CALICO RESOURCES AGREES TO BUSINESS COMBINATION WITH PARAMOUNT GOLD NEVADA
Calico Resources Corp. (CKB.V) and Paramount Gold Nevada Corp. have entered into an arrangement agreement dated March 14, 2016, pursuant to which Paramount has agreed to acquire all of the issued and outstanding common shares of Calico by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia).
Paul Parisotto, Calico’s President and CEO, said: “The board of directors of Calico believes that the proposed transaction will unlock the considerable value in our Grassy Mountain project for the benefit of our shareholders. Paramount has a strong cash position of approximately US$7.9 million (as at December 31, 2015), along with experienced technical and operational leadership able to take the project forward to production and the financial resources needed to complete the permitting process and a feasibility study, work which our Calico team has so ably advanced to this point. We also believe Paramount’s Sleeper Gold Project will represent an excellent economic opportunity in a better metal price environment. Calico shareholders will also benefit from Paramount’s listing on the NYSE MKT. In our view, the proposed combination is synergistic; the combined company will have a stronger asset base than Calico or Paramount separately, offering shareholders a better opportunity for capital appreciation while also reducing administrative costs.”
Particulars of the Transaction
Pursuant to the Arrangement Agreement, holders of Calico Shares (“Calico Shareholders”) will be entitled to receive 0.07 of a share of common stock of Paramount (“Paramount Shares”) in exchange for each Calico Share held (the “Exchange Ratio”), representing an implied offer price of CDN$0.112 per Calico Share and a premium of 49.2% (based on the Bank of Canada noon exchange rate of US$1.00 to CDN$1.3215 on the last trading day prior to the announcement of the Arrangement) and a premium of 45.5% based on the trailing 30-day volume weighted average trading price of Calico Shares on the TSX Venture Exchange and Paramount Shares on the NYSE MKT as of the date of the Arrangement Agreement. Based on the foregoing, the Arrangement represents total consideration to Calico Shareholders of CDN$11.5 million. All existing Calico stock options will be cancelled in connection with the Arrangement.
In connection with the Arrangement, approximately 7,171,209 Paramount Shares are expected to be issued to existing Calico Shareholders, which would result in existing Calico Shareholders owning approximately 46% of the combined company on a basic basis and approximately 43% on a fully-diluted basis (based on the Exchange Ratio, the number of issued and outstanding Calico Shares and Paramount Shares, and the number of outstanding options to acquire Paramount Shares as of the date of the Arrangement Agreement).