Intuitivo Capital Corporation enters into definitive agreement for qualifying
transaction with Argonaut Gold
/THIS PRESS RELEASE IS INTENDED FOR DISTRIBUTION IN
The Definitive Agreement provides for, among other things, the three-cornered amalgamation (the "Amalgamation") of Argo with a wholly-owned subsidiary of Intuitivo to be incorporated for the purposes of the Amalgamation ("Subco"). On completion of the Amalgamation, among other things: (i) the amalgamated company will become a wholly-owned subsidiary of Intuitivo; and (ii) all of the outstanding common shares of Argo will be cancelled and exchanged for post-consolidation (as described below) common shares of Intuitivo on a share for share basis. After giving effect to the amalgamation, the shareholders of Argo will collectively exercise control over Intuitivo. The Intuitivo private placement contemplated in the company's
Upon the closing of the Qualifying Transaction, it is intended that Intuitivo will change its name to "Argonaut Gold Inc." or such other name as determined by Argo and accepted by the applicable regulatory authorities. Completion of the proposed Qualifying Transaction is subject to, among other things, receipt of all necessary regulatory and shareholder approvals.
About Argo
Argo is a Yukon corporation which was incorporated on
Prior to the completion of the Qualifying Transaction, Argo plans to acquire all of the issued and outstanding common shares of Castle Gold Corp. (("Castle"), a federally incorporated gold company engaged in exploration, mine development and production activities on gold-bearing properties in
Assuming the successful completion of the Castle Bid, Argonaut will hold a 100% interest in the production-stage El Castillo Project and the exploration-stage La Fortuna Project, located in the State of Durango,
As of the date hereof, there are 4,000,000 common shares of Argo outstanding. The following persons own, control or direct 10% or more of the outstanding common shares of Argo:
------------------------------------------------------------------------- Number of Common Shares Percentage of Outstanding Name of Argo Common Shares of Argo ---- ----------------------- ------------------------- ------------------------------------------------------------------------- Brian J. Kennedy 1,548,460 39% ------------------------------------------------------------------------- Peter C. Dougherty 1,445,896 36% ------------------------------------------------------------------------- Edgar A. Smith 1,005,644 25% -------------------------------------------------------------------------
Terms of the Proposed Qualifying Transaction
Prior to the completion of the proposed Qualifying Transaction, it is intended that Intuitivo will effect a consolidation of its outstanding common shares on the basis of one post-consolidation share for every 30 pre-consolidation shares (the "Consolidation"). The Consolidation and the proposed change of name of Intuitivo, as described above, will require the approval of Intuitivo's shareholders by special resolution at a meeting of its shareholders to be held on
Pursuant to the Amalgamation, among other things, holders of Argo common shares will receive one post-Consolidation common shares of Intuitivo for each one Argo common share held immediately prior to the Amalgamation (the "Exchange Ratio").
In addition, holders of options and warrants to purchase common shares of Argo will receive from Intuitivo, an option or warrant, as applicable, to purchase the same number of post-Consolidation common shares of Intuitivo at the same exercise price per share as previously provided for in former Argo securities, reflecting the one for one Exchange Ratio. As of the date hereof, Intuitivo has 7,500,000 common shares outstanding.
Upon completion of the Qualifying Transaction, it is expected that Intuitivo will be a Tier 1 issuer pursuant to the policies of the Exchange. Based on the number of Argo common shares outstanding as of the date hereof, and assuming the exchange of each Argo Subscription Receipt (as defined below) for one Argo common share and one-half of one Argo share purchase warrant prior to the Amalgamation, there would be approximately 55,750,000 post-Consolidation Intuitivo common shares outstanding upon completion of the Qualifying Transaction, on a non-diluted basis. On completion of the Qualifying Transaction, the current shareholders would hold an aggregate of approximately 250,000 post-Consolidation common shares, or approximately 0.45% of the outstanding common shares, the current shareholders of Argo would hold an aggregate of 4,000,000 post-Consolidation common shares of Intuitivo, or approximately 7.2%, and investors in the Argo Private Placement (as defined below) would hold an aggregate of 51,500,000 post-Consolidation common shares, or approximately 92.4%.
Florence R. Unger, the Corporate Secretary of Intuitivo and holder of 400,000 Intuitivo common shares and options to acquire a further 150,000 Intuitivo common shares, holds 20,000 Subscription Receipts of Argo. Upon the exchange of the Subscription Receipts,
Castle Gold Bid
Argo commenced the Castle Bid on
Argo Private Placement
On
The proceeds of the Argo Private Placement, less the estimated costs and expenses of the Agent, have been placed in escrow and are held by a third party trustee pending completion of the Escrow Release Conditions. Unless the consent of holders of not less than 66?% of the then outstanding Subscription Receipts is obtained, in the event that the Escrow Release Conditions are not satisfied prior to the date that is 90 days following the closing date, the escrowed funds shall be used by Argo to repurchase the then issued and outstanding Subscription Receipts for cancellation at a redemption price per Subscription Receipt equal to the issue price thereof. To the extent that the escrowed funds are not sufficient to purchase all of the Subscription Receipts, Argo is required to contribute such amounts as are necessary to satisfy any shortfall.
In consideration for their services in connection with the Argo Private Placement, Argo is required to pay the Agent a commission equal to 3.0% of the gross proceeds from the sale of the Subscription Receipts, which commission has been deposited in escrow, and has issued to the Agent 1,500,000 Subscription Receipts. As additional consideration for the services of the Agent, the Agent has been granted compensation options (the "Broker Options") entitling the Agent to subscribe for 1,500,000 common shares of Argo. Each Broker Option is exercisable to acquire one common share of Argo for a period of three years following the exercise of the Subscription Receipts at an exercise price of Cdn$4.50 per share.
It is intended that the net proceeds from the Argo Private Placement will be used to complete the Castle Bid, for other acquisitions and for working capital and general corporate purposes. Upon completion of the Qualifying Transaction, it is anticipated that the resulting issuer will have sufficient financial resources to carry on its business plan for a period of at least 18 months.
Intuitivo intends to apply to the Exchange for a waiver of the sponsorship requirements for the Qualifying Transaction based upon the Argo Private Placement and/or other exemptions available in Exchange policies.
Proposed Directors and Senior Management Team
Upon the closing of the Qualifying Transaction, it is anticipated that
The following are brief resumes of the currently proposed directors and senior officers of the resulting issuer following the Qualifying Transaction:
Christopher R.. Lattanzi, Director:
Dale Peniuk, Director:
Dale Peniuk is a chartered accountant that provides financial consulting services to a number of mining companies and currently serves on the Board and as Audit Committee Chair of Lundin Mining Corporation (TSX; OMX), Capstone Mining Corp. (TSX), Corriente Resources Inc. (TSX; AMEX), Quest Capital Corp. (TSX; AMEX), Rainy River Resources Ltd. (TSX-V), Reservoir Capital Corp. (TSX-V) and Q2 Gold Resources Inc. (not yet listed).
Conditions to Completion of the Qualifying Transaction
Completion of the proposed Qualifying Transaction is subject to a number of conditions precedent, including, but not limited to, the completion of the Castle Bid, acceptance by the Exchange and other applicable regulatory approvals and the approval of shareholders of Argo. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.
Qualified Person
This press release has been reviewed by
Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements (including, without limitation, information regarding the proposed Qualifying Transaction and the business opportunities of the resulting issuer after giving effect to the Qualifying Transaction) that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors including, among others: the Qualifying Transaction may not be completed; any significant disruptions affecting operations at the Castle Gold Projects, whether due to labour disruptions, supply disruptions, damage to equipment or otherwise; the exchange rate between the Canadian dollar, the Mexican peso and the U.S. dollar may not remain consistent with current levels; certain price assumptions for gold; the prices for energy and other key supplies may not remain consistent with current levels; production forecasts may fail to meet expectations; the current mineral reserve and resource estimates of the Castle Gold Projects could be inaccurate. The matters discussed in this news release also involve risks and uncertainties described in Intuitivo's continuous disclosure documents filed from time to time with the Canadian securities regulatory authorities. Except as required by law, Intuitivo assumes no obligation to update the forward-looking information contained in this new release.
Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the proposed Qualifying Transaction, any information released or received with respect to the Qualifying Transaction, including the information contained in this news release, may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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For further information: Mark Wilder, President & CEO, Intuitivo Capital Corporation, Tel: (416) 928-1800, E-mail: [email protected]; or Peter C. Dougherty, President & CEO, Argonaut Gold Inc., Tel: (775) 852-9432, E-mail: [email protected]
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