Apollo Gold Corporation (TSX: APG)(NYSE Amex: AGT) (“Apollo”) and Linear
Gold Corp. (TSX:LRR) (“Linear”) announce that Apollo has unwound its
Canadian dollar currency hedges that were originally entered into in
connection with Apollo’s US$70 million Black Fox Project Facility
Agreement (the “Facility Agreement”). As a result of this action, gross
proceeds to Apollo were approximately US$8.2 million, which will be used
to reduce the debt outstanding under the Facility Agreement.
Following this repayment, Apollo’s indebtedness will be reduced to
approximately US$51.8 million. Additionally, post closing of the
proposed business combination of Apollo and Linear (the “Merger”),
expected to be completed by the end of the second quarter of 2010, the
combined company will further repay US$10 million to the project lenders
to reduce the Project Facility to approximately US$41.8 million.
Enhanced Financial Flexibility
R. David Russell, Chief Executive Officer (“CEO”) and President of
Apollo, said, “We acted opportunistically to close out our in-the-money
foreign currency contracts in order to reduce our indebtedness. This
US$8.2 million repayment, together with the US$10 million repayment from
proceeds of Linear’s Cdn$25 million private placement on March 19, 2010,
have reduced interest payments annually by US$1.3 million.”
Wade K. Dawe, CEO and President of Linear, said, “The collapse of the
foreign currency hedge to further reduce debt is an important step in
our plan to strengthen Apollo’s balance sheet. Following completion of
the Merger, we believe that the recapitalized company will be in a
strong position to emphasize underground production at Black Fox and to
take advantage of growth opportunities for our shareholders going
forward. Having significantly deleveraged the balance sheet, our new
company is well positioned as an emerging Canadian mid-tier gold
producer.”
Linear and Apollo entered into a definitive arrangement agreement (the
“Agreement”), dated March 31, 2010, in respect of the previously
announced business combination pursuant to which the businesses of
Apollo and Linear will be combined by way of a court approved plan of
arrangement, subject to a number of conditions precedent, including
approval of the shareholders of each of Apollo and Linear. The Agreement
provides that Linear shareholders will receive 5.4742 Apollo shares for
each Linear share.
Proposed Share Consolidation and Name Change
As a part of the Merger, Apollo and Linear believe that it is in the
best interests of the combined company (“New Company”) to effect a name
change and share consolidation currently anticipated to be on the basis
of one post-consolidation New Company common share for every four Apollo
common shares outstanding immediately prior to the share consolidation.
Such consolidation and name change will be submitted to the Apollo
shareholders for approval at the shareholder meeting to approve matters
relating to the Merger (the “Meeting”) and would only be effective upon
such approval and the closing of the Merger. Both Apollo and Linear
believe that the share consolidation will allow the combined company
greater access to the capital markets, including access to those
institutions and investors who invest in stocks with a US$1 minimum
price, and potential enhanced trading liquidity. The proposed new name
for the New Company will be determined over the coming weeks and
included in the management information circulars to be mailed to
shareholders.
If approved by the Apollo shareholders and implemented by the New
Company, the proposed name change and share consolidation would affect
all New Company shareholders uniformly, including existing Linear
shareholders who, after giving effect to the Merger and the
consolidation, will receive 1.37 New Company shares for each Linear
share on completion of the Merger (5.474 divided by 4).
The proposed share consolidation would not affect any New Company
shareholder’s percentage ownership interests or proportionate voting
power, except to the extent that the share consolidation results in any
shareholders owning a fractional New Company common share (an “New
Company Share”) (in which case each fractional New Company Share that is
less than one-half of one New Company Share will be cancelled without
any compensation therefor and each fractional New Company Share that is
at least one-half of one New Company Share will be adjusted upward to
one whole New Company Share). Following the share consolidation, the New
Company Shares will have the same voting rights and will be identical in
all other respects to the Apollo shares now authorized.
Both the proposed share consolidation and name change must be approved
by at least two-thirds of the votes cast at the Meeting.
Proxy Solicitor
Both Apollo and Linear have engaged Laurel Hill Advisory Group, 200-366
Bay Street, Toronto, Ontario, M5H 4B2, to assist in their respective
proxy solicitation efforts.
Apollo shareholders with questions about the Merger may call the
Proxy Solicitor at:1-888-987-3940 or collect at 416-637-4661.
Linear shareholders with questions about the Merger may call the
Proxy Solicitor at:1-888-987-3949 or collect at 416-637-4661.
About Apollo
Apollo is a growing gold producer that operates the wholly owned Black
Fox Mine in Ontario, Canada, which commenced gold production in May
2009. Apollo is also exploring the adjoining Grey Fox and Pike River
properties, all in the Timmins gold district in Ontario, Canada, as well
as the Huizopa Joint Venture, (80 percent Apollo and 20 percent Minas De
Coronado, S. de R.L. de C.V.), an early stage, gold-silver exploration
project, approximately 16 kilometers (10 miles) southwest of Minefinders
Dolores gold-silver mine, in the Sierra Madres in Chihuahua, Mexico.
About Linear
Linear Gold Corp. is a well financed gold exploration and development
company committed to maximizing shareholder value through a strategy of
mine development, focused exploration, and effective risk management
through selective partnerships and acquisitions. Linear's flagship
development property located near Uranium City, Saskatchewan, hosts an
economic gold deposit and is now in the development stage to become a
70,000 - 90,000 ounce per year gold producer. Linear also holds an
extensive and diverse portfolio of mineral projects in the Dominican
Republic and Mexico.
Forward-looking Statements
Certain statements in this press release relating to the proposed Merger
are “forward-looking statements” within the meaning of securities
legislation. These statements include statements regarding the use of
proceeds from the unwinding of the foreign currency hedge, the timing of
the completion of the arrangement with Linear Gold Corp. and the share
consolidation’s ability to allow the combined company greater access to
the capital markets and enhanced trading liquidity. Apollo does not
intend, and does not assume any obligation, to update these
forward-looking statements. These forward-looking statements represent
management's best judgment based on current facts and assumptions that
management considers reasonable, including that the required approval
will be obtained from the shareholders of Apollo or Linear, that all
third party regulatory and governmental approvals to the Merger will be
obtained and all other conditions to completion of the Merger will be
satisfied or waived, that operating and capital plans will not be
disrupted by issues such as mechanical failure, unavailability of parts,
labour disturbances, interruption in transportation or utilities, or
adverse weather conditions, that there are no material unanticipated
variations in budgeted costs, that contractors will complete projects
according to schedule, and that actual mineralization on properties will
not be less than identified mineral reserves. Apollo makes no
representation that reasonable business people in possession of the same
information would reach the same conclusions. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of the
companies to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. In particular, fluctuations in the price of gold or in
currency markets could prevent the companies from achieving their
targets. Other factors are disclosed under the heading “Risk Factors”
and elsewhere in Apollo documents filed from time to time with the
Toronto Stock Exchange and the NYSE Amex Equities Exchange and, on SEDAR
and with other regulatory authorities, including the United States
Securities and Exchange Commission.
Additional Information and Where to Find It
In connection with Apollo’s and Linear’s solicitation of proxies with
respect to the meeting of shareholders of each of Apollo and Linear to
be called with respect to the proposed plan of arrangement, Apollo will
file a proxy statement with the SEC and with regulatory authorities in
Canada and Linear will file an information circular with regulatory
authorities in Canada. SHAREHOLDERS ARE ADVISED TO READ THE PROXY
STATEMENT/INFORMATION CIRCULAR WHEN IT IS FINALIZED AND DISTRIBUTED TO
SHAREHOLDERS BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders
will be able to obtain a free-of-charge copy of Apollo’s proxy statement
(when available) and other relevant documents filed with the SEC and
with regulatory authorities in Canada from the SEC’s website at http://www.sec.gov
and from SEDAR at http://www.sedar.com,
as applicable. Shareholders will be able to obtain a free-of-charge copy
of Linear’s information circular (when available) and other relevant
documents filed with regulatory authorities in Canada on SEDAR at http://www.sedar.com.
Shareholders of Apollo will also be able to obtain a free-of-charge copy
of the proxy statement and other relevant documents (when available) by
directing a request by mail or telephone to Apollo Gold Corporation,
5655 South Yosemite St., Suite 200, Greenwood Village, Colorado
80111-3220 or (720) 886-9656, or from Apollo’s website, www.apollogold.com.
Shareholders of Linear will also be able to obtain a free-of-charge copy
of the information circular and other relevant documents (when
available) by directing a request by mail or telephone to Linear Gold
Corp., Suite 502, 2000 Barrington Street, Halifax, Nova Scotia B3J 3K1
or (902) 422-1421, or from Linear’s website, www.lineargoldcorp.com.
Interests of Participants in the Solicitation of Proxies
Apollo and certain of its directors, executive officers and other
members of its management and employees may, under the rules of the SEC,
be deemed to be “participants” in the solicitation of proxies from its
shareholders in connection with the proposed merger. Information
concerning the interests of the persons who may be considered
“participants” in the solicitation is set forth in Apollo’s proxy
statements and Annual Reports on Form 10-K (including any amendments
thereto), previously filed with the SEC, and in the proxy statement
relating to the plan of arrangement when it becomes available. Copies of
these documents can be obtained, without charge, at the SEC’s internet
website at www.sec.gov
or by directing a request to Apollo at the address above.
