Teranga Announces Intention to Make Offer to Acquire Oromin Explorations Ltd.
TORONTO, ONTARIO -- (Marketwired) -- 06/03/13 -- Teranga Gold
Corporation ("Teranga") (TSX:TGZ)(ASX:TGZ) announces that it intends
to make an offer (the "Offer") to acquire all of the outstanding
common shares ("Oromin Shares") of Oromin Explorations Ltd.
("Oromin") that it does not already own. The proposed Offer would
constitute 80,000,000 Teranga common shares ("Teranga Shares") being
offered to Oromin shareholders, including Teranga's interest in
Pursuant to the proposed Offer, Oromin shareholders would receive
0.582 of a Teranga Share for each Oromin Share held. The proposed
Offer would represent a premium of 50% to the 20-day volume-weighted
average price ("VWAP") of the Oromin Shares on the Toronto Stock
Exchange (the "TSX") for the period ending May 31, 2013 (based on the
20-day VWAP of the Teranga Shares on the TSX for the same period) and
a premium of 68.7% to the closing price of the Oromin Shares on the
TSX on May 31, 2013 (based on the closing price of the Teranga Shares
on the TSX on the same date).
Teranga currently owns 18,699,500 Oromin Shares, representing
approximately 13.6% of the outstanding Oromin Shares. IAMGOLD
Corporation has entered into a lock-up agreement with Teranga
pursuant to which it has agreed to tender its 16,088,636 Oromin
Shares, representing approximately 11.7% of the outstanding Oromin
Shares, to the proposed Offer. Together, this represents
approximately 25.3% of the outstanding Oromin Shares.
"Our Offer provides Oromin shareholders with significant and
immediate value for their shares, and the opportunity to participate
in the development of the OJVG deposits," said Alan R. Hill Executive
Chairman of Teranga.
"The combination of Teranga and Oromin would result in a combined
company that is expected to have increased production from Teranga's
interest in the OJVG's open pit reserves, higher earnings and higher
free cash flow per share," said Richard Young, President and CEO of
Benefits to Oromin Shareholders
In addition to a significant and immediate premium for their Oromin
Shares, shareholders of Oromin would be expected to realize the
following benefits from the proposed Offer:
-- The proposed Offer would provide Oromin shareholders with an interest in
a producing gold company with an operating mill within trucking distance
of the Oromin Joint Venture Group Ltd. ("OJVG") deposits.
-- Teranga would acquire Oromin's 43.5% interest in the OJVG and Teranga
intends to expeditiously work with the other OJVG partners to develop
the OJVG deposits.
-- Oromin shareholders would benefit from ongoing participation in the
development of, and production from, the OJVG deposits.
-- The proposed Offer would remove the risk to Oromin shareholders from
Oromin's immediate near-term liquidity issues and long-term need for
significant capital expenditures to advance the OJVG Project.
-- Improved trading liquidity.
-- Opportunity to own shares of a gold company that is 100% hedge free and
has the financial capacity to develop the OJVG deposits from free
operating cash flow.
Benefits to Teranga Shareholders
The proposed Offer would result in the issuance of approximately 69.1
million Teranga Shares from treasury, which would increase the issued
and outstanding Teranga Shares by approximately 28%. For this
dilution, Teranga shareholders would be expected to indirectly
realize the following benefits from the proposed Offer, as Teranga
-- A joint venture interest in OJVG's open pit reserves of 1,445,000 ounces
-- An ability to blend ores from multiple deposits which would be expected
to enhance Teranga's cost profile.
-- The ability to leverage Sabodala's existing mill, infrastructure and
mobile equipment fleet through increased production from Teranga's
interest in the OJVG's open pit reserves and anticipated toll milling
opportunities that enhances financial metrics.
-- Financial metrics to Teranga, on the basis of gold at $1,400 as follows:
-- Full life free cash flow that is expected to increase by 50%;
-- NAV that is expected to increase by 50%; and
-- Earnings that are expected to increase by 300%.
These financial metrics are based on the following assumptions:
-- Open pit proven and probable mineral reserves of the OJVG contained in
the OJVG 43-101 Report.
-- Operating cost assumptions based on Sabodala actual costs.
-- No change in the operator of the OJVG, and mining, processing and site
administrative costs charged to the OJVG based on actual costs plus on a
-- Teranga charging the OJVG an equipment rental fee in line with Teranga's
depreciation cost per ounce and as a result OJVG would not be expected
to incur any future capital costs.
-- Teranga would charge OJVG a 5% corporate administration charge as the
operator in respect of site direct costs, excluding royalties.
-- Otherwise based on the terms and conditions regarding distributions
contained in the OJVG shareholders agreement (as publicly filed on
(1) Probable mineral reserves of 21,889,000 tonnes at a grade of 2.05
g/t (with an effective date of January 30, 2013 - NI 43-101 technical
report entitled OJVG Golouma Gold Project Updated FS Technical
Report, March 15, 2013, prepared for Oromin (the "OJVG 43-101
Background to the Proposed Offer
-- Oromin owns a 43.5% interest in the OJVG which owns a mining license
adjacent to Teranga's operating Sabodala gold mine. Bendon International
Ltd ("Bendon") and Badr Investment & Finance Company ("Badr") own the
remaining 43.5% and 13% of the OJVG, respectively. The OJVG property is
located directly adjacent to the Sabodala mine license with current
Proven and Probable Reserve of 2.34 million ounces (28 MT grading 2.59
g/t Au) as set out in the OJVG 43-101 Report.
-- Teranga was in the advanced stages of negotiation with Oromin, Bendon
and Badr to purchase the OJVG in December 2011, subject to the waiver of
the Republic of Senegal's option to acquire 25% of the Senegalese
subsidiary holding the mining concession of OJVG, however, such waiver
could not be obtained at that time.
-- Since then, Teranga was working on a comprehensive agreement in
principle with the Republic of Senegal that would provide for a price
and formula to purchase the waiver of the Republic of Senegal's
additional participation right on deposits not currently on Teranga's
Mine License that would be processed through the Sabodala Mill.
-- Following the signing of the agreement in principle with the Republic of
Senegal on April 2, 2013, Teranga approached the OJVG shareholders, and
on May 17, 2013 Teranga made an offer to the OJVG for similar share
consideration as in the original offer which was agreed to in December
2011. Bendon rejected the offer as it did not satisfy their requirements
for cash consideration.
-- On May 24, 2013 Teranga provided Oromin with an offer to purchase all of
the outstanding Oromin shares for the same consideration as under the
proposed Offer, subject to conditions similar to those described herein,
as well as confirmatory due diligence. Oromin declined to grant Teranga
due diligence access on terms acceptable to Teranga or to engage with
Teranga in resp
ect of such offer, which expired on May 31, 2013.
-- Teranga announced on May 31, 2013 that it had signed a global agreement
with the Republic of Senegal embedding a formula to purchase the
Republic of Senegal's additional participation right, into its amended
Mining Convention as well as Financial Settlement Agreements with the
Republic of Senegal.
-- With a 43.5% interest in the OJVG, Teranga intends to work with Bendon
and Badr to develop the OJVG deposits and process its ore through
Teranga's Sabodala mill on a toll milling basis on terms and conditions
to be determined.
-- Teranga believes that its mill and related infrastructure and operating
team can develop the OJVG deposits quicker, more efficiently and at
significantly lower capital costs then Oromin or the OJVG can on a stand
-- Now that its intention to make the Offer has been announced, Teranga
intends to approach Oromin to see whether a negotiated transaction among
the parties can be achieved.
Additional Details of the Proposed Offer
The making of the Offer will be contingent on there not being any
pending or threatened legal action prohibiting or restricting it,
Oromin not taking any preclusive defensive tactics, no material
adverse change occurring in Oromin and Teranga not becoming aware of
any material adverse information regarding Oromin that was not
previously disclosed by Oromin.
Full details of the proposed Offer are expected to be set out in the
formal offer and take-over bid circular, which is expected to be
mailed to Oromin shareholders by mid June 2013 and filed with
applicable securities regulators, a copy of which is expected to be
available at www.sedar.com. Teranga expects to make a formal request
for the list of Oromin shareholders from Oromin and expects to mail
the offer and circular to Oromin shareholders as soon as reasonably
practicable following the receipt of such shareholder list.
In addition to customary conditions, the proposed Offer is expected
to be conditional upon not less than 66 2/3% of the Oromin Shares
(including Oromin Shares owned by Teranga as if they were deposited)
and a majority of the minority (excluding Oromin Shares owned by
Teranga), being validly deposited under the Offer and not withdrawn,
approval of the shareholders of Teranga for the Teranga Shares to be
issued under the Offer, obtaining all required governmental, stock
exchange, and regulatory approvals, no material adverse change
occurring in Oromin, and the OJVG Shareholders Agreement being in the
form filed as at the date hereof with the Canadian securities
regulatory authorities on Sedar. If sufficient Oromin Shares are
validly deposited under the Offer and not withdrawn, Teranga intends,
but is not required, to take the appropriate steps either by way of
compulsory acquisition or subsequent acquisition transaction to
acquire the remaining outstanding Oromin Shares.
The lock-up agreement between IAMGOLD Corporation and Teranga may be
terminated by IAMGOLD Corporation to support a superior proposal if
and only if a bona fide offer is made by a third party for all of the
Oromon Shares (an "Alternative Proposal"), the board of directors of
Oromin have determined and publicly announce that such Alternative
Proposal is a superior proposal to the Offer, and Teranga has not
increased its Offer to provide for at least equivalent consideration
in value to the Alternative Proposal within 5 business days.
Teranga has engaged Cormark Securities Inc. to act as financial
advisor to Teranga in connection with the proposed Offer.
This press release does not constitute an offer to buy or an
invitation to sell, or the solicitation of an offer to buy or
invitation to sell, any securities of Teranga or Oromin (including in
any state where the proposed Offer is not permitted). The proposed
Offer may only be made pursuant to a formal offer and take-over bid
circular filed with the securities regulatory authorities in Canada
and pursuant to registration or qualification under the securities
laws of any other such jurisdiction. Accordingly, Teranga may not
complete the proposed Offer and issue any securities until, among
other things, the registration statement filed with the United States
Securities and Exchange Commission (the "SEC") is effective.
In connection with the proposed transaction, Teranga also intends to
file relevant materials with the SEC, including one or more
registration statements that contain a prospectus. U.S. investors and
U.S. securityholders are urged to read these documents (if and when
they become available) and any other relevant documents filed by
Teranga with the SEC, as well as any amendments or supplements to
these documents because they will contain important information. U.S.
Investors and U.S. security holders may obtain these documents free
of charge at the SEC's website at www.sec.gov. In addition, the
documents filed with the SEC by Teranga can be obtained free of
charge by directing such request to Teranga's Information Agent, or
at Teranga's website at www.terangagold.com. Such documents are not
currently available. U.S. investors and U.S. security holders are
urged to read the prospectus and the other relevant materials when
they become available before making any investment decision with
respect to the proposed transaction.
Teranga is a Canadian-based gold company listed on the Toronto Stock
Exchange (TSX:TGZ) and Australian Securities Exchange (ASX:TGZ).
Teranga is principally engaged in the production and sale of gold, as
well as related activities such as exploration and mine development.
Teranga's mission is to create value for all of its stakeholders
through responsible mining. Its vision is to explore, discover and
develop gold mines in West Africa, in accordance with the highest
international standards, and to be a catalyst for sustainable
economic, environmental and community development. All of its actions
from exploration, through development, operations and closure will be
based on the best available techniques.
Qualified Persons and Competent Persons Statement
The technical information contained in this press release under the
section "Benefits to Teranga Shareholders" is based on information
compiled by Mr. Paul Chawrun P. Eng, using existing publicly
available information provided by Oromin, including the NI 43-101
technical report entitled OJVG Golouma Gold Project Updated FS
Technical Report, March 15, 2013, prepared for Oromin and available
at www.oromin.com and at www.sedar.com. Mr. Chawrun is member of the
Professional Engineers Ontario, which is currently included as a
"Recognised Overseas Professional Organisation" in a list promulgated
by the ASX from time to time.
Mr. Chawrun is a full-time employee of Teranga and is a "qualified
person" as defined in NI 43-101 and a "competent person" as defined
in the 2004 Edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun
has sufficient experience relevant to the style of mineralization and
type of deposit under consideration and to the activity he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Mr. Ch
consented to the inclusion in the press release of the matters based
on his compiled information in the form and context in which it
Oromin's disclosure of mineral reserve and mineral resource
information is governed by National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101") under the guidelines
set out in the Canadian Institute of Mining, Metallurgy and Petroleum
(the "CIM") Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as may be amended from time to time by
the CIM ("CIM Standards"). CIM definitions of the terms "mineral
reserve", "proven mineral reserve", "probable mineral reserve",
"mineral resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource", are substantially similar
to the JORC Code corresponding definitions of the terms "ore
reserve", "proved ore reserve", "probable ore reserve", "mineral
resource", "measured mineral resource", "indicated mineral resource"
and "inferred mineral resource", respectively. Estimates of mineral
resources and mineral reserves prepared in accordance with the JORC
Code would not be materially different if prepared in accordance with
the CIM definitions applicable under NI 43-101. There can be no
assurance that those portions of mineral resources that are not
mineral reserves will ultimately be converted into mineral reserves.
Mineral resources are not mineral reserves and do not have
demonstrated economic viability.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL REPORTING
Teranga prepares its disclosure in accordance with the requirements
of securities laws in effect in Canada, which differ from the
requirements of US securities laws. Terms relating to mineral
resources and mineral reserves in this press release are defined in
accordance with NI 43-101. The SEC permits mining companies, in their
filings with the SEC, to disclose only those mineral deposits that a
company can economically and legally extract or produce. Teranga uses
certain terms, such as, "measured mineral resources", "indicated
mineral resources", "inferred mineral resources" and "probable
mineral reserves", that the SEC does not recognize.
For further information regarding the OJVG property, reference should
be made to the NI 43-101 technical report entitled OJVG Golouma Gold
Project Updated FS Technical Report, March 15, 2013, prepared for
Oromin and available at www.oromin.com and at www.sedar.com.
This news release contains certain statements that constitute
forward-looking information and forward-looking statements within the
meaning of applicable securities laws (collectively, "forward-looking
statements") and includes statements relating to the timing and the
terms and benefits of the proposed Offer to be made. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Teranga, or developments in Teranga's
business or in its industry, or with respect to the proposed Offer to
be made, to differ materially from the anticipated results,
performance, achievements or developments expressed or implied by
such forward-looking statements. Forward-looking statements include
all disclosure regarding possible events, conditions or results of
operations that is based on assumptions about, among other things,
future economic conditions and courses of action, and assumptions
related to government approvals, the co-operation of Bendon and Badr
and anticipated costs and expenditures. The words "poised", "gives",
"expect", "its vision", "plan", "support", "assist", "commit to",
"will not", "intend", "intends to" and similar expressions identify
forward looking statements. Forward-looking statements may also
include, without limitation, any statement relating to future events,
conditions or circumstances. Teranga cautions you not to place undue
reliance upon any such forward-looking statements, which speak only
as of the date they are made. There is no guarantee that the terms
and conditions to the proposed Offer to be made will be met or that
the anticipated benefits of the proposed Offer to be made will be
achieved. The risks and uncertainties that may affect forward-looking
statements include, among others: economic market conditions,
anticipated costs and expenditures, government approvals,
co-operation of Bendon and Badr; and other risks detailed from time
to time in Teranga's filings with Canadian provincial securities
regulators. Forward-looking statements are based on management's
current plans, estimates, projections, beliefs and opinions, and,
except as required by law, Teranga does not undertake any obligation
to update forward-looking statements should assumptions related to
these plans, estimates, projections, beliefs and opinions change.
Nothing in this news release should be construed as either an offer
to sell or a solicitation to buy or sell Teranga securities.
Teranga Gold Corporation
Vice-President, Investor & Stakeholder Relations
+1 416-594-0088 (FAX)
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