Further to their January 24, 2014 news release, Kerr Mines Inc. ("Kerr Mines") and Bear Lake Gold Ltd. ("Bear Lake") are pleased to announce that they have entered into an arrangement agreement dated as of February 25, 2014 (the "Arrangement Agreement").
Under the terms of the Arrangement Agreement, Kerr Mines will issue 1.4 units (each, a "Unit") of Kerr Mines in exchange for every one (1) common share of Bear Lake pursuant to a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). Each Unit will consist of one Kerr Mines share and one-half of one Kerr Mines warrant. Each whole Kerr Mines warrant will entitle the holder thereof to purchase one Kerr Mines share at an exercise price of $0.16 per Kerr Mines share for a period of two (2) years from the closing date of the Arrangement. Currently, Kerr Mines has 432,267,608 shares issued and outstanding while Bear Lake has 136,381,545 shares issued and outstanding. Each holder of the stock options of Bear Lake outstanding as of the date of completion of the Arrangement will receive such number of replacement stock options of Kerr Mines adjusted in accordance with the exchange ratio of 1.4 to 1. The board of directors of each of Kerr Mines and Bear Lake have approved the Arrangement.
The Arrangement must be approved by two-thirds of the votes cast by shareholders present and voting at the special meeting of Bear Lake shareholders called to consider the Arrangement. The board of directors of Bear Lake has unanimously resolved to recommend that its shareholders vote their securities in favour of the Arrangement.
The Arrangement is subject to the approval of the Ontario Superior Court of Justice, the TSX Venture Exchange, the TSX and all applicable regulatory authorities. Completion of the Arrangement is further subject to Kerr Mines shareholder approval and additional conditions set out in the Arrangement Agreement. Kerr Mines and Bear Lake expect to close the transaction on or before May 30, 2014.
It is anticipated that the closing of the Arrangement will occur prior to the proposed acquisition of American Bonanza Mining Corp. by Kerr Mines, announced on January 23, 2014 (the "American Bonanza Transaction").
As previously announced, the objective of the combination of Kerr Mines and Bear Lake is to consolidate a greater than 20-km strike length of highly prolific land on the Cadillac-Larder Lake break by creating a larger, stronger company that will be better positioned to exploit the tremendous upside potential of their projects, as well as create a higher profile company within the financial community.
Subject to the requisite shareholder approvals of each of Kerr Mines and Bear Lake, the board of directors of the company resulting from the combination of Kerr Mines and Bear Lake will consist of six nominees from Kerr Mines and one nominee from Bear Lake. As approved by the shareholders of Kerr Mines at the annual and special meeting of the shareholders of Kerr Mines held on December 19, 2013, the Kerr Mines shares will, following completion of the Arrangement and the American Bonanza Transaction, be consolidated on a 1 for 15 basis.
Primary Capital Inc. is acting as financial advisor to Bear Lake.
A copy of the Arrangement Agreement will be filed on SEDAR and will be available for viewing under the profiles of Kerr Mines and Bear Lake at https://www.sedar.com/homepage_en.htm.