April 28, 2015
Vancouver, British Columbia…
Starcore International Mines Ltd. (“Starcore” or the “Company”) (TSX:
SAM) is pleased to announce the signing of a letter of intent with
Cortez Gold Corp. (“Cortez”) (TSXV: CUT) (the “LOI”) that would see
Starcore acquire all of the outstanding securities of CUT in an
all-share transaction (the “Transaction”) to be completed pursuant to a
court approved Plan of Arrangement under the Business Corporations Act
(British Columbia). Under the terms of the planned acquisition, each
CUT shareholder would receive three Starcore common shares for every one
CUT common share held.
Cortez owns the Altiplano gold and silver processing plant in Matehuala, Mexico.
Highlights of the Acquisition
The proposed Transaction will enable the two companies to realize synergies between their operations.
- CUT’s mineral processing business owned by its
wholly-owned Mexican subsidiary will expand Starcore’s business in
Mexico, giving Starcore a turnkey processing plant designed to process
lead and copper concentrates along with extracting gold and silver.
- With the amalgamation, CUT broadens its range of
potential financial partners as it avails itself of Starcore’s credit
history and performance. CUT’s processing business requires financial
backing in order to grow.
- CUT’s processing plant will provide Starcore with a steady source of revenue.
In addition, CUT’s shareholders will be able to participate in all
of Starcore’s properties and business. Starcore is larger and well
capitalized with cash holdings of approximately $5.3 million.
The LOI provides that CUT shareholders will be entitled to receive three
(3) common shares of Starcore (a “Starcore Share”) for one common share
of CUT (the “CUT Shares”) held by such CUT shareholders (the “Exchange
Ratio”), subject to adjustment, pursuant to a plan of arrangement under
the Business Corporations Act (British Columbia) (the “Arrangement”).
In addition, each holder of the outstanding common share purchase
warrants of CUT (the “CUT Warrants”) will receive such number of
replacement warrants of Starcore (the “Starcore Warrants”) based upon
the Exchange Ratio, and the exercise price of the replacement Starcore
Warrants will be adjusted based upon the Exchange Ratio.
Currently, there are 9,555,850 CUT Shares and 3,415,250 CUT warrants
outstanding. In connection with the Transaction, Starcore will issue
approximately 28,667,550 Starcore Shares and 10,245,750 common share
purchase warrants exercisable at $0.13 and $0.25, and expiring in
January, February and March of 2016.
Following completion of the Transaction, former CUT shareholders would
hold approximately 15.87 % of the outstanding Starcore Shares.
The Transaction is subject to the execution of a definitive Arrangement
Agreement. The definitive agreement will include covenants,
representations and warranties customary for transactions such as the
Transaction, as well as deal protection measures and provisions for
exclusive dealing similar to those contained in the LOI. CUT expects to
execute a definitive agreement in respect of the Transaction within 30
The Transaction will be subject to the approval of the Supreme Court of
British Columbia, the TSX and the TSX Venture Exchange. Completion of
the Transaction is further subject to the approval of at least
two-thirds of the votes cast by the holders of CUT Shares and CUT
Warrants voting together as a class and who are present and voting at a
special meeting of CUT securityholders to be called to consider the
Deal Protection Measures
The Letter of Intent includes deal-protection provisions in favour of
Starcore, including a non-solicitation covenant from CUT (except for
certain unsolicited approaches) and a break fee upon signing the
definitive agreement of C$250,000 if, following an unsolicited superior
proposal, CUT wishes to pursue that proposal.
If the definitive agreement is terminated by Starcore, a break fee will
be due to CUT in the form of Starcore completing a $250,000 private
placement for common shares of CUT at the minimum subscription price
allowed by TSX Venture Exchange policies.
Voting lock-up agreements
Pursuant to the Letter of Intent, CUT has agreed to seek voting
agreements from directors, officers and shareholders holding in
aggregate a minimum of 25% of the outstanding shares of CUT as a
condition to the execution of the definitive Arrangement Agreement.
The Board of Directors of each company has approved the terms of the
Transaction. Of the six current directors of CUT, three are also
directors of Starcore (being each of Robert Eadie, Gary Arca and
Federico Villaseñor). CUT has established a special committee comprised
of three independent directors.
Starcore is engaged in exploring, extracting and processing gold and
silver through its wholly-owned subsidiary, Compañia Minera Peña de
Bernal, S.A. de C.V., which owns the San Martin mine in Queretaro,
Mexico. The Company is a public reporting issuer on the Toronto Stock
Exchange. The Company is also engaged in owning, acquiring, exploiting,
exploring and evaluating mineral properties, and either joint venturing
or developing these properties further. The Company has interests in
properties located in Mexico, Canada and the United States.
About Cortez Gold Corp.
Cortez Gold Corporation is a Canadian precious metals production
company, incorporated in 2007, headquartered in Vancouver, with
operations in Mexico. Cortez offers a low-risk gold processing business
model that will generate cash flow, and provide low processing charges
and efficient payment schedules to compete with larger scale smelters.
for more information.
This press release contains forward-looking statements that involve
risks and uncertainties. When used in this press release, the words
“plan,” “expect,” “believe,” and similar expressions generally identify
forward-looking statements. These statements reflect our current
expectations. They are subject to a number of risks and uncertainties,
including, but not limited to, changes in market conditions. Factors
that could cause future events to differ from those anticipated in
forward looking statements include: inability to negotiate a definitive
agreement for the CUT transaction; delays in obtaining, or inability to
obtain, required approvals, including the approval of the TSX Venture
Exchange, TSX or shareholders of CUT; and other factors that could cause
the Company’s actual results, performance or achievements to be
materially different from those expressed or implied by such
information. Although the Company has attempted to identify important
factors that could cause actual results, performance or achievements to
differ materially from those contained in forward-looking information,
there can be other factors that cause results, performance or
achievements not to be as anticipated, estimated or intended. There can
be no assurance that such information will prove to be accurate or that
management’s expectations or estimates of future developments,
circumstances or results will materialize. As a result of these risks
and uncertainties, any proposed transaction could be modified,
restricted or not completed, and the results or events predicted in
these forward looking statements may differ materially from actual
results or events. Accordingly, readers should not place undue reliance
on forward-looking information.
ON BEHALF OF STARCORE INTERNATIONAL MINES LTD.
Signed “Robert Eadie”
Robert Eadie, President & Chief Executive Officer
FOR FURTHER INFORMATION PLEASE CONTACT:
Telephone: (416) 640-1936
Telephone: (416) 640-1936
Toll Free: 1-866-602-4935
The Toronto Stock Exchange has not reviewed nor does
it accept responsibility for the adequacy or accuracy of this press
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