SYDNEY: Austral Gold Limited and Revelo Resources Corp. have entered into a conditional non-binding letter of intent pursuant to which Austral would purchase all the outstanding shares of Revelo in exchange for shares in Austral and cash, a news release said.
The transaction remains subject to further due diligence, negotiation, and satisfaction of material conditions, such as entering into definitive agreements.
The parties will continue to negotiate exclusively and in good faith to enter into definitive agreements during September 2020.
At present, the key details of the Transaction are as follows:
Each Revelo shareholder (collectively, the “Revelo Shareholders”) to receive, in exchange for each Revelo Share held immediately prior to the effective date of the Transaction, 0.9184 (the “Exchange Ratio”) common shares of Austral (each whole share, an “Austral Share”).
The Exchange Ratio to result in the current Revelo Shareholders owning approximately 5.90% of the outstanding shares of the combined entity on an undiluted basis and 5.80% on a fully-diluted basis. The Austral Shares will be issued utilising the Company’s existing capacity under ASX Listing Rule 7.1.
In addition, Austral to pay C$ 1,176,471 (the “Cash Consideration”) to the Revelo Shareholders, pro rata, based on their respective shareholdings as of the completion date of the Transaction. Austral proposes to fund the Cash Consideration utilising its existing cash reserves.
Based on the 30 day volume-weighted trading price of Revelo’s and Austral’s shares on the TSX-V prior to signing of the Offer Letter, the Austral Shares being issued represent a 55% premium to the price of Revelo’s stock and the aggregate of the Austral Shares being issued and the Cash Consideration represents a 77% premium.
Austral and Revelo have mutually agreed to pay the other party a termination fee of US$ 500,000 if the Transaction does not close by February 28, 2021, for any reason other than certain exceptions agreed to between the parties in the Offer Letter (which includes the entering into definitive agreements). Therefore, if definitive agreements are not entered into by the parties and the Transaction does not proceed, the termination fee will not be payable.
The Transaction is expected to proceed on a friendly basis with the unanimous support of the Board of Directors of both Austral and Revelo.
There will be no changes to the Board of Austral as a consequence of the Transaction.
Chairman, Michael Winn, and President and CEO, Timothy Beale, holding an aggregate of 19,938,869 common shares of Revelo, representing approximately 51.6% of the outstanding common shares of Revelo, have entered into a voting support agreement with Austral pursuant to which they and entities controlled by them have agreed, among other things, to support the Transaction and vote their common shares of Revelo in favour of the Transaction.
Austral’s Chief Executive Officer, Stabro Kasaneva, said; “We are pleased to make an offer for the acquisition of Revelo as they own seven interesting assets, three of which are precious metals projects located in the Paleocene-Eocene belt, which is in the vicinity of our Guanaco/Amancaya mining complex. In addition, Revelo is pursuing an attractive transaction with West Pacific Ventures Corp. which should result in Revelo owning a 19.9% interest in a new vehicle that will control an interesting set of copper projects in the same area. This transaction would allow us to consolidate our leading role in the Paleocene-Eocene Belt in Chile and increase our portfolio of exploration assets.”
Revelo’s Chairman, Michael Winn, commented; “This is a very attractive deal for Revelo’s shareholders. Austral Gold is a growing producer of gold and silver with what we believe to be great upside potential. The proposed business combination between Austral’s production and Revelo’s exploration assets, with three of Revelo’s gold-silver exploration projects within easy trucking distance of Austral’s processing plant at Guanaco, make for a compelling story”.
Leave a Reply