward-looking statement
or information herein will prove to be accurate. Forward-looking
statements and information by their nature are based on assumptions and
involve known and unknown risks, uncertainties and other factors which
may cause Odin's and/or EGX's actual results, performance or
achievements, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements or information. These factors include, but
are not limited to: risks and costs to Odin and EGX if the arrangement
is not completed; EGX's obligation to pay a break fee if the arrangement
is terminated under certain circumstances, which might deter other
parties from making a competing offer to acquire EGX; the investment of
executive management time to the arrangement, which may delay or prevent
Odin and/or EGX from exploiting business opportunities that may arise
pending completion of the arrangement; the restrictions on the conduct
of EGX's business prior to completion of the arrangement; the interests
of management and other related parties in the arrangement, which may
differ from those of EGX shareholders in certain respects; risks
associated with the business of Odin; risks related to the satisfaction
or waiver of certain other conditions contemplated by the definitive
agreement in respect of the arrangement; risks related to reliance on
technical information provided by EGX; risks relating to exploration and
potential development of EGX's projects; business and economic
conditions in the mining industry generally; the supply and demand for
labour and other project inputs; prices for commodities to be produced
and changes in commodity prices; changes in interest and currency
exchange rates; risks relating to inaccurate geological and engineering
assumptions (including with respect to the tonnage, grade and
recoverability of reserves and resources); risks relating to
unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications or
expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, and
unanticipated events related to health, safety and environmental
matters); risks relating to adverse weather conditions; political risk
and social unrest; changes in general economic conditions or conditions
in the financial markets; and other risk factors as detailed from time
to time in Odin's and EGX's continuous disclosure documents filed with
Canadian securities administrators.