NovaCopper and Sunward Announce Arrangement
April 23, 2015 - Vancouver, British Columbia - NovaCopper Inc. (TSX, NYSE-MKT: NCQ) ("NovaCopper") and Sunward Resources Ltd. (TSX: SWD; OTCQX: SNWRF) ("Sunward") are pleased to announce that they have entered into a definitive arrangement agreement (the "Arrangement Agreement")
pursuant to which NovaCopper has agreed to acquire all of the issued
and outstanding common shares of Sunward by way of a court approved plan
of arrangement (the "
The combination of NovaCopper and Sunward will create a leading
exploration and development company with a strong balance sheet of
approximately US$23 million in cash for the advancement of the Arctic
and Bornite deposits located in the Ambler mining district of Alaska,
USA. The company plans to advance the Arctic deposit towards
feasibility with a US$8-10 million field program this summer.
Meanwhile, plans are underway to maximize shareholder value at the
Titiribi exploration asset in Colombia. Sunward has focused on
community engagement at its Titiribi project and with its talented and
experienced Colombian management team, has built a strong reputation
with local communities.
Under the terms of the Arrangement, Sunward shareholders will receive 0.3 (the "Exchange Ratio") of a NovaCopper common share ("NovaCopper Share") for each Sunward common share ("Sunward Share")
held. The Exchange Ratio represents the equivalent of US$0.1841 per
Sunward Share based on the closing price of the NovaCopper Shares on the
NYSE MKT LLC ("
NYSE-MKT") as of April 22, 2015 and represents
the equivalent of US$0.1865 per Sunward Share based on the 20-day volume
weighted average price ("
VWAP20") of the NovaCopper Shares on
the NYSE-MKT as of the same date. The Exchange Ratio implies a total
transaction value of approximately US$27.6 million on a VWAP20 basis,
including the automatic vesting and exchange into NovaCopper Shares of
Sunward's outstanding deferred share units, and the exercise of
in-the-money stock options for NovaCopper Shares. Outstanding Sunward
options will be converted at the Exchange Ratio, and shall expire 90
days following the completion of the Arrangement.
NovaCopper has received voting support agreements from all Sunward
officers and directors. Additionally, Sunward's four largest
shareholders, including Gold First Investments Limited, Electrum
Strategic Acquisitions LLC and Paulson & Co. Inc., who hold, in
aggregate, approximately 70% of Sunward's issued and outstanding Shares,
have all agreed to vote in support of the Arrangement at Sunward's
special meeting of shareholders expected to be held in June or July.
Upon completion of the Arrangement, the combined company will be owned
approximately 58% by NovaCopper shareholders and 42% by Sunward
Highlights and Benefits of the Combined Company
- Strong balance sheet, expected to have approximately US$23 million
(C$28 million) in cash upon the closing of the Transaction,
significantly de-risking the development of the Ambler mining district;
- Sufficient cash to advance the Arctic deposit towards feasibility
over an estimated two to three year period, in parallel with AIDEA's
infrastructure development activities;
- Sufficient cash to commit approximately US$8-10 million to advancing
the Upper Kobuk Mineral Projects during the 2015 field season; and in
particular, to complete in-fill drilling of the Arctic in-pit resources,
and collection of in-pit geotechnical and metallurgical data. The
funds will also be utilized to advance assessment work at the Bornite
deposit, specifically to evaluate potential synergies between the Arctic
and Bornite deposits which are in close proximity; and
- Additional exploration potential of the multi-million ounce Titiribi asset in Colombia.
"The combination of Sunward and NovaCopper provides shareholders a
single company with a strong balance sheet to advance critical path
objectives at our high quality Arctic and Bornite copper-zinc assets in
Alaska. It also gives the company significant exposure and leverage to
additional gold and copper in Colombia. Within the context of a market
place which is demanding consolidation but is challenging for
development project financing, management believes this is a win-win
solution for all shareholders" said Rick Van Nieuwenhuyse, NovaCopper's
President and Chief Executive Officer.
Sunward's Chief Executive Officer, Philip O'Neill said, "I believe this
business combination gives our shareholders exposure to a very high
quality asset located in a mining friendly jurisdiction, and we feel
NovaCopper's exploration team, with its demonstrated track record of
success, will be able to add value to both the Ambler and Titiribi
The implementation of the Arrangement is subject to the approval of at
least 66 2/3% of the votes cast by holders of Sunward Shares and, if
required under applicable securities laws, a majority of disinterested
Sunward shareholders, at a special meeting of Sunward shareholders
expected to take place in early summer 2015. Issuance of the NovaCopper
Shares in the Arrangement is also subject to the approval of a majority
of the votes cast by the holders of NovaCopper Shares at a special
meeting of NovaCopper shareholders expected to take place on or about
the same date. In addition to shareholder approvals, the Arrangement is
also subject to the receipt of certain regulatory, court and stock
exchange approvals and certain other closing conditions customary in
transactions of this nature.
The Arrangement Agreement has been unanimously approved by the board of
directors of each of Sunward and NovaCopper, two common directors having
declared their interest and abstained from voting. Dr. Thomas Kaplan, a
director of NovaCopper, also declared his interest and abstained from
voting due to his relationship with Electrum Strategic Resources L.P.,
which owns approximately 27.8% of NovaCopper's issued and outstanding
shares, and whose affiliated fund owns approximately 18.2% of Sunward's
issued and outstanding shares.
Haywood Securities Inc. has provided an oral fairness opinion to the
Special Committee of the board of directors of NovaCopper that, subject
to the assumptions, limitations and qualifications set out in such
fairness opinion, the consideration to be paid by NovaCopper pursuant to
the Arrangement is fair, from a financial point of view, to NovaCopper.
Cormark Securities Inc. has provided a fairness opinion to the Special
Committee of the board of directors of Sunward that, subject to the
assumptions, limitations and qualifications set out in such fairness
opinion, the consideration to be received by Sunward shareholders in
connection with the Arrangement is fair, from a financial point of view,
to such Sunward shareholders.
The directors and officers of Sunward have entered into customary voting
support agreements to vote in favour of the transaction. In addition,
large shareholders from Sunward have entered into customary voting
support agreements to vote in favour of the Arrangement. The directors
and officers and large shareholders of NovaCopper have advised that they
intend to vote their NovaCopper Shares in favour of the transaction.
Additional Information and Where To Find It
Further information regarding the Arrangement will be contained in a
joint information circular/proxy statement to be prepared by the
companies, filed on SEDAR by Sunward and by NovaCopper on SEDAR and with
the Securities and Exchange Commission (the "SEC") and mailed in due
course to their respective shareholders in connection with the special
meetings of each of the NovaCopper and Sunward shareholders. The
Arrangement Agreement will be filed on the SEDAR profiles of NovaCopper
and Sunward and with the SEC by NovaCopper. The joint information
circular/proxy statement will contain important information about the
proposed Arrangement and related matters. INVESTORS AND SHAREHOLDERS
ARE URGED TO READ THE JOINT INFORMATION CIRCULAR/PROXY STATEMENT
CAREFULLY WHEN IT BECOMES AVAILABLE.
NovaCopper and its respective directors and executive officers and other
persons may be deemed to be participants in the solicitation of proxies
in respect of the proposed transaction. Information regarding
NovaCopper's directors and executive officers is available in
NovaCopper's proxy statement filed on Schedule 14A for its 2015 annual
meeting of shareholders and its 2014 Annual Report on Form 10-K, each of
which have been filed with the SEC and on SEDAR. Other information
regarding the participants in the proxy solicitation and a description
of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement and other relevant
materials to be filed with the SEC when they become available.
Investors and shareholders will be able to obtain free copies of the
forthcoming a joint information circular/proxy statement, past proxy
statements and other documents filed with the SEC by NovaCopper through
the website maintained by the SEC at
In addition, investors and shareholders will be able to obtain free
copies of the joint information circular/proxy statement from NovaCopper
by telephone at (604) 638-8088, or by going to NovaCopper's Investor
Center page on its corporate website at
Board and Management
The Board of the combined company will consist of nine members, two of
which will be nominees of Gold First Investments Limited, Sunward's
largest shareholder, and the remaining members will be incumbent
directors of NovaCopper's board.
NovaCopper management will remain in their current capacity, with Rick
Van Nieuwenhuyse serving as President & Chief Executive Officer and
Elaine Sanders serving as Vice President & Chief Financial Officer.
NovaCopper anticipates retaining the local management team of Sunward
Advisors and Counsel
Haywood Securities Inc. is acting as financial advisor and has provided
an oral fairness opinion to the Special Committee of the board of
directors of NovaCopper. Blakes, Cassels & Graydon LLP and Dorsey
& Whitney, LLP are acting as legal counsel to NovaCopper.
Cormark Securities Inc. is acting as financial advisor and has provided a
fairness opinion to the Special Committee of the board of directors of
Sunward. Anfield Sujir Kennedy & Durno LLP is acting as legal
counsel to Sunward.
NovaCopper Inc. is a base metals exploration company focused on
exploring and developing the Ambler mining district located in
northwestern Alaska. It is one of the richest and most-prospective
known copper-dominant districts located in one of the safest
geopolitical jurisdictions in the world. It hosts world-class
polymetallic VMS deposits that contain copper, zinc, lead, gold and
silver, and carbonate replacement deposits which have been found to host
high-grade copper mineralization. Exploration efforts have been focused
on two deposits in the Ambler district - the Arctic VMS deposit and the
Bornite carbonate replacement deposit. Both deposits are located within
NovaCopper's land package that spans approximately 143,000 hectares.
NovaCopper has an agreement with NANA Regional Corporation, Inc., a
Regional Alaska Native Corporation that provides a framework for the
exploration and potential development of the Ambler mining district in
cooperation with local communities. Our vision is to develop the Ambler
mining district into a premier North American copper producer.
More information on NovaCopper, its properties and its management team is available on their company's website at www.novacopper.com.
Sunward Resources Ltd. is a Canadian-based company focused on the
exploration and development of the 100%-owned Titiribi Project in
Colombia. Titiribi hosts NI 43 101-compliant Measured and Indicated
Resource of 4.63 million ounces of gold contained within 285.8 million
tonnes grading 0.50 grams/tonne and Inferred Resource of 6.01 million
ounces of gold contained within 349.4 million tonnes grading 0.53
grams/tonne. All Titiribi resources were assessed using a cut-off of 0.3
grams/tonne gold. Titiribi also hosts 654.4 million pounds of copper in
the Measured & Indicated Mineral Resource and 216.3 million pounds
of copper in the Inferred Resource. For more information, please see
Sunward's press release dated September 12, 2013 as published on SEDAR
and on Sunward's website, as well as the technical report by Behre
Dolbear & Company (USA), Inc. dated September 9, 2013.
Ms. Heather White, P.Eng, is Special Advisor to the COO, and a
consultant to Sunward. Ms. Heather White is a qualified person under
National Instrument 43-101 - Standards of Disclosure for Mineral
NI 43-101") and has reviewed and approved all of the
scientific and technical information in this press release as it relates
to the Titiribi Project.
The Titiribi Project is located approximately 70 kilometres southwest of
the city of Medellin, Colombia, in Antioquia department, within the
historical Titiribi mining district. Access to Titiribi is by a paved
highway from Medellin.
More information on Sunward, its properties and its management team is available on their company's website at www.sunwardresources.com.
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