Solitario Exploration & Royalty Corp. (NYSE MKT:XPL;
TSX:SLR) (“Solitario”) and Ely Gold & Minerals Inc.
(TSX.V:ELY) (“Ely Gold”, and together with Solitario, the
“Sellers”) are pleased to announce that they have entered into a
definitive agreement (the “Agreement”) to sell their combined
interests in the Mt. Hamilton gold project (“Mt. Hamilton”) to
Waterton Nevada Splitter, LLC, a wholly-owned subsidiary of
Waterton Precious Metals Fund II Cayman, LP (collectively,
“Waterton”), for total cash proceeds of US$30 million (the
“Transaction”).
Solitario will sell its 80% interest in Mt. Hamilton LLC
(“MH-LLC”), a limited liability company which holds 100% of the Mt.
Hamilton project assets, and DHI Minerals (U.S.) Ltd., Ely Gold’s
wholly-owned U.S. subsidiary, will sell its 20% interest in MH-LLC.
As a result, on closing Solitario will receive cash proceeds of
US$24 million and Ely Gold will receive cash proceeds of US$6
million.
Transaction Structure and Details
The Transaction is structured as the sale of the Sellers’
membership interests in MH-LLC. Completion of the Transaction is
subject to customary closing conditions, including regulatory
approvals and affirmative votes of the holders of a majority of
Solitario’s outstanding shares of common stock and 66 ⅔% of the
votes cast by Ely Gold shareholders in respect of the Transaction.
Shareholder meetings for both Solitario and Ely Gold are expected
to be held in Q3 2015, with the closing of the Transaction soon
thereafter.
In addition, Waterton has committed to provide Solitario, at
Solitario’s request, with a standby debt facility (the “Standby
Debt Facility”) necessary to repay Solitario’s outstanding US$5
million corporate credit facility with RMB Australia Holdings
Limited (“RMB”) due on August 21, 2015. The Standby Debt Facility
will be secured by Solitario’s interest in MH-LLC as well as other
corporate assets, have a six-month term and earn interest at 8% per
annum. Waterton will also be entitled to a 2% structuring fee
should Solitario exercise its right to enter into the Standby Debt
Facility.
Solitario and Ely Gold’s Board of Directors have each determined
that the proposed transaction is in the best interest of their
respective shareholders, unanimously approved the Transaction and
recommend that their shareholders vote in favor of the
Transaction.
As further defined in the Agreement, the Sellers will pay a
break fee of $900,000 to Waterton in the event (i) the Sellers
accept a Superior Proposal; (ii) there is a material breach in a
representation or warranty or (iii) the transaction does not close
prior to October 1, 2015, subject to certain extension periods. In
the event the shareholders of either Solitario or Ely Gold do not
approve the Transaction, Waterton is entitled to an expense
re-imbursement fee of $450,000. On closing of the Transaction, Ely
Gold will pay a C$200,000 fee to Maxit Capital LP for its services
in connection with the Transaction.
Chris Herald, President and CEO of Solitario, stated: “We are
pleased to have successfully progressed Mt. Hamilton through
feasibility and permitting, and believe that Waterton is well
positioned to see the project through the next phase of its
development. It is extremely exciting for Solitario to be able to
monetize its Mt. Hamilton asset during exceedingly difficult market
conditions. Upon closing the Transaction, Solitario will have a
very strong balance sheet to focus towards new potential
opportunities. Perhaps more importantly we will now be able to
highlight our fully-carried to production interest in the
high-grade Bongará zinc project being advanced by Compañía Minera
Milpo S.A.A. (“Milpo”), our Peruvian partner. In total,
approximately US$60 million has been invested in exploration and
development on the Bongará project to date and we look forward to
ongoing success as Milpo progresses the asset through
pre-feasibility during 2015.”
Trey Wasser, President and CEO of Ely Gold, stated: “We are
pleased to have reached this agreement with Waterton, representing
a successful conclusion to nearly eight years of development work
on the Mt. Hamilton project. Solitario has proven to be an
excellent joint venture partner. We wish to thank them for their
hard work and perseverance in some very difficult markets. This
sale will provide Ely with the capital to focus on advancing our
100% owned Green Springs project, located just seven miles south of
Mt. Hamilton. Green Springs is fully permitted for exploration and
we expect to begin a drill program late this summer.”
Isser Elishis, Managing Partner and Chief Investment Officer of
Waterton’s investment adviser, said, “We are pleased to have
reached an agreement with the boards of each of Solitario and Ely
Gold to purchase the Mt. Hamilton project. Waterton would like to
thank the management teams of each Seller for progressing this
transaction to signing in an expeditious manner, and we look
forward to closing this transaction promptly upon the receipt of
all shareholder and customary regulatory approvals. The acquisition
of the Mt. Hamilton project will add another key development asset
to Waterton’s growing portfolio of high-quality Nevada assets.”
Agreement on Standby Debt Facility
Solitario and Ely Gold have negotiated an arm’s length agreement
(the “Consent Agreement”) pursuant to which Ely Gold has agreed to
provide its consent (required under the MH-LLC Operating Agreement)
for Solitario to pledge its 80% interest in MH-LLC in connection
with the Standby Debt Facility and to relieve Solitario of certain
continuing payment obligations that Solitario was required to make
on behalf of both members of MH-LLC. In return, Solitario has
agreed to return for cancellation approximately 15.7 million common
shares (19.6% of the issued and outstanding shares) of Ely Gold
currently held by Solitario. The Consent Agreement is subject to
acceptance by the TSX Venture Exchange (the “TSXV”).
Advisors and Legal Counsel
Maxit Capital LP acted as financial advisor to both Solitario
and Ely Gold and provided fairness opinions to their respective
boards of directors that, as of the date thereof and subject to the
assumptions, limitations, and qualifications set out therein, the
consideration to be received by each of Solitario and Ely Gold
pursuant to the Transaction is fair, from a financial point of
view, to each of Solitario and Ely Gold.
Solitario’s US legal counsel is Davis Graham & Stubbs LLP
and Polsinelli PC, and its Canadian legal counsel is Fogler
Rubinoff LLP. Ely Gold’s US legal counsel is Parsons Behle and
Latimer LLP and its Canadian legal counsel is Holmes & King.
Waterton’s US legal counsel is Parr Brown Gee and Loveless PC and
its Canadian legal counsel is Davies Ward Phillips & Vineberg
LLP.
About Solitario
Solitario is a precious and base metal exploration and royalty
company. Recently, a significant focus of Solitario’s has been on
financing and potentially developing the Mt. Hamilton gold project
in Nevada. Solitario controls an 80% interest in Mt. Hamilton.
Besides Solitario’s interest in Mt. Hamilton, Solitario also has a
significant joint venture with Milpo Mining, Votorantim Metais’s
51%-owned affiliate, on its advanced Bongará high-grade zinc
project in Peru. Additional information about Solitario is
available at www.solitarioxr.com.
About Ely Gold
Ely Gold is focused on the acquisition and development of gold
resources in Nevada, including its Green Springs property, 7 miles
south of Mt. Hamilton. Ely Gold is traded on the TSXV. Additional
information about Ely Gold is available online at
www.elygoldandminerals.com.
About Waterton
Waterton is a leading mining-focused private equity firm
dedicated to developing high quality precious and base metals
projects located in stable jurisdictions. Waterton’s
cross-functional, fully-integrated, in-house team of professionals
have significant mining, financial and legal expertise. Waterton’s
proactive approach to asset management, significant sector
knowledge and ability to leverage extensive industry relationships
has resulted in a strong track record of managing investments in
the metals sector. Additional information about Waterton is
available online at www.watertonglobal.com.
This press release contains certain "forward-looking
statements," as defined in the United States Private Securities
Litigation Reform Act of 1995, and within the meaning of Canadian
securities legislation, including statements relating to the sale
of MH-LLC through the sale of Solitario and Ely’s combined
membership interest in MH-LLC and the estimated proceeds of that
sale. Forward-looking statements are statements that are not
historical fact. They are based on the beliefs, estimates and
opinions of the Sellers’ managements on the date the statements are
made and they involve a number of risks and uncertainties.
Consequently, there can be no assurances that such statements will
prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements. The
Sellers undertake no obligation to update these forward-looking
statements if their managements’ beliefs, estimates or opinions, or
other factors, should change, unless required by law, including the
rules and regulations of the NYSE MKT or the TSXV. The purchase and
sale of the membership interests of MH-LLC is subject to a number
of conditions, including requirements for shareholder and
regulatory approvals. Accordingly, there can be no assurance that
the Transaction will close.
Neither the NYSE MKT nor 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 and
accuracy of this press release.
Additional Information and Where to Find It
This communication may be deemed to be a solicitation of proxies
from Solitario’s shareholders in connection with the proposed
Transaction. In connection with the proposed sale of Solitario’s
interest in Mt. Hamilton, the Company intends to file a proxy
statement and relevant documents with respect to a meeting of
shareholders to be held in connection with the proposed
transactions with the SEC. The definitive proxy will be mailed to
the Company’s shareholders in advance of the meeting. Investors and
security holders of the Company are urged to read the proxy
statement and any other relevant documents filed with the SEC when
they become available because they will contain important
information about Solitario and the proposed Transaction. The proxy
statement, when it becomes available, and any other documents filed
by Solitario with the SEC, may be obtained free of charge at the
SEC’s website at www.sec.gov. In addition, investors and security
holders may obtain free copies of the documents filed with the SEC
by Solitario by sending a written request to Solitario Exploration
& Royalty Corp. Attn: Corporate Secretary, 4251 Kipling St.
Suite 390, Wheat Ridge, CO 80033, (303) 534-1030. Investors and
security holders are urged to read the proxy statement and the
other relevant materials when they become available before making
any voting or investment decision with respect to the proposed
asset sale.
Participants in the Solicitation
Solitario and its directors and executive officers may, under
SEC rules, be deemed to be participants in the solicitation of
proxies from Solitario’s shareholders in connection with the
proposed Transaction. Information about the directors and executive
officers, including their interests in the transactions, will be
included in Solitario’s proxy statement relating to the proposed
transactions when it becomes available.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150611005321/en/
FOR MORE INFORMATION at SOLITARIO, CONTACT:Christopher E.
Herald, 303-534-1030President & CEOorDebbie Mino-Austin,
800-229-6827Director – Investor RelationsorFOR MORE INFORMATION at
ELY GOLD, CONTACT:Steve Kenwood, 604-488-1104DirectororTrey Wasser,
972-803-3087President & CEOorFOR MORE INFORMATION at WATERTON,
CONTACT:Bayfield Strategy, Inc.Riyaz Lalani, 416-907-9365
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