ENP Newswire -
Release date- 10062014 -
The Project is a fully-permitted, open pit, heap leach gold and silver project located just outside the town of
Management of Golden Queen believes that the transaction will have the following benefits for the Company and its shareholders:
Support by members of the Clay group, long-term shareholders who have supported Golden Queen for over 20 years;
Commitment from Leucadia and the Clay group to fund up to an additional
Low-risk, equity-based capital structure with no hedging and no financial covenants.
We believe that a low-risk, equity-based capital structure is the prudent approach to managing the risks of the construction stage. If and when in production, we look forward to reexamining the capital structure to determine whether or not returns to equity investors can be enhanced through leverage.'
The Company will be hosting a conference call today at
Terms of the Transaction
Pursuant to the terms of the Transaction Agreement, Golden Queen will convert its wholly-owned subsidiary that is developing the
On closing of the joint venture transaction, Golden Queen, through a wholly-owned subsidiary ('GQ Holdco'), and Gauss will each own 50% of GQ California and will enter into a joint venture agreement (the 'JV Agreement') that will govern the management of the Project, the obligations of the parties in connection with further funding requirements and ownership of GQ California. GQ California will be managed by a board of managers comprising an equal number of representatives of each of Gauss and GQ Holdco.
GQ California will apply most of the purchase price received from Gauss to the continued development of the Project. Golden Queen currently anticipates conducting a Rights Offering (described below) and to use a portion of the proceeds from the Rights Offering to make an additional investment in GQ California to fund development of the Project (the 'Top-Up Contribution').
Pursuant to the JV Agreement, if Golden Queen (through GQ Holdco) makes the Top-Up Contribution, Gauss is committed to fund an amount equal to the Top-Up Contribution to GQ California, and the aggregate amount of such contributions are anticipated to provide GQ California with sufficient funding to fully develop the Project.
If GQ Holdco does not make the Top-Up Contribution, Gauss will be obligated to make up to a
Pursuant to the terms of the Transaction Agreement, Golden Queen is subject to customary no-shop covenants and the payment of a
Prior to closing of the joint venture transaction, Golden Queen will incorporate GQ Holdco and cause the transfer of the current liabilities of GQ California, consisting primarily of intercompany loans, to GQ Holdco.
On closing of the joint venture transaction, Golden Queen's CEO,
The transaction is subject to customary closing conditions, including approval by the
Golden Queen's Board of Directors Has Unanimously Voted to Support the Transaction
Golden Queen's board of directors has unanimously determined that the Transaction Agreement is in the best interests of Golden Queen and its shareholders.
Golden Queen reached this determination based upon the favorable recommendation of a special committee of directors of Golden Queen unaffiliated with the Clay group, which was appointed to consider the foregoing transaction, and the receipt of an opinion from
Legal counsel to Leucadia was provided by
Golden Queen currently anticipates conducting a rights offering (the 'Rights Offering') in order to raise proceeds to, among other things, make the Top-Up Contribution. It is anticipated that the Rights Offering will commence on or about the closing of the joint venture transaction and will be completed after that closing.
In the Rights Offering, each eligible shareholder of Golden Queen will be issued rights to acquire common shares of Golden Queen. The exercise price of the rights will be determined at a future date. The Company intends to apply to list the rights for trading on the TSX in accordance with TSX rules.
Golden Queen entered into a backstop guarantee agreement with the members of Gauss (the 'Backstop Agreement') whereby the Gauss members agreed to purchase, upon the terms set forth in the Backstop Agreement, any common shares which have not been acquired pursuant to the exercise of rights under the Rights Offering at a price per common share not to exceed
Leucadia has subsidiaries, joint venture interests and investments in a range of businesses, including our largest wholly-owned subsidiary,
Leucadia has a range of other investments in auto retail (Garcadia), beef processing (
We continuously review and consider new and add-on acquisitions and investments in businesses, securities and assets. Leucadia is headquartered in
The Company is developing a gold-silver, open pit, heap leach operation on its fully-permitted Soledad Mountain property, located just outside the town of
Tel: (604) 921-7570
Caution With Respect To Forward-Looking Statements
The information in this news release includes certain 'forward-looking statements'.
All statements in this news release, other than statements of historical fact, including, without limitation, the closing of the transactions contemplated under the Transaction Agreement and the JV Agreement; the estimated proceeds from additional commitments to fund the joint venture and the projections for a fully funded project; the expectation that Golden Queen will successfully close the Rights Offering and apply the proceeds to fund the Top Up Contribution; plans for and intentions with respect to capital requirements, construction and other development activities on the
There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ materially from statements in this news release regarding our intentions include, without limitation, risks and uncertainties regarding: conditions required for the closing of the Transaction Agreement and the JV Agreement or the completion of the Rights Offering; the transfer of 50% of the Company's interest in the Soledad Mountain property; failure to fund the Company's Top Up Contribution in accordance with the JV Agreement and related dilution in GQ California; required shareholder and regulatory approvals; the development and operation of the
Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors should not put undue reliance on forward-looking statements. Any forward-looking statement made by us in this news release is based only on information currently available to us and speaks only as of the date on which it is made.
Additional Information and Where to Find It
In connection with Golden Queen's solicitation of proxies in regards to the meeting of shareholders of Golden Queen to be called with respect to the transaction, Golden Queen will file a proxy statement with the
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