Toronto, Ontario - Detour Gold Corporation (TSX: DGC) ("Detour Gold")
and PDX Resources Inc. (TSX:PLG) ("PDX") are pleased to announce they
have entered into an agreement providing for the merger of the
companies. PDX is Detour Gold's largest shareholder, and the 19 million
common shares of Detour Gold that it holds represent an approximately
42% interest in Detour Gold.
Summary of the Transaction
Pursuant to the transaction, each PDX share will be exchanged for 0.2571
of a common share of Detour Gold, representing a value of $2.12 per PDX
share based upon the closing price of Detour Gold shares on the TSX on
January 23, 2009. The value accorded each PDX share is 28% over the
closing price of the PDX Shares on January 23, 2009 and 31% over the
20-day volume weighted average trading price of the PDX Shares on the
TSX as at the same date. Pursuant to the transaction, a total of 19
million common shares of Detour Gold will be issued to PDX Shareholders.
PDX will become a wholly-owned subsidiary of Detour Gold and the shares
of Detour Gold currently held by PDX will be cancelled. As a result,
the transaction will have no material impact on the capitalization of
Detour Gold. Detour Gold shareholders will continue to hold their
existing Detour Gold shares.
Benefits of the Transaction
The proposed transaction offers a number of benefits to the shareholders
of both PDX and Detour Gold, including the following:
- a simplified ownership structure and a larger public float which
should facilitate a broader base of institutional investors and greater
liquidity in the Detour Gold shares;
- for shareholders of PDX:
- the elimination of the significant discount in the trading price of
the PDX shares relative to the market value of PDX's interest in Detour;
and
- direct exposure to the potential of the Detour Lake project,
one of the world's largest undeveloped gold resources;
- for shareholders of Detour Gold:
- the elimination of the overhang created in the Detour Gold shares by
PDX's significant ownership block; and
- the addition of further experience to Detour Gold's board of
directors, whose combined expertise and proven track record will be
invaluable in moving the Detour Lake project forward.
Ingrid Hibbard, President and Chief Executive
Officer of PDX, said, "This transaction represents an excellent
opportunity to create value for the shareholders of PDX. It eliminates
the discount in PDX's share price relative to its holding in DGC and
provides our shareholders with more liquid securities offering direct
exposure to one of the world's largest undeveloped gold resources."
Gerald Panneton, President and Chief Executive Officer of Detour Gold,
stated, "We are delighted by this opportunity to move forward on the
Detour Lake project under a broader investor base and assisted by a
respected and experienced board of directors. It's a compelling
combination of project and people."
Management and Directors
Upon completion of the transaction, Gerald Panneton will continue to
serve as the President and Chief Executive Officer of Detour Gold and
Michael Kenyon, a current director of Detour Gold, will assume the role
of Executive Chairman. Three new independent directors will be appointed
to Detour Gold's board of directors: Peter Crossgrove, in the role of
Non-Executive Co-Chairman and Lead Director, André Gaumond and Jonathan
Rubenstein, bringing with them over 80 years of additional experience in
the mining industry. With these additions, Detour Gold's new board of
directors will be composed of Michael Kenyon (Executive Chairman), Peter
Crossgrove (Non-Executive Co-Chairman and Lead Director), Gerald
Panneton (President and Chief Executive Officer), Louis Dionne, André
Gaumond, Ingrid Hibbard, Philip Olson, Jonathan Rubenstein and Ronald
Thiessen.
Advisors
RBC Capital Markets is acting as financial advisor and Osler, Hoskin
& Harcourt LLP is acting as legal advisor to PDX in connection with
the proposed transaction. BMO Capital Markets is acting as financial
advisor and Davies Ward Phillips and Vineberg LLP is acting as legal
advisor to Detour Gold in connection with the proposed transaction.
Boards of Directors' Recommendations
The board of directors of Detour Gold (with the directors that also
serve on PDX's board not participating) and the board of directors of
PDX (with the directors that also serve on Detour Gold's board
abstaining from voting) have unanimously approved the proposed
transaction. All of the directors of PDX and Detour Gold have indicated
that they intend to vote their respective shares in favour of the
transaction.
Further Transaction Details
The transaction will be implemented through an amalgamation under the
Business Corporations Act (Alberta) in which PDX will amalgamate with a
newly formed, wholly-owned subsidiary of Detour Gold. In this
amalgamation, shareholders of PDX will receive shares in Detour Gold
based on the exchange ratio referred to above. Promptly following the
amalgamation, the Detour Gold shares currently held by PDX will be
cancelled.
Special meetings of the shareholders of each of Detour Gold and PDX will
be held to consider the transaction. The transaction requires the
approval of not less than two-thirds of the votes cast by PDX
shareholders. In addition, the transaction requires the approval of a
simple majority of the votes cast by Detour Gold shareholders, as well
as the approval of a simple majority of the votes cast by Detour Gold's
minority shareholders. The transaction is also subject to the receipt of
customary regulatory approvals, including the approval of the Toronto
Stock Exchange for the listing of the Detour Gold shares to be issued to
PDX shareholders in the transaction.
The merger agreement includes a commitment by PDX and Detour Gold not to
solicit or initiate discussions concerning alternative transactions. In
addition, PDX and Detour Gold have each agreed to pay a termination fee
of $3 million to the other party in specified circumstances where the
transaction is not consummated.
Full details of the proposed transaction, a copy of the fairness opinion
prepared by BMO Capital Markets for the board of directors of Detour
Gold, the factors considered by PDX and Detour Gold's respective boards
of directors and other information relevant to the transaction will be
included in a joint information circular, which the parties expect to
mail in February 2009. It is expected that the special meetings of
shareholders to approve the proposed transaction will be held in late
March 2009 and, if approved at those meetings, it is expected that the
transaction would close immediately thereafter.
The Detour Gold shares to be issued in the proposed transaction have not
been and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act"), and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements of the Securities Act.
About PDX Resources Inc.
PDX's principal asset is its 19 million common shares (representing a
42.3% equity interest) of Detour Gold. PDX provides prospective
investors with an opportunity to participate in potential increases in
the size of the resource at the Detour Lake project and the value of
PDX's equity interest in Detour.
For further information, please contact:
Ingrid Hibbard, President & CEO
Brendan Cahill, Corporate Secretary
PDX Resources Inc., 440 Harrop Drive, Milton, Ontario L9T 3H2
Tel: 905-875-3828 / Toll-free: 1-877-746-1632 / Email:
info@pdxresources.com
About Detour Gold Corporation
Detour Gold is a Canadian gold exploration and development company whose
focus is to advance the development of its Detour Lake project located
in northeastern Ontario. To date, Detour Gold has outlined a measured
and indicated resource of 10.8 million ounces (242.9 million tonnes
grading 1.38 g/t gold) and an inferred resource of 2.4 million ounces
(63.9 million tonnes grading 1.19 g/t gold), based on a detailed
engineered pit design at US$700/oz gold price (refer to July 2nd 2008
Press Release). Detour Gold is expected to complete a feasibility study
in 2009.
For further information, please contact:
Gerald Panneton, President and CEO
Tel: (416) 304.0800
Laurie Gaborit, Director Investor Relations
Tel: (416) 304.0581
Detour Gold Corporation, Royal Bank Plaza, North Tower, 200 Bay Street,
Suite 2040, Toronto, Ontario M5J 2J1
Forward-Looking Information
This press release contains certain forward-looking information as
defined in applicable securities laws (referred to herein as
"forward-looking statements"). Forward-looking information includes, but
is not limited to, information concerning the proposed transaction
between Detour Gold and PDX and matters relating thereto. Often, but
not always, forward-looking statements can be identified by the use of
words such as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "continues", "forecasts", "projects", "predicts",
"intends", "anticipates" or "believes", or variations of, or the
negatives of, such words and phrases, or statements that certain
actions, events or results "may", "could", "would", "should", "might" or
"will" be taken, occur or be achieved. Specifically, this press release
includes forward-looking statements regarding: Detour Gold's planned
drilling program and estimate of the quantity and quality of its mineral
resources. Inherent in forward-looking statements are risks,
uncertainties and other factors beyond Detour Gold's and PDX's ability
to predict or control. These risks, uncertainties and other factors
include, but are not limited to, the uncertainties involved in
interpreting geological data and other risks involved in the gold
exploration and development industry as well as those risk factors
listed in Detour Gold's Annual Information Form (AIF), Item 4.4 -
"Description of Business - Risk Factors" filed on SEDAR. Readers are
cautioned that the list of factors included in the AIF is not exhaustive
of the factors that may affect the forward-looking statements. Actual
results and developments are likely to differ, and may differ
materially, from those expressed or implied by the forward-looking
statements contained in this press release. Such statements are based on
a number of assumptions which may prove to be incorrect, including, but
not limited to, the following assumptions: Detour Gold's exploration
and development activities on the Detour Lake Property will proceed in
accordance with Detour Gold's current timetables; and Detour Gold's
resource estimates, geological and metallurgical assumptions (including
with respect to the size, grade and recoverability of mineral resources)
and operational and price assumptions on which the resource estimates
are based, are accurate. Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause Detour
Gold's and PDX's actual results, performance or achievements to be
materially different from any of its future results, performance or
achievements expressed or implied by forward-looking statements. All
forward-looking statements herein are qualified by this cautionary
statement. Accordingly, readers should not place undue reliance on
forward-looking statements. Neither Detour Gold or PDX undertakes any
obligation to update publicly or otherwise revise any forward-looking
statements whether as a result of new information or future events or
otherwise, except as may be required by law.
Information Concerning Estimates of Mineral Resources
This news release uses the terms 'measured', 'indicated' and 'inferred'
resources. Detour Gold advises investors that although these terms are
recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects), the
U.S. Securities and Exchange Commission does not recognize them.
Investors are cautioned not to assume that any part or all of the
mineral deposits in these categories will ever be converted into
reserves. In addition, 'inferred resources' have a great amount of
uncertainty as to their existence, and economic and legal feasibility.
It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the basis of
feasibility or pre-feasibility studies, or economic studies except for
Preliminary Assessment as defined under 43-101. Investors are cautioned
not to assume that part or all of an inferred resource exists, or is
economically or legally mineable.
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