Apollo Gold Corporation (TSX: APG)(NYSE Amex: AGT) (“Apollo”)
and Linear Gold Corp. (TSX: LRR) (“Linear”) are pleased to announce
the closing of the previously announced private placement (the
“Private Placement”) whereby Linear has acquired 62,500,000 common
shares of Apollo at a price of Cdn$0.40 per share for gross
proceeds of Cdn$25,000,000. The common shares of Apollo were issued
from treasury under the terms of a subscription agreement between
Linear and Apollo dated March 9, 2010.
The Private Placement was completed in connection with a
proposed business combination (the “Merger”) pursuant to which the
businesses of Apollo and Linear will be combined by way of a court
approved plan of arrangement under a binding letter of intent (“the
Agreement”) to create an emerging Canadian mid-tier gold producer
(“New Company”) with over two million ounces of gold reserves.
Apollo and Linear are also announced that upon completion of the
Merger a management restructuring will occur pursuant to which Wade
Dawe will be appointed as President and Chief Executive Officer of
the New Company and David Russell will resign from the position.
Apollo and Linear have also initiated a search for an experienced
Chief Operating Officer who will be responsible for all operational
aspects of the producing Black Fox Mine and the development and
future operation of the Goldfields Project. Apollo and Linear have
also agreed to a modification to the previously announced board
structure of the New Company with each of Apollo and Linear now
appointing or nominating three directors to the board and mutually
agreeing upon a seventh new board member.
Under the terms of the Agreement, Apollo has agreed to acquire
all of the outstanding common shares of Linear in exchange for
common shares of Apollo at an agreed upon exchange ratio of 5.474
Apollo common shares per Linear common share. The 62,500,000 common
shares of Apollo acquired by Linear from the Private Placement will
be cancelled effective as of the date of closing of the Merger.
New Company Highlights
Following completion of the Merger, the New Company will be
owned 52.2% by current Apollo shareholders and 47.8% by current
Linear shareholders based on current shares issued and outstanding
The Merger valued Linear at approximately Cdn$102 million based on
the 20-day volume weighted average share price (“VWAP”) on the
Toronto Stock Exchange as of March 8, 2010.
Upon completion of the Merger, the New Company will have the
following compelling characteristics:
- A strong production profile with
significant development potential;
- 2010 estimated gold production
at Apollo’s Black Fox Mine in the Timmins Mining District, Ontario,
of approximately 100,000 ounces;
- Additional expected production
of approximately 70,000 ounces of gold per year beginning in 2013
from the Box deposit at Linear’s Goldfields Project in northern
Saskatchewan;
- Total reserves of approximately
2.3 million ounces of gold in Canada;
- Excellent exploration potential
within highly prospective land packages in multiple
jurisdictions;
- A strengthened balance sheet
with a lower debt burden and improved financial flexibility with
cash and cash flows available for continued exploration and
development, solidifying the company’s capital structure to support
future growth; and
- A strong management team with
complementary experience in exploration, development, operations,
and financing.
Wade Dawe, Chief Executive Officer (“CEO”) and President of
Linear, who is expected to become President and Chief Executive
Officer of the New Company, said, “This private placement by Linear
demonstrates our commitment to our shareholders to create a new
investment vehicle for gold investors looking for growth in gold
production and resources in a safe mining jurisdiction, as well as
our recognition of the untapped value of Apollo’s Black Fox Mine’s
proposed underground operations and the resource upside potential
at their adjacent Grey Fox and Pike River properties. In agreement
with our partners at Apollo, approximately US$10 million of the
private placement investment will be directed to advancing the
underground mine development and aggressively drilling from
underground platforms for additions to reserves and resources. We
will also continue to advance Linear’s Goldfields Project, which
will be an important development and future production asset for
the New Company.”
R. David Russell, CEO and President of Apollo, added, “Apollo
and Linear are making excellent progress towards closing the Merger
to launch our New Company by the end of the second quarter of 2010.
This investment in the underground operations allows us to commence
the Black Fox underground development project, enhancing our
ability to achieve the stated goal of 750 tonnes per day (“tpd”) by
the end of 2010, and as importantly, positioning the underground
operations for potential future ramp up in production by ensuring
sufficient underground development of headings.”
Mr. Russell continued, “We believe that we have significantly
reduced the operating risks of our new Black Fox Mine operations
with all of our start up capital construction now completed, and
our Black Fox Mill has been operating at a steady rate of 2,000 tpd
since the beginning of the fourth quarter 2009. In addition, as
Wade noted, we believe there is significant upside in resource
additions at our Grey Fox and Pike River properties from both
surface and underground drilling, which have only been constrained
by the amount of exploration investment to date.”
Following the Merger, the New Company will undergo a rebranding
which will result in a new company name.
Private Placement – Additional Details
Linear did not own or exercise control over any securities of
Apollo prior to the completion of the Private Placement.
Immediately following the completion of the Private Placement, the
62,500,000 common shares of Apollo owned by Linear represented
approximately 18.6% of the issued and outstanding Apollo common
shares. Linear does not currently have any future intention to
acquire ownership of or control over any additional securities of
Apollo. The Private Placement was completed pursuant to the
exemptions from the prospectus and registration requirements set
out in NI 45-106 and in reliance on an exemption from registration
contained in Regulation S of the U.S. Securities Act of 1933, as
amended. The common shares of Apollo issued in the Private
Placement are subject to a four-month hold period set out in NI
45-102 and are “restricted securities” under United States federal
and state securities law. In the event the Merger is not completed
for any reason, Apollo has agreed to file a registration statement
with the United States Securities and Exchange Commission (“SEC”)
in respect of the common shares of Apollo issued in the Private
Placement and to take all necessary steps in order to have such
registration statement declared effective by the SEC as
expeditiously as possible so as to register the resale of such
shares by Linear in the United States.
In accordance with National Instrument 62-103 (“NI 62-103”),
Linear has filed a report describing the Private Placement with
applicable securities regulators.
It is anticipated that in connection with the Merger, Linear
will be amalgamated with a wholly-owned subsidiary of Apollo.
For further information or a copy of the NI 62-103 report,
please contact:
Wade K. Dawe, President and Chief Executive OfficerLinear Gold
Corp.Suite 502, 2000 Barrington StreetHalifax, Nova ScotiaB3J
3K1(902) 422-1421
About Apollo
Apollo is a growing gold producer that operates the wholly owned
Black Fox Mine in Ontario, Canada, which commenced gold production
in May 2009. In 2010, Apollo expects to produce approximately
100,000 ounces of gold from its Black Fox Mill at total cash costs
between US$500 and US$550 per ounce produced. Apollo is also
exploring the adjoining Grey Fox and Pike River properties, all in
the Timmins gold district in Ontario, Canada, as well as the
Huizopa Joint Venture, (80 percent Apollo and 20 percent Minas De
Coronado, S. de R.L. de C.V.), an early stage, gold-silver
exploration project, approximately 16 kilometers (10 miles)
southwest of Minefinders Dolores gold-silver mine, in the Sierra
Madres in Chihuahua, Mexico.
About Linear
Linear Gold Corp is a well financed gold exploration and
development company committed to maximizing shareholder value
through a strategy of mine development, focused exploration, and
effective risk management through selective partnerships and
acquisitions. Linear's flagship development property located near
Uranium City, Saskatchewan, hosts an economic gold deposit and is
now in the development stage to become a 70,000 - 90,000 ounce per
year gold producer. Linear also holds an extensive and diverse
portfolio of mineral projects in the Dominican Republic and
Mexico.
Forward-looking Statements
Certain statements in this presentation relating to the proposed
Merger and the companies' exploration activities, project
expenditures and business plans are “forward-looking statements”
within the meaning of securities legislation. These statements
include statements regarding completion of the Merger, the near and
long term value of the Apollo, future production by Apollo or the
combined company, future exploration activities and advancement
towards feasibility, future valuation multiples and estimates of
future cash flows, cash costs, strip ratios, grades, mill
capacities, recovery rates, mine life, capital expenditures and
future development at Apollo’s and Linear’s properties. The
companies do not intend, and do not assume any obligation, to
update these forward-looking statements. These forward-looking
statements represent management's best judgment based on current
facts and assumptions that management considers reasonable,
including that the required approval will be obtained from the
shareholders of Apollo or Linear, that all third party regulatory
and governmental approvals to the Merger will be obtained and all
other conditions to completion of the Merger will be satisfied or
waived, that operating and capital plans will not be disrupted by
issues such as mechanical failure, unavailability of parts, labour
disturbances, interruption in transportation or utilities, or
adverse weather conditions, that there are no material
unanticipated variations in budgeted costs, that contractors will
complete projects according to schedule, and that actual
mineralization on properties will not be less than identified
mineral reserves. The companies make no representation that
reasonable business people in possession of the same information
would reach the same conclusions. Forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the companies to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. In particular, fluctuations in the
price of gold or in currency markets could prevent the companies
from achieving their targets. Other factors are disclosed under the
heading “Risk Factors”, “Risks and Uncertainties” and elsewhere in
Apollo and Linear documents filed from time to time with the
Toronto Stock Exchange, SEDAR and other regulatory authorities, and
Apollo documents filed with the NYSE Amex and the SEC.
Additional Information and Where to Find It
In connection with Apollo’s and Linear’s solicitation of proxies
with respect to the meeting of shareholders of each of Apollo and
Linear to be called with respect to the proposed plan of
arrangement, Apollo will file a proxy statement with the SEC and
with regulatory authorities in Canada and Linear will file an
information circular with regulatory authorities in Canada.
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/INFORMATION
CIRCULAR WHEN IT IS FINALIZED AND DISTRIBUTED TO SHAREHOLDERS
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders will be
able to obtain a free-of-charge copy of Apollo’s proxy statement
(when available) and other relevant documents filed with the SEC
and with regulatory authorities in Canada from the SEC’s website at
http://www.sec.gov and from SEDAR at http://www.sedar.com, as
applicable. Shareholders will be able to obtain a free-of-charge
copy of Linear’s information circular (when available) and other
relevant documents filed with regulatory authorities in Canada on
SEDAR at http://www.sedar.com. Shareholders of Apollo will also be
able to obtain a free-of-charge copy of the proxy statement and
other relevant documents (when available) by directing a request by
mail or telephone to Apollo Gold Corporation, 5655 South Yosemite
St., Suite 200, Greenwood Village, Colorado 80111-3220 or (720)
886-9656, or from Apollo’s website, www.apollogold.com.
Shareholders of Linear will also be able to obtain a free-of-charge
copy of the information circular and other relevant documents (when
available) by directing a request by mail or telephone to Linear
Gold Corp., Suite 502, 2000 Barrington Street, Halifax, Nova Scotia
B3J 3K1 or (902) 422-1421, or from Linear’s website,
www.lineargoldcorp.com.
Interests of Participants in the Solicitation of
Proxies
Apollo and certain of its directors, executive officers and
other members of its management and employees may, under the rules
of the SEC, be deemed to be “participants” in the solicitation of
proxies from its shareholders in connection with the proposed
merger. Information concerning the interests of the persons who may
be considered “participants” in the solicitation is set forth in
Apollo’s proxy statements and Annual Reports on Form 10-K
(including any amendments thereto), previously filed with the SEC,
and in the proxy statement relating to the plan of arrangement when
it becomes available. Copies of these documents can be obtained,
without charge, at the SEC’s internet website at www.sec.gov or by
directing a request to Apollo at the address above.
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