
Gold Resource Enters Into Arrangement Agreement With Aquila Resources
PRESS RELEASE
DENVER, CO / ACCESSWIRE / October 6, 2021 / Gold Resource Corporation ( " GRC " or the " Company ") (NYSE American:GORO) is pleased to announce that it has entered into a definitive arrangement agreement (the " Arrangement Agreement ") with Aquila Resources Inc. (" Aquila ") (TSX:AQA)(OTCQB:AQARF) providing for the acquisition by GRC of all the issued and outstanding common shares of Aquila by way of a plan of arrangement under the Business Corporations Act (Ontario) (the " Transaction ").
As announced by GRC on September 7, 2021, pursuant to the Transaction GRC will, through a wholly-owned subsidiary, acquire all the issued and outstanding Aquila shares for 0.0399 of a GRC share per Aquila share (the " Exchange Ratio "). Based upon the 20-day volume-weighted average price (" VWAP ") of GRC's shares on the NYSE American stock exchange on September 3, 2021, being the last trading day prior to the date of the announcement of the Transaction, the Exchange Ratio represents a 29% premium to the 20-day VWAP of Aquila's shares on the Toronto Stock Exchange as of such date. The Exchange Ratio represents consideration of C$0.09 per Aquila share (the " Per Share Price "), reflecting a premium of 12.5%, based upon the closing prices of the Aquila shares and the GRC shares on September 3, 2021. The Per Share Price implies an aggregate acquisition price for 100% of the outstanding Aquila shares of approximately C$30.9 million.
Upon closing of the Transaction, the existing GRC and Aquila shareholders will own approximately 85.1% and 14.9%, respectively, of the combined company on a fully diluted basis.
Allen Palmiere, President and Chief Executive Officer of GRC, said: "This Transaction offers an attractive opportunity to the shareholders of Aquila and GRC to develop the Back Forty Project using GRC's strong balance sheet and cash flows. In addition, the combination of our complementary gold-rich assets will enhance both our mineral inventory and jurisdiction diversification. The announcement by Aquila yesterday, that it had closed the sale of its Bend and Reef exploration properties, was an important step in the process for signing the Arrangement Agreement. With this Transaction, we look forward to becoming a new intermediate gold producer with a peer leading growth profile."
Strategic Rationale for the Transaction
As previously announced on September 7, 2021, the benefits of the Transaction to GRC and Aquila shareholders include the following:
- Accretive Transaction for GRC Shareholders. The Transaction is expected to be immediately accretive to GRC shareholders on a net asset value basis.
- Significantly Improved Gold Resource Profile. Based upon the parties' respective public disclosure and GRC's technical due diligence to date on the Back Forty Project, GRC anticipates that its gold resources have the potential to increase by in excess of 500% upon completion of the Transaction.
- Growth Profile and Financial Strength of Combined Company. The combined company is expected to benefit from a peer leading growth profile, a robust balance sheet with no debt and cash of US$30.2 million at June 30, 2021, free cash flow generation from its Don David Gold Mine and the synergies that generally accrue from scale in the areas of general and administrative expenses, from less duplication of salaries, wages and other public company expenses, improved concentrate sales and marketing and supply chain efficiencies. Its position of financial strength is expected to result in an improved ability to access required additional financing to fund the Back Forty Project's capital expenditures.
- Enhanced Project and Jurisdictional Diversification. Each of GRC and Aquila is currently a single-asset, single-jurisdiction company. Through the Transaction, GRC and Aquila shareholders will have the opportunity to participate in the ongoing growth of a multi-jurisdictional, diversified precious and base metal producer with exposure to gold, silver, zinc, copper and lead through GRC's producing Don David Gold Mine in Oaxaca, Mexico and Aquila's Back Forty Project in Menominee County, Michigan.
- Enhanced Market Presence and Re-Rating Potential. GRC currently benefits from inclusion in the VanEck Junior Gold Miners ETF (the " GDXJ ") and from an average daily trading volume of approximately 1 million shares, trailing three months. The Transaction is intended to result in the Back Forty Project being placed into production on a more accelerated basis, funded by cash flow generation, thus elevating the combined company to intermediate producer status. Following the completion of the Transaction, GRC is expected to continue to be included in the GDXJ and to benefit from an enhanced capital markets profile in the United States and Canada, as well as increased trading liquidity and broadened appeal to global index, resource, and generalist investors. This offers the potential for a re-rating to a multiple more in line with other intermediate gold producers.
- Experienced Management Team. The combined company will benefit from GRC's and Aquila's technical and operational teams' expertise in polymetallic open pit and underground mines. The GRC executive team has a demonstrated record of success in developing and operating mining projects in the Americas.
- Immediate and Significant Premium to Aquila Shareholders. Based on the 20-day VWAPs of the GRC shares and the Aquila shares, the Transaction offers an immediate and significant premium to Aquila's shareholders of 29%. Given the current market environment and lack of liquidity for the shares of Aquila, GRC continues to believe that this a compelling value proposition.
Demonstrated Consistent Dividend History. Post-Transaction, GRC intends to continue to pay dividends in accordance with its past practice. The recent dividend of US$0.01 per GRC share, paid to shareholders on September 30, 2021, continues the more than ten years of consistent dividend payments by GRC.
Support for the Transaction from Key Aquila Stakeholders
- Each of Orion Mine Finance and Hudbay Minerals Inc., which hold 28.3% and 10.4%, respectively, of the issued and outstanding Aquila shares, has entered into a voting support agreement with GRC pursuant to which they have agreed to vote their Aquila shares in favour of the Transaction. In addition, all of the directors and officers of Aquila holding approximately 1.9% Aquila shares in aggregate have also executed a voting support agreement.
- Osisko Bermuda Limited which is a wholly-owned subsidiary of Osisko Gold Royalties Ltd and a party to gold and silver stream agreements with Aquila relating to the Back Forty Project, has also reiterated that it considers GRC to be an approved purchaser under those agreements, and that it is supportive of the Transaction.
Board Approvals
The Arrangement Agreement has been unanimously approved by the boards of directors of both GRC and Aquila. The Aquila board's approval of the Arrangement Agreement was based in part on the unanimous recommendation of a special committee of independent directors of Aquila which was appointed to consider the Transaction. The board of Aquila has received an opinion from one of its financial advisors, PI Financial Corp., that based upon and subject to the assumptions, limitations, and qualifications set forth therein, the consideration to be received by Aquila shareholders pursuant to the Transaction is fair, from a financial point of view, to Aquila shareholders.
Transaction Summary
The Transaction will require the approval of 66⅔ percent of the votes cast by Aquila shareholders at a special meeting of shareholders (the " Aquila Shareholder Meeting "). The Aquila Shareholder Meeting is scheduled to be held on November 17, 2021. The Transaction is also subject to approval by the Ontario Superior Court of Justice (Commercial List) and applicable stock exchange approvals. The Transaction does not require the approval of GRC's shareholders.
In addition to shareholder, court and regulatory approvals, the Transaction is also subject to the satisfaction of certain other closing conditions that are customary for a transaction of this nature, and each of GRC and Aquila has provided appropriate interim period covenants regarding the operation of its business in the ordinary course. The Arrangement Agreement includes customary deal protection provisions pursuant to which Aquila has agreed not to solicit any other acquisition proposal (subject to customary fiduciary out rights), has agreed to grant GRC the right to match any superior proposal, and will pay a termination fee of US$1,000,000 to GRC if the Arrangement Agreement is terminated in certain circumstances.
Details of the Transaction and the Arrangement Agreement will be set out in the management information circular to be prepared and mailed to Aquila shareholders in connection with the Aquila Shareholder Meeting. A copy of the Arrangement Agreement will be filed with the Securities and Exchange Commission on Form 8K and will be available on GRC's website under the Reports and Filings tab located in the Investors section located here: https://goldresourcecorp.com/investors/reports-and-filings/ .
Subject to all conditions precedent to completion of the Transaction being met, the Transaction is expected to close in late November 2021. In connection with the closing of the Transaction, Aquila will apply to have its shares delisted from the TSX.
Advisors
Fasken Martineau DuMoulin LLP and Davis Graham & Stubbs LLP are GRC's Canadian and U.S. legal advisors, respectively, and Beacon Securities Limited is GRC's financial advisor.
About Gold Resource Corporation
Gold Resource Corporation is a gold and silver producer, developer, and explorer with its operations centered on the Don David Gold Mine in Oaxaca, Mexico. Under the direction of a new board and senior leadership, the Company focus is to unlock the significant upside potential of its existing infrastructure and large land position surrounding the mine, to close our acquisition of Aquila Resources Inc., and to develop the Back Forty Project in Michigan, USA. For more information, please visit GRC's website, located at www.goldresourcecorp.com and read the Company's 10-K for an understanding of the risk factors involved.
About Aquila Resources Inc.
Aquila Resources Inc. is a development‐stage company focused on the development its 100%-owned gold-rich Back Forty Project in Michigan.
Subscribe to the most trusted business intelligence platform in Latin America. Let us show you our solutions for Suppliers, Contractors, Operators, Government, Legal, Financial and Insurance.
News in: Mining & Metals (Mexico)

SilverCrest lowers construction cost forecast for Las Chispas mine
The Canadian company said the construction cost estimate for the Mexican mine has been lowered to US$133mn.

Why Mexico's mining sector faces a gloomy future
BNamericas talks with Karen Flores, head of mining chamber Camimex, about the consequences of a permissions freeze, taxes, and more.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects in: Mining & Metals (Mexico)
Get critical information about thousands of Mining & Metals projects in Latin America: what stages they're in, capex, related companies, contacts and more.
- Project: Oregano
- Current stage:
- Updated:
5 months ago
- Project: 1068
- Current stage:
- Updated:
5 months ago
- Project: Elektra
- Current stage:
- Updated:
6 months ago
- Project: Nieves
- Current stage:
- Updated:
6 months ago
- Project: San Celso
- Current stage:
- Updated:
6 months ago
- Project: Rebeico
- Current stage:
- Updated:
6 months ago
- Project: Guadalupe y Calvo
- Current stage:
- Updated:
6 months ago
- Project: Cusi Expansion
- Current stage:
- Updated:
6 months ago
- Project: Promontorio (Au, Ag, Cu)
- Current stage:
- Updated:
6 months ago
- Project: Sara Alicia
- Current stage:
- Updated:
6 months ago
Other companies in: Mining & Metals (Mexico)
Get critical information about thousands of Mining & Metals companies in Latin America: their projects, contacts, shareholders, related news and more.
- Company: Compañía Minera La Llamarada, S.A. de C.V.  (Llamarada)
-
Minera La Llamarada S.A. de C.V. is a Mexican mining company, subsidiary of the Canadian SilverCrest Metals Inc. It was founded in 2001 to acquire, explore and develop deposits ...
- Company: Desarrollos Mineros San Luis S.A. de C.V.  (Desarrollos Mineros San Luis)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by BNamericas’ content team. However, it may have been au...
- Company: Minera Magna S.A de C.V  (Minera Magna)
-
Minera Magna
- Company: Seadrill Management LTD Mexico  (Seadrill Mexico)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: LAVISA, S. DE R.L. DE C.V.
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Minera Mexicana El Rosario, S.A. de C.V.  (Minera Mexicana El Rosario)
-
Minera Mexicana El Rosario (MMR) is the local unit of Canadian firm Great Panther Silver. Its operations in Mexico include the Guanajuato mining complex, the Topia zinc-silver-l...
- Company: Underground Construction Supply México, S.A. de C.V.  (UCS México)
-
Underground Construction Supply México, S.A. de C.V. is a Mexican commercial representative of diverse North American trademarks aimed at the manufacturing of construction machi...
- Company: Minera Real del Oro S.A. de C.V.  (Minera Real del Oro)
-
Minera Real del Oro S.A. de C.V., a wholly owned subsidiary of Argonaut Gold Inc., is engaged in the exploration, exploitation and processing of minerals, such as gold, silver a...
- Company: Flour Valve International S.A. de C.V.  (Flour Valve)
-
Flour Valve is a valve manufacturer focused primarily on the oil sector, but also provides solutions for the electric power, water and waste, infrastructure, petrochemical and m...