Oro Gold Resources Ltd. ("Oro Gold") (TSX VENTURE: OGR) and Oro
Silver Resources Ltd. ("Oro Silver") (TSX VENTURE: OSR) today
jointly announce that they have entered into a binding letter of
agreement (the "Agreement") to combine the two companies through a
plan of arrangement (the "Transaction"). Under the Agreement, Oro
Gold and Oro Silver have agreed, based on the recommendations of
their respective special committees comprised of independent
directors (the "Special Committees") in consultation with their
advisors, that the Transaction will be an all-share transaction
whereby Oro Gold would acquire all of the outstanding securities of
Oro Silver on the basis of four common shares of Oro Silver for
each common share of Oro Gold (the "Exchange Ratio").
The combination aligns with Oro Gold's corporate strategy of
making low-cost acquisitions of gold ounces in under-explored
mining camps that have significant expansion and discovery
potential. Oro Silver's flagship property, El Compas, has excellent
growth potential.
"With Oro Silver's assets becoming gold dominant, the strategy
of the combined companies will simplify the corporate structure,
consolidate management and reduce costs. This transaction will put
us in a strong position to create value for our shareholders by
having two low-cost gold assets with near term gold production and
significant resource growth potential through exploration," stated
Darren Bahrey, President and CEO of Oro Gold and Oro Silver.
Oro Silver shareholders will benefit from Oro Gold's strong
liquidity and market position combined with participation in the
exploration and development potential of Oro Gold's substantial
Mexican property portfolio including the advanced Taunus deposit.
The value of the offer provides Oro Silver shareholders with an
approximate 11% premium to the preceding 20 day volume weighted
average share price. Oro Silver stock options and warrants will be
converted to Oro Gold stock options and warrants at the Exchange
Ratio.
Key Points:
-- Combining both companies creates a better capitalized, more liquid
company with a focused management team that brings an impressive track
record of past successes in gold exploration and mining to the expanded
asset portfolio.
-- The combined entity will have two near-term gold production properties
located in Mexico with excellent infrastructure and resource growth
potential through exploration.
-- Oro Silver's core asset is the El Compas gold-silver property which has
a NI 43-101 compliant resource of 65,000 gold-equivalent ounces in the
indicated category (grading 5.8 g/t gold and 59.1 g/t silver) and 41,200
gold-equivalent ounces in the inferred category (grading 4.9 g/t gold
and 45.7 g/t silver), using a 3 g/t gold-equivalent cut-off (See press
release dated November 12, 2008).
-- Oro Gold's core asset is the Taunus gold deposit which has a NI 43-101
compliant inferred resource of 200,930 ounces (4.5 million tonnes at an
average gold grade of 1.4 g/t, using a 0.5 g/t gold cut-off (See press
release dated July 2, 2008).
-- Post transaction, Oro Gold will have approximately 84 million common
shares outstanding and cash in excess of $5 million to continue its
exploration activities, and to complete resource estimation updates and
necessary engineering studies to advance towards production.
Oro Silver was a spin-out of Oro Gold in 2007. Management of
both companies have agreed that under current market conditions and
in the interest of the shareholders the consolidation of both
entities is the most advantageous strategy for advancing the
companies' gold assets towards production and thus creating value
for shareholders.
Exploration activities conducted this summer has been focused on
exploration drilling at Oro Gold's projects. Four drill rigs are
operating with the goal of adding to the already identified
resource and targeting new discoveries. An additional drilling
program will also be commencing at El Compas shortly.
Following the combination of Oro Gold and Oro Silver an updated
NI 43-101 compliant resource estimate for both the Taunus and El
Compas gold deposits will be prepared in the fall of 2010.
The parties are currently negotiating a definitive agreement
(the "Definitive Agreement") that will incorporate the terms of the
binding letter and other terms and conditions customary for
transactions of this nature. It is estimated that the parties will
enter into the Definitive Agreement within two weeks. The
Transaction is anticipated to close early in the fourth quarter of
2010 subject to applicable regulatory authority approval including
acceptance by the TSX Venture Exchange and Oro Silver shareholder
approval of at least 2/3 of the votes cast.
The board of directors of Oro Gold will announce a new
management team following the completion of this Transaction.
The directors and officers of Oro Silver, in their capacity as
security holders of Oro Silver, have entered into lock-up
agreements for their securities and unanimously vote in favour of
the Transaction.
The full details of the terms of the Transaction will be
contained in the Definitive Agreement that will form part of a
proxy statement that will be filed with the regulatory authorities
and mailed to Oro Silver shareholders in accordance will applicable
securities laws. The Transaction is subject to customary
conditions, including regulatory approval, fairness opinions and
the parties negotiating and entering into the Definitive Agreement.
The Transaction is subject to customary deal protection provisions,
which include non-solicitation obligations for Oro Silver with the
right to respond to a superior proposal and terminate on payment of
a break fee of $200,000 in certain circumstances following a right
to match any superior proposal in favour of Oro Gold.
About Oro Silver
Oro Silver's strategy is to develop properties toward production
through a strategic business arrangement and development plan
focused on advanced-stage projects with known silver resources that
exhibit potential for expansion. The El Compas mine continues to be
the cornerstone for Oro Silver's growth strategy in the Zacatecas
silver district - known to have produced several billion ounces of
silver and hosts the world's largest silver mine, the Fresnillo
Mine, located 45 kilometres to the northwest.
About Oro Gold
Oro Gold is a publicly-listed gold exploration company with
projects located in Mexico and Panama. Oro Gold focuses exploration
in under-explored mining camps that have the potential to host
multi-million ounce gold deposits. The district-scale Trinidad
property that hosts the Taunus gold deposit continues to be Oro
Gold's top priority project and main focus of exploration and
resource definition. Oro Gold's mission is to discover world class
gold discoveries.
Gary Lustig, P.Geo, a qualified person as defined by National
Instrument 43-101 has reviewed the technical content of this press
release on behalf of Oro Gold.
Freeman Smith, P. Geo. a qualified person as defined by National
Instrument 43-101 has reviewed the technical content of this press
release on behalf of Oro Silver.
On Behalf of the Board of Directors of ORO GOLD RESOURCES
LTD.
Ron Ewing, Chair, Special Committee
On Behalf of the Board of Directors of ORO SILVER RESOURCES
LTD.
Gregory J. Martin, Chair, Special Committee
Some statements in this release may contain forward-looking
information. These statements include, but are not limited to the
use of the terms "subject to", "expects", "anticipates", "will",
statements with respect to Board assessments, statements with
respect to updating resource estimates, statements with respect to
entering into the Definitive Agreement, future plans and
expectations. Such statements are subject to a number of risks,
uncertainties and assumptions. Actual results and events may vary
for a variety of reasons. The assumptions used in the preparation
of such statements, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.
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 release.
Contacts: Oro Gold Resources Ltd. Ron Ewing Chair, Special
Committee 604 646-1580 604 642-2411 (FAX) www.orogoldresources.com
Oro Silver Resources Ltd. Gregory J. Martin Chair, Special
Committee 604-646-1588 604 642-2411 (FAX) www.orosilver.com
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