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Galane Gold (TSXV:GG) has announced plans to acquire Galaxy Gold Mining Ltd. The company has entered binding share purchase agreements to acquire approximately 78 percent of Galaxy’s shares. Following that, and pursuant to the share purchase agreements, Galane will make an offer to all other shareholders of Galaxy to acquire the remaining shares of the company on economically equivalent terms.
As quoted in the press release:
Galane Gold has entered into share purchase agreements with the majority shareholders of Galaxy, pursuant to which a wholly-owned subsidiary of the Company has agreed to acquire approximately 78% of the issued and outstanding Galaxy Shares in exchange for 19,311,378 common shares in the capital of the Company (“Common Shares”), with an aggregate value of approximately Cdn.$2.4 million, based on a deemed price of Cdn.$0.125 per Common Share, and common share purchase warrants (“Warrants”) exercisable to acquire an aggregate of up to 4,293,805 Common Shares for a period of two years from the closing date at Cdn.$0.175 per Common Share.
Upon issuance of the Common Shares, the above-noted majority vendors of Galaxy Shares will hold an aggregate of 26.8% of the issued and outstanding Common Shares on an undiluted basis, based on the outstanding number of Common Shares as of today’s date, or 30.9% assuming the exercise of the Warrants and no other convertible securities of the Company. If all of the remaining shareholders of Galaxy tender their Galaxy Shares pursuant to the Mandatory Offer in exchange for Common Shares and Warrants, the shareholders of Galaxy, including the majority vendors, will hold 31.8% of the Common Shares on an undiluted basis, based on the outstanding number of Common Shares as of today’s date, or 36.6% assuming the exercise of the Warrants and no other convertible securities of the Company.
The acquisition of the Galaxy Shares pursuant to the share purchase agreements is subject to the satisfaction or waiver of various closing conditions on or before June 30, 2015, including the completion of due diligence by the Company and the receipt of applicable regulatory approvals, including the approval of the TSX Venture Exchange. Galane Gold may, in its sole discretion, extend the closing date under the share purchase agreements to August 31, 2015.
The Company also intends to provide a secured loan facility to Galaxy in an amount up to U.S.$0.2 million to fund Galaxy’s working capital requirements until the closing of the transactions contemplated in the share purchase agreements.
Galane Gold CEO, Nick Brodie, said:
We are pleased with the proposition of adding the Galaxy operation to our portfolio. Gold mining in South Africa started in Barberton, home to Galaxy and its prolific Agnes Gold Mine which was discovered in 1888. While it is a current producer with substantial infrastructure in place, Galaxy has been constrained in recent years by a lack of working capital and an inability to make expenditures required to increase its production. Having completed substantial preliminary due diligence, we are confident that Galane brings the appropriate resources, both financial and managerial, to maximise the potential of Galaxy. This acquisition is consistent with our approach of acquiring production or near-term production assets at a fraction of the replacement cost to position ourselves as a substantial gold producer with minimal additional capital requirements. We have a clear path forward, funded through internal resources that we are optimistic can substantially increase Galaxy’s production and resources which will be defined in a 43-101 technical report to be delivered by the vendors prior to closing. We are optimistic that this transaction will ultimately prove to be highly accretive in terms of both production and resource.
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