PMI Gold Corporation ("PMI") (TSX:PMV)(FRANKFURT:PN3N)(ASX:PVM)and
Keegan Resources Inc. ("Keegan") (TSX:KGN)(NYSE MKT:KGN) are
pleased to announce that today they have entered into a definitive
arrangement agreement to combine their respective businesses (the
"Merger") and to create a leading West African gold development
company. A joint conference call hosted by Peter Breese and Collin
Ellison will be held at 4:30 pm (EST) and 1:30 pm (PST) today (8:30
am Thursday in Sydney) to discuss this transaction. Call-in details
are provided at the end of this release.
The combined company will continue under the name "Asanko Gold
Inc." ("Asanko"), reflective of the West Ghana region in which the
two companies hold their principal gold projects. Asanko will be
led by Peter Breese, the current President and CEO of Keegan and
Collin Ellison, the current Managing Director and CEO of PMI. Under
terms of the Merger (which will be effected by means of a statutory
plan of arrangement of PMI), each PMI shareholder will receive 0.21
Asanko shares for each PMI share (the "Exchange Ratio"). As Keegan
is the surviving corporate entity, existing Keegan security holders
will not need to exchange their securities in the Merger. The
Merger will create a combined company with an aggregate market
capitalization expected to be in the $700 million range. Existing
Keegan and PMI shareholders will each own approximately 50% of the
combined company, inclusive of currently in-the-money dilutive
securities.
HIGHLIGHTS OF THE MERGER
Asanko is set to become the leading gold development company in
West Africa with near term production expected from a unitized
project comprised of two nearby gold deposits - Obotan and Esaase.
Other merger highlights include:
-- Measured and Indicated Resources of combined projects = 6.94 million
ounces at an average grade of 1.90 grams per tonne (1), (2) ,(3);
-- Additional Inferred Resources of combined projects = 2.65 million ounces
at an average grade of 1.87 grams per tonne (1), (2) ,(3);
-- Strongly capitalized with over $340 million in cash on hand and no debt
outstanding;
-- Obotan can proceed to construction quickly - approximately 200,000
ounces per year with first gold pour expected in 2014;
-- Esaase development to be funded from cash flow - additional 150,000 to
200,000 ounces per year by 2017;
-- Targeted operational and capital synergies through a 2013 optimization
analysis - Obotan and Esaase located within a 15 km radius;
-- Experienced mine development and operational executive and management
team to build and operate;
-- Consolidated Asankrangwa gold belt - over 70 km of belt strike anchored
by the Obotan and Esaase deposits and over 1,000 square kilometers in
Ghana;
-- Planned growth through exploration of numerous high priority targets on
the belt as well as Kubi and Asumura;
-- Enhanced capital markets presence - Asanko is expected to appeal to a
broader shareholder base, increase analytical following and improved
share trading liquidity;
-- Merger is expected to be tax neutral or deferred for substantially all
participants; and
-- Asanko shares issued to PMI shareholders under the Merger will be free
of trading restrictions in Canada and United States (except for
affiliated persons); Asanko shares are required to be listed on the TSX,
ASX and NYSE MKT Equities Exchange upon completion of the Merger.
Peter Breese, President and CEO of Keegan, stated: "This is
truly a unique and exciting opportunity to combine these two
adjacent and near-term development projects and to have available
some $340 million in combined cash to fund a Mid-Tier scale
production growth profile starting in about two years. We expect
significant synergies through the joint development of Obotan and
Esaase which we expect will ultimately create one of the largest
gold mining and exploration districts in Africa."
Collin Ellison, Managing Director and CEO of PMI, stated: "We
think the combination of these two companies with adjacent and
complementary deposits, highly prospective exploration holdings on
the Asankrangwa belt, outstanding self-funding financial
flexibility and a combined management strength will allow both
groups of shareholders to realize maximum value through Asanko
Gold's path to production and aggressive growth profile through to
Mid-Tier Producer status by 2017."
MANAGEMENT TEAM AND BOARD OF DIRECTORS
The Board of Directors and management of Asanko will draw from
the expertise of both companies. Peter Buck and Shawn Wallace, the
respective Chairmen will become Co-Chairmen, while Peter Breese
will become Chief Executive Officer and Collin Ellison will become
Asanko's President. Other senior management will be determined
following completion of the Merger.
On immediate completion of the Merger, the Board will be
comprised of three directors from each predecessor and a seventh
director will be added post-completion. The initial six directors
of Asanko will be, from PMI: Peter Buck, Ross Ashton and John
Clarke; and from Keegan: Shawn Wallace, Colin Steyn and Gord
Fretwell.
DETAILS OF THE ARRANGEMENT AGREEMENT
The proposed Merger will be effected by way of court-approved
plan of arrangement of PMI (the "Arrangement") under the Business
Corporations Act of British Columbia. Full details of the Merger
will be included in joint management information circulars for both
PMI and Keegan which will be mailed to their respective
shareholders in late January 2013. The Merger will be subject to
approval of 50% plus one of the votes cast by Keegan shareholders
and by 2/3 of the votes cast by PMI shareholders at their
respective special meetings of shareholders which will both be held
on the same day targeted for late February, 2013. In addition to
the shareholder approvals and a court approval, the Merger is
subject to applicable regulatory approvals and the satisfaction of
other customary closing conditions, including Asanko obtaining an
ASX listing for its shares. A copy of the arrangement Agreement
will be posted at www.SEDAR.com and a summary will be included in
the joint information circular.
Pro-forma the Arrangement, Asanko will have approximately 171.7
million shares outstanding, 11.4 million options outstanding and
9.8 warrants outstanding. PMI options and warrants will be
cancelled and replaced by equivalent length options and warrants of
Asanko which will be adjusted as to number and exercise based on
the Exchange Ratio. Pro-forma ownership of Asanko is approximately
50% PMI and 50% Keegan including currently in-the-money dilutive
securities.
Asanko will maintain its TSX and NYSE MKT listings, and will
forthwith apply to list on the ASX subject to completion of the
Merger. In the United States the issuance of securities of Asanko
under the Merger will be conducted in reliance on the exemption
from registration found under section 3(a)(10) of the Securities
Act of 1933. Asanko will continue to be a foreign private issuer
under United States securities laws.
The Arrangement Agreement includes mutual deal protection
provisions, including no solicitation obligations, right to match,
a mutual $13 million break fee and customary fiduciary-out
provisions in the event of a superior proposal being received by
either company.
Both companies' Boards of Directors have determined that the
proposed business combination is in the best interests of their
respective shareholders based on a number of factors, including
verbal fairness opinions received from each of their respective
financial advisors. These opinions are subject to certain
assumptions and limitations and opine on the fairness, from a
financial point of view, of the consideration to be received by
their respective shareholders pursuant to the Merger. These factors
will be further discussed in the joint information circular. Each
company's Board of Directors has unanimously approved the terms of
the proposed Merger and will recommend that their respective
shareholders vote in favour of the Merger at their respective
shareholder meetings. In addition, directors and officers of both
companies have entered into voting lock-up agreement to vote in
favour of the Merger.
ADVISORS AND COUNSEL
PMI has retained Macquarie Capital Markets Canada Ltd. to act as
financial advisor and Stikeman Elliott LLP to act as legal
advisor.
Keegan has retained Canaccord Genuity to act as financial
advisor and McMillan LLP to act as legal advisor.
NOTES:
(1). Mineral Resources for Esaase stated using a 0.8 g/t Au
cut-off, NI 43-101 Technical Report filed on SEDAR November 23,
2012 and Mineral Resources for Obotan stated using a 0.5 g/t
cut-off, NI 43-101 Technical Report filed on SEDAR on May 25,
2012.
(2). NI43-101/JORC Code compliant Mineral Resource inventory for
Obotan consist of Measured Resources of 15.57Mt grading 2.47g/t Au
for 1.23Moz; Indicated Resources of 29.21Mt grading 2.00g/t Au for
1.88Moz; and Inferred Resources of 21.91Mt grading 1.99g/t Au for
1.40Moz, as reported in the NI43-101 Technical Report filed on
SEDAR on May 25, 2012.
(3). Figures shown exclude PMI's Kubi Gold Project consisting of
NI 43-101/JORC Mineral Resources estimate of Measured 0.66 Mt
grading 5.30 g/t for 112k oz, Indicated 0.66Mt grading 5.65 g/t for
121 k oz, Inferred 0.67Mt grading 5.31 g/t for 115k oz. The
preceding information relates to Mineral Resources at the Kubi Main
Deposit, Ghana, is based on a resource estimate that has been
audited by Simon Meadows Smith, who is a full time employee of SEMS
Exploration Services Ltd, Ghana. Simon Meadows Smith is a Member of
the Institute of Materials, Minerals and Mining (IMO3), London and
has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which 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, and under NI43-101. Simon Meadows Smith consents to the
inclusion in press release of the matters based on information in
the form and context in which it appears.
CONFERENCE CALL AND WEBCAST INFORMATION
A joint conference call hosted by Peter Breese and Collin
Ellison will be held today (Wednesday) at 4:30 pm (ET), 1:30 pm
(PT), 9:30 pm (London), Thursday 5:30 am (Perth) and 8:30 am
(Sydney) to discuss this merger. Details are as follows:
Live Webcast Information:
Event Title: PMI and Keegan Resources Merger Announcement
To view the live webcast:
http://www.investorcalendar.com/IC/CEPage.asp?ID=170293
Webcast replay available until: December 11, 2013 at
www.InvestorCalendar.com
Teleconference Information (all numbers are Toll-Free):
Live Participant Dial In (North America): 877-407-8033
Live Participant Dial In (International): 201-689-8033
Conference ID #: 405440
Teleconference Replay available until: December 19, 2012 at
11:59pm
Replay Number (North America): 877-660-6853
Replay Number (International): 201-612-7415
Conference ID #: 405440
Webcasts will also be available at Keegan's website at
www.keeganresources.com and PMI's website at
www.pmigoldcorp.com.
About PMI Gold Corporation
PMI is an international gold company which is focused on
developing a substantial West African gold business spanning three
emerging mining centres in south-west Ghana, one of the world's
most prolific gold producing regions. PMI has a strong portfolio of
assets in Ghana, with a dominant 70km contiguous landholding in the
Asankrangwa Gold Belt with interests in 9 concessions which
comprises the 100% owned Obotan Gold Project and the 100% owned
Asanko Regional Exploration Project. PMI also holds 2 mining leases
and 2 concessions within the Ashanti Gold Belt which comprises the
advanced exploration Kubi Gold Project. The Obotan Gold Project
(Measured Resources of 15.57Mt grading 2.47g/t Au for 1.23Moz;
Indicated Resources of 29.21Mt grading 2.00g/t Au for 1.88Moz; and
Inferred Resources of 21.91Mt grading 1.99g/t Au for 1.40Moz, based
on a 0.5g/t Au cut-off) is scheduled to start gold production in
2014 and expected to produce an average of 221,500 oz Au per year
over the first five years. Mineral Resources is based on a resource
estimate audited by Mr Peter Gleeson, who is a full time employee
of SRK Consulting. Mr Gleeson is a Member of the Australian
Institute of Geoscientists (MAIG) with sufficient experience
relevant to the style of mineralization and type of deposit under
consideration and to the activity undertaken 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' and as defined in terms of NI43-101 standards for
resource estimation of gold. Mr Gleeson has more than 5 years'
experience in the field of Exploration Results and of resource
estimation in general and consents to the inclusion of matters
based on information in the form and context in which it
appears.
PMI trades on the TSX, ASX and Frankfurt under the symbols PMV,
PVM and PN3N.F, respectively.
Collin Ellison, Bsc Mining, MIMMM, C.Eng is the Qualified Person
within the definition of that term under NI 43-101, who has assumed
responsibility for the technical disclosure relating to PMI in this
release.
The NI43-101 technical report outlining the Obotan Project
Mineral Resources and Reserve Estimate and the results of the
Feasibility Study on September 17, 2012 was prepared by GR
Engineering Services Limited, and co-authored by P. Gleeson, B.Sc.
(Hons), M.Sc, MAIGS, MGSA, J. Price, FAusIMM(CP), FGS, MIE(Aust.),
R Cheyne, BEng. (Mining), FAusIMM, CEng (IEI), and G. Neeling,
BAppSc. (Multidisciplinary) FAusIMM, each of whom is independent
for the purposes of NI 43-101.
About Keegan Resources Inc.
Keegan is a gold development company which has been focussing on
near term gold production at its high grade multi-million ounce
Esaase gold project in Ghana. The Company offers investors the
opportunity to share ownership in the rapid exploration and
development of high quality pure gold assets. Keegan is focused on
its wholly owned flagship Esaase gold project (3.83 million ounces
of gold in the Measured and Indicated category with an average
grade of 1.73 g/t Au and 1.25 million ounces of gold in the
Inferred category with an average grade of 1.75 g/t Au, based on a
0.8 g/t Au cut-off) located in Ghana, West Africa; a highly
favourable and prospective jurisdiction. Managed by highly skilled
and successful technical and financial professionals, Keegan is
well financed with no debt. The Company is also strongly committed
to the highest standards for environmental management, social
responsibility, and health and safety for its employees and
neighbouring communities.
Keegan trades on the TSX and the NYSE MKT under the symbol
KGN.
Greg McCunn, P.Eng. of Keegan Resources is the Qualified Person
under NI 43-101 who has assumed responsibility for the technical
disclosure relating to Keegan in this release.
Charles J. Muller, B.Sc. Geology (Hons), Pr.Sci.Nat., MGSSA, a
Director of Minxcon Pty Ltd. of Johannesburg, South Africa and an
independent Qualified Person under NI 43-101 is responsible for any
disclosure related to Keegan's Mineral Resources in this
release.
Cautionary Note Regarding Forward-Looking Statements and
Information:
This PMI and Keegan joint press release contains
"forward-looking information", as such term is defined in
applicable Canadian securities legislation and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Such statements concern
PMI's and Keegan's future financial or operating performance and
other statements that express management's expectations or
estimates of future developments, circumstances or results.
Generally, forward-looking information can be identified by the use
of forward-looking terminology such as "expects", "believes",
"anticipates", "budget", "scheduled", "estimates", "forecasts",
"intends", "plans" and variations of such words and phrases, or by
statements that certain actions, events or results "may", "will",
"could", "would" or "might", "be taken", "occur" or "be achieved".
Such forward-looking information may include, without limitation,
statements regarding the completion and expected benefits of the
proposed Merger and other statements that are not historical facts.
Forward-looking information is based on a number of assumptions and
estimates that, while considered reasonable by management based on
the business and markets in which PMI and Keegan operate, are
inherently subject to significant operational, economic and
competitive uncertainties and contingencies. Assumptions upon which
forward looking statements relating to the plan of arrangement have
been made include that PMI and Keegan will be able to satisfy the
conditions in the Arrangement Agreement, that ongoing due diligence
investigations of each party will not identify any materially
adverse facts or circumstances, that the required approvals will be
obtained from the shareholders of each of PMI and Keegan, that all
required third party, and that regulatory and government approvals
will be obtained.
PMI and Keegan caution that forward-looking information involves
known and unknown risks, uncertainties and other factors that may
cause PMI's and Keegan's actual results, performance or
achievements to be materially different from those expressed or
implied by such information, including, but not limited to: gold
price volatility; fluctuations in foreign exchange rates and
interest rates; between actual and estimated reserves and resources
or between actual and estimated metallurgical recoveries; costs of
production; capital expenditure requirements; the costs and timing
of construction and development of new deposits and expansion of
existing operations; the success of exploration and permitting
activities; parts, equipment, labor or power shortages or other
increases in costs; mining accidents, labour disputes or other
adverse events; and changes in applicable laws or regulations. In
addition, the factors described or referred to in the section
entitled "Risk Factors" in PMI's Annual Information Form for the
year ended June 30, 2012 or under the heading "Business Description
- Risk Factors" in Keegan's Annual Information Form for the
financial year ended March 31, 2012, both of which are available on
the SEDAR website at www.sedar.com, should be reviewed in
conjunction with the information found in this press release.
Although PMI and Keegan have attempted to identify important
factors that could cause actual results, performance or
achievements to differ materially from those contained in
forward-looking information, there can be other factors that cause
results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that such
information will prove to be accurate or that management's
expectations or estimates of future developments, circumstances or
results will materialize. As a result of these risks and
uncertainties, the proposed Merger could be modified, restricted or
not completed, and the results or events predicted in these forward
looking statements may differ materially from actual results or
events. Accordingly, readers should not place undue reliance on
forward-looking information. The forward-looking information in
this press release is made as of the date of this press release,
and PMI and Keegan disclaim any intention or obligation to update
or revise such information, except as required by applicable law
and neither Keegan not PMI assume any liability for disclosure
relating to the other company herein.
Cautionary Note to US Investors Regarding Mineral Reporting
Standards:
PMI and Keegan prepare their 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 in this press release are defined in accordance
with National Instrument 43-101 - Standards of Disclosure for
Mineral Projects under the guidelines set out in the Canadian
Institute of Mining, Metallurgy, and Petroleum Standards on Mineral
Resources and Mineral Reserves. The Securities and Exchange
Commission (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. PMI and
Keegan use certain terms, such as, "measured mineral resources",
"indicated mineral resources", "inferred mineral resources" and
"probable mineral reserves", that the SEC does not recognize (these
terms may be used in this press release and are included in the
public filings of each of PMI and Keegan which have been filed with
securities commissions or similar authorities in Canada).
Contacts: Keegan Resources Inc. Peter Breese President and CEO
1-604-683-8193 or 1-800-863-8655 Keegan Resources Inc. John Eren VP
Investor Relations 1-604-683-8193 or
1-800-863-8655info@keeganresources.com www.keeganresources.com
Rebecca Greco Fig House Communications 1-416-822-6483 or
1-888-682-8089 Nicholas Read Read Corporate 61-8- 9388
1471info@pmigoldcorp.com www.pmigoldcorp.com Contacts: PMI Gold
Corporation Collin Ellison Managing Director and CEO