Fact Sheet | Company Presentation

TSX:KER

|

US:KERMF

Subscribe for updates

Subscribe for Updates

Toronto, June 12, 2014 /CNW/ – Kerr Mines Inc. (“Kerr Mines”) (TSX:KER) announces that it intends to issue up to 594,228,760 common shares (the “Kerr Shares”) pursuant to the terms of an arrangement agreement dated April 10, 2014 between Kerr Mines, American Bonanza Gold Corp. (“American Bonanza”) and a wholly-owned subsidiary of Kerr Mines (the “Arrangement Agreement”).

Pursuant to the terms and conditions of the Arrangement Agreement, Kerr Mines will acquire all of the issued and outstanding common shares in the capital of American Bonanza (the “American Bonanza Shares”) pursuant to a plan of arrangement (the “Arrangement”). Assuming completion of the Arrangement, American Bonanza Shareholders will receive 0.53 of a Kerr Share for each American Bonanza Share held (the “Exchange Ratio”). In addition, each holder of the outstanding stock options of American Bonanza (the “American Bonanza Options”) and common share purchase warrants of American Bonanza (the “American Bonanza Warrants”) will receive such number of replacement stock options of Kerr Mines (the “Kerr Options”) and/or common share purchase warrants of Kerr Mines (the“Kerr Warrants”) equal to the product of the number of American Bonanza Shares based upon the Exchange Ratio.

The current holders of American Bonanza Options and American Bonanza Warrants shall have their American Bonanza Options and/or American Bonanza Warrants exchanged for Kerr Options and/or Kerr Warrants, as applicable, which shall expire on the earlier of: (i) the current expiry date of the corresponding American Bonanza Options and/or American Bonanza Warrants; and (ii) the first anniversary of the date of completion of the Arrangement. The number of Kerr Options and/or Kerr Warrants (rounded to the nearest whole number) shall be equal to the product of: (A) the number of American Bonanza Options and/or American Bonanza Warrants outstanding immediately prior to completion of the Arrangement; and (B) 0.53. The exercise price per Kerr Share subject to any such Kerr Option and/or Kerr Warrant shall be an amount (rounded to the nearest cent) equal to the quotient of: (A) the exercise price per American Bonanza Option and/or American Bonanza Warrant divided by (B) 0.53. The obligations of American Bonanza under the American Bonanza Options and the American Bonanza Warrants as so exchanged shall be assumed by Kerr Mines.
The aggregate number of Kerr Shares which could be issued in connection with the Arrangement (consisting of: (i) the 594,228,760 Kerr Shares issued at the closing of the Arrangement; (ii) the 5,088,530 Kerr Shares issuable upon the exercise of the Kerr Warrants issued at the closing of the Arrangement; and (iii) the 2,418,017 Kerr Shares issuable upon the exercise of the Kerr Options granted at the closing of the Arrangement) would be up to 601,735,307 Kerr Shares. This would represent 82.5% of the issued and outstanding Kerr Shares immediately prior to the Arrangement, on a non-diluted basis.

Completion of the Arrangement will be conditional upon Kerr Mines and American Bonanza obtaining requisite shareholder approval, all required regulatory approvals, including The Toronto Stock Exchange (“TSX”) and the satisfaction of any conditions imposed by the TSX on the Arrangement.

The Arrangement is an arm’s length transaction. The Arrangement will not materially affect control of Kerr Mines and no shareholder or combination of shareholders are acting together to influence the outcome of Arrangement.

Pursuant to the terms of the Arrangement, Mr. Brian Kirwin, the current President, Chief Executive Officer and a director of American Bonanza and Mr. Wayne Tisdale, a current director of American Bonanza, will be appointed to the board of directors of Kerr. Otherwise, no other insiders will be created as a result of the Arrangement, including any person becoming an insider of Kerr by virtue of holding more than 10% of the issued and outstanding Kerr Shares.

An application has been filed with the TSX for conditional approval of the Arrangement. Pursuant to Section 607(g)(i) of the TSX Company Manual, the TSX will require Kerr Mines to obtain shareholder approval for the Arrangement because the aggregate number of Kerr Shares issuable pursuant to the Arrangement is greater than 25% of the number of Kerr Shares which will be outstanding, on a non-diluted basis, prior to the date of closing of the Arrangement.

Pursuant to the policies of the TSX, the TSX will give consideration to permitting Kerr Mines to provide the TSX with written evidence that holders of more than 50% of the voting securities of Kerr Mines are familiar with the terms of the Arrangement and are in favour of it rather than holding a special meeting of shareholders to obtain shareholder approval. Management of Kerr Mines will seek to obtain written evidence of such consent. If management of Kerr Mines is successful in obtaining such evidence shareholder approval of the Arrangement, shareholder approval will not be required to be obtained at a special meeting of the shareholders.

A copy of the Arrangement Agreement is available on SEDAR under the profiles of Kerr Mines and American Bonanza at www.sedar.com

Forward Looking Statements

This press release contains “forward-looking information” within the meaning of Canadian securities legislation. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Kerr Mines or Bear Lake to be materially different from those expressed or implied by such forward-looking information, including but not limited to: (i) the possibility that the Transaction would not be completed; (ii) volatile stock price; (iii) the general global markets and economic conditions; (iv) the possibility of write-downs and impairments; (v) the risk associated with exploration, development and operations of mineral deposits; (vi) the risk associated with establishing title to mineral properties and assets; (vii) the risks associated with entering into joint ventures; (viii) fluctuations in commodity prices; (ix) the risks associated with uninsurable risks arising during the course of exploration, development and production; (x) competition faced by the resulting issuer in securing experienced personnel and financing; (xi) access to adequate infrastructure to support mining, processing, development and exploration activities; (xii) the risks associated with changes in the mining regulatory regime governing the resulting issuer; (xiii) the risks associated with the various environmental regulations the resulting issuer is subject to; (xiv) risks related to regulatory and permitting delays; (xv) risks related to potential conflicts of interest; (xvi) the reliance on key personnel; (xvii) liquidity risks; (xviii) the risk of potential dilution through the issue of resulting issuer common shares; (xix) the resulting issuer does not anticipate declaring dividends in the near term; (xx) the risk of litigation; and (xxi) risk management.

Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, completion of the Transaction, continued exploration activities, no material adverse change in metal prices, exploration and development plans proceeding in accordance with plans and such plans achieving their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although Kerr Mines and Bear Lake have attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose of assisting investors in understanding Kerr Mines and Bear Lake’s business, operations and exploration plans and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this press release, and Kerr Mines and Bear Lake do not undertake to update such forward-looking information except in accordance with applicable securities laws.

For further information contact:

Greg Gibson
President and CEO
Kerr Mines Inc.
Email: ggibson@kerrmines.com