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BT
I currently hold EMP
INTREPID AND EMPEROR TO CREATE A DYNAMIC AND WELL FUNDED GOLDPRODUCER, DEVELOPER AND EXPLORER18 SEPTEMBER 2007
Intrepid Mines Limited (TSX: IAU, IXN & ASX: IAU) and Emperor Mines Limited (ASX:EMP) are pleased to announce that their respective Boards have signed an agreement to merge the two companies.
The Merged Company
The new company, to be named Intrepid Mines Limited, will be a dynamic and well funded international gold producer, developer and explorer listed on both the TSX and ASX.
The combination of Emperor’s balance sheet strength, Intrepid’s producing Paulsens Gold Mine and its Casposo development project, and both companies’ exploration assets, together with the combined skills of the two management teams, will create a well balanced company capable of adding significant value for its shareholders.
I
n particular, the merged Intrepid’s strengthened balance sheet and the ability to secure project finance, will allow the company to immediately move forward with corporate objectives, including:
• accelerated underground exploration at the Paulsens Gold Mine;
• imminent development of the Casposo gold/silver Project in Argentina on an
unhedged basis and continued examination of early expansion options;
• immediate exploration at Taviche (Mexico) and Tujuh Bukit Project (Indonesia) and an expanded exploration budget of up to approximately A$8.0 million per annum;
and
• improved capacity to target project and corporate acquisition opportunities.
The proposed merger, if it proceeds, will take place by way of a scheme of arrangement.
Emperor’s 78.7% shareholder, DRDGOLD, has informed Emperor that it intends to refocus its attention on opportunities in South Africa and so intends to seek to realise its investment in an orderly manner prior to the scheme meeting convened by the Court to approve the proposed scheme. Emperor has agreed to work with DRDGOLD to seek to facilitate such an exit. The proposed merger with Intrepid is therefore subject to DRDGOLD being able to successfully realise its investment in Emperor prior to this time.
The boards of directors of Emperor and Intrepid have resolved to support the proposed merger.
Overview
The merger will take place by way of a scheme of arrangement, with Emperor
shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held. Existing unlisted Emperor employee options are to be either cancelled for cash or new Intrepid options issued on equivalent terms and conditions.
Board and Management Structure
The merged company will benefit from the skills and international experience of the combined management teams, with personnel who have held senior positions with major resource companies such as Placer Dome, BHP Billiton, and Western Mining Corporation. Management of the merged company will be led by Mr Brad Gordon as Chief Executive Officer and Mr Laurence Curtis as President. The merged company’s head office will be located in Brisbane, Australia and the capital markets and the Americas exploration office will be located in Toronto, Canada.
The Board of the merged company will comprise at least three representatives from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman of the merged company.
Synergy and Benefits of the Merged Company
The principal assets of the merged company will be:
• Paulsens operating gold mine in Western Australia (100% interest);
• Casposo gold/silver development project in Argentina (100% interest); and
• advanced exploration projects at Taviche (Mexico – earning a 35% interest,
gold/silver) and Tujuh Bukit Project (Java, Indonesia – earning up to 70% interest,gold/silver/copper).
The merger is expected to deliver an expanded production profile and near term increased gold inventory potential, leveraging exposure to the gold price.
Transaction Implementation Emperor and Intrepid have entered into a Merger Implementation Deed under which they have agreed to certain undertakings and arrangements to facilitate the merger. The complete document may be found on the companies’ websites or on www.sedar.com, the official site that provides access to most public securities’ documents and information
filed by public companies and investment funds with the Canadian Securities
Administrators in the SEDAR filing system. Key terms of the Merger
Implementation
Deed are summarised in Appendix A.
The proposed merger is conditional on, amongst other things:
i) Emperor shareholder approval;
ii) Intrepid shareholder approval;
iii) DRDGOLD selling its shareholding in Emperor;
iv) The acquisition or cancellation of all Emperor options;
v) Each of Emperor and Intrepid being satisfied with the results of their respective due
diligence enquiries;
vi) Emperor having surplus net cash of at least A$54 million immediately prior to the second Court hearing to approve the scheme (taking into account any amounts provided by Emperor to Intrepid, any sum expended in respect of the Tujuh Bukit
Joint Venture and any other expenditure approved by Intrepid);
vii) Any other regulatory approvals, no regulatory action, no material adverse change, no prescribed occurrences, TSX consent; and
viii) Court approval. Both companies have entered into no solicitation – no talk provisions customary for this type of transaction. In addition Emperor has provided financial accommodation to Intrepid Minerals Corporation, a wholly owned subsidiary of Intrepid, amounting to A$5.0 million and holds an option to convert this loan into Intrepid shares.
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