MEGA AND ROLLING ROCK ANNOUNCE BUSINESS COMBINATION
Thunder Bay, Ontario and Vancouver, British Columbia
September 24, 2010
Mega Precious Metals Inc. (TSX-V:MGP) (“Mega”) and Rolling Rock Resources Corporation (TSX-V:RLL) (“Rolling Rock”) jointly announced today that they have entered into a binding letter agreement (the “Agreement”) whereby Mega will acquire all of the outstanding common shares of Rolling Rock in an all-share transaction. The transaction will effectively combine the assets of both companies on a consolidated basis, with Rolling Rock becoming a wholly-owned subsidiary of Mega.
Under the Agreement, Rolling Rock shareholders (other than Mega) will receive 0.4 common shares of Mega for each common share of Rolling Rock. Based on the closing price of Mega on the TSX-V on September 23, 2010, the exchange ratio represents a 37.0% premium over Rolling Rock’s 20-day volume weighted average share price. Total consideration is valued at approximately $10.1 million.
Jim Rogers, President and CEO of Mega stated, “The acquisition of Rolling Rock is a critical step toward the realization of Mega’s strategic business plan. The Monument Bay Project, which Rolling Rock acquired from Bema Gold and Wolfden Resources in 2006, fits well in our project portfolio and is known to our management team. I am excited by the opportunity to champion this project and am confident that Mega’s experienced team has the expertise to realize this project’s potential.”
Scott Angus, President and CEO of Rolling Rock stated, “We believe that this business combination will be of great value to the existing shareholders of Rolling Rock. With the technical experience and proven track record of Mega’s board of directors and management team, I look forward to the future development of the Monument Bay Project.”
Mega currently owns, and exercises control or direction over, 9,900,000 common shares of Rolling Rock (representing approximately 18.8% of the outstanding Rolling Rock common shares). Pinetree Capital Ltd. owns, or exercise control or direction over, 7,755,631 common shares of Mega (representing approximately 17.6% of the outstanding Mega common shares) and 7,868,000 common shares of Rolling Rock (representing approximately 15.0% of the outstanding Rolling Rock common shares).
Mega and Rolling Rock have agreed to negotiate in good faith and use their reasonable commercial efforts to enter into a definitive agreement with respect to the transaction as soon as practicable and in any event on or before October 29, 2010, failing which either party may terminate the Agreement. It is currently contemplated that the transaction will be structured as a three-cornered amalgamation; however, the ultimate form of the transaction will be determined based on corporate, tax and securities law and other considerations. PowerOne Capital Markets Limited is acting as financial advisor to Mega in connection with the transaction.
Terms of the Transaction
- There are currently 44,068,780 Mega common shares outstanding and 52,600,000 Rolling Rock common shares outstanding. Rolling Rock shareholders (other than Mega) will receive 0.4 common shares of Mega for each common share of Rolling Rock. Upon completion of the transaction, Rolling Rock shareholders (other than Mega) will own approximately 17.1 million shares or 27.9% of the resulting 61.1 million Mega shares outstanding.
- Each outstanding option and warrant to acquire Rolling Rock common shares will entitle the holder thereof to receive, upon the exercise thereof, 0.4 common shares of Mega in lieu of each one common share of Rolling Rock and otherwise on the same terms and conditions as the original option or warrant
- Completion of the transaction is subject to customary conditions, including receipt by Rolling Rock of a fairness opinion by no later than the date the definitive agreement is executed, the negotiation and entering into of the definitive agreement, no material adverse change in Rolling Rock or Mega, a favourable vote of at least two-thirds of the shares voted at a special meeting of Rolling Rock shareholders (including the minority shareholder approval required under National Instrument 61-101) and the receipt of all necessary regulatory approvals, including the approval of the TSX-V. Completion of the transaction is also subject to each of Mega and Rolling Rock being satisfied with the results of their respective due diligence investigations, which due diligence must be completed by the date the definitive agreement is executed.
- The Agreement includes customary deal protection provisions, including non-solicitation obligations for Rolling Rock (subject to Rolling Rock and the directors thereof being able to respond to unsolicited bona fide offers in accordance with fiduciary obligations) and provides for the payment of a $450,000 break fee in certain circumstances. Mega has the right to match any superior proposal.
- Concurrent with the entering into of the definitive agreement, Rolling Rock is obligated to deliver to Mega lock-up agreements from each of the directors and officers of Rolling Rock and each shareholder of Rolling Rock (other than Mega) holding, directly or indirectly, 10% or more of Rolling Rock’s outstanding common shares.
- Mega and Rolling Rock will use their reasonable commercial efforts to complete the transaction by December 31, 2010.
About Mega
Mega Precious Metals Inc. is a well financed Canadian-based mineral exploration company with several projects in Northwestern Ontario, Nunavut and the Yukon. The Company is committed to an accelerated growth strategy and is backed by a team of experienced mining experts and a strong financial position. The Company is poised for rapid expansion through quick response to new opportunities and changes in the market. Mega’s common shares trade on the TSX Venture Exchange under the symbol MGP. For further information and presentation material, please review the Mega website at www.megapmi.com
About Rolling Rock
Rolling Rock Resources Corp. is a Canadian mineral resource company engaged in the acquisition and exploration of mineral resource properties in Manitoba, Canada. The principal mineral resource properties of Rolling Rock are the Monument Bay and Domain properties located in northern Manitoba. For further information and presentation material, please review the Rolling Rock website at www.rollingrockresources.com
Mega Precious Metals Inc.
Jim Rogers, President and CEO
O: 807-766-3380
TF: 877-592-3380
info@megapmi.com
Rolling Rock Resources Corporation
Scott Angus, President and CEO
O: 604-488-1456
sangus@rollingrockresources.com
Forward-looking Information
This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information is frequently, but not always, characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking information in this news release includes, but is not limited to, statements with respect to the negotiation and final terms of a definitive agreement with respect to the business combination, the completion of the business combination, Mega’s business plans and strategies, the development of the Monument Bay project and the realization of the potential, if any, at the Monument Bay project. The reader is cautioned not to place undue reliance on forward-looking information. Forward-looking information is based on certain assumptions, opinions and estimates of management at the date the information is given and is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. These assumptions include, but are not limited to, no material adverse change in the business or affairs of either Mega or Rolling Rock. Factors that could cause the forward-looking information to differ materially in actuality include risks typical of operating in the mining industry, changes in gold and other metal prices, fluctuations in currency exchange rates and the failure to obtain the required shareholder and regulatory approvals for the business combination. More information about the risks and uncertainties affecting Mega and Rolling Rock can be found in Mega’s and Rolling Rock’s filings posted on SEDAR at www.sedar.com. Neither of Mega and Rolling Rock undertakes an obligation to update forward-looking information if circumstances or management’s estimates or opinions should change, except in accordance with applicable laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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