NewCastle Gold and Catalyst Copper Announce Merger to Strengthen Board and Provide Financial Flexibility
NewCastle Gold Ltd. (NCA:TSX-V, the “Company” or “NewCastle”) and Catalyst Copper Corp. (CCY:TSX-V or “Catalyst”) are pleased to announce that they have entered into an agreement (the “Agreement”) to combine their respective businesses to create a new company, anchored by the substantially permitted Castle Mountain Gold Project located in California, with the goal of creating a new mid-tier gold company.
The combined company will provide shareholders with exposure to a significant, substantially permitted gold resource at NewCastle’s Castle Mountain Gold Project, including 0.48 million measured ounces of gold at 0.86 g/t, 3.7 million indicated ounces at 0.57 g/t, and 0.76 million inferred ounces at 0.58 g/t1, as well as a strengthened management team led by Richard Warke, as Executive Chairman, and including high profile and experienced board members Jim Gowans and Frank Giustra. The combined company will continue to be named “NewCastle Gold Ltd.”
Highlights of the strengthened NewCastle:
- Highly-experienced board and management team with a proven record of success to drive value on the Castle Mountain Gold Project
- Operational strength and access to extensive project and technical skills to supplement and strengthen existing management team
- Addition of significant expertise in respect of United States permitting matters
- Addition of extensive capital markets experience
- C$3,750,000 of capital to provide NewCastle with financial flexibility, with the objective of fully funding NewCastle to maximize the potential of the Castle Mountain Gold Project
Mr. Warke was responsible for the founding and success of several resource companies, including Arizona Mining Inc., where he is currently the Executive Chairman, Augusta Resource Corporation, which was sold in 2014 for $666 million, and the former Ventana Gold Corporation, which was sold in 2011 for $1.533 billion. Richard has more than 25 years’ of experience in corporate finance and marketing in the global resource industry and has been involved in raising over $1 billion in equity for various resource companies.
Mr. Gowans was formerly Co-President of Barrick Gold Corporation from July 2014 to August 2015 and Executive Vice President and Chief Operating Officer from January to July 2014. Prior to that, Jim has held the most senior executive roles with mining companies, including Debswana Diamond Company (Pty) Ltd., De Beers Canada Inc., International Nickel Indonesia tbk PT and Placer Dome Inc. Mr. Gowans has more than 30 years’ of experience in exploration, development, construction and operations in the mining industry. Currently President and Chief Executive Officer of Arizona Mining, Chairman of Dominion Diamond Corporation and a director of Cameco Corp and Gedex Inc. Jim previously served as the President of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).
Mr. Giustra has an established track record of building natural resource companies, including Wheaton River, Silver Wheaton and Endeavor Mining. In 1997, Frank established The Radcliffe Foundation; which supports a wide variety of international and local charities. Mr. Giustra is a board member of Lions Gate Entertainment, Endeavour Mining, Petromanas Energy and Thunderbird Films. In addition, Frank sits on boards of the Clinton Giustra Enterprise Partnership, The Bill, Hillary and Chelsea Foundation, International Crisis Group, and Streethome Foundation.
The Agreement provides that the parties will complete a business combination, pursuant to which NewCastle will acquire all of the outstanding common shares of Catalyst in exchange for common shares of NewCastle (“NewCastle Shares”), either by way of amalgamation or plan of arrangement. The exchange ratio will be such that on a post-merger basis the outstanding shares of NewCastle will be held, as to 60%, by the shareholders of NewCastle and, as to 40%, by the shareholders of Catalyst. It is a condition of the transaction that, prior to completion of the business combination, stock options and warrants of Catalyst will be exercised such that Catalyst will have not less than C$3,750,000 cash (less any amounts invested pursuant to the private placement, described below). The implied premium to Catalyst shareholders on a fully diluted basis, based on respective share prices at close on March 21, 2016, is 3%.
The Agreement also provides that Catalyst will subscribe for up to C$600,000 of NewCastle Shares by way of a private placement at an issue price of C$0.275 per common share (the “Private Placement”), of which C$100,000 will be closed on in the next few days.
The Agreement contemplates that the parties will enter into a long-form definitive agreement containing conditions, representations and deal protection provisions customary for a transaction of this nature. Completion of the transaction is subject to receipt of all necessary regulatory, court and shareholder approvals.
The post-merger board of NewCastle will consist of Richard Warke, David Adamson, Mark Wayne, David Reid, Jim Gowans, Frank Giustra and Colin Sutherland.
NewCastle has retained GMP Securities L.P. as its exclusive financial advisor in respect of the transaction.
Benefits to NewCastle Shareholders
The new board will add significant new expertise to NewCastle in areas viewed as critical to NewCastle’s success, including enhanced capital markets experience and access to critical technical skills and permitting experience in the United States.
The transaction is expected to maximize the ability of NewCastle to secure adequate funds to ensure that development of the Castle Mountain Gold Project is optimized. The transaction is also expected to enhance NewCastle’s market capitalization and expand its shareholder base, which NewCastle anticipates will provide additional shareholder liquidity.
The transaction is expected to provide optionality to copper through Catalyst’s 60%-owned La Verde Copper Project, located in the Michoacán State of west-central Mexico.
David Adamson, Chief Executive Officer of NewCastle, said “This is an exciting step forward for NewCastle shareholders, one which best ensures that the true value of our outstanding gold resource at Castle Mountain is realized. We think the combined Company will create a unique and attractive ‘go-to’ gold vehicle focused on realizing shareholder value.”
Benefits to Catalyst Shareholders
The transaction is expected to provide Catalyst shareholders exposure to a world class gold deposit and maintain optionality on Catalyst’s La Verde Copper Project.
The transaction is expected to provide an opportune entry point at a time when considerable de-risking has occurred on the Castle Mountain Gold Project but the value for which has not yet been recognized by the market.
The transaction is also expected to enhance Catalyst’s market capitalization and expand its shareholder base, which Catalyst anticipates will provide additional shareholder liquidity.
Richard Warke, President and Chief Executive Officer of Catalyst, said “The combination with NewCastle gives us a great foothold in gold and a great base to build upon. We are excited that the Castle Mountain Gold Project has tremendous upside and plan to fully test that in 2016 and we are looking forward to working with the existing NewCastle management team to pursue this exciting opportunity.”
NewCastle has 100% of the right, title and beneficial interest in and to the Castle Mountain Venture, a California general partnership, which owns the Castle Mountain property (the “Project”) in San Bernardino County, California. The Castle Mountain heap leach gold mine produced over one million ounces of gold from 1992 to 2001, when mining was suspended due to low gold prices. The Mine and Reclamation Plan, under which the mine operated, was authorized by the County of San Bernardino as the Lead Agency and remains in effect. Water for the drill programs was accessed from existing patented wells on the Project.
An updated NI 43-101 resource for the project was announced December 2, 2015 which includes Measured Mineral Resource of 17.4 million tonnes grading 0.86 g/t containing 0.48 million ounces, Indicated Mineral Resources of 202.5 million tonnes grading 0.57 g/t gold and containing 3.71 million gold ounces along with Inferred Mineral Resources of 40.8 million tonnes grading 0.58 g/t gold and containing 0.76 million gold ounces. The Project hosts a disseminated low sulphidation epithermal system. Gold is primarily hosted by late-stage rhyolite volcanic units within zones of silicification and brecciation associated with northeast-southwest trending/southeast dipping fault structures which are interpreted to have developed within a collapsed caldera environment. Eleven gold domains are represented by both steep and shallow-dipping orientations.
Ian R. Cunningham-Dunlop, P. Eng., the Company’s Vice President Exploration, is the designated Qualified Person for this news release within the meaning of NI 43-101. He has reviewed and verified that the technical information contained in this release is accurate and has approved of the written disclosure of the same.
For further information, please contact:
NewCastle Gold Ltd.
Catalyst is a copper and base metal company with a focus on copper mining projects in Mexico. Catalyst’s 60%-owned La Verde Copper Project (remaining 40%-owned indirectly by Teck Resources Limited) is situated in the Sierra Madre del Sur, approximately 320 kilometres west of Mexico City in Michoacán State and has excellent infrastructure. The amended September 30, 2012 Preliminary Economic Assessment contemplates La Verde to be an open pit producing over 200 million pounds of copper per year over a 20 year mine life. The Mineral Resources2 at La Verde include 57.5 million tonnes grading 0.45% copper Measured, 350.4 million tonnes grading 0.40% copper Indicated and 337.8 million tonnes grading 0.37% copper Inferred.
Catalyst Copper Corp.
Cautionary Note Regarding Forward Looking Statements
Certain information contained in this news release, including any information relating to the Agreement and completion of the transaction involving NewCastle and Catalyst and the Private Placement and any other statements regarding NewCastle’s and Catalyst’s future expectations, beliefs, goals or prospects, constitute forward-looking information within the meaning of applicable securities legislation (collectively, “forward-looking statements”). All statements in this news release that are not statements of historical fact (including statements containing the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “potential” and similar expressions) should be considered forward-looking statements. All such forward-looking statements are subject to important risk factors and uncertainties, many of which are beyond NewCastle’s and Catalyst’s ability to control or predict. A number of important factors could cause actual results or events to differ materially from those indicated or implied by such forward-looking statements, including without limitation: the parties’ ability to complete the transaction contemplated by the Agreement, including the receipt of shareholder approvals, court approval or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the parties’ ability to meet expectations regarding the timing, completion and tax treatments of the transaction; the volatility of the international marketplace; and other risk factors as described in NewCastle’s most recent annual information form and annual and quarterly financial reports and as described in Catalyst’s publicly available information.
Neither NewCastle nor Catalyst assumes any obligation to update the information in this communication, except as otherwise required by law. Additional information identifying risks and uncertainties is contained in NewCastle’s filings with the various provincial securities commissions which are available online at www.sedar.com. Forward-looking statements are provided for the purpose of providing information about the current expectations, beliefs and plans of the managements of NewCastle and Catalyst relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. Readers are also cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication.
Cautionary Note Concerning Estimates of Inferred and Indicated Resources
This news release uses the terms “Inferred Resources” and “Indicated Resources”, which have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred and/or Indicated Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. NewCastle advises U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. U.S. investors are cautioned not to assume that part or all of an Inferred and Indicated resource exists, or is economically or legally minable.
- The NI 43-101 Technical Report and Updated Mineral Resource Estimate for the Castle Mountain Project, San Bernardino County, California, USA” (the “Report”), dated January 15, 2016, prepared by James N. Gray, P.Geo. of Advantage Geoservices Ltd., R. Bob Singh, P.Geo. of North Face Software Ltd., William J. Pennstrom, Jr., Registered Member/SME of Pennstrom Consulting Inc., Kevin Kunkel, P.Geo. and Ian R. Cunningham-Dunlop, P.Eng., in accordance with disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”), “Standards of Disclosure for Mineral Projects”. Mr. Gray, Mr. Singh and Mr. Pennstrom are independent Qualified Persons as defined by NI 43-101. Garth D. Kirkham, P.Geo. of Kirkham Geosystems Ltd. performed a third-party peer review of the Mineral Resource estimate and the Report prior to filing. This report is available at www.sedar.com.
- On January 18, 2013 the Catalyst Copper announced delivery of a NI 43-101 Technical Report; including a Preliminary Economic Assessment Study (“PEA”) completed by AMC Mining Consultants (Canada) Ltd. (effective date September 2012). This Technical Report was based in part on the Tetratech Technical Report. Both technical reports are available under Catalyst’s profile at www.sedar.com
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