Athabasca Nuclear (ASC-V) and Strike Graphite (SRK-V) July 15, '14 intend to merge and form a combined Saskatchewan-centred exploration and development company with a multifaceted project portfolio being focused on the Preston Lake uranium and the Sask Craton diamond projects.
The transaction will be completed by way of a plan of arrangement, or other business combination, in which Athabasca Nuclear will acquire all of the issued and outstanding common shares of Strike. Each Strike shareholder will receive one common share of Athabasca Nuclear for each common share of Strike held. All outstanding Strike options and warrants will be exchanged for options and warrants of Athabasca Nuclear in an amount and at exercise prices adjusted in accordance with the same exchange ratio.
Merged entity highlights:
- Athabasca Nuclear is the operator of and a working interest partner in the Western Athabasca Syndicate, which is advancing the Preston uranium project, a large-scale uranium exploration project that is regionally proximate to the high-grade uranium discovery made by Fission Uranium Corp. in the southwest Athabasca basin. Approximately $3.5-million in exploration has been carried out since July, 2013, by the Western Athabasca Syndicate in advancing the Preston uranium project within a broader tenure base consisting of approximately 709,513 acres.
- Strike's principal asset is the early-stage Sask Craton and Sask Craton North diamond exploration properties, for which Strike has received conditional TSX Venture Exchange approval. The Sask Craton properties, in which Strike will hold an 80-per-cent undivided interest, are contiguous and proximate to the recent Pikoo diamond discovery made by North Arrow Minerals Inc. and consists of a mineral tenure base of approximately 1.3 million acres.
- The combined entity stands to benefit from reduced operating costs associated with the elimination of certain duplicative administrative and staffing costs affiliated with running a publicly traded company. The elimination of such duplicative costs may result in incremental capital being available to be allocated to exploration of the combined entity's project base rather than to administrative expenses.
- The aggregation of multiple large-scale project interests within the same jurisdiction (Saskatchewan) offers the prospective benefit of being able to co-ordinate regional service companies on a multiproject basis with potential economic advantages resulting from volume-based work.
- The combined entity stands to benefit from a stronger working capital position and balance sheet. Leveraging the fiscal strength of Athabasca Nuclear, Strike shareholders will gain access to financing to advance their project and address a working capital deficiency which previously would have required significant dilution.
- The combined entity stands to benefit from a diversified project base attracting capital market interest in multiple commodity areas.
- The combined entity will offer shareholders of both companies greater liquidity by way of a larger combined capitalization and the benefit of trading volumes for both equities being concentrated into a single vehicle.
"This proposed transaction offers valuable benefits to the current shareholders of both Athabasca Nuclear and Strike. Not only will a combined entity present a superior fiscal situation, but it will also uniquely capture and focus the interest of the capital markets in two of Canada's emerging resource plays, the southwest Athabasca basin and the Sask Craton, into a single listed vehicle," stated Ryan Kalt, chairman and chief executive officer of Athabasca Nuclear.
"Strike is in a fortunate position to have successfully negotiated for its Sask Craton and Sask Craton North properties, which recently received conditional approval by the TSX Venture Exchange. By combining with a larger exploration company, Strike will be in an improved position to better access exploration capital for its projects, fund current liabilities and benefit from a diversified project base," noted Geoff Balderson, president of Strike.
Athabasca Nuclear currently has 48,593,954 common shares outstanding and Strike currently has 4,490,649 shares outstanding, with a further 12,691,453 shares expected to be issued as a result of its previously announced property acquisitions and debt settlement.
Terms of transaction
The transaction will be placed into effect by a plan of arrangement under the Business Corporations Act (British Columbia). Subject to the fulfilment of closing conditions, Athabasca Nuclear will acquire from the shareholders of Strike 100 per cent of the outstanding common shares of Strike in exchange for common shares of Athabasca Nuclear, and Strike will, as a result, become a wholly owned subsidiary of Athabasca Nuclear. Each Strike shareholder will receive one common share of Athabasca Nuclear for each common share of Strike held. All outstanding Strike options and warrants will be exchanged for options and warrants of Athabasca Nuclear in an amount and at exercise prices adjusted in accordance with the same exchange ratio. On issuance of the Athabasca Nuclear options and warrants, the Strike options and warrants will be cancelled.
If the transaction is completed, the combined Athabasca Nuclear and Strike entity would have approximately 65,776,056 common shares issued and outstanding, of which current Athabasca Nuclear shareholders will own approximately 73.9 per cent and former Strike shareholders would own approximately 26.1 per cent.
After completion of the transaction, the executive officers and board of directors of Athabasca Nuclear will be unchanged, with exception of the addition of Blair Way, a current director of Strike, who is expected to join the board of directors of Athabasca Nuclear.
Closing of the transaction, expected on or before Sept. 20, 2014, is subject to, among other conditions enumerated below, receipt of court approval and the affirmative vote of at least 66-2/3 per cent of the votes cast by Strike shareholders, currently standing at 4,490,649 shares, at a special meeting of the Strike shareholders.
Closing conditions
Completion of the transaction is conditional upon, among other conditions:
- Shareholders of Athabasca Nuclear and Strike having approved the transaction at joint meetings expected to be held in September, 2014;
- Completion of legal and financial due diligence by each of the parties;
- Closing of the of the Sask Craton and Sask Craton North property acquisitions announced by Strike in its news releases of May 22, 2014, and July 3, 2014;
- Completion of the proposed debt settlement announced by Strike in its news releases dated May 22, 2014, and July 3, 2014;
- Execution of a formal plan of arrangement agreement;
- A fairness opinion to support the exchange ratio of Strike securities for Athabasca Nuclear securities in the transaction, if required;
- Receipt of all necessary regulatory approvals, including approval of the TSX Venture Exchange;
- The absence of a material adverse change in the business, financial condition, assets or operations with respect to each party;
- The waiver of change-of-control payments, if applicable;
- The discontinuance by Strike of its non-brokered private placement announced July 3, 2014.
The parties caution that no assurance can be given at this time that the transaction will be completed, that the conditions to closing will be satisfied or that the terms of the transaction will not change materially from those described in this news release. |
