San Gold, Kerr Mines firm up merger plans

2014-08-19 09:07 ET - News Release

Also News Release (C-KER) Kerr Mines Inc (2)

Mr. Gestur Kristjansson reports

SAN GOLD AND KERR MINES SIGN DEFINITIVE MERGER AGREEMENT

San Gold Corp. and Kerr Mines Inc., further to their joint press release of July 21, 2014, have entered into a definitive agreement to merge their respective businesses pursuant to a plan of arrangement.

"I am very pleased with the deal we have structured. We've fixed a lot of problems over the past few months at Rice Lake. We're looking forward to continuing improvement as well as leveraging the entire team at the Copperstone opportunity and at other projects," said San Gold's president, Gestur Kristjansson.

"Combining the Rice Lake and Copperstone assets is an important step in creating the next North American mid-tier gold producer. Once this transaction has been completed, the combined entity will have a much stronger market presence than either company could achieve on its own," said Kerr Mines' chairman, Stephen McIntyre.

Under the terms of the arrangement agreement between San Gold and Kerr Mines, each Kerr Mines shareholder will be entitled to an exchange ratio of three common shares of San Gold for every one common share of Kerr Mines held by such Kerr Mines shareholder. The boards of directors of both companies have each been provided with separate fairness opinions.

Currently, San Gold and Kerr Mines have approximately 373 million and 95 million shares outstanding, respectively. Closing share prices on Monday, Aug. 18, 2014, were 12.5 cents for San Gold shares and 34.5 cents for Kerr Mines shares.

In addition, each holder of outstanding stock options and common share purchase warrants of Kerr Mines will receive such number of replacement options or warrants of San Gold based upon the exchange ratio. A break fee of $1-million is payable by either San Gold or Kerr Mines in the event that either party proceeds with an alternative transaction during a specified period while the parties pursue completion of the transaction.

The transaction remains subject to certain conditions, including, without limitation: (a) receipt of shareholder approval of the transaction by the shareholders of San Gold and Kerr Mines; and (b) receipt of all necessary consents, waivers, permits, exemptions, orders and approvals, including court approval of the plan of arrangement and the approval of the Toronto Stock Exchange.

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