REG - SolGold PLC - SolGold & Cornerstone Announce Friendly Merger

SolGoldAnnouncement

07/10/2022 07:00

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RNS Number : 1476C  SolGold PLC  07 October 2022

SolGold & Cornerstone Announce Friendly Merger Transaction

Consolidates 100% of the Cascabel Project

Strategic Review Process Initiated for Combined Group

 

Brisbane, Australia / Ottawa, Canada (October 7, 2022) - SolGold plc
(LSE:SOLG; TSX:SOLG) ("SolGold") and Cornerstone Capital Resources Inc.
(TSXV:CGP; OTC:CTNXF; FWB:GWN1) ("Cornerstone") (together the "Parties" and
individually, a "Party") are pleased to announce that they have entered into a
definitive agreement (the "Agreement") whereby SolGold will acquire all of the
issued and outstanding shares of Cornerstone ("Cornerstone Shares"), other
than Cornerstone Shares already held, directly or indirectly, by SolGold,
pursuant to a court-approved plan of arrangement (the "Transaction").

Under the terms of the Agreement, Cornerstone Shares will be exchanged for 15
SolGold ordinary shares ("SolGold Shares") for each Cornerstone common share
held. Pursuant to the terms of the Agreement, SolGold may elect to pay up to
20% of the consideration in cash, in which case the cash would be pro rated
among all Cornerstone shareholders and the number of SolGold Shares issuable
to Cornerstone shareholders would be reduced. Upon completion of the
Transaction, if SolGold elects not to pay any portion of the consideration in
cash, existing SolGold and Cornerstone shareholders are expected to own
approximately 80% and 20% of the combined entity (the "Combined Group"),
respectively, on a fully diluted in-the-money basis which is consistent with
the current effective exposure of approximately 80/20 to the Cascabel Project
prior to the Transaction.

The merger of Cornerstone and SolGold will significantly strengthen the
ability of the Combined Group to create value for shareholders by
consolidating ownership of the Cascabel Project along with a robust portfolio
of other projects primarily across Ecuador.

Darryl Cuzzubbo, CEO and Managing Director of SolGold, stated: "It has been my
view from the start that SolGold and Cornerstone are more valuable together
than apart. This is an exciting value enhancing transaction for all
stakeholders. This Transaction also sets the stage for a strategic review of
the Combined Group as we methodically assess options that are in the best
interest of our shareholders."

Brooke Macdonald, President and CEO of Cornerstone, stated: "This merger
transaction makes sense for both sets of shareholders. The merger allows our
shareholders to maintain exposure to the world class Cascabel Project and is a
step towards maximizing value. Having considered the landscape, we are
convinced that combining forces with SolGold will unlock significant value for
all shareholders. The strategic review for the combined group aligns with our
views on the best path forward. Today represents a significant milestone for
all Cornerstone stakeholders and I would like to thank them for their support
over the years."

The PDF of the release is available through this link:
http://www.rns-pdf.londonstockexchange.com/rns/1476C_1-2022-10-7.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1476C_1-2022-10-7.pdf)

Transaction Summary

The proposed Transaction will be completed pursuant to a court-approved plan
of arrangement under the Business Corporations Act (Alberta). The Transaction
will require approval by two-thirds of the votes cast by the shareholders of
Cornerstone and a majority of the votes cast by disinterested shareholders at
a special meeting of Cornerstone shareholders expected to be held in the
fourth quarter of 2022.

All Cornerstone directors, executive officers and certain shareholders,
collectively representing 44.1% of the Cornerstone Shares (47.0% on a fully
diluted basis) have entered into voting support agreements with SolGold,
agreeing to, among other things, vote their Cornerstone Shares in favour of
the Transaction. The Transaction is subject to obtaining customary approvals
including applicable court and stock exchange approvals. The Agreement
includes customary deal protection provisions in favour of SolGold.

In addition, the Parties have agreed to make any amendments to the Agreement
or plan of arrangement if necessary or desirable in order to implement an
exchangeable share structure to allow eligible Canadian Cornerstone
shareholders to receive a tax-deferred roll-over under the Income Tax Act
(Canada) to the extent that the non-share consideration received does not
exceed the shareholder's cost base for Canadian tax purposes. The
implementation of such amendments will not be a condition of closing of the
Transaction and there is no assurance that such a structure will be
implemented.

Upon closing of the Transaction, the SolGold board of directors will be
comprised of up to ten individuals with Cornerstone entitled to nominate two
directors.

Full details of the Transaction and the Agreement will be included in
Cornerstone's management information circular which is expected to be filed
with the regulatory authorities in Canada and mailed to shareholders of
Cornerstone in the fourth quarter of 2022. Further, SolGold intends on filing
a prospectus with the applicable regulatory authorities in the UK with respect
to the shares to be distributed to Cornerstone shareholders pursuant to the
Transaction, which is expected to be filed in the fourth quarter of 2022.

Pursuant to the Agreement, SolGold is pursuing a strategic review process with
the goal of maximizing value for all shareholders (the "Strategic Review
Process"). Accordingly, SolGold has appointed Citigroup Global Markets Inc.
("Citi") and Maxit Capital LP ("Maxit Capital") to act as financial advisors
to assist with exploring value creating alternatives for the Combined Group.
The Strategic Review Process may include, but shall not be limited to,
evaluating and pursuing the following:

·    evaluating financing alternatives for the Combined Group;

·    a spin-out of assets, other than the Cascabel Project, to all
shareholders of the Combined Group;

·    the direct or indirect acquisition of an interest in ENSA and/or the
Cascabel Project howsoever effected; or

·    any other transaction or series of related transactions as may be
agreed to between the Parties.

The completion of the Transaction is not contingent on the completion of the
Strategic Review Process and there can be no assurance that the Strategic
Review Process will lead to any transaction.

Board of Directors' Recommendation

The Transaction has been unanimously approved by the boards of directors of
SolGold and Cornerstone including, in the case of Cornerstone, following the
unanimous recommendation of a special committee of independent directors. The
Cornerstone board of directors unanimously recommends that Cornerstone
shareholders vote in favour of the Transaction.

Paradigm Capital Inc. ("Paradigm Capital"), financial advisor to Cornerstone,
has provided a verbal opinion to the Cornerstone board of directors stating
that, and based upon and subject to the assumptions, limitations, and
qualifications set forth therein, the consideration to be received pursuant to
the Transaction is fair, from a financial point of view, to the Cornerstone
shareholders (other than SolGold).

Advisors

Citi is acting as financial advisor to SolGold and Bennett Jones LLP is acting
as its legal advisor in connection with the Transaction.

Paradigm Capital and Maxit Capital are acting as financial advisors to
Cornerstone and Davies Ward Phillips & Vineberg LLP is acting as its legal
advisor in connection with the Transaction.

Investor Presentation

SolGold CEO and Managing Director Darryl Cuzzubbo and Interim Group Chief
Financial Officer Keith Pollocks will host a live presentation on Wednesday,
12 October at 1:00pm (London time), 8:00am (Toronto time), 10:00pm (Brisbane
time). Investors can register to view the live presentation at:
https://www.investormeetcompany.com/solgold-plc/register-investor
(https://www.investormeetcompany.com/solgold-plc/register-investor) .

About SolGold

SolGold is a leading resources company focused on the discovery, definition
and development of world-class copper and gold deposits and continues to
strive to deliver objectives efficiently and in the interests of shareholders.
SolGold is exploring the length and breadth of this highly prospective and
gold-rich section of the Andean Copper Belt which is currently responsible for
~40% of global mined copper production.

SolGold operates with transparency and in accordance with international best
practices. SolGold is committed to delivering value to its shareholders, while
simultaneously providing economic and social benefits to impacted communities,
fostering a healthy and safe workplace and minimizing the environmental
impact.

About Cornerstone

Cornerstone Capital Resources Inc. is a mineral exploration company with a
diversified portfolio of projects in Ecuador and Chile, including a direct
& indirect interest in the Cascabel gold-enriched copper porphyry in
northwest Ecuador.

For further information, please contact:

 SolGold                                                      Cornerstone

 Fawzi Hanano (Head of Investor Relations)                    Brooke Macdonald (CEO)

 investors@solgold.com.au (mailto:investors@solgold.com.au)   ir@cornerstoneresources.ca (mailto:ir@cornerstoneresources.ca)

 Rufus Gandhi (Company Secretary)

 +61 (0) 7 3303 0660

 Tavistock (SolGold Media)

 Jos Simson / Gareth Tredway

 +44 (0) 20 7920 3150

Certain information contained in this announcement would have been deemed
inside information.

 

Cautionary Note - Forward Looking Statements

News releases, presentations and public commentary made by the Parties and
their respective officers  may contain certain statements and expressions of
belief, expectation or opinion which are forward looking statements, and which
relate, among other things, to: expectations for the Combined Group; the
possible payment of up to 20% of the consideration in cash; the proportionate
ownership of SolGold and Cornerstone shareholders of the Combined Group
following completion of the Transaction; the anticipated timing of the
Cornerstone shareholders meeting, the filing of meeting materials, the mailing
of meeting materials to Cornerstone shareholders, the filing of the SolGold
prospectus and the closing of the Transaction; the timing and anticipated
receipt of required approvals and the ability of SolGold and Cornerstone to
satisfy the other conditions to, and to complete, the Transaction; the
potential amendments to the Agreement and the plan of arrangement; the
anticipated benefits of the Transaction; and the timing, structure, results
and benefits of the Strategic Review Process. Such forward-looking and
interpretative statements involve known and unknown risks, uncertainties and
other important factors beyond the control of the Parties that could cause the
actual performance or achievements of the Parties to be materially different
from such interpretations and forward-looking statements.

Accordingly, the reader should not rely on any interpretations or
forward-looking statements; and save as required by the stock exchange rules
of the Toronto Stock Exchange, TSX Venture Exchange and London Stock Exchange
or by applicable securities laws, the Parties do not accept any obligation to
disseminate any updates or revisions to such interpretations or
forward-looking statements.

This release may contain "forward‑looking information" within the meaning of
applicable Canadian securities legislation. Forward‑looking information
includes, but is not limited to, forward looking statements related to the
items discussed above. Generally, forward‑looking information can be
identified by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or state that certain
actions, events or results "may", "could", "would", "might" or "will be
taken", "occur" or "be achieved".

Forward‑looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Parties to be materially
different from those expressed or implied by such forward‑looking
information, including but not limited to: transaction risks; general
business, economic, competitive, political and social uncertainties; future
mineral prices; accidents, labour disputes and shortages and other risks of
the mining industry. Although the Parties have attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking information, there may be other factors that
cause results not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in such
statements.  Factors that could cause actual results to differ materially
from such forward-looking information include, but are not limited to, risks
relating to the ability of exploration activities (including assay results) to
accurately predict mineralization; errors in management's geological modelling
and/or mine development plan; capital and operating costs varying
significantly from estimates; the preliminary nature of visual assessments;
delays in obtaining or failures to obtain required governmental, environmental
or other required approvals; uncertainties relating to the availability and
costs of financing needed in the future; changes in equity markets; inflation;
the global economic climate; fluctuations in commodity prices; the ability of
the Parties to complete further exploration activities, including drilling;
delays in the development of projects; environmental risks; community and
non-governmental actions; other risks involved in the mineral exploration and
development industry; the ability of the Parties to retain their key
management employees and skilled and experienced personnel; and those risks
set out in the Parties' public documents filed on SEDAR at www.sedar.com.
Accordingly, readers should not place undue reliance on forward‑looking
information. The Parties do not undertake to update any forward-looking
information, except as required by the stock exchange rules of the Toronto
Stock Exchange, TSX Venture Exchange and London Stock Exchange or in
accordance with applicable securities laws.

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