Avino Silver & Gold Mines Ltd. and Bralorne Gold Mines Ltd.: Further to their joint news release dated June 30, 2014, Avino and Bralorne have executed a binding arrangement agreement whereby Avino will acquire all of the outstanding common shares of Bralorne which Avino does not already own by way of a plan of arrangement under the Business Corporations Act (British Columbia).
Upon completion of the Arrangement, it is anticipated that approximately 2,636,857 common shares of Avino will be issued to former Bralorne shareholders to acquire Bralorne, which holds an undivided 100% legal and beneficial interest in the operating Bralorne gold mine in British Columbia.
David Wolfin, President and CEO of Avino commented "We are very pleased to have signed the definitive agreements to complete this transaction. The Bralorne gold mine will be our second production center in North America and the Avino team looks forward to working with Bralorne team to expand the mine and realize its full operational and financial potential."
William Kocken, CEO of Bralorne added "I am a significant Bralorne shareholder and long-serving Bralorne director and officer and speaking as a Bralorne shareholder and director and officer, I believe that this transaction represents an exceptional opportunity for Bralorne shareholders to gain exposure to a profitable precious metals producer with a track record of accretively financing the expansion of operating mines. I am very confident that Bralorne shareholders will benefit not only from the growth and expansion of the Bralorne gold mine, but also from the growth and expansion of Avino's flagship silver and gold mine. Avino recently became our largest shareholder and I appreciate their support through what were very difficult and challenging financial circumstances for Bralorne."
Summary Terms of the Arrangement
Under the terms of the Arrangement, on the effective date of the Arrangement the shareholders of Bralorne will receive 0.14 of an Avino common share for each Bralorne common share held by such shareholder (the "Share Exchange Ratio"), and all of the issued and unexercised stock options of Bralorne will be cancelled. Bralorne will as a result become a wholly-owned subsidiary of Avino. Avino previously held 179,149 common shares of Bralorne and recently purchased 9,500,000 common shares of Bralorne from a third party, and therefore already owns 9,679,149 common shares of Bralorne, representing approximately 34% of Bralorne's outstanding common shares. Avino is Bralorne's largest shareholder and will vote in favour of the Arrangement.
The Share Exchange Ratio represents a 25.2% offer premium to Bralorne shareholders based on the closing prices of Avino and Bralorne on the TSX Venture Exchange as of June 27, 2014. No fractional shares of Avino will be issued, and fractions will be rounded down to the nearest lower whole share. Based on the 28,513,844 common shares of Bralorne outstanding on the date hereof, Bralorne shareholders (not including Avino) will receive under the Arrangement approximately 2,636,857 common shares of Avino (more or less), representing approximately 8.09% of Avino's outstanding shares on completion of the Arrangement (based on Avino's 32,611,807 outstanding common shares on the date hereof).
With the acceptance of the TSX Venture Exchange, and to provide Bralorne with required working capital pending completion of the Arrangement, Avino has also agreed to loan to Bralorne up to CAD$1.25 million, consisting of an initial advance of $500,000 (which has been made), and the balance of $750,000 upon the delivery of a mutually agreeable budget. All advances will bear interest at 12% per annum payable on maturity, and will mature thirty days after demand made after October 31, 2014. The principal amount and any accrued interest has been secured by a general security interest against all of the assets of Bralorne.
The Arrangement has been reviewed by the independent special committees of both Avino and Bralorne, and was approved unanimously by the independent directors of both Bralorne and Avino. The directors and officers of Bralorne have also entered into voting support agreements with Avino under which they have agreed to vote their Bralorne shares (if any) and options in favour of the Arrangement representing approximately 5.31% of the shares and 75% of the options entitled to vote at the Bralorne annual general and special meeting, currently scheduled to be held on October 9, 2014.
The special committee and Board of Directors of Bralorne have received a fairness opinion from Bruce McKnight Minerals Advisor that the Avino share consideration is fair, from a financial perspective, to the shareholders of Bralorne. The Board of Directors of Bralorne unanimously recommends to the shareholders to vote in support of the Arrangement.
The special committee and Board of Directors of Avino has also received a fairness opinion from Ross Glanville & Associates that the Avino share consideration is fair, from a financial perspective, to the shareholders of Avino. Cantor Fitzgerald Canada Corporation is acting as financial advisor to Avino in connection with the Arrangement.
The acquisition of Bralorne by Avino is expected to be completed by way of a court approved plan of arrangement in British Columbia in October 2014.
The Arrangement provides for customary deal protection mechanisms, including non-solicitation and right to match, in favour of Avino. Pending completion of the Arrangement, Bralorne will not issue any debt, equity or equity like securities without the prior written consent of Avino.
The closing of the Transaction will be subject to completion of several conditions, including:
- There shall have been no change, condition, event or occurrence which has or is reasonably likely to have a material adverse effect on Bralorne;
- The Transaction and plan of arrangement will be subject to approval by the shareholders and option holders of Bralorne voting as a single class, at an annual general and special meeting of shareholders; and
- Receipt of all necessary approvals to the Arrangement, including from the TSX Venture Exchange, and the approval of the Supreme Court of British Columbia after a hearing upon the fairness of the Arrangement.
No assurance can be given at this time that the proposed Arrangement will be completed, that the conditions to closing will be satisfied or that the terms of the Arrangement will not change materially from those described in this news release.
Bralorne security holders and Avino shareholders and all other interested parties are advised to read the proxy materials relating to the proposed Arrangement that will be filed by Bralorne with securities regulatory authorities in Canada when they become available. Anyone may obtain copies of these documents when available free of charge at the Canadian Securities Administrators' website at www.sedar.com, under Bralorne's profile.
This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell the shares or a solicitation of a proxy.
Bralorne is a Canadian junior mining and exploration company, whose current project is a 100% interest in the Bralorne Gold Mine, BC. The Bralorne mining camp has a history of past production of 4 million ounces of gold from three mines (Bralorne, Pioneer and King) that fed two mills with a combined capacity of 875 tons per day with gold grades that averaged half an ounce per ton until 1971. Historically, the focus was on mining high grade material delineated by driving drifts on the veins at successively lower levels in the mines. Minimal exploration work was conducted beyond the known veins, and the areas between the historical mines were left undeveloped. Under Bralorne's management, and supervision of William Kocken, new mill facilities have been developed, permitted, and are fully operational, and new discoveries have been made within the gap areas between the old mines, using geochemical surveys followed by diamond drilling. On November 21, 2012, Bralorne filed on SEDAR a preliminary economic assessment report on the Bralorne Mine property prepared by Beacon Hill Consultants (1988) Ltd., which reported as at August 31, 2012 measured and indicated mineral resources of 170,583 tons grading 0.266 oz gold/ton, and inferred mineral resources of 272,089 tons grading 0.256 oz gold/ton (mineral resources are not mineral reserves and do not have demonstrated economic viability).
In 2011, Bralorne began limited production at 100 tons per day and has sustained the operation since that time. Despite the limited production, the mine property is still considered in the exploration and evaluation stage. During fiscal year 2013, Bralorne produced an estimated 3,842 ounces of gold.