Compass Gold Corporation (TSX VENTURE:CVB) -
Highlights
-- Independent Committee supports the disposal of the Company's Mali gold
assets and Share Sale Agreement signed.
-- Existing Compass shareholders (as a group) will represent a significant
proportion of post-transaction Oklo shareholders.
-- Oklo Consideration Shares to be distributed to Compass shareholders by
way of a proposed 5 for 1 return of capital.
-- Completion of the sale of the Mali gold asset is subject to various
conditions, including minimum financing, regulatory approvals and
shareholder approvals.
Compass Gold Corporation ("Compass" or the "Company") which is focused on gold
exploration on six properties in Mali, Africa's third largest gold producer, is
pleased to announce that it has entered into an agreement with Oklo Resources
Limited ("Oklo"), a Australian Stock Exchange listed company, for Oklo to
acquire 100% of the issued shares (the "Shares") of Compass' wholly-owned
subsidiary Compass Gold (BVI) Mali Corp. ("Compass BVI Mali") which would
constitute the sale of substantially all of the assets of the Company (the
"Transaction").
Compass BVI Mali, through subsidiaries in Mali, owns 100% of the Company's gold
projects which are the Yanfolila, Dandoko, Moussala, Kolondieba, Solabougouda
and Sirakourou gold exploration permits located in Mali, West Africa. A
description of these projects is provided in Appendix A.
Background
On July 30, 2013, Compass announced that it had entered into a non-binding
letter of intent dated July 30, 2013 with Oklo in respect of the Transaction
(the "Letter Agreement"). Mr. Henderson, the Chairman of the Company, is also
Chairman of Oklo and consequently the Transaction with Oklo is a non-arm's
length transaction under the policies of the TSX Venture Exchange (the "TSXV").
Consequently, the Company formed a special committee of independent directors
(the "Independent Committee") to consider the Transaction and to advise the
board of Compass (the "Board") whether the Transaction would be in the best
interests of the Company and its shareholders and to approve, if appropriate,
the terms of a definitive agreement in respect of the Transaction.
Following its review of the Transaction, the Independent Committee recommended
to the Board, and the Board approved, the Transaction. The Company entered into
a share sale agreement dated September 12, 2013 between the Company, Compass
Gold (BVI) Holdings Corp., Compass BVI Mali and Oklo (the "Share Sale
Agreement") to sell the Shares to Oklo.
Oklo (ASX:OKU) is listed on the Australian Stock Exchange ("ASX"). Oklo's
primary assets are two gold projects located in the key gold producing region of
Western Mali. These projects are located near established infrastructure close
to the Mali-Senegal-Mauritania borders and north of the regional gold mining
centre of Kayes. The projects are located within the important greenstone belt
geology system and are in the same mineralized corridor that hosts the Sadiola
(IamGold Corporation/AngloGold Ashanti), Loulo (Randgold Resources) and Yatela
(IamGold Corporation/Anglogold Ashanti) mines.
Over the last few years, the Company has positioned itself as an emerging
mineral exploration company in the highly prospective gold producing areas in
South and Western Mali. The Company, through Compass BVI Mali, currently holds
permits covering 1,138 square kilometers located within Mali's Birimian
Greenstone Belt, believed to be one of the fastest growing gold production and
exploration areas in the world. The core rationale for the Transaction is to
effectively move the Company's assets to an ASX listing with a company that has
complementary operations and assets and in doing so provide improved access to
capital markets and achieve overall cost efficiencies.
As part of the Transaction, Compass proposes to undertake a return of capital to
Compass shareholders in the form of Consideration Shares (as defined below) on
the basis of 5 Consideration Shares for every 1 Company share held (the
"Distribution"). On completion of the Distribution, Compass shareholders are
expected to own approximately 61% to 54% of Oklo, based on the size of Oklo's
private placement and other factors. Further details are set out below.
Transaction Terms
1. Subject to certain terms and conditions precedent, as outlined below,
Compass has agreed to sell all of the Shares, and Oklo has agreed to
purchase all of the Shares, for an aggregate price of A$4,000,000 (the
"Purchase Price") plus the provision of the working capital facility
(see below) plus the payment of transaction costs (see below)
(collectively, the "Consideration").
2. The Purchase Price will be satisfied by the issuance to the Company by
Oklo of an aggregate of 800,000,000 fully paid shares (the
"Consideration Shares") in the capital of Oklo.
3. Oklo has agreed to provide a working capital facility of up to A$250,000
to be advanced during the period between the date of the Share Sale
Agreement and closing of the Transaction on normal commercial terms
including security arrangements (the "Working Capital Facility"). At
closing, the Working Capital Facility will cease and the balance
outstanding will form part of the Consideration.
4. Oklo has agreed to fund reasonable transaction costs incurred by Compass
or Compass BVI Mali in connection with the Transaction, up to a maximum
of A$200,000 incurred from the date of the Letter Agreement
("Transaction Costs").
Conditions Precedent
The parties' obligations under the Share Sale Agreement are subject to the
satisfaction of the usual conditions precedent to a transaction such as the
Transaction, including:
1. the completion of due diligence investigations by Compass in respect of
Oklo, and Oklo in respect of Compass, to their sole and absolute
satisfactions;
2. Oklo having either completed on or before the closing of the Transaction
a minimum A$600,000 and maximum A$1,500,000 private placement or secured
an unconditional underwriting for a minimum A$600,000 and maximum
A$1,500,000 private placement, which must be closed within 60 days of
November 30, 2013;
3. Compass having assigned full rights to the Net Smelter Royalty Option
Agreement between Compass and Africa Mining SARL dated December 3, 2009
to Compass BVI Mali;
4. the Consideration Shares, upon completion of the Transaction and the
Distribution, not being subject to any resale restrictions in Canada or
Australia, other than any escrow imposed by ASX on related parties of
Compass;
5. all consents being obtained from all third parties that are necessary to
complete the Transaction, including without limitation, receiving all
necessary Oklo shareholder approvals, Compass shareholder approvals, and
regulatory approvals (including the TSXV) and the requirement for any
independent report or independent valuations and the ASX confirming in
writing that Listing Rule 11.1.3 will not apply to the Transaction; and
6. no material adverse changes in the financial condition, assets or
liabilities (contingent or otherwise) of either Compass, Compass BVI
Mali or Oklo.
The Share Sale Agreement also contains termination provisions in the event the
conditions are not satisfied or waived by the parties. In particular:
1. if the Transaction is not completed as a result of Compass not
satisfying certain conditions precedent, then:
a. the Working Capital Facility will become due and payable and Compass
will have a period of 120 days from the date of termination in order
to repay the loan in full with interest;
b. any Transaction Costs paid by Oklo must be repaid within 60 days of
the termination date; and
c. Compass will be required to pay a break fee of A$150,000 within 60
days from the termination date.
2. If the Transaction is not completed as a result of Oklo not satisfying
certain conditions precedent, then:
a. the Working Capital Facility will be converted into a non-interest
bearing loan for a period of 6 months following the termination
date, after which time the loan will become due and payable and
interest will accrue or, at Oklo's option, the loan may be converted
into shares of Compass;
b. any Transaction Costs paid by Oklo will be on account of Oklo and
Oklo will have no recourse to Compass.
Completion of the Transaction is subject to the above conditions precedent,
including but not limited to TSXV acceptance. The Transaction cannot close until
the required shareholder and regulatory approvals are obtained. There can be no
assurance that the Transaction will be completed as proposed or at all.
Key Rationales for the Transaction
a. Faster Path to Access Funding and ASX listing - Like many junior
exploration companies listed on the TSXV, Compass has had difficulty in
raising sufficient capital to adequately advance its projects. The
Transaction addresses two key issues:
i. It provides sufficient immediate cash to deal with existing and
expected liabilities and some surplus cash to progress an initial
exploration program at its Dandoko project; and
ii. It provides a relatively fast and cheaper path to an ASX listing -
which ultimately should improve ongoing access to capital.
b. Strategic Land-holding - The Transaction allows the consolidation of
Oklo and Compass' gold asset landholdings in Mali. Post Transaction,
Oklo will hold interests in 8 gold projects covering 1,389 km2 in Mali's
most prospective gold zones.
c. Consolidation of Exploration Expertise - Oklo and Compass already share
some on-the-ground exploration resources in Mali. The Transaction would
allow the Mali exploration teams to be consolidated and would allow for
efficiencies of scale and greater geological continuity, facilitating
more focussed exploration. The post-Transaction geological team will
have an expanded capability to move key projects through exploration
phases and project development.
d. Opportunity to Attract Dedicated Broker Support - Strategically, given
the combined scale of assets and focussed management, the Transaction
provides an opportunity to enlist a dedicated broker for Oklo who could
support the financing as well as providing ongoing broker support to
Oklo. Neither Oklo nor Compass has been large enough to attract
dedicated broker support in the past.
Finder's Fees
Oklo has advised that on successful completion of the Transaction, its corporate
advisers will be paid a finder's fee in the form of fully paid shares in Oklo
equal to 2% of Oklo's post-Transaction issued capital.
No finders' fees are payable by Compass.
Distribution
Compass expects to undertake the Distribution within 14 days of the completion
of the Transaction, subject to applicable regulatory requirements and approvals.
At a result of the Distribution, Compass shareholders will be issued
Consideration Shares that should not be subject to any resale restrictions in
Canada or Australia, other than any escrow imposed by ASX on certain related
parties of Compass. The Consideration Shares will continue to trade on the ASX.
Full details of the Distribution will be separately provided to Compass
shareholders. Subsequent to the Distribution, Compass will be a shell company
and it is expected that Compass will be suspended from trading on the TSXV and
will be moved to the NEX board of the TSXV.
General
The Transaction and the Share Sale Agreement were considered and approved by the
Independent Committee, which, among other things, received an estimate valuation
report and related fairness opinion from RWE Growth Partners Inc., a financial
advisor engaged by the Independent Committee in connection with the Transaction.
Full details of the Independent Committee's review and approval process and the
fairness opinion will be contained in the information circular to be sent to
shareholders of Compass for the special shareholder meeting to be called to
approve the Transaction. The information circular is expected to be mailed to
shareholders during October, 2013.
All scientific and technical information contained in this news release
(including Appendix A) has been reviewed and approved by Malcolm A Carson, BSc
Geo, MSc Nat Res. Mgt., MAIG, a director of Compass and a "qualified person"
within the meaning of National Instrument 43-101.
About Compass Gold
Compass Gold Corporation, a Tier 2 mining issuer listed on the TSXV, is focused
on gold exploration in Mali, Africa's third largest producer of gold. Compass,
through its wholly owned subsidiary, Africa Mining SARL, owns a 100% interest in
six gold exploration permits (Yanfolila, Dandoko, Moussala, Kolondieba,
Solabougouda and Sirakourou), covering an aggregate of 1,138 sq kms in key
gold-producing regions in southwest Mali, West Africa. Further information is
available at www.compassgoldcorp.com.
COMPASS GOLD CORPORATION
Ian Spence, President and CEO
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
Forward-Looking Information
This news release may include "forward-looking statements" or "forward-looking
information" as defined in applicable Canadian securities laws. Forward-looking
statements include, but are not limited to, the timing of the completion of the
Transaction, regulatory and shareholder approvals, rationales for the
Transaction, timing of the proposed Distribution, escrow and resale restrictions
of the Consideration Shares and timing of mailing the information circular, many
of which are beyond the control of Compass. Forward-looking statements are based
on a number of factors or assumptions including, but not limited to, obtaining
regulatory and shareholder approvals on a timely basis and the parties being
able to meet the conditions precedent to complete the Transaction.
Forward-looking statements are subject to various known and unknown risks and
uncertainties, including, but not limited to: the risk that the Transaction will
not be approved by the shareholders of Compass or Oklo or regulatory
authorities; risks related to the Transaction not being completed in the event
that the conditions precedent are not satisfied; unanticipated costs and
expenses; regulatory restrictions, including escrow or resale restrictions on
the Consideration Shares; and other risks and uncertainties. Investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in the forward-looking statements. Such forward-looking information represents
management's best judgment based on information currently available. No
forward-looking statement can be guaranteed and actual future results may vary
materially. Additional risks and uncertainties about Compass' business are more
fully discussed in the Company's disclosure materials, including its MD&A, filed
with the securities regulatory authorities in Canada and available at
www.sedar.com and readers are urged to read these materials. Compass does not
undertake any obligation to update any forward-looking statement, except as
required by applicable law.
Appendix A - Summary of Compass BVI Mali Assets
A successful completion of the Transaction will involve Compass disposing its
entire portfolio of 6 Mali gold projects to Oklo. Details of the assets being
disposed of are set out below:
--------------------------------------------------------
Project Region Size (km2)
--------------------------------------------------------
Dandoko Mali West 134
--------------------------------------------------------
Moussala Mali West 66
--------------------------------------------------------
Yanfolila Mali South 250
--------------------------------------------------------
Kolondieba Mali South 250
--------------------------------------------------------
Solabougouda Mali South 188
--------------------------------------------------------
Sirakourou Mali South 250
--------------------------------------------------------
To view the map accompanying this press release please click on the following
link: http://media3.marketwire.com/docs/CVB0912.pdf
Dandoko Project - West Mali
Dandoko is located 30km east of the recently discovered Fekola deposit (Papillon
Resources ASX: PIR) in West Mali's gold belt. The 134km2 project was originally
selected for its favorable structural setting, prospective for large gold
occurrences.
Dandoko is situated over major, highly prospective, known gold bearing NE-SW
trending secondary structures, with E-W and NW-SE cross cutting shears. Multiple
large gold-in-soil anomalies have been defined over 12 linear kilometers, over
known prospective structures. 5 linear kilometers of recent (majority since
September 2012) artisanal workings, currently producing substantial amounts of
nuggets & free gold provide the basis for some outstanding drill ready targets
in conjunction with structural & geochemical interpretations.
Moussala Project - West Mali
Moussala is located only 15km east of the Fekola deposit (Papillon Resources
ASX: PIR). This recently granted tenement has known large NE-SW trending
structures running through it, interpreted as secondary structures emanating
from the main Mali-Senegal fault system. Recent mapping, geochemical sampling
and identification of artisanal mining has identified gold mineralized zones
requiring drill testing for the first time.
Yanfolila Project - South Mali
Yanfolila is attractively located by being adjacent to existing infrastructure,
including sealed roads, hydroelectric power, water sources & telecommunications.
The project is located 25km east of Goldfields' (JSE:GFI) Komana deposit and
30km and 35km north of the Kodieran (Pearl Gold AG FSE:02P), Kalana (Avnel Gold
Mining Ltd TSX:AVK) gold mines.
The 250km2 project is located over a highly prospective package of structurally
controlled granite greenstone terrain composed of basement granites in contact
with Birimian metasediments and metavolcanics. Several highly prospective major
NE-SW trending structures with large coincident gold-in-soil anomalies are
present through the project area.
Drilling of one of these major structures in 2012 at the Solona Main prospect (1
of several prospects identified) intersected high-grade gold mineralization in a
large unusually deeply weathered (greater than 160m deep) gold system.
Kolondieba Project, South Mali
Located 70km west northwest of the Syama Gold Mine and 50km south of the Morila
Mine the Kolondieba project is prospective for gold mineralization in a similar
structural setting to Morila. Drilling to test identified gold in soil anomalies
over major structures is planned.
Solabougouda & Sirakourou, South Mali
These projects are located on interpreted major NW-SE structures in south Mali.
To date, little work has been done on the projects with Sirakourou only having
been very recently granted.
FOR FURTHER INFORMATION PLEASE CONTACT:
Compass Gold Corporation
James Henderson
Chairman
+61 2 8823 3100
info@compassgoldcorp.com
www.compassgoldcorp.com
Compass Gold Corporation
Ian Spence
President & CEO
+61 2 8823 3100
info@compassgoldcorp.com
www.compassgoldcorp.com
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