Unanimous approval for the transaction came from AuEx’s Board, with directors and senior officers agreeing to vote their shares in favor. AuEx’s largest shareholder, with 22.5%, also approved the move.
President and CEO of FRG, Mark O’Dea, welcomed the acquisition as solidifying control of the Company’s flagship Long Canyon project in Nevada, and giving FRG a “dominant position in the Pequops”. The Long Canyon project is an advanced-stage, high-quality gold resource being aggressively moved toward production.
O’Dea spoke of how highly he values the strong relationship cultivated with AuEx, and acknowledged all of the hard work AuEx has put into developing the region for future production.
President and CEO of AuEx, Ronald L. Parratt, noted the attractive, immediate premium to shareholders, which lets them share in the future of Long Canyon via the FRG shares, and still gives them access to a wide variety of opportunities through the SpinCo shares.
Parratt praised the drive, strong capital position, and vision of FRG, projecting that Long Canyon would soon come to fruition as a producing revenue engine.
The plan of arrangement and transaction each have several requirements:
• AuEx shareholders to receive 0.645 of a Fronteer Gold share, $0.66 in cash and 0.5 shares in the new exploration firm to be called SpinCo per share of AuEx (excluding SpinCo shares roughly a 50.9% premium or diluted equity value of $280.8M based on volume weighted average of both shares from both companies on the TSX for 20-day period ending August 26 this year)
• SpinCo takes ownership of all AuEx exploration sites outside the Pequops District and will have $5M in cash
• 18.6% of the pro forma outstanding shares of Fronteer Gold (fully diluted) to be held by AuEx shareholders at completion of transaction
• 90.1% of SpinCo shares to be held by AuEx shareholders with the remaining 9.9% going to Fronteer
• Fronteer’s 51% owner/operator status of Long Canyon expanded to 100%, along with remaining AuEx interests in the Pequops District (including the South Pequop project and 49% interest in the West Pequop Project)