NovaGold Resources Inc. (TSX: NG)(NYSE Amex: NG) ("NovaGold") and
Copper Canyon Resources Ltd. (TSX VENTURE: CPY) ("Copper Canyon")
announced today that they have entered into a binding letter
agreement providing for NovaGold to acquire all of the outstanding
common shares of Copper Canyon by way of a plan of arrangement (the
"Arrangement") under the Business Corporations Act (Alberta).
Under the Arrangement, Copper Canyon shareholders will receive
common shares of NovaGold on the basis of 0.0735 of a NovaGold
common share for each common share of Copper Canyon, plus one
common share of a newly incorporated company ("SpinCo") for every
four Copper Canyon common shares. SpinCo will hold substantially
all of Copper Canyon's assets other than certain cash and Copper
Canyon's 40% joint venture interest in the Copper Canyon
copper-gold-silver property.
The NovaGold share consideration being offered represents an
effective purchase price of C$1.05 per Copper Canyon common share
based on the 20-day volume-weighted average price of NovaGold
common shares on the Toronto Stock Exchange ("TSX") for the period
ending March 4, 2011. The NovaGold share consideration being
offered represents a 28.7% premium to the 20-day volume-weighted
average price of Copper Canyon common shares on the TSX Venture
Exchange ("TSX-V") ending March 4, 2011 and a 150.0% premium based
on the closing price of the Copper Canyon common shares on the
TSX-V on December 17, 2010, the last trading day prior to
NovaGold's announcement of its intention to make an offer for
Copper Canyon.
The boards of directors of both NovaGold and Copper Canyon have
unanimously approved the transaction. The board of directors of
Copper Canyon, acting on the recommendation of its special
committee of independent directors, after consultation with Copper
Canyon's financial and legal advisors, has determined that the
transaction is fair and in the best interests of Copper Canyon and
its shareholders. Primary Capital Inc. has provided a fairness
opinion to the Copper Canyon board advising that the transaction is
fair, from a financial perspective, to the Copper Canyon
shareholders other than NovaGold. Copper Canyon's board of
directors unanimously recommends that Copper Canyon shareholders
vote in favor of the proposed Arrangement.
"We are pleased to have reached agreement with Copper Canyon on
a proposed transaction," said Rick Van Nieuwenhuyse, President and
CEO of NovaGold. "We believe the acquisition of Copper Canyon
shares in accordance with the Arrangement will benefit the
shareholders of both NovaGold and Copper Canyon."
Tim Termuende, Copper Canyon's President and CEO, commented: "We
are very pleased with the outcome of our negotiations with
NovaGold. In addition, the creation of a new exploration company
gives Copper Canyon shareholders the ability to participate in
additional growth opportunities during a robust bull market
commodities cycle."
Summary of the Transaction
While the letter agreement is binding, it contemplates the
execution of definitive agreements and the completion of the
Arrangement is subject to various other conditions, including
approval of Copper Canyon securityholders, approval of the
Arrangement by the Alberta court, regulatory approvals including
the approval of the TSX and TSX-V and customary closing conditions
for a transaction of this nature. NovaGold has agreed to allow its
offer to Copper Canyon shareholders dated January 18, 2011 to
expire, and both NovaGold and Copper Canyon have agreed to withdraw
their respective applications to the British Columbia Securities
Commission ("BCSC") and cancel the BCSC hearing scheduled for March
10, 2011. Under the terms of the letter agreement, Copper Canyon
has agreed to hold in abeyance its Notice of Civil Claim against
NovaGold and NovaGold Canada Inc. filed March 1, 2011 in the
British Columbia Supreme Court and has agreed to dismiss the Notice
of Civil Claim upon completion of the Arrangement or in the event
the Arrangement Agreement is terminated in certain
circumstances.
Under the terms of the letter agreement, Copper Canyon has also
agreed that it will not solicit or otherwise participate in any
discussions regarding any merger or other business combination or
sale of its common shares or material assets until a definitive
agreement has been entered into or the letter agreement is
terminated in accordance with its terms. NovaGold and Copper Canyon
have agreed to work diligently and in good faith to sign definitive
agreements as soon as is practicable.
The definitive agreements will contain customary
representations, warranties and covenants for transactions of this
type, but will not provide for a due diligence review of Copper
Canyon by NovaGold. The Arrangement Agreement will provide for a
C$2,000,000 break fee which would be payable by Copper Canyon to
NovaGold in certain customary events such as withdrawal by the
Copper Canyon board of directors of support for the Arrangement, if
the Copper Canyon board of directors accepts or recommends an
alternative transaction, if Copper Canyon enters into an
alternative transaction within 12 months of termination of the
Arrangement, if Copper Canyon breaches certain non-solicitation
covenants or if Copper Canyon fails to timely convene a
securityholders' meeting to consider the Arrangement. Each of the
directors and officers of Copper Canyon have entered into, or are
expected to enter into, voting support agreements with NovaGold
under which they will agree to vote in favor of the Arrangement. In
addition, Copper Canyon has agreed to use commercially reasonable
efforts to have certain shareholders enter into voting support
agreements.
SpinCo and Related Transactions
Upon entering into the definitive agreements, NovaGold will make
available to Copper Canyon a loan of up to C$0.5 million (the
"NovaGold Loan") to be advanced to Copper Canyon to pay for
operating expenses (but not for transaction expenses).
At the effective time of the Arrangement, Copper Canyon will
transfer to SpinCo substantially all of Copper Canyon's assets
other than certain cash and its 40% interest in the Copper Canyon
property. This includes its interests in the Harrison Lake (Abo)
Gold Property, the Severance Project and the Kiwi Project
(collectively, the "Transferred Exploration Properties") as well as
all share positions in other companies held by Copper Canyon,
including 50,000 common shares of NovaGold and any other related
information, data and contracts. SpinCo will assume the associated
liabilities of the Transferred Exploration Properties as well as
the outstanding balance under the NovaGold Loan.
At or immediately prior to the effective time of the
Arrangement, NovaGold will subscribe for common shares of Copper
Canyon, for an aggregate subscription price of C$2.5 million less
the outstanding balance of the NovaGold Loan. This cash amount will
be transferred by Copper Canyon to SpinCo. Immediately following
the effective time, NovaGold will own, directly or indirectly, 9.9%
of the issued and outstanding shares of SpinCo.
Full details of the transaction will be included in an
information circular to be mailed to Copper Canyon shareholders in
accordance with applicable securities laws. The transaction is
expected to close in May 2011.
Advisors and Counsel
NovaGold's financial advisor is TD Securities Inc. Its legal
advisors are Blake, Cassels & Graydon LLP in Canada and Dorsey
& Whitney LLP in the United States. Copper Canyon's financial
advisor is Primary Capital Inc. McLeod & Company acted as
counsel, and Fraser Milner Casgrain LLP acted as special counsel to
Copper Canyon.
About NovaGold
NovaGold is a precious metals company engaged in the exploration
and development of mineral properties in Alaska, U.S.A. and British
Columbia, Canada. NovaGold is focused on advancing its two core
properties, Donlin Creek and Galore Creek, with the objective of
becoming a low-cost million-ounce-a-year gold producer, and offers
superior leverage to gold with one of the largest reserve/resource
bases of any junior or mid-tier gold company. NovaGold has a strong
track record of expanding deposits through exploration success and
forging collaborative partnerships, both with local communities and
with major mining companies. The Donlin Creek project in Alaska,
one of the world's largest undeveloped gold deposits, is held by a
limited liability company owned equally by NovaGold and Barrick
Gold U.S. Inc. The Galore Creek project in British Columbia, a
large copper-gold-silver deposit, is held by a partnership owned
equally by NovaGold and Teck Resources Limited. NovaGold also owns
a 100% interest in the high-grade Ambler copper-zinc-gold-silver
deposit in northern Alaska and has other earlier-stage exploration
properties. NovaGold trades on the TSX and NYSE-AMEX under the
symbol NG. More information is available at www.novagold.net or by
emailing info@novagold.net.
About Copper Canyon
Copper Canyon was created by way of a plan of arrangement on
June 9, 2006. Shareholders of Eagle Plains Resources Ltd. (TSX
VENTURE: EPL) approved the plan of arrangement to reorganize the
company's mineral property assets in an effort to maximize
shareholder value. Under the terms of the plan of arrangement,
three of Eagle Plain's projects: Copper Canyon, Severance and Abo
(Harrison) Gold, were transferred into Copper Canyon.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, included herein including, without
limitation, plans for and intentions with respect to the business
combination with Copper Canyon, are forward-looking statements.
Forward-looking statements involve various risks and uncertainties.
There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ
materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from
NovaGold's expectations include uncertainty as to the completion of
the business combination with Copper Canyon in accordance with the
terms and conditions of the definitive agreements; the accuracy of
management's assessment of the effects of the successful completion
of the Arrangement; the timing and prospects for Copper Canyon
shareholder acceptance of the Arrangement and the implementation
thereof; the satisfaction of any conditions to an Arrangement;
uncertainties involving the need for additional financing to
explore and develop properties and availability of financing in the
debt and capital markets; uncertainties involved in the
interpretation of drilling results and geological tests and the
estimation of reserves and resources; the need for continued
cooperation with NovaGold in the exploration and development of the
Galore Creek property; the need for cooperation of government
agencies and native groups in the development and operation of
properties; the need to obtain permits and governmental approvals;
risks of construction and mining projects such as accidents,
equipment breakdowns, bad weather, non-compliance with
environmental and permit requirements, unanticipated variation in
geological structures, ore grades or recovery rates; unexpected
cost increases; fluctuations in metal prices and currency exchange
rates; the outcome of litigation pending against the company; and
other risk and uncertainties disclosed in NovaGold's Annual
Information Form for the year ended November 30, 2010, filed with
the Canadian securities regulatory authorities, and NovaGold's
annual report on Form 40-F filed with the United States Securities
and Exchange Commission and in other NovaGold reports and documents
filed with applicable securities regulatory authorities from time
to time. NovaGold's forward-looking statements reflect the beliefs,
opinions and projections on the date the statements are made.
NovaGold assumes no obligation to update the forward-looking
statements of beliefs, opinions, projections, or other factors,
should they change.
Contacts: NovaGold Contacts NovaGold Resources Inc. Rhylin
Bailie Director, Communications & Investor Relations
604-669-6227 or 1-866-669-6227 NovaGold Resources Inc. Elaine
Sanders VP & Chief Financial Officer 604-669-6227 or
1-866-669-6227 Copper Canyon Contact Copper Canyon Resources Ltd.
Mike Labach Investor Relations Manager 1-866 HUNT ORE
(486-8673)
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