The Agreement includes a commitment by each of Castillian and Ridgemont not to solicit alternative transactions to the proposed Transaction. The Agreement provides that if a party terminates the Transaction in certain circumstances such party is obligated to pay to the other party $250,000 on account of costs and expenses in connection with the Transaction. Each party has also been provided with certain other rights, representations and warranties and covenants customary for a transaction of this nature, and each party has the right to match any competing offers made to the other party.
Ridgemont shareholders will be granted dissent rights which, if exercised in accordance with applicable requirements, will provide such shareholders the right to be paid the fair value for their Ridgemont common shares by Ridgemont.
Upon completion of the Transaction, Castillian will have 130.6 million common shares outstanding (153.6 million common shares on a fully-diluted basis), and the ownership of the combined company is expected to be approximately 57.8% by existing Castillian shareholders and 42.2% by former Ridgemont shareholders on a basic shares outstanding basis (assuming the issuance by Castillian of (a) 8,000,000 common shares to Ryan Gold Corp. to repurchase Ryan Gold's 10% interest in the Hope Brook gold project (see news release dated February 6, 2013) and (b) the Severance Shares).
Timing
The terms of the Agreement will be described in detail in the management information circular of Ridgemont to be filed with the regulatory authorities and mailed to Ridgemont shareholders in accordance with applicable securities laws in respect of the annual general and special meeting of Ridgemont shareholders, currently scheduled to be held on June 24, 2013. Subject to shareholder, court and regulatory approvals, the Transaction is expected to close in July 2013.
Recommendation of Boards of Directors
The board of directors of each of Ridgemont and Castillian unanimously support the proposed Transaction. The board of directors of Ridgemont established a special committee to review the Transaction and retained Evans & Evans, Inc. to prepare a fairness opinion. The special committee of Ridgemont has received the fairness opinion from Evans & Evans, Inc. which states that the consideration to be received by the Ridgemont shareholders is fair, from a financial point of view, to the Ridgemont shareholders. The board of directors of Ridgemont recommends that Ridgemont shareholders vote in favour of the Transaction at the shareholder meeting to be called to approve the Transaction. The reasons for the board of directors' recommendation will be detailed in the aforementioned management information circular.
ABOUT CASTILLIAN
Castillian Resources Corp. is a Canadian mineral exploration company listed on the TSX Venture Exchange under the symbol "CT" and on the OTCQX International under the symbol "CTIIF". Castillian's flag ship property is the Hope Brook Gold Project located in southwestern Newfoundland, which has 2.4 million tonnes at 1.48 g Au/t for 590,000 ounces of indicated mineral resources and 8.2 million tonnes at 2.07 g Au/t for 548,000 ounces of inferred mineral resources (see technical report entitled "Updated Mineral Resource Estimate Technical Report, Hope Brook Gold Project, Newfoundland and Labrador, Canada" and Table 1, effective October 1, 2012). The bulk of these ounces are within a potentially open pittable constraining shell defined at US$1,400 gold and a cutoff grade of 0.5 g Au/t. The property includes the former Hope Brook mine, which produced 752,163 ounces of gold from 1987 to 1997. The mine also produced a copper concentrate from 1993 to 1997.
-------------------------------------------------------------------------------------------------------------------------------------------------------- Table 1: Mineral Resource, Hope Brook Gold Project as at October 1, 2012(i)-------------------------------------------------------------------------------------------------------------------------------------------------------- Within constraining shell Below constraining shell @ 0.50 g Au/t cut-off @ 2.0 g Au/t cut-off--------------------------------------------------------------------------------------------------------------------------------------------------------Category Gold Gold Gold Gold Tonnes g/t (Oz) Tonnes (g/t) (Oz)----------------------------------------------------------------------------Indicated 10,624,000 1.24 422,000 1,743,000 2.99 168,000----------------------------------------------------------------------------Inferred 6,458,000 1.91 397,000 1,792,000 2.62 151,000-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Table 1: Mineral Resource, Hope Brook Gold Project as at October 1, 2012(i)------------------------------------------------------------------------------------------------ Total------------------------------------------------------------------------------------------------Category Gold Tonnes Gold g/t (Oz)------------------------------------------------Indicated 12,367,000 1.48 590,000------------------------------------------------Inferred 8,251,000 2.07 548,000-------------------------------------------------------------------------------------------------- Constraining shell incorporates essentially all of the remaining historic resources in the former Hope Brook mine in addition to new areas of resource as defined by Castillian, including the Pit Zone, Hanging Wall Zone and Mine Zone Extension.-- There is a possible copper credit that is not included in the mineral resource due to missing copper assays in historical drill holes.
