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Calibre Mining Corp (2)
Symbol CXB
Shares Issued 339,470,645
Close 2021-10-22 C$ 1.71
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Calibre Mining to acquire Fiore Gold

2021-10-25 07:56 ET - News Release

Also News Release (C-F) Fiore Gold Ltd

Mr. Blayne Johnson of Calibre reports

CALIBRE ANNOUNCES ACQUISITION OF FIORE IN NEVADA CREATING A DIVERSIFIED, AMERICAS-FOCUSED, GROWING MID-TIER GOLD PRODUCER

Calibre Mining Corp. and Fiore Gold Ltd. have entered into a definitive arrangement agreement whereby Calibre will acquire all of the issued and outstanding common shares of Fiore pursuant to a court-approved plan of arrangement. The transaction will create a diversified, Americas-focused, growing mid-tier gold producer with targeted annual gold production of approximately 245,000 ounces. The combined company will have comprehensive technical capabilities to exploit a pipeline of development and exploration opportunities across a broader portfolio. This growth strategy will be supported by a strong balance sheet with a combined cash balance of $96-million and no bank debt (as at Sept. 30, 2021). All amounts are in U.S. dollars unless otherwise indicated.

Calibre will be acquiring a 100-per-cent interest in Fiore's operating Pan gold mine, the adjacent advanced-stage Gold Rock project and the formerly producing Illipah gold project in Nevada, as well as the Golden Eagle project in Washington State.

Highlights of the transaction

Key highlights following completion of the transaction include:

  • Creates a diversified, Americas-focused, growing mid-tier gold producer with targeted annual gold production of approximately 245,000 oz and AISC (all-in sustaining costs) of $1,020 per ounce;
  • Nevada gold production of 50,000 oz per year at the Pan mine;
  • Supported by a mineral resource base of 4.4 million ounces of measured and indicated and 3.1 million ounces of inferred;
  • Strong balance sheet with $96-million in cash and zero bank debt (as at Sept. 30, 2021);
  • Strong free cash flow generation to fully finance organic growth initiatives;
  • Growth driven by near-term development of the federally permitted and fully financed Gold Rock project in Nevada and the Eastern Borosi project in Nicaragua;
  • Multiple near-mine, high-impact exploration targets to support mineral reserve and mine life expansion;
  • Proven management team, led by Darren Hall as chief executive officer and Blayne Johnson as chairman, with a long record of shareholder value creation;
  • Attractive relative valuation versus gold peers;
  • Enhanced market presence with broad research analyst coverage, trading liquidity and index inclusions.

Mr. Johnson stated: "This transaction is the type of value-add diversified growth we set out to accomplish when we partnered with B2Gold to acquire our initial gold production. The addition of a top-tier, low-risk mining jurisdiction in Nevada creates a lower-risk profile with greater asset and country diversification. The Pan heap leach gold mine brings an immediate increase to our production and cash flow, in addition to significant exploration potential. This transaction unlocks value for both Calibre and Fiore shareholders and further demonstrates Calibre's commitment to building a quality diversified mid-tier gold producer."

Mr. Hall stated: "Calibre has delivered on its commitment to create value for its shareholders through a disciplined operating and exploration approach. This transaction builds on that commitment, bringing a diversified asset base with immediate production and strong exploration upside in one of the top gold mining jurisdictions in the world. The pro forma company will have an exciting fully funded growth pipeline with Calibre's high-grade Eastern Borosi project and Fiore's Gold Rock project located approximately 10 kilometres from the operating Pan mine. I look forward to working with the team in Nevada as they have done a great job delivering on Pan and advancing Gold Rock. I believe with increased cash flow generation and balance sheet strength, we can collaboratively unlock significant additional value for both our shareholders."

Tim Warman, chief executive officer of Fiore, stated: "We are pleased to undertake this combination with Calibre to create a new mid-tier gold producer with excellent growth prospects. There is a great deal of common ground between our companies. In the past few years, we have both overseen the successful ramp-up of our respective assets through solid operating discipline and ESG focus. While staying focused on cash flow generation and capital allocation discipline, we have both prioritized organic growth through successful exploration, reserve replacement, regional land acquisition and progression of our development assets. Our shared culture of operating and fiscal integrity creates an excellent fit. We have tremendous respect for the Calibre team and their successful implementation of a hub-and-spoke mining and milling strategy in Nicaragua. Calibre's assets were formerly cornerstone assets of B2Gold and have produced gold over a multidecade history. Not only will Fiore shareholders be exposed to this considerably larger and more diversified production profile, but within a larger company, we expect to enjoy higher trading liquidity and deeper institutional ownership."

Benefits to Calibre shareholders:

  • Establishes a platform of production and growth in Nevada -- a Tier 1 mining jurisdiction globally;
  • Additional gold production of 50,000 oz per year and cash flows from the Pan mine -- an established heap leach mining operation;
  • Potential to expand mineral resources and make new discoveries at identified robust targets along strike at the Pan mine and Gold Rock project;
  • Meaningful production growth potential from the future development of the Gold Rock project in Nevada;
  • Potential to surface synergy value from the Pan mine and Gold Rock project given proximity;
  • Establishes a Nevada base of operations with a substantial underexplored 222-square-kilometre land package;
  • Long-term optionality from the Golden Eagle project in the United States;
  • Accretive on key operating and financial per-share metrics.

Benefits to Fiore shareholders:

  • Meaningful upfront premium of 44 per cent to the closing price of Fiore common shares on Oct. 22, 2021;
  • Partnership with an established multimine 170,000 to 180,000 oz per year gold producer with a common operating philosophy and record of fiscal discipline, and a proven history of shareholder value creation;
  • Exposure to a mid-tier gold producer with greater market relevance, enhanced trading liquidity, broader analyst and institutional investor following, and index inclusions;
  • Access to a strong balance sheet and robust free cash flow generation to fully finance and accelerate development projects and exploration initiatives;
  • Meaningful continuing exposure to future value catalysts across the combined asset portfolio, including Calibre's assets and Fiore's Gold Rock project;
  • Participation in substantial exploration activity through Calibre's 16-drill, 80-plus-kilometre regional program.

Transaction details

Pursuant to the transaction, Fiore shareholders will receive 0.994 of a Calibre common share and 10 Canadian cents in cash for each Fiore common share held. The consideration implies $1.80 (Canadian) per Fiore common share, a premium of 44 per cent based on the closing prices of Calibre and Fiore common shares on Oct. 22, 2021, and a premium of 36 per cent based on the volume-weighted average prices of both companies for the 20-day period ending on Oct. 22, 2021. Existing shareholders of Calibre and Fiore will own approximately 78 per cent and 22 per cent of the combined company, respectively.

The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), requiring the approval of (i) at least 66-2/3rds per cent of the votes cast by the shareholders of Fiore voting in person or represented by proxy, (ii) if applicable, a simple majority of the votes cast by shareholders of Fiore excluding for this purpose the votes of related parties and interested parties and other votes required to be excluded under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting of Fiore's shareholders to consider the transaction, and (iii) the approval of the Supreme Court of British Columbia. The issuance of common shares by Calibre in connection with the transaction is subject to the approval of a majority of the votes cast by the shareholders of Calibre voting in person or represented by proxy at a special meeting of Calibre's shareholders.

Officers and directors of Calibre, along with B2Gold Corp., which hold approximately 37 per cent of the outstanding Calibre common shares, have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their Calibre common shares in favour of the transaction. Officers and directors of Fiore, which hold approximately 1 per cent of the outstanding Fiore common shares, have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their Fiore common shares in favour of the transaction.

In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals, including the approvals of the Toronto Stock Exchange and TSX Venture Exchange, and the satisfaction of certain other closing conditions customary in transactions of this nature. The arrangement agreement contains customary provisions including non-solicitation and right to match superior proposals in favour of Calibre, as well as a reciprocal $6.5-million termination fee payable under certain circumstances.

Full details of the transaction will be included in the respective management information circulars of Calibre and Fiore, expected to be mailed to shareholders in mid-December, 2021. Both shareholder meetings and closing of the transaction are expected in January, 2022.

Board of directors recommendations

The arrangement agreement has been unanimously approved by the board of directors of each of Calibre and Fiore, including, in the case of Fiore, following the unanimous recommendation of a special committee of independent directors of Fiore. Both boards of directors unanimously recommend that their respective shareholders vote in favour of the transaction.

Trinity Advisors Corp. and Canaccord Genuity Corp. have provided fairness opinions to the board of directors of Calibre, each stating that, as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be paid under the transaction is fair, from a financial point of view, to Calibre. The full text of the fairness opinions, which describe, among other things, the assumptions made, procedures followed, factors considered, and limitations and qualifications on the review undertaken, and the terms and conditions of the transaction, will be included in the management information circular of Calibre.

Haywood Securities Inc. has provided a fairness opinion to the board of directors of Fiore and Stifel GMP has provided a fairness opinion to the Fiore special committee, each stating that, as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be paid under the transaction is fair, from a financial point of view, to Fiore shareholders. The full text of the fairness opinions, which describe, among other things, the assumptions made, procedures followed, factors considered and limitations and qualifications on the review undertaken, and the terms and conditions of the transaction, will be included in the management information circular of Fiore.

Advisers and counsel

Trinity Advisors is acting as financial adviser to Calibre. Cassels Brock & Blackwell LLP is acting as Canadian legal adviser to Calibre, and Greenberg Traurig LLP is acting as U.S. legal adviser to Calibre.

Haywood Securities Inc. is acting as financial adviser to Fiore. Miller Thomson LLP is acting as Canadian legal adviser to Fiore, Thorsteinssons LLP is acting as Canadian legal tax adviser and Dorsey & Whitney LLP is acting as U.S. legal adviser to Fiore.

Conference call and webcast

Calibre and Fiore will hold a joint conference call and webcast on Oct. 25, 2021, at 9 a.m. Toronto time to discuss the transaction:

Toll-free Canada/U.S.:  866-221-1882

International:  470-495-9179

The webcast will be archived on both the Calibre and Fiore websites until the transaction closes.

Calibre qualified person

Mr. Hall, MAusIMM, is a qualified person as set out under National Instrument 43-101 Standards of Disclosure for Mineral Projects and has reviewed and approved the scientific and technical information in this news release with respect to Calibre and its assets. Mr. Hall has verified the data disclosed in this news release and no limitations were imposed on his verifications process.

Fiore qualified person

Mr. Warman, PGeo, is a qualified person as set out under NI 43-101 and has reviewed and approved the scientific and technical information in this news release with respect to Fiore and its assets. Mr. Warman has verified the data disclosed in this news release and no limitations were imposed on his verification process.

About Calibre Mining Corp.

Calibre Mining is a Canadian-listed international gold mining and exploration company with three 100-per-cent-owned operating gold mines and strong exploration assets located in highly prospective gold regions across Nicaragua. The company is focused on unlocking resources and generating value through sustainable operating performance and a disciplined approach to growth. Since the acquisition of the Limon, Libertad gold mines and Pavon gold project, Calibre has proceeded to integrate its operations into a hub-and-spoke operating philosophy whereby the company can take advantage of reliable infrastructure, favourable transportation costs and multiple high-grade ore sources that can be processed at either Limon or Libertad, which have a combined 2.7 million tonnes of annual mill throughput capacity.

About Fiore Gold Ltd.

Fiore Gold is a growth-oriented U.S. gold producer generating cash flow from its Pan mine in Nevada, organic growth from its adjacent and federally permitted Gold Rock project, further Nevada landholding at its Illipah project, and future upside from its Golden Eagle project in Washington State. Fiore controls a contiguous 222-square-kilometre land package on Nevada's prolific Battle Mountain-Eureka trend, with excellent exploration potential.

We seek Safe Harbor.

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