Timberline Resources Corporation announced today that it has restructured its proposed acquisition of Wolfpack Gold Corp. and has executed an Amended Letter of Intent reflecting the revised terms.
Timberline's acquisition of Wolfpack is expected to create a Nevada-focused gold exploration company with a substantial portfolio of quality assets in a world-class jurisdiction.
Pursuant to the amended structure, Timberline intends to acquire all of the outstanding shares of a Wolfpack subsidiary which will hold all of Wolfpack's current assets other than its uranium holdings in exchange for shares of common stock in the capital of Timberline at a ratio equal to 0.75 shares of Timberline for each outstanding share of Wolfpack. Wolfpack expects to distribute the Timberline shares to its shareholders at closing through dividend or other means. Under the amended terms of the LOI, Timberline will retain ownership of its 50% carried-to-production interest in the Butte Highlands Gold Project in Montana.
Upon completion of the transaction, Timberline shareholders will hold, as a group, approximately 65% of the outstanding shares of Timberline, while Wolfpack shareholders will hold, as a group, approximately 35% of the outstanding Timberline shares. At a result of the acquisition, Timberline will acquire a number of gold projects in Nevada and approximately US$4.7 million in cash, inclusive of the loan. The exact transaction structure and timing will be determined following completion of due diligence and a review of tax, securities law and related issues, and remain subject to any necessary shareholder, corporate, and regulatory approvals.
Timberline President and CEO Paul Dircksen commented, "We are pleased that this amended acquisition structure includes a greater share of ownership for Timberline shareholders and the retention of our ownership interest in the Butte Highlands project where final permits appear to be forthcoming soon. While operation of the project is in the hands of our joint venture partner, who has already completed significant pre-development work, Timberline's shareholders will continue to benefit from the future developments at Butte Highlands as well as acquire ownership of additional gold properties in Nevada, and funding that will allow us to advance our priority properties".
Timberline and Wolfpack have agreed to extend the exclusivity period until May 5, 2014, during which time the parties will complete their respective due diligence and, upon satisfactory completion thereof, conclude a definitive agreement. The acquisition is expected to be completed by a plan of arrangement or other suitable mechanism.
At closing, Timberline expects to reconstitute its board of directors to be comprised of five directors, three of whom will be nominated by the Company and two of whom will be nominated by Wolfpack. Wolfpack chairman Mr. William Sheriff will be appointed as Chairman of the Board while Paul Dircksen will continue as the President and Chief Executive Officer of Timberline and Randy Hardy will continue as the Chief Financial Officer. The Company also anticipates at closing that it will consolidate its shares on a ratio to be determined by the Company's Board of Directors. Additionally, the LOI requires a break fee in the amount of US$500,000 be paid by a party electing to terminate the definitive agreement to accept a third party superior proposal.
Under the terms of the LOI, Wolfpack has agreed to provide Timberline with a bridge loan of up to US$1,000,000 to fund the working capital needs of Timberline during the interim period prior to the completion of the proposed transaction. Repayment of the loan is secured by Timberline's interest in the Seven Troughs property located in Pershing County, Nevada. As previously announced, Wolfpack provided Timberline the initial advance of US$500,000 under the bridge loan on March 14, 2014.
Completion of the proposed acquisition is subject to a number of conditions, including satisfactory completion of due diligence by each of the parties, execution of a mutually acceptable definitive agreement by May 5, 2014, and receipt by both Wolfpack and Timberline of all stock exchange and third party approvals, including shareholder approval, if required. Advancement of the bridge loan and any conversion thereof into Timberline shares, is subject to receipt by both parties of stock exchange approval.
Source: http://www.timberline-resources.com