13:27:41 EST Mon 05 Dec 2022
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Gran Colombia Gold Corp (4)
Symbol GCM
Shares Issued 61,845,744
Close 2021-03-12 C$ 6.19
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Gran Colombia to acquire Gold X Mining for $315M

2021-03-15 07:58 ET - News Release

Also News Release (C-GLDX) Gold X Mining Corp

Mr. Serafino Iacono of Gran Colombia reports


Gran Colombia Gold Corp. and Gold X Mining Corp. have entered into a definitive arrangement agreement pursuant to which Gran Colombia will acquire all of the issued and outstanding common shares of Gold X not already owned by Gran Colombia by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). Gran Colombia currently owns 9,571,158 shares of Gold X, or approximately 18 per cent of the Gold X shares outstanding.

Under the terms of the agreement, all of the issued and outstanding Gold X shares will be acquired by Gran Colombia in exchange for Gran Colombia common shares on the basis of 0.6948 of a Gran Colombia share for each Gold X share. The exchange ratio implies consideration of $4.10 per Gold X share based on the 20-day volume-weighted average price of the Gran Colombia shares on the Toronto Stock Exchange as of the market close on March 12, 2021, for total consideration of approximately $315-million on a 100-per-cent and fully diluted in-the-money basis. The exchange ratio represents a premium of 39 per cent based on the closing price of the Gold X shares on the TSX Venture Exchange on the value date and a 44-per-cent premium based on the 20-day volume-weighted average price of the Gold X shares ending on the value date.

Transaction highlights:

  • Creation of a new, Latin American-focused growth platform: The combined company will consist of a complementary asset portfolio including the world-class, free cash flow generating Segovia operations located in Colombia, as well as the large, high-growth and substantially derisked Toroparu gold project in Guyana that boasts 4.5 million ounces of LOM (life of mine) gold production over a 24-year mine life.
  • Latin American operating and mine building expertise: Unlocking the value of the Toroparu gold project through development and achieving production will be supported by Gran Colombia's proven record of mine building and operating in Latin America.
  • Significant resource growth and exploration potential: There is significant potential to grow minable ounces from 24 largely untested, highly prospective veins in close proximity to the Segovia operations, as well as delineate additional large gold deposits and discover high-priority targets within the 538-square-kilometre Toroparu gold project land package, which predominately remains unexplored.
  • Enhanced balance sheet and access to capital: The combined company will have approximately $100-million (U.S.) in cash, greater access to equity and debt capital markets, financing support from Wheaton Precious Metals as well as robust free cash flow from Gran Colombia's Segovia operations.
  • Enhanced capital markets profile: Combining Gran Colombia and Gold X has the potential to result in increased critical mass for further consolidation, improved trading liquidity and attracting greater support from institutional investors.

Serafino Iacono, executive chairman of Gran Colombia, commented: "We are pleased to present this arrangement to the shareholders of Gran Colombia and Gold X. Creating long-term value for our shareholders is at the core of our strategy. The contemplated acquisition will provide Gran Colombia with an opportunity to add a large-scale, long-life Latin American gold development project to its portfolio. When this transaction is consummated, the Toroparu gold project will join our Segovia operations as cornerstones of our long-term growth strategy."

Paul Matysek, chief executive officer and director of Gold X, stated: "Gold X has delivered on its commitment to maximize value for its shareholders through its disciplined approach to risk mitigation, exploration and project development. This transaction provides Gold X shareholders with an immediate and significant upfront premium, exposure to an established Latin American gold producer, and rerating potential. With a strong operating history, solid balance sheet and track record of developing assets within the Guiana shield, we believe that Gran Colombia is an ideal partner to bring Toroparu into production."

Benefits to Gran Colombia shareholders:

  • Adds a large, substantially derisked growth project to Gran Colombia's portfolio;
  • 7.35 million gold ounces added to Gran Colombia's measured and indicated mineral resource profile;
  • Significant potential to upgrade inferred resources into minable ounces;
  • Exploration and incremental resource growth within a highly prospective 538-square-kilometre land package;
  • Geographic and asset diversification;
  • Alignment with Gran Colombia's geographic, development and operational competencies;
  • Capital markets rerating opportunity.

Benefits to Gold X shareholders:

  • Significant premium (44 per cent based on Gold X's 20-day VWAP as of March 12, 2021, on the TSX Venture Exchange);
  • Increased balance sheet strength, access to capital and free cash flow to finance development;
  • Continued exposure to upside at the Toroparu gold project;
  • Diversified ownership in Gran Colombia's world-class Segovia gold mine;
  • Access to Gran Colombia's in-house development and operational capabilities;
  • Gran Colombia's monthly dividend;
  • Significant improvement in trading liquidity and greater capital markets exposure.

Transaction conditions and timing

Gold X intends to call a meeting of shareholders to be held in May, 2021, to seek shareholder approval for the arrangement. Completion of the arrangement will require:

  • Approval of at least 66-2/3rds per cent of the votes cast by Gold X shareholders at the Gold X meeting;
  • Approval of a simple majority of the votes cast by Gold X shareholders at the Gold X meeting, excluding votes from certain shareholders, including Gran Colombia, as required under Multilateral Instrument 61-101.

Completion of the arrangement is also subject to the receipt of court and stock exchange approvals, the approval of a simple majority of the shareholders of Gran Colombia to the issuance of the Gran Colombia Shares, and other customary closing conditions for transactions of this nature. Gran Colombia intends to hold its shareholder meeting on or around the date of the Gold X meeting.

The agreement provides for, among other things, non-solicitation covenants, with fiduciary out provisions that allow Gold X to consider and accept a superior proposal, subject to a right-to-match period in favour of Gran Colombia. The agreement also provides for a termination fee of $5.5-million to be paid by Gold X to Gran Colombia if the agreement is terminated in certain specified circumstances and a reverse termination fee of $5.5-million to be paid by Gran Colombia to Gold X if the agreement is terminated in certain specified circumstances. Gran Colombia and Gold X have also agreed to a reciprocal expense reimbursement of $1-million payable if the agreement is terminated in certain circumstances.

The directors and senior officers of Gold X, holding in aggregate over 2.5 per cent of the issued and outstanding common shares of Gold X, have entered into voting support agreements with Gran Colombia, pursuant to which they have agreed to vote their shares in favour of the arrangement. Together with shares already owned or held by Gran Colombia, approximately 20.6 per cent of Gold X's issued and outstanding shares would be voted in support of the arrangement at the Gold X meeting.

The directors and senior officers of Gran Colombia, holding in aggregate over 4.3 per cent of the issued and outstanding common shares of Gran Colombia, have entered into voting support agreements with Gold X, pursuant to which they have agreed to vote their shares in favour of the arrangement at the Gran Colombia shareholder meeting.

The companies are working toward closing the transaction in late May/early June, 2021.

Board approval and recommendation

The special committee of independent directors of Gold X has received an opinion from BMO Capital Markets that, based upon and subject to the limitations, assumptions and qualifications of and other matters considered in connection with the preparation of such opinion, the consideration to be received by Gold X shareholders (other than Gran Colombia) pursuant to the arrangement is fair, from a financial point of view, to the Gold X shareholders (other than Gran Colombia).

Following its review and in consideration of, among other things, the fairness opinion, the special committee has unanimously recommended that the board of directors of Gold X approve the arrangement. The Gold X board (with any interested directors having abstained from voting), following the receipt and review of recommendations from the special committee, has unanimously approved the agreement and the arrangement and has determined that the arrangement is fair to shareholders of Gold X (other than Gran Colombia) and is in the best interests of Gold X, and recommends to shareholders that they vote in favour of the arrangement.

The agreement has also been unanimously approved by the board of directors of Gran Colombia.

Additional information

Full details of the arrangement are set out in the agreement, which will be filed by Gold X under its profile on SEDAR. In addition, further information regarding the arrangement will be contained in management information circulars to be prepared in connection with the shareholder meetings and filed on each company's profile on SEDAR at the time that each is mailed to shareholders. All shareholders of each company are urged to read the management information circular once it becomes available as it will contain additional important information concerning the arrangement.

Gran Colombia currently owns 9,571,158 Gold X shares, representing approximately 18 per cent of the issued and outstanding Gold X shares on a non-diluted basis. Gran Colombia also holds warrants to acquire up to 4,625,000 additional Gold X shares at a weighted average exercise price of $2.33 (subject to adjustment in certain events) expiring at various dates within the next 42 months. Assuming exercise in full of the warrants, Gran Colombia would own 14,196,158 Gold X shares, representing approximately 25 per cent of the issued and outstanding Gold X shares on a partially diluted basis.

If the arrangement is not consummated for any reason, Gran Colombia intends to continue to review Gold X's business affairs, capital needs and general industry and economic conditions, and, based on such review, Gran Colombia may, from time to time, depending on market and other conditions, increase or decrease its ownership, control or direction over the shares or other securities of Gold X, through market transactions, private agreements, public offerings or otherwise, or approve a corporate transaction with regard to Gold X. A copy of Gran Colombia's related amended early warning report will be filed with the applicable securities commissions and will be made available on SEDAR.

Advisers and counsel

Gran Colombia has engaged Canaccord Genuity Corp. as its financial adviser and Wildeboer Dellelce LLP as its legal adviser in connection with the transaction.

BMO Capital Markets is acting as financial adviser to the Gold X special committee and Stikeman Elliott LLP is acting as legal adviser to Gold X and the special committee in connection with the transaction.

About Gran Colombia Gold Corp.

Gran Colombia is a Canada-based mid-tier gold producer with its primary focus in Colombia, where it is currently the largest underground gold and silver producer with several mines in operation at its high-grade Segovia operations. Gran Colombia owns approximately 44 per cent of Aris Gold Corp., a Canadian mining company currently advancing a major expansion and modernization of its underground mining operations at its Marmato project in Colombia. Gran Colombia's project pipeline also includes an approximately 18-per-cent equity interest in Gold X Mining Corp. (Guyana -- Toroparu), an approximately 36-per-cent equity interest in Denarius Silver Corp. (Colombia -- Guia Antigua and Zancudo) and an approximately 26-per-cent equity interest in Western Atlas Resources Inc. (Nunavut -- Meadowbank).

About Gold X Mining Corp.

Gold X Mining is a Canadian junior mining company developing the Toroparu gold project in Guyana, South America. Gold X has spent more than $150-million (U.S.) on the project to date to classify 7.35 million ounces of measured and indicated and 3.15 million ounces of inferred gold resources, develop engineering studies for use in a feasibility study, and define a number of exploration targets around the Toroparu project on its 53,844-hectare (538-square-kilometre) 100-per-cent-owned Upper Puruni concession. Gold X has 52.7 million issued and outstanding common shares with more than 40 per cent of the shares closely held by insiders and the company's executive management team.

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