TORONTO, ONTARIO and VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/06/13 -- Mega Uranium Ltd. ("Mega") (TSX: MGA) and Rockgate Capital Corp. ("Rockgate") (TSX: RGT) are pleased to announce that they have entered into a binding letter of intent (the "LOI") to combine the two companies (the "Merger") and create a diversified uranium company with advanced uranium assets in Australia and Mali, a pro forma cash balance of approximately $22 million and a uranium-focused investment portfolio valued at approximately $12 million. Completion of the Merger is subject to the satisfaction of certain conditions discussed below.
Under the terms of the Merger, Rockgate shareholders will receive 2.2 Mega Shares for each one (1) common share of Rockgate held (subject to rounding and without giving effect to the proposed share consolidation of the Mega Shares discussed below). The exchange ratio represents an implied price of C$0.25 per Rockgate share, based on the closing price of the Mega Shares on the Toronto Stock Exchange ("TSX") on June 5, 2013, and a 36% premium to Rockgate's 20-day volume-weighted average price ("VWAP") for the period ending June 5, 2013. Upon completion of the Merger, Rockgate and Mega shareholders will own approximately 49% and 51% of the combined company, respectively.
Sheldon Inwentash, Chairman and Chief Executive Officer of Mega, commented "This transaction represents the opportunity to combine one of Africa's most promising undeveloped uranium assets with our significant Australian portfolio, to create an international uranium developer. We are confident about the combined team's ability to unlock significant value from our collective assets for our shareholders."
Commenting on the transaction, Karl Kottmeier, President of Rockgate, said "By combining Rockgate and Mega, we are creating a truly unique new company. Our experienced team will be dedicated to building value by advancing our diversified asset base of uranium-focused projects and prudently managing our portfolio of equity investments and cash. We believe this new company will provide investors with an ideal way to gain exposure to the junior uranium sector."
-- A pipeline of advanced stage and exploration projects in Africa and Australia with a sizable global resource base-- Larger entity with superior capital markets presence and trading liquidity-- Strong combined management team with complementary market and operational expertise-- A portfolio of equity investments in quality junior uranium explorers and developers providing access to future growth-- Potential synergies and cost savings via back-office consolidation, sharing of facilities / resources and overall economies of scale
BENEFITS TO MEGA SHAREHOLDERS
-- Increased resource diversification and access to a growing poly-metallic deposit in Falea-- Accretive on a resource per share basis-- Bolsters company treasury-- Access to experienced technical team
BENEFITS TO ROCKGATE SHAREHOLDERS
-- Resource diversification geographically and with varying stages of development-- Advanced projects in a leading uranium mining jurisdiction-- Further diversification through exposure to a global equity portfolio-- Significant premium on both a spot and 20-day VWAP basis-- Management team additions with extensive uranium market transactional expertise