The Mission Group Regulatory News (TMG)

1 Feb 2007 07:01

Thistle Mining Inc.01 February 2007 THISTLE MINING INC. Thistle Announces Transaction with CGA Mining Limited Regarding Thistle's Masbate Gold Project Toronto, January 31 , 2007: Thistle Mining Inc ("Thistle" or the "Company")(AIM:TMG) and CGA Mining Limited (previously named Central Asia Gold Limited) ("CGA") (ASX and TSX:CGX) announced today that they have entered into a Sale andPurchase Agreement ("SPA") for the sale to a wholly-owned subsidiary of CGA (the"Purchaser") of 100% of Thistle's shareholding in Philippine Gold Ltd ("PGO"), awholly-owned subsidiary of the Company, and its other interests in the Masbategold project located on the island of Masbate in the Philippines (the "MasbateProject") including PGO's effective 19.2 % interest in the Runruno Gold Projectlocated in the Philippines which is controlled by Metals Exploration PLC (AIM:MTL) (collectively, the "Shares and Assets". The Shares and Assets are currentlyheld principally through PGO. The completion of the transaction ("Completion")is subject to various conditions referred to below. The Masbate Project is an epithermal gold system located within the municipalityof Aroroy, Masbate province, approximately 360 kilometres south east of Manila,which has been extensively studied and is considered to be at an advanceddevelopment stage. The project is supported by a large gold resource andreserve estimate and extensive exploration work. For additional informationrelating to the mineral and resource estimates in respect of the MasbateProject, reference is made to: (a) the technical report titled "Masbate GoldProject, Masbate Island, Philippines Form NI-43 101F1 Technical Report" datedApril 30, 2006, which was prepared by Mr. Andrew James Vigar of MiningAssociates and Mr. Stewart Charles Lewis of IMC Consultants Pty. Ltd., who areindependent qualified persons for the purposes of NI 43-101; (b) Thistle's 2005Annual Information Form; and (c) the Company's press release dated May 15, 2006("Results for the first quarter ended March 31, 2006"), all of which areavailable to the public at www.sedar.com. Under the terms of the transaction, the consideration payable for the sale andpurchase of the Shares and Assets is, in aggregate, US$51 million (the "PurchaseConsideration"). As the book value of Thistle's investment in PGO and loansadvanced by Thistle to PGO as at December 31, 2006 amounted to US$9.9 millionand US$25.1 million respectively, the transaction will be immediately accretiveto Thistle shareholders. More details of the financial impact of thetransaction will be disclosed in a circular to be sent to Thistle shareholdersin mid-February 2007. The Purchase Consideration shall be satisfied by: (a) the issue by CGA to a new wholly-owned subsidiary of Thistle("Thistle Sub") at Completion of such number of fully paid ordinary shares ofCGA as shall have a value nearest to (but not less than) US$21 million (the "CGAShares"); (b) the payment by the Purchaser to Thistle at Completion of US$25million in cash, less the deposit of US$500,000 that has already been paid bythe Purchaser to Thistle. The deposit is repayable in limited circumstancesincluding if Thistle shareholders do not vote in favour of the transaction; (c) the payment by the Purchaser into escrow (the "Escrow") ofUS$4 million and US$1 million to Thistle, less any amount(s) which are required to meet any substantiated warranty and indemnity claims that may have been madeby the Purchaser, on a date not later than six months from the the date ofCompletion (the "Completion Date"); and (d) the payment to Thistle twelve months after Completion of theamount of US$4 million paid into Escrow as referred to in sub-paragraph (c)above, less any amount(s) required to meet any substantiated warranty andindemnity claims that may have been made by the Purchaser within twelve monthsof the Completion Date. In addition to the above, Thistle will be reimbursed for approximately US$4.4million in working capital and capital expenditures in respect of the MasbateProject. The issue price of the CGA Shares forming part of the Purchase Considerationwill be based on the lesser of A$0.65 per share and the volume weighted averageprice at which ordinary shares in the share capital of CGA are traded on theAustralian Stock Exchange (the "ASX") in the 10 consecutive trading daysimmediately prior to the Completion Date. A share price of A$0.65 represents apremium of 14 % to the closing price of CGA's ordinary shares on the ASX onJanuary 31, 2007 and an 18% premium to the 5 day volume weighted average tradingprice of CGA's ordinary shares on the ASX immediately preceding January 31 ,2007. This compares with cash on hand in CGA's balance sheet as at December 31,2006 in an amount of A$78 million or A$0.65 per share. It is expected that, immediately following Completion, the Company, throughThistle Sub, will own approximately 25% of the issued shares of CGA. Thistlecurrently intends to maintain its position in the CGA Shares and will be subjectto a lock-up preventing it from disposing of those shares for a period of 12months from the Completion Date. Further details on the lock-up are set outbelow. In compliance with: (a) a general Security Agreement made by the Company infavour of Casten Holdings Limited ("Casten") dated June 30, 2005, (b) a generalSecurity Agreement made by Thistle in favour of MC Resources Limited ("MC")dated June 30, 2005, (c) a Pledge of Securities made by Thistle in favour ofCasten dated June 30, 2006, (d) a Pledge of Securities made by Thistle in favourof MC dated June 30, 2005; and (e) an Equitable Charge Over Shares betweenThistle, MC, Casten and Thistle Holdings, as security agent for MC and Casten,dated March 28, 2006 (together, the "Existing Security Documents"), Thistle willprovide a first priority security to Thistle Holdings (the "First Ranking Pledge") over all the issued and outstanding shares in Thistle Sub (the "Thistle SubShares") as security for the performance by Thistle of all its obligations underthe Existing Security Documents. The First Ranking Pledge will terminate uponrepayment of all amounts owing to MC and Casten under the Existing SecurityDocuments and related credit agreements and loan notes (the "Existing LoanDocuments"). Under the terms of the SPA, Thistle will provide a second priority security tothe Purchaser (the "Second Ranking Pledge") over the Thistle Sub Shares (rankingin priority after the First Ranking Pledge) as security for the amount of anysubstantiated warranty or indemnity claims made by the Purchaser under the SPAand certain related agreements. If the amount of any such claim is in excess ofthe amounts then held in Escrow, the Purchaser may instruct Thistle to: (a) either (at Thistle's sole discretion) cause Thistle Sub to sell suchnumber of CGA Shares on market or provide loans to Thistle Sub as are requiredto raise a sum (net of any permitted expenses) equal to the remaining amount dueunder all such claims; and (b) where CGA Shares are sold, cause the sale proceeds (net of anypermitted expenses) to be paid to the Purchaser in or towards satisfaction ofsuch claims or, where a loan is provided, cause that the loan to be paid to thePurchaser in or towards satisfaction of such claims. The Second Ranking Pledge will terminate 12 months after the Completion Date,unless a valid claim under the SPA or related agreements has been institutedprior to the end of that period in which event that pledge will remain in effectuntil the claim has been substantiated. The Second Ranking Pledge will alsoterminate on the date all amounts due under the Existing Loan Documents havebeen repaid in full (other than by means of a financing facility) or fullyconverted into equity. At all times during the term of the aforementioned pledge agreements, andsubject to no event of default having occurred thereunder, Thistle Sub will beentitled to exercise all rights attaching to the CGA Shares including, amongother things, the right to vote and the right to receive dividends. Thistle and Thistle Sub will be subject to a 12 month "lock-up" from Completionunder which they will agree not to dispose of the CGA Shares during that period,subject to certain limited exceptions set out in an investor agreement to beentered into between Thistle, Thistle Sub and CGA (the "CGA Investor Agreement")including upon a takeover, insolvency event, court order, and transfers toThistle or any of its affiliates, being any wholly-owned subsidiary of Thistle,MC and Casten each of which owns 35% of the outstanding share capital ofThistle, subject to any additional requirements of the ASX Listing Rules, asapplicable Completion of the sale of the Shares and Assets by the Purchaser is subject tocertain conditions, including the following: • approval of the shareholders of both CGA and Thistle; • the written approval of the TSX to the listing of the CGA Shares on theTSX (in addition to the obligation of CGA to apply to the ASX immediatelyfollowing Completion for the quotation of the CGA Shares on the ASX within fivebusiness days following Completion); and • the release of all existing security over the Shares and Assets. A meeting of the Company's shareholders to consider the proposed sale isexpected to be held in Toronto on or about March 16, 2007. In connection withthe meeting, the Company will be preparing and sending to its shareholders anotice of meeting and circular containing additional details concerning thetransaction in mid-February. The transaction will require approval by a simplemajority of the votes cast by Thistle shareholders at the meeting. The Companyhas received no assurances from any of its shareholders as to any suchshareholder's intention to vote for the approval of the transaction. CGA's shareholder meeting to approve the transaction is expected to be held onor about March 17, 2007 in Australia. The transaction will require approval by asimple majority of the votes cast by CGA shareholders at the meeting. CGA hasnot received any assurances from any of its shareholders as to any suchshareholder's intention to vote for the approval of the transaction. Assuming the shareholders of CGA and Thistle approve the transaction and allother conditions to the Completion are satisfied or waived, Thistle expects thatthe proposed transaction will be completed by March 30, 2007. Under the terms ofthe SPA, if the transaction is not completed on or before March 30, 2007, eitherThistle or CGA may terminate the SPA and the transactions contemplated by theSPA unless the Completion Date is extended by mutual agreement. The projected debt due and payable by the Company on April 1, 2007 is expectedto be $39.5 million (Assuming a US dollar/Canadian dollar exchange rate of1.1764 ). The total debt of the Company as at January 31, 2007 (including debtnot immediately due and payable on April 1, 2007) is $ 36.74 million and CAD $30.93 million. The transaction is expected to strengthen the Company's balancesheet by enabling it to apply approximately $27.0 million of the PurchaseConsideration to the repayment of the Company's short term debt on or after theCompletion Date. As noted above, at Completion the Company, through Thistle Sub, will receive aninterest of approximately 25% in CGA and accordingly will retain significantexposure to the Masbate Project through that interest as well as exposure toother resource projects in which CGA is involved. Under the terms of the CGA Investor Agreement, for so long as Thistle Sub andits affiliates own more than 10% of the voting shares of CGA, Thistle Sub willbe entitled to nominate one person to be appointed as a director to the board ofdirectors of CGA. It is anticipated that the first director nominated by ThistleSub at the Completion Date with be Andreas J. Graetz, the Company's ChiefFinancial Officer. CGA is in a strong position to assume the development of the Masbate Project. Inparticular: • CGA has a strong balance sheet. At December 31, 2006, cash on handamounted to A$78.0 million or A$0.65 per share; and • CGA management has been responsible for the successful development ofa number of significant gold mines, including the Boroo gold project inMongolia, Golden Pride in Tanzania, the Obotan mine in Ghana and the ChaliceGold Project in Western Australia. In addition, preliminary agreements to acquire interests in three new resourceprojects have been entered into by CGA. Those projects are: two copper projectsin Zambia, the Mkushi and Mokambo Copper Projects, and the Segilola Gold Projectin Nigeria. With regard to this announcement and for further information on CGA and itsprojects reference is made to the announcement ("Proposed Acquisition of theMasbate Gold Project in the Philippines") made by CGA in Canada and Australia onthe date hereof and to CGA's website: http://www.cagl.com.au/. The transaction is also expected to allow the Company to focus on the continuedrejuvenation and development of its South African mining operations includingunderground mine development, the exploration programme over the unminedEldorado reefs and the development of the Golden Triangle at President SteynGold Mine ("PSGM"). For additional information relating to the Golden Triangleproject and mineral reserve and mineral resource estimates on PSGM, please referto the technical report titled "43-101 Document for President Steyn Gold MinesSituated in the Witwatersrand Basin, Free State Goldfield, South Africa" datedMarch 16, 2006, which was prepared by Peter Camden-Smith, an independentqualified person for the purpose of National Instrument 43-101, and is availableto the public on www.sedar.com. Lord Lang, the Chairman of Thistle states that: "We could not have wished for a better partner to develop the Masbate project.The strong balance sheet and talented and experienced management team of CGAwill allow the Company to benefit from the development of the Masbate projectthrough its holding of approximately 25% in CGA on completion of the transactionin a rapid and effective manner. In addition, the cash proceeds of the sale willbe mainly applied by Thistle to the reduction of debt and the strengthening ofthe Company's balance sheet which will help position Thistle for the developmentof its South African operations and other opportunities." For further information, contact: Andy Graetz, Chief Financial Officer at + 27 82 929 5562 or email toagraetz@disselgroup.com Gerry Beaney, Grant Thornton Corporate Finance at +44 (0) 207 383 5100 Forward Looking Information: This press release may contain or refer toforward-looking information based on current expectations. Forward-lookingstatements are subject to significant risks and uncertainties, and other factorsthat could cause actual results to differ materially from expected results.These forward-looking statements are made as of the date hereof and the Companyassumes no responsibility to update or revise them to reflect new events orcircumstances. This information is provided by RNS The company news service from the London Stock Exchange