Global measured and indicated mineral resources of 20.5 million ounces (inclusive of mineral reserves)
Advancing North America's 4th Largest Gold Reserves Towards Development
Message: Detour Gold and PDX Resources Agree to Merger
| January 26, 2009 | |
| Detour Gold and PDX Resources Agree to Merger | |
|
TORONTO, ONTARIO--(Marketwire - Jan. 26, 2009) - Detour Gold Corporation (TSX:DGC) ("Detour Gold") and PDX Resources Inc. (TSX:PLG) ("PDX") are pleased to announce they have entered into an agreement providing for the merger of the companies. PDX is Detour Gold's largest shareholder, and the 19 million common shares of Detour Gold that it holds represent an approximately 42% interest in Detour Gold. Summary of the Transaction Pursuant to the transaction, each PDX share will be exchanged for 0.2571 of a common share of Detour Gold, representing a value of $2.12 per PDX share based upon the closing price of Detour Gold shares on the TSX on January 23, 2009. The value accorded each PDX share is 28% over the closing price of the PDX Shares on January 23, 2009 and 31% over the 20-day volume weighted average trading price of the PDX Shares on the TSX as at the same date. Pursuant to the transaction, a total of 19 million common shares of Detour Gold will be issued to PDX Shareholders. PDX will become a wholly-owned subsidiary of Detour Gold and the shares of Detour Gold currently held by PDX will be cancelled. As a result, the transaction will have no material impact on the capitalization of Detour Gold. Detour Gold shareholders will continue to hold their existing Detour Gold shares. Benefits of the Transaction The proposed transaction offers a number of benefits to the shareholders of both PDX and Detour Gold, including the following: - a simplified ownership structure and a larger public float which should facilitate a broader base of institutional investors and greater liquidity in the Detour Gold shares; - for shareholders of PDX: - the elimination of the significant discount in the trading price of the PDX shares relative to the market value of PDX's interest in Detour; and - direct exposure to the potential of the Detour Lake project, one of the world's largest undeveloped gold resources; - for shareholders of Detour Gold: - the elimination of the overhang created in the Detour Gold shares by PDX's significant ownership block; and - the addition of further experience to Detour Gold's board of directors, whose combined expertise and proven track record will be invaluable in moving the Detour Lake project forward. Management and Directors Upon completion of the transaction, Gerald Panneton will continue to serve as the President and Chief Executive Officer of Detour Gold and Michael Kenyon, a current director of Detour Gold, will assume the role of Executive Chairman. Three new independent directors will be appointed to Detour Gold's board of directors: Peter Crossgrove, in the role of Non-Executive Co-Chairman and Lead Director, Andre Gaumond and Jonathan Rubenstein, bringing with them over 80 years of additional experience in the mining industry. With these additions, Detour Gold's new board of directors will be composed of Michael Kenyon (Executive Chairman), Peter Crossgrove (Non-Executive Co-Chairman and Lead Director), Gerald Panneton (President and Chief Executive Officer), Louis Dionne, Andre Gaumond, Ingrid Hibbard, Philip Olson, Jonathan Rubenstein and Ronald Thiessen. Advisors RBC Capital Markets is acting as financial advisor and Osler, Hoskin & Harcourt LLP is acting as legal advisor to PDX in connection with the proposed transaction. BMO Capital Markets is acting as financial advisor and Davies Ward Phillips and Vineberg LLP is acting as legal advisor to Detour Gold in connection with the proposed transaction. Boards of Directors' Recommendations The board of directors of Detour Gold (with the directors that also serve on PDX's board not participating) and the board of directors of PDX (with the directors that also serve on Detour Gold's board abstaining from voting) have unanimously approved the proposed transaction. All of the directors of PDX and Detour Gold have indicated that they intend to vote their respective shares in favour of the transaction. Further Transaction Details The transaction will be implemented through an amalgamation under the Business Corporations Act (Alberta) in which PDX will amalgamate with a newly formed, wholly-owned subsidiary of Detour Gold. In this amalgamation, shareholders of PDX will receive shares in Detour Gold based on the exchange ratio referred to above. Promptly following the amalgamation, the Detour Gold shares currently held by PDX will be cancelled. Special meetings of the shareholders of each of Detour Gold and PDX will be held to consider the transaction. The transaction requires the approval of not less than two-thirds of the votes cast by PDX shareholders. In addition, the transaction requires the approval of a simple majority of the votes cast by Detour Gold shareholders, as well as the approval of a simple majority of the votes cast by Detour Gold's minority shareholders. The transaction is also subject to the receipt of customary regulatory approvals, including the approval of the Toronto Stock Exchange for the listing of the Detour Gold shares to be issued to PDX shareholders in the transaction. The merger agreement includes a commitment by PDX and Detour Gold not to solicit or initiate discussions concerning alternative transactions. In addition, PDX and Detour Gold have each agreed to pay a termination fee of $3 million to the other party in specified circumstances where the transaction is not consummated. Full details of the proposed transaction, a copy of the fairness opinion prepared by BMO Capital Markets for the board of directors of Detour Gold, the factors considered by PDX and Detour Gold's respective boards of directors and other information relevant to the transaction will be included in a joint information circular, which the parties expect to mail in February 2009. It is expected that the special meetings of shareholders to approve the proposed transaction will be held in late March 2009 and, if approved at those meetings, it is expected that the transaction would close immediately thereafter. The Detour Gold shares to be issued in the proposed transaction have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. About PDX Resources Inc. PDX's principal asset is its 19 million common shares (representing a 42.3% equity interest) of Detour Gold. PDX provides prospective investors with an opportunity to participate in potential increases in the size of the resource at the Detour Lake project and the value of PDX's equity interest in Detour. About Detour Gold Corporation Detour Gold is a Canadian gold exploration and development company whose focus is to advance the development of its Detour Lake project located in northeastern Ontario. To date, Detour Gold has outlined a measured and indicated resource of 10.8 million ounces (242.9 million tonnes grading 1.38 g/t gold) and an inferred resource of 2.4 million ounces (63.9 million tonnes grading 1.19 g/t gold), based on a detailed engineered pit design at US$700/oz gold price (refer to July 2nd 2008 Press Release). Detour Gold is expected to complete a feasibility study in 2009. |
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