Repadre and Golden Knight Boards Approve Plan of Arrangement
VANCOUVER, BRITISH COLUMBIA--In the news release transmitted earlier today February 15, 1999, the release date
was incorrectly entered as February 12, 1999. The correct date of release should be February 15, 1999.
Repadre Capital Corporation and Golden Knight Resources Inc. [OTC BB:GKRVF - news] are pleased to report that they have entered into an agreement which,
subject to Golden Knight shareholder, regulatory and court approvals, would result in shareholders of Golden Knight exchang ing their shares for a combination of
cash, common shares and warrants of Repadre. Under the terms of the proposed plan of arrangement, shareholders of Golden Knight will be offered either:
- a combination of 0.125 common shares of Repadre and cash of $0.33; or
- a combination of 0.20 common shares of Repadre, 0.20 of a warrant, each whole warrant entitling the holder to subscribe for one additional common share of
Repadre at a price of $4.00 at any time until the date that is 36 months from the effective date
of the business combination, and cash of $0.10.
The plan of arrangement has been approved by the boards of both companies. Approval by Golden Knight's board followed its receipt of an opinion provided by
Goepel McDermid Inc. that the terms of the arrangement are fair from a financial point of view to
the minority shareholders of Golden Knight. The annual and extraordinary general meeting of Golden Knight shareholders, at which the proposed plan of
arrangement will be voted on, is scheduled to take place in Vancouver on April 20, 1999. Completion o
f the transaction is subject to a number of conditions, including no material adverse change in Golden Knight. Golden Knight's common shares are now trading at a
premium to its share price prior to the announcement of Repadre's proposed offer on January
13, 1999.
Golden Knight's major asset is a 17.5 percent interest in Gold Fields Ghana Limited (GFGL) which manages surface and underground gold mining operations at the
Tarkwa Concession in Ghana. In October 1998, Gold Fields Limited, owner of 70 percent of GFGL,
reported its decision to recapitalize GFGL with an injection of US$60 million. The recapitalization will result in significantly reduced debt for GFGL and finance
completion of the Phase II expansion. The recapitalization is also expected to accelerat
e the timing of dividend payments and repayment of shareholder loans with even modest increases in gold prices.
Golden Knight is required to provide US$15 million as its pro rata share of the recapitalization. As part of the overall transaction, Repadre has agreed to an interim
loan of US$15 million to maintain the 17.5 percent interest in GFGL. The demand loan,
with an interest rate of LIBOR plus 3 percent, is secured by a second pledge of Golden Knight's shares of GFGL and other assets, and is payable in June 1999 if
the proposed business combination does not proceed.
To provide continuity, Repadre has invited Robert A. Quartermain, president of Golden Knight and a director of GFGL, to join its board. Mr. Quartermain has
been associated with the Tarkwa project during exploration and subsequent development since 1993 and has served as a director of GFGL since 1997.
GFGL has advised Golden Knight that the new surface mine at Tarkwa continues to outperform operating parameters in its feasibility study of heap leach
operations. Gold production from the new mine, which commenced operation in May 1998, exceeded 83,000 ounces in 1998. Cash operating costs at the surface
mine, including royalties, at US$240 per ounce of gold, exclude management fees and rehabilitation provisions. These costs will be reduced in the near future
through continued optimization. Productio n from both surface and underground operations exceeded 137,000 ounces in 1998.
The fourth quarter of 1998 was the second full quarter of gold production and Gold Fields Ghana Limited reported that production from the new surface mine again
exceeded budget. The quarterly and total 1998 results of mining operations at Tarkwa are sum marized here:
TARKWA MINE - 1998 GOLD PRODUCTION/SALES SUMMARY
(in ounces)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter TOTAL
Surface Mine - 15,175 33,437 34,401 83,013
Underground Mine 13,375 13,729 13,439 13,503 54,046
TOTAL 13,375 28,904 46,876 47,904 137,059
GKR'S SHARE
(17.5 percent) 2,341 5,058 8,203 8,383 23,985
During the fourth quarter at Tarkwa, 1.1 million tonnes of surface ore, or approximately 20 percent higher than feasibility rates, were treated. The mine continues its
good performance in 1999 with both ore placed and gold produced exceeding budget.
Gold Fields Limited, operator and owner of 70 percent of GFGL, reported that construction of Phase II at Tarkwa is on track and is expected to be completed
during the second half of 1999. The expansion will result in a doubling of capacity and an increa se in gold output in excess of 250,000 ounces annually. Cash costs
are expected to decline to levels approximating US$200 per ounce.
The incorporation of Tarkwa, a long-term asset, will provide Repadre shareholders with valuable exposure to future gold price increases and complements
Repadre's diversified global royalty portfolio.
Contact:
Golden Knight Resources Inc.
Robert A. Quartermain
President and Chief Executive Officer
(604) 689-3846
(604) 689-3847
E-mail: invest@golden-knight.com
or
Repadre Capital Corporation
Joseph F. Conway
President and Chief Executive Officer
(416) 365-2430
(416) 365-8065 |
