Tuesday May 12, 2015, 2:30pm PDT
First Mining Finance Corp. (TSXV:FF) announced that it’s entered into a definitive arrangement agreement with Coastal Gold Corp. (TSXV:COD) under which it will acquire all of Coastal’s outstanding shares “on the basis of 0.1625 common shares in the capital of First Mining for each COD common share.”
Coastal’s share price was up 25 percent, at $0.05, at close of day Tuesday on the back of the news.
As quoted in the press release:
The Transaction implies a value of $0.065 per COD common share and an overall equity value of $11.0 million, which represents a premium of:
333% to the unaffected COD common share price on February 27, 2015, the last trading day prior to the public announcement of the arrangement agreement made as of March 1, 2015 (the ‘Sulliden Agreement’) between COD and Sulliden Mining Capital Inc. (TSX: SMC) (‘Sulliden’); and
62.5% to the current market price of the COD common shares.
Further details of the transaction are as follows:
Pursuant to the terms of the Arrangement Agreement, the Transaction will be conducted by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario), resulting in COD becoming a wholly-owned subsidiary of First Mining. Each COD common share issued and outstanding immediately prior to closing of the Transaction will be exchanged for 0.1625 of a First Mining common share.
All options of COD outstanding immediately prior to closing of the Transaction will, following closing and subject to regulatory approval, be exercisable for that number of common shares of First Mining using the same exchange ratio applicable to the COD common shares under the Transaction, with corresponding adjustment to the exercise prices on the basis of such exchange ratio.
The parties have also entered into a loan agreement whereby First Mining has advanced to COD $950,000 (the ‘Loan’) in order to allow COD to pay the termination fee payable under the Sulliden Agreement, to repay the loan previously advanced by Sulliden to COD and to pay COD’s expenses in connection with the Transaction and the Sulliden Agreement. The Loan will accrue interest at the rate of 8% per annum and mature on the earlier of: (a) the completion of the Transaction; (b) termination of the Arrangement Agreement; and (c) the date that is six months following the date of the Loan. Subject to the approval of the TSX Venture Exchange, in certain circumstances the outstanding principal amount of the Loan together with all accrued and unpaid interest thereon may be converted into COD Common Shares at a price per common share equal to: (a) in the case of the principal amount, $0.05 per share; and (b) in the case of accrued and unpaid interest, subject to TSX Venture Exchange approval at the time of settlement, the Market Price (as defined in the policies of the TSX Venture Exchange) of the COD common shares.
Keith Neumeyer, chairman of First Mining, commented:
We are very pleased to have reached this agreement with COD. We feel that COD’s Hope Brook Gold Project fits well into our overall portfolio strategy. We strongly believe that the combination of our company with COD will supplement our existing diverse asset portfolio and provide COD shareholders with exposure to a broad portfolio which is diversified across a number of minerals and geographic areas. We are confident that we can deliver on our growth plans to all First Mining and COD shareholders following completion of this acquisition.