Posted in | Gold | Mining Business

Rio Alto Mining Signs Definitive Arrangement Agreement with Sulliden Gold

Rio Alto Mining Limited and Sulliden Gold Corporation Ltd. are pleased to announce that they have signed a definitive arrangement agreement relating to the previously announced business combination of Rio Alto and Sulliden.

The material terms of the Transaction are as previously disclosed in the joint press release of Rio Alto and Sulliden dated May 21, 2014. The Transaction remains subject to court and regulatory approval, as well as the approval of Rio Alto and Sulliden shareholders. The Special Meeting of Sulliden shareholders and the Special Meeting of Rio Alto shareholders to approve the Transaction are both scheduled to take place on July 30, 2014 (the "Meetings") and the record date for receiving notice of and the right to vote at the Meetings is June 26, 2014.

The Transaction combines the respective businesses of Rio Alto and Sulliden to create a new, leading mid-tier gold producer with operations focused in the world-class gold mining district of Peru. Shareholders of both Rio Alto and Sulliden will benefit from the synergies that result from the combination of Rio Alto's currently producing, low cost La Arena gold oxide mine and adjoining sulphide copper-gold deposit with Sulliden's low cost, scalable Shahuindo gold development project located in northern Peru approximately 30 kilometers away from La Arena. The combined company will have near-term production potential of approximately 300,000 ounces of gold per year and the opportunity to materially expand production in the near-term while maintaining attractive and sustainably low cash costs.

The Transaction

Pursuant to the Transaction, Rio Alto will acquire all of the issued and outstanding Sulliden common shares that it does not already own by the issue of 0.525 of a Rio Alto common share for each Sulliden common share (the "Exchange Ratio"). In addition, as part of the Transaction, Sulliden shareholders will receive 0.10 of a common share in a newly incorporated company ("SpinCo") for each Sulliden common share held. SpinCo will hold Sulliden's 100% interest in the East Sullivan Property in Val-d'Or, Quebec and will be capitalized with approximately C$25 million which at Rio Alto's option may be provided entirely in cash or C$15 million in cash and C$10 million in common shares of Rio Alto. Following completion of the Transaction, each outstanding warrant and stock option to purchase Sulliden common shares will be exercisable to purchase 0.525 of a Rio Alto common share and 0.10 of a SpinCo common share in lieu of each Sulliden share.

The Transaction will be carried out by way of court-approved plan of arrangement and will require the approval of at least 66⅔% of the votes cast in person or by proxy of the shareholders of Sulliden at the Special Meeting of Sulliden shareholders. The Transaction must also be approved by a simple majority of the votes cast at the Special Meeting of Sulliden Shareholders in person or by proxy, after excluding votes cast in respect of Sulliden shares over which certain officers/directors of Sulliden, exercise control or direction in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions). The Transaction is also subject to obtaining approval by a majority of votes cast by the shareholders of Rio Alto at the Special Meeting of Rio Alto shareholders. In addition to shareholder approvals, the Transaction is also subject to the receipt of all necessary regulatory, court and other approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature.

The Agreement includes customary deal protection provisions including, among other things, reciprocal non-solicitation covenants, subject to "fiduciary out" provisions that entitle a party to consider and accept a superior proposal and a right in favour of the other party to match any superior proposal. The Agreement provides for a reciprocal C$15 million termination fee payable and a cost reimbursement fee of C$2 million payable by one party to the other in certain circumstances if the Transaction is not completed.

Rio Alto currently owns 8.6% of Sulliden's basic common shares outstanding and has agreed to vote those shares in favour of the Transaction. In addition, Rio Alto and Sulliden have each received from the other voting support agreements providing that the holders of 7.18% of Sulliden common shares and the holders of 3.9% of Rio Alto common shares will vote in favour of the Transaction.

Materials for the Meetings are expected to be mailed to the shareholders of Rio Alto and Sulliden in the first week of July. The closing of the Transaction is expected to occur as soon as reasonably practicable following the Meetings and the satisfaction of all other closing conditions.

Source: http://www.sulliden.com

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