Harfang Exploration to acquire rest of Neworigin shares

Aug 9, 2024

2024-08-09 09:41 ET – News Release

Also News Release (C-NEWO) Neworigin Gold Corp

Mr. Vincent Dube-Bourgeois of Harfang reports

HARFANG AGREES TO ACQUIRE NEWORIGIN TO CONSOLIDATE CASA BERARDI TREND ASSETS IN ONTARIO

Harfang Exploration Inc. and Neworigin Gold Corp. have entered into a definitive arrangement agreement dated Aug. 8, 2024, pursuant to which Harfang has agreed, subject to certain conditions, to acquire all the issued and outstanding common shares of Neworigin that it does not already own or may acquire. Following completion of the transaction, it is expected that the shareholders of Neworigin will own approximately 20 per cent of the issued and outstanding common shares of Harfang.

Pursuant to the terms of the transaction, and as further discussed herein, the expected share exchange ratio is 0.25694426 of a Harfang share for each Neworigin share (except for any Neworigin shares held by Harfang, as applicable), subject to adjustment in accordance with the agreement. Warrants and stock options of Neworigin will be adjusted or exchanged to become warrants and stock options, respectively, of Harfang based on the exchange ratio. This exchange ratio implies a purchase price of 2.29 cents per Neworigin share or gross consideration of $1.44-million, based on 10-day volume-weighted average price of the Harfang shares of 8.93 cents ending on Aug. 8, 2024. This represents an approximate 14.7-per-cent premium over the 10-day VWAP ending on Aug. 8, 2024, of the Neworigin shares on the TSX Venture Exchange.

Transaction highlights

The transaction offers several positive direct benefits to the shareholders of Harfang and Neworigin, including:

 

  • 25-kilometre strike length along the prolific Casa Berardi deformation zone: Combining Harfang’s Blakelock project and Neworigin’s North Abitibi project results in an asset with a consolidated area of more than 11,000 hectares over a combined 25-kilometre strike length along a prolific deformation zone.
  • Underexplored asset in the Pickle Lake gold camp: The Sky Lake gold project covers 9,100 hectares over a 27-kilometre strike length in a favourable geological setting. Please see the technical report titled “Technical Report on the Sky Lake Gold Project, Patricia Mining Division, Ontario, Canada,” with an effective date of March 31, 2023, and report date of April 6, 2023, which is available on Neworigin’s issuer profile on SEDAR+.
  • Polymetallic potential at South Abitibi in a renewed mining camp: The South Abitibi project benefits from exceptional infrastructures and year-round road access, where VTEM (versatile time-domain electromagnetic) and IP (induced polarization) work suggest the potential for high-priority targets along a two-kilometre length of underexplored anomalies associated with nickel-copper mineralization.
  • Accelerated growth potential: The transaction adds significant depth to the asset portfolio and sets Harfang up for a greater potential of discovery.
  • Additional exposure to Ontario: The transaction will result in a more balanced overall portfolio in Quebec and Ontario, allowing Harfang to explore year-round and benefit from Ontario’s infrastructure.
  • Promotes capital efficiency in the mining industry: With over 1,100 mining companies listed on the Toronto Stock Exchange and TSX-V, business combinations that consolidate assets and management teams are critical to drastically increasing the efficient use of resources.

 

“The acquisition of Neworigin comes at an opportune time for Harfang to diversify and strengthen our portfolio,” commented Vincent Dube-Bourgeois, interim president and chief executive officer of Harfang. “With a new and highly engaged management team, these additional assets will accelerate our growth by increasing our ground along the Casa Berardi and gaining an underexplored asset in the incredible Pickle Lake mining camp. I truly believe this transaction will create significant value for existing Harfang shareholders, and I look forward to welcoming the Neworigin shareholders and creating value for them as well.”

“We are delighted that Harfang views Neworigin as an important and strategic acquisition,” commented Robert Valliant, chairman and interim chief executive officer of Neworigin. “We can now move forward as Harfang shareholders and share in ownership of a well-funded group with demonstrated access to capital and an energetic management team. It is also a testament to the work completed and prospectivity of our assets and will clearly benefit the ability to rapidly advance Neworigin’s key properties at Sky Lake and North Abitibi.”

Board and management

Upon closing of the transaction, Mr. Valliant will join Harfang’s board of directors. As a result, Harfang’s board of directors and management team will comprise the following individuals.

Board of directors:

 

  • Jean-Pierre Janson, chair;
  • Mr. Dube-Bourgeois;
  • Daniel Innes;
  • Sylvie Prud’homme;
  • Karen Rees;
  • Mr. Valliant.

 

Management team:

 

  • Mr. Dube-Bourgeois, interim president and chief executive officer;
  • Ludovic Bigot, vice-president, exploration;
  • Yvon Robert, chief financial officer.

 

Transaction details

Prior to the completion of the transaction, Neworigin expects to complete a series of shares for debt transactions, pursuant to which it will issue Neworigin shares to settle several outstanding accounts and loans, currently payable to certain current and former directors and officers of Neworigin (including wholly owned corporations thereof) and service providers, for a total amount of $181,110.50. Assuming the shares for debt transactions are settled in the foregoing total aggregate amount, Neworigin expects to issue 6,037,017 Neworigin shares at a deemed price of three cents per Neworigin share in connection with the shares for debt transactions. The shares for debt transactions are being consummated at approximately a 50-per-cent premium to the 10-day VWAP ending on Aug. 8, 2024, of the Neworigin shares on the TSX-V.

Under the terms of the transaction, the exchange ratio will be adjusted depending on the number of Neworigin shares issued in the shares for debt transactions such that the shareholders of Neworigin will own approximately 20 per cent of the issued and outstanding Harfang shares regardless of the number of Neworigin shares issued in the shares for debt transactions. Assuming the shares for debt transactions are completed on the terms described herein, the shareholders of Neworigin will receive 0.25694426 of a Harfang share in exchange for each Neworigin share.

The share exchange ratio in the agreement provides for an exchange ratio of 0.28420966 of a Harfang share for each Neworigin share issued and outstanding as at the date hereof, however the agreement provides that the exchange ratio will be adjusted to provide the Neworigin shareholders (except Harfang, as applicable) the same economic effect as contemplated by the agreement prior to such shares for debt transactions, given the intent that existing Neworigin shareholders (except Harfang, as applicable) will own approximately 20 per cent of the issued and outstanding Harfang shares immediately following the completion of the transaction. Neworigin may furthermore settle additional outstanding accounts payable in Neworigin shares at the condition that the aggregate amount of the shares for debt transactions does not exceed $220,000, thereby further affecting the exchange ratio. It is a condition of the agreement that Neworigin completes the shares for debt transactions prior to the completion of the arrangement, subject to the approval of the TSX-V. The Neworigin shares to be issued pursuant to shares for debt transactions will be subject to a four-month-and-one-day statutory hold period from the date of issuance.

Harfang and Neworigin have entered into a subscription agreement, pursuant to which, as soon as reasonably practicable, Neworigin will issue to Harfang a convertible debenture, pursuant to which Harfang will loan lend principal amount of $250,000 to Neworigin. The principal amount of the debenture will bear interest at a rate of 11.95 per cent per annum. The proceeds arising from the debenture are expected to be used by Neworigin to pay certain accounts payable and loans currently outstanding as well as various transaction fees. The maturity date of the debenture will be the earlier of the closing of the transaction and Jan. 31, 2025. Subject to certain conditions, the principal amount of the debenture will be convertible into Neworigin shares at a price of five cents per Neworigin share.

The transaction will be completed by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of the Ontario Superior Court of Justice (Commercial List) and the approval by 66-2/3rds per cent of the votes cast by Neworigin shareholders at a meeting of Neworigin shareholders to be held no later than Nov. 30, 2024. The transaction is expected to be completed shortly following the Neworigin meeting.

The agreement includes customary representations and warranties of each party, non-solicitation covenants by Neworigin, right-to-match provisions in favour of Harfang in the event of a superior proposal (within the meaning of the agreement), as well as a covenant of Harfang to ensure that all mineral claims related to the Sky Lake, North Abitibi and South Abitibi projects remain in good standing beginning on the date of the agreement. A termination fee of $100,000 may be payable by either party in the case of certain termination events.

Directors and officers of Neworigin holding an aggregate number of Neworigin shares that represent approximately 14.09 per cent of the currently outstanding Neworigin shares have entered into customary support agreements with Harfang to vote their shares in favour of the transaction.

The completion of the transaction, the debenture and the shares for debt transactions remains subject to customary conditions, including receipt of all necessary court, shareholder and regulatory approvals.

Jean-Pierre Janson, chairman of Harfang, is also a director of Neworigin. As such, Harfang and Neworigin are non-arm’s-length parties within the meaning of the policies of the TSX-V. Mr. Janson did not take part in any deliberations or votes relating to the transaction within each respective board of directors. Harfang and Neworigin consider that the transaction has been negotiated at arm’s length and is not a related party transaction within the meaning of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions.

Further information regarding the transaction will be included in the management information circular to be prepared by Neworigin and mailed to its securityholders in connection with the Neworigin meeting. All securityholders of Neworigin are urged to read the Neworigin circular once available as it will contain important additional information concerning the transaction.

Neworigin board recommendation

The board of directors of Neworigin (except for Mr. Janson, who declared his interest and did not participate in any deliberations or vote regarding the transaction), following a review of the terms and conditions of the agreement and consideration of a number of factors, including the receipt of a fairness opinion from its advisers, has unanimously determined that the transaction is in the best interests of Neworigin and will recommend that Neworigin shareholders vote in favour of the agreement. Prior to the execution of the agreement, Working Capital Corp. provided a fairness opinion that, based upon and subject to the assumptions, limitations and qualifications in such opinion, the consideration to be received by the Neworigin shareholders is fair, from a financial point of view, to Neworigin shareholders. A summary of the fairness opinion will be included in the Neworigin circular.

Neworigin delisting and SEDAR+

If the transaction is completed, the Neworigin shares will be delisted from the TSX-V. A copy of the agreement will be available through Neworigin’s and Harfang’s filings with the applicable securities regulatory authorities in Canada on SEDAR+.

Shares for debt related party disclosure

Certain directors and officers of Neworigin will be issued Neworigin shares in connection with the shares for debt transactions, accordingly, such issuance of Neworigin shares to insiders of the Neworigin will be considered a related party transaction within the meaning of MI 61-101. Neworigin is relying on the exemption from the requirement for a formal valuation and minority shareholder approval under MI 61-101 on the basis of the exemptions contained in Section 5.5(1)(a) and Section 5.7(1)(a) of MI 61-101 as the fair market value of the consideration of the Neworigin shares to be issued to such directors and officers of Neworigin in connection with the shares for debt transaction is not expected to exceed 25 per cent of Neworigin’s market capitalization.

Advisers and counsel

Evans & Evans Inc. is acting as financial adviser and Fasken Martineau DuMoulin LLP is acting as legal counsel to Harfang.

Working Capital has provided Neworigin with a fairness opinion in respect of the agreement and Peterson McVicar LLP is acting as legal counsel to Neworigin.

Qualified person

Ludovic Bigot, PGeo, vice-president, exploration, of Harfang, and Mark Petersen, PGeo, have reviewed and approved the technical information contained in this news release. Mr. Bigot and Mr. Petersen are qualified persons within the meaning of National Instrument 43-101, Standards of Disclosure for Mineral Projects.

About Harfang Exploration Inc.

Harfang Exploration is a well-financed, technically driven mineral exploration company with the primary mission to discover ore deposits in Quebec and Ontario. The company is managed by an experienced team of industry professionals with a proven record of success and controls a portfolio of highly prospective projects. Harfang is dedicated to best practices through engagement with all stakeholders and commitment to the environment.

About Neworigin Gold Corp.

Neworigin Gold is a Canadian mineral exploration company focused on making discoveries at its portfolio of gold projects in the Canadian Shield. Neworigin’s management and board have extensive experience in the delineation and development of gold deposits.

We seek Safe Harbor.

https://harfangexploration.com/en/

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