VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/06/13 -- The Boards of Directors of Kenai Resources Ltd (TSX VENTURE: KAI) and Serabi Gold plc. (AIM: SRB)(TSX: SBI) announce that they have entered into an agreement ("the Transaction"), subject to the approval of shareholders of Kenai and other conditions precedent, whereby Serabi will acquire all the issued and outstanding common shares of Kenai ("Kenai Shares") by way of a Plan of Arrangement ("the Arrangement").
Significant Benefits of the transaction:
-- Kenai's wholly owned subsidiary Gold Aura do Brasil Mineracao Ltda ("GOAB") owns the high-grade Sao Chico gold deposit, some 23 kilometres from Serabi's Palito gold mine. Sao Chico hosts a NI 43-101 compliant combined Measured and Indicated Mineral Resource of 25,275 ounces of gold at 29.77 grams per tonne ("g/t") and an Inferred Mineral Resource of 71,385 ounces gold at 26.03 g/t.-- Serabi's nearby Palito mine is set to recommence gold production by the end of 2013, with average annual production of 24,000 ounces(1) with an average ore grade of 9 g/t.-- The existing Palito gold recovery plant is currently being refurbished and upgraded, and Sao Chico is expected to be the first satellite gold resource to supplement Palito mine production with high grade material, taking advantage of the excess plant capacity available to quickly expand Serabi's future gold production.-- An exploration programme at Sao Chico including an approximate 6,000 metre drill campaign is expected to start mid-2013, with strong potential to increase the current mineral resource.
(1) Production estimates for the Palito Mine are derived from the Preliminary Economic Assessment NI 43-101 Technical report 13 June 2012 (the "PEA") which partially utilises Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Highlights of the Arrangement include:
-- Shareholders of Kenai will receive 0.85 of one new ordinary share of 5 pence par value of Serabi (a "Serabi Share") in exchange for each Kenai Share held (the "Exchange Ratio").-- Based on the closing price of the Kenai Shares and Serabi Shares on May 3, 2013, the Exchange Ratio represents: -- an implied price of C$0.0936 per Kenai share; -- a premium of 87% and 152% based respectively on the May 3, 2013 closing prices and 30-day volume-weighted average share prices of both companies;-- Upon completion of the Transaction, Kenai shareholders will own approximately 20.8% of Serabi's enlarged issued share capital (and 22.1% on a fully diluted basis);-- An opportunity for Kenai shareholders to benefit from Serabi's near term gold production, its exploration potential, expertise, ability to finance exploration and improved trading liquidity.