Mr. Derek White of Ascot Resources reports
ASCOT RESOURCES TO ACQUIRE IDM MINING TO CREATE A LEADING GOLD DEVELOPMENT AND EXPLORATION COMPANY
Ascot Resources Ltd. and IDM Mining Ltd. have entered into a definitive arrangement agreement, pursuant to which Ascot Resources will acquire all of the issued and outstanding common shares of IDM Mining. Each IDM Mining shareholder will be entitled to receive 0.0675 of one common share of Ascot Resources for each share of IDM Mining held. The transaction will consolidate Ascot Resources' Premier gold project and IDM Mining's Red Mountain project to create the leading high-grade gold development and exploration company in northwestern British Columbia's Golden Triangle. The combined entity will benefit from numerous operational and development synergies.
The consideration values IDM Mining at approximately 8.6 cents per share, representing a premium of approximately 54 per cent to IDM Mining shareholders, based on the trailing 20-day volume-weighted average price of each company as of the close of trading on Jan. 4, 2019. Upon completion of the transaction, it is expected that IDM Mining shareholders will hold approximately 16.7 per cent of Ascot Resources' shares on an outstanding basis.
Highlights of the transaction:
- Combination of the two companies will result in a compelling resource base of high-grade measured and indicated gold-silver resources, positioning Ascot Resources as a consolidator of the southern Golden Triangle;
Complementary management teams with a combined skill set of mining development, operations, finance, exploration and community relations experience, as well as locally based miners, drillers and a support team;
Two 15-plus-kilometre-long early-Jurassic geological trends totalling 25,000 hectares, which host multiple advanced deposits with new potential high-grade gold discoveries located 25 kilometres from each other;
Geographic and regulatory proximity, with all assets located within treaty territory of the Nisga'a Nation, near the prominent mining communities of Stewart, B.C., and Hyder, Alaska;
Acquisition of high-grade, development-stage resources at IDM Mining's Red Mountain project, which received its provincial environmental assessment certificate in October, 2018;
A solid infrastructure foundation at Premier, which includes a process mill, tailings storage facility, power and water treatment facilities;
Strong, supportive combined corporate, retail and institutional shareholder base, which provides enhanced market visibility.
Derek White, president and chief executive officer of Ascot Resources, commented: "The combination of Ascot and IDM creates a very attractive opportunity in northwest British Columbia's Golden Triangle for our shareholders and stakeholders. Based near the historic mining town of Stewart, this area has hosted several prominent, profitable and high-grade gold mines, and we see that similar potential going forward. At this time in the gold sector, scale is important and, together with the Red Mountain project, the larger company will hopefully become a prominent gold developer in terms of both grade and tonnage. In addition, the company will have experienced people with deep local knowledge and backgrounds in exploration, underground mine development, finance and mining operations, which will ultimately maximize value for shareholders. Our vision is to build profitable gold mining operations based out of Stewart, B.C., and the surrounding communities. I would also like to take this opportunity to welcome Andree St-Germain, a current board member of the IDM board, to the board of Ascot, along with Robert McLeod, Ryan Weymark and Dave Green as members of the team upon the closing of the transaction to help realize our vision. I am excited for what lies ahead in 2019 and beyond."
Robert McLeod, PGeo, president and chief executive officer of IDM Mining, commented: "In addition to long-term value for both shareholders of Ascot and IDM, this combination provides a critical mass and optionality for development of multiple high-grade gold deposits, which will result in significant stakeholder benefits for citizens of the Nisga'a Nation, for my hometown of Stewart and for my friends in the border town of Hyder. The combined company will control two geological trends hosting significant exploration ground in the Golden Triangle, which remains highly prospective for additional gold-silver discoveries."
Ascot Resources' deposits and IDM Mining's Red Mountain project are located within separate mineralized trends and have separate National Instrument 43-101 mineral resource estimates. The proposed pro forma resource base would include 5.55 million tonnes of measured and indicated resources averaging 7.68 grams per tonne gold, totalling 1.37 million ounces gold, with additional inferred resources of 6.35 million tonnes averaging 7.12 grams per tonne gold, totalling 1.45 million ounces gold. The pro forma resources are provided in the attached table.
Class Deposit Tonnes Average grades Contained ounces
Au (g/t) Ag (g/t) Au Ag
Measured Red Mountain 1,827,900 8.92 28.3 524,000 1,663,300
Indicated Premier/Northern Lights 1,250,000 6.97 30.2 281,000 1,220,000
Big Missouri 539,000 8.19 20.5 142,000 355,000
Silver Coin 859,000 8.01 20.5 221,000 566,000
Martha Ellen 130,000 5.47 48.0 23,000 201,000
Indicated Ascot all zones 2,780,000 7.46 26.2 667,000 2,340,000
Indicated Red Mountain all zones 943,400 5.95 12.0 180,600 363,500
Total indicated All above 3,721,400 7.07 22.6 847,600 2,705,500
Total M&I Total 5,549,300 7.68 24.5 1,371,600 4,368,800
Inferred Premier/Northern Lights 1,740,000 5.95 24.2 333,000 1,350,000
Big Missouri 2,250,000 8.25 18.4 596,000 1,330,000
Silver Coin 1,160,000 7.78 22.1 289,000 821,000
Martha Ellen 653,000 6.12 34.3 129,000 720,000
Dilworth 235,000 6.13 56.0 46,000 424,000
Inferred Ascot all zones 6,030,000 7.18 24.0 1,390,000 4,650,000
Inferred Red Mountain all zones 316,000 6.04 7.6 61,400 77,200
Total inferred All above 6,354,000 7.12 23.2 1,454,400 4,722,200
Pursuant to the terms of the definitive agreement, each IDM Mining shareholder will receive 0.0675 of one share of Ascot Resources in exchange for each IDM Mining share held. Each IDM Mining warrant will be converted into an Ascot Resources warrant, per the terms of its warrant certificate. IDM Mining stock options will be exchanged for replacement options under Ascot Resources' stock option plan or cancelled without payment, in accordance with the plan of arrangement. The definitive agreement includes customary provisions, including non-solicitation, right to match and fiduciary out provisions, as well as certain representations, covenants and conditions that are customary for a transaction of this nature. The definitive agreement provides for a $2-million termination fee payable by IDM Mining to Ascot Resources in certain circumstances and a reciprocal expense reimbursement fee of $500,000 payable under certain circumstances. The transaction is expected to be completed by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of: (i) at least 66-2/3rds per cent of the votes cast by IDM Mining securityholders; (ii) at least 66-2/3rds per cent of the votes cast by IDM Mining shareholders; and (iii) if applicable, a majority of the votes cast by IDM Mining shareholders present in person or represented by proxy at the IDM Mining special meeting, excluding, for this purpose, votes attached to IDM Mining shares held by persons described in items (a) through (d) of Section 8.1(2) of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. Ascot Resources will provide IDM Mining with a $3.35-million secured convertible bridge loan to improve IDM Mining's liquidity until closing. The loan will have an interest rate of CDOR (Canadian-dollar offered rate) plus 9 per cent per year and is convertible into IDM Mining common shares at 8.57 cents per share. If the definitive agreement is terminated, the loan will become payable within 30 days or six months of termination, depending on the circumstances. If Ascot Resources converts the loan into IDM Mining common shares, it will not vote its IDM Mining common shares at the IDM Mining shareholder meeting to approve the transaction.
Concurrent with entering into the definitive agreement, Ascot Resources signed a term sheet with Sprott Resource Lending for a convertible note of $10-million (U.S.). The note, which has an interest rate of 8 per cent to 8.5 per cent, will mature in two years and may be paid in cash or common shares of Ascot Resources. The note is convertible into Ascot Resources common shares at a conversion price of $1.50 per share. The terms of the note remain subject to the review and approval of the TSX Venture Exchange as well as the parties entering into the definitive documentation.
Closing of the transaction is subject to the receipt of applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature. Closing of the transaction is anticipated to be completed by the end of March, 2019.
Further information regarding the arrangement will be contained in a management information circular that IDM Mining will prepare, file and mail to the IDM Mining securityholders in connection with the special meeting of IDM Mining securityholders to be held to consider the arrangement. All securityholders are urged to read the information circular once available, as it will contain additional important information concerning the arrangement. The definitive agreement will be filed on SEDAR.
Board of directors recommendation and voting support
The arrangement has been unanimously approved by the board of directors of both Ascot Resources and IDM Mining. The board of directors of IDM Mining received fairness opinions with respect to the fairness of the consideration to be received by the shareholders of IDM Mining under the arrangement, from a financial point of view, and the board of directors of Ascot Resources received a fairness opinion that the consideration to be paid by Ascot Resources is fair, from a financial point of view, to Ascot Resources.
Directors and officers of IDM Mining, along with IDM Mining's largest shareholder, Osisko Gold Royalties Ltd., holding, in the aggregate, 18.86 per cent of the outstanding IDM Mining shares have each entered into customary voting and support agreements to, amongst other things, vote in favour of the arrangement at the special meeting of IDM Mining securityholders to be held to consider the transaction.
Advisers and counsel
Haywood Securities Inc. is acting as financial adviser and Blake, Cassels & Graydon LLP is acting as legal counsel to Ascot Resources.
Raymond James Ltd. is acting as financial adviser and DuMoulin Black LLP is acting as legal counsel to IDM Mining. Borden Ladner Gervais LLP is acting as legal counsel to IDM Mining's special committee. Raymond James and Cormark Securities Inc. each provided a fairness opinion to IDM Mining's special committee and board of directors indicating that the arrangement is fair from a financial point of view to the shareholders of IDM Mining, subject to the assumptions, limitations and qualifications set out in such fairness opinion.
Ascot Resources and IDM Mining will host a joint webcast and teleconference on Jan. 7, 2019, at 1:15 p.m. PT to discuss the transaction. Mr. White and Mr. McLeod will lead the discussion and be available to answer questions at the end of the call.
The webcast can be accessed through the investor page of Ascot Resources' website and IDM Mining's website. The live call may be accessed by dialling 1-800-319-4610 for North American callers or 1-604-638-5340 for international callers. Callers should dial five to 10 minutes prior to the scheduled start time and ask to join the Ascot-IDM Golden Triangle consolidation call. The webcast will be available on demand for three months following the live event.
John Kiernan, PEng, chief operating officer of Ascot Resources, and Mr. McLeod are each qualified persons as defined by NI 43-101. Mr. Kiernan and Mr. McLeod have reviewed and approved the scientific and technical contents of this news release of Ascot Resources and IDM Mining, respectively.
About Ascot Resources Ltd.
Ascot Resources is a gold-and-silver-focused exploration company with a portfolio of advanced and grassroots projects in the Golden Triangle region of British Columbia. Ascot Resources' flagship Premier project is a near-term, high-grade advanced exploration project with large upside potential.
About IDM Mining Ltd.
IDM Mining is an exploration and development company based in Vancouver, B.C., Canada, focused on advancing the Red Mountain gold project toward production. The 17,125-hectare Red Mountain gold project is located in northwestern British Columbia, 15 kilometres northeast of the mining town of Stewart. In 2018, IDM Mining announced a 20.7-per-cent increase in high-grade, near-surface measured and indicated resources at Red Mountain. Located near a paved highway and grid power, IDM Mining envisions bulk underground mining methods, with gold-silver dore produced on site.
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