Superior Offer to Acquire CB Gold ReconfirmedVancouver, BC, August 24, 2015 - Red Eagle Mining Corporation (TSX-V: RD, OTCQX: RDEMF, SSE-V: RDCL)reminds shareholders of CB Gold Inc. ("CB Gold") to tender their Shares to Red Eagle Mining's superior Offer. The share exchange takeover bid, including consideration to CB Gold shareholders of 0.162 Red Eagle Mining shares for each CB Gold common share ("Share") issued and outstanding (the "Offer") expires August 31, 2015. Shareholders whose CB Gold Shares are registered in the name of an investment dealer, stockbroker, bank, trust company or other nominee should instruct that nominee to promptly tender their Shares. Shareholders are encouraged to provide tender instructions well in advance of the expiry as nominees may implement internal tender submission deadlines as early as this Thursday, August 27, 2015.
Red Eagle Mining outlines the reasons and benefits of tendering to its Offer below and addresses concerns with the actions of CB Gold and Batero, which shareholders should be aware of and carefully consider before making their decision.
Reasons to Accept the Red Eagle Mining Offer
Support of CB Gold Shareholders - Approximately 40% of all CB Gold shareholders or 50% of disinterested shareholders have already tendered their shares to Red Eagle Mining.
Advanced Gold Development Company Exposure - Participation in Red Eagle Mining's flagship project, the 100% owned, fully permitted, fully financed and in construction Santa Rosa Gold Project in Colombia which is expected to be in production during 2016. Red Eagle Mining also plans to aggressively advance development of the Vetas gold deposit.
Superior Financial Capacity - Red Eagle Mining's strong financial capacity and institutional shareholder base, including significant shareholders Liberty Metals & Mining Holdings LLC, Stracon GyM and Orion Mine Finance. Red Eagle Mining has raised over $100 millionin equity and debt financing during 2015.
Significant Premium - The Offer represents a premium of 46% to CB Gold's 20-day VWAP of $0.035 and CB Gold's closing share price of $0.035 on June 12, 2015, the last trading day prior to CB Gold's announcement of Red Eagle Mining's proposal. Based on closing share prices on August 20, 2015 both Red Eagle Mining and Batero's bids continue to imply Offer consideration of $0.05 per CB Gold Share.
Exposure to a Superior Suite of Assets - The Batero-Quinchia project has permitting challenges and is not feasible at current gold prices. Accordingly, Batero has a market capitalization of just $5.7 million and will be inadequately funded to sufficiently advance its projects with less than $5 million in cash if its offer were to be successful.
Colombian Experience - Red Eagle Mining's proven experience in discovery, permitting, financing, and developing underground gold projects in Colombia. The Santa Rosa Gold Project is the first significant gold mine in Colombia to be permitted and commence construction in decades.
No Control Position- Without a controlling shareholder, Red Eagle Mining is managed for the benefit of all shareholders. CB Gold and Batero insider, the Navarro-Grau Group has a history of obtaining control of public companies through diluting existing shareholders.
All Share Consideration - In current gold markets, share consideration offers CB Gold shareholders the ability to have additional exposure to future upside through the Santa Rosa Gold Project and the Vetas gold deposit, rather than crystalizing losses at the bottom of the cycle through Batero's partial cash offer.
Red Eagle Mining has filed complaints with the British Columbia Securities Commission ("Commission") and the TSX Venture Exchange ("TSXV") regarding what appear to be serious violations of applicable securities laws in connection with Batero Gold Corp.'s ("Batero") takeover bid for the shares of CB Gold. The complaints relate, among other things, to:
Failure to Properly Disclose - the relationship between the Navarro-Grau Group, Batero and other related entities who are joint actors under applicable securities laws;
Failure to Provide a Formal Valuation - of CB Gold, as is required in the case of Insider Bids and its purported reliance on an exemption which is not available in the circumstances;
Failure to Make Early Warning Disclosures - as required by applicable securities laws;
Failure to File a Director's Circular- within 15 days as required by applicable securities laws; and
Private Placement in Violation of Securities Laws- by Batero of Shares of CB Gold which was completed subsequent to the announcement of the Batero takeover bid, in violation of takeover bid provisions in applicable securities laws and to the best of our knowledge still has not received final approval of the TSXV.
Red Eagle Mining is awaiting what, if any, investigatory and enforcement action will be taken by the Commission and TSXV before determining what further steps it will take in respect of these violations. Such steps may include applications to cease trade the private placement and to cease trade the Batero bid.
CB Gold's Ongoing Efforts to put the Vetas Gold Deposit Under Control of the Navarro-Grau Group
Unsuccessful Shareholder Approval - On May 19, 2015, CB Gold announced that it had entered into a definitive share purchase agreement with the Navarro-Grau Group owned OM.L Trading Inc. to acquire 100% of the shares in Leyhat Corporation, CB Gold's wholly-owned subsidiary which holds the Vetas gold deposit (the "OM.L Transaction"). The OM.L Transaction was subject to shareholder approval, which was sought at CB Gold's Annual and Special Meeting (the "Shareholders' Meeting") scheduled for June 23, 2015. The deadline for submission of proxies in respect of the Shareholders' Meeting was set at 10:00 a.m. on June 19, 2015. Following receipt of all proxies for the Shareholders' Meeting, on June 22, 2015 CB Gold announced its intent to complete a $3,500,000 Private Placement (the "Private Placement"). On the following day, June 23, 2015, at the Shareholders' Meeting, 66% of disinterested shareholders voted against the OM.L Transaction, contrary to CB Gold's management and board recommendation.
Withdrawn Dilutive Transaction Restricting CB Gold Shareholders - On June 24, 2015, CB Gold announced that the Private Placement would be led by the Navarro-Grau Group, the same related party who was frustrated in its attempt to acquire CB Gold's primary asset a day earlier. Red Eagle Mining applied to the Commission seeking an order to cease trading any securities issued under the Private Placement (the "Cease Trade Application"). The Cease Trade Application was made on the basis that the Private Placement is a dilutive transaction designed to frustrate the ability of shareholders to consider Red Eagle Mining's Offer, and as such is an improper defensive tactic contrary to the public interest. Despite CB Gold's objections, the Commission decided that it would hear the Cease Trade Application and scheduled the hearing for July 3, 2015. On July 2, 2015, just prior to the hearing, CB Gold withdrew the Private Placement.
Third Attempt to Acquire CB Gold - On July 24, 2015 Batero, which is also controlled by the Navarro-Grau Group and is not operating at arm's length, announced a third attempt to obtain control of CB Gold's Vetas deposit, without disclosing that its bid will constitute an 'insider bid' under applicable securities law. Batero made an offer to acquire all of the Shares of CB Gold for a combination of $0.0275 in cash plus 0.3056 of a Batero common share for each CB Gold Share, matching Red Eagle Mining's implied Offer consideration of $0.05 per CB Gold Share. In conjunction with announcement of the Batero takeover bid, CB Gold announced that it had closed a $575,000 private placement with Batero. This private placement was completed in violation of takeover provisions in applicable securities laws and to the best of our knowledge still has not received final approval of the TSXV.
About the Red Eagle Mining Offer
The Red Eagle Mining Offer is for all of the issued and outstanding Shares of CB Gold, including any CB Gold Shares that may become issued and outstanding upon the exercise of existing CB Gold convertible securities. The Offer is subject to certain customary conditions including the deposit under the Offer of not less than 51% of CB Gold Shares, receipt of all necessary regulatory approvals and no material adverse change in CB Gold. The Offer will not be subject to the approval of Red Eagle Mining's shareholders and is not subject to any financing or due diligence conditions.
Under the terms of the Offer, each CB Gold Share will be exchanged for 0.162 of a Red Eagle Mining common share with an implied value of $0.05 per CB Gold Share and an implied total offer value for all outstanding CB Gold Shares of approximately $8,400,000 based on Red Eagle Mining's 20-day volume weighted average share price ("VWAP") on June 12, 2015, the last trading day prior to CB Gold's announcement of Red Eagle Mining's proposal, and the closing share price on August 20, 2015 of $0.31. The Offer will remain open until 4:00PM (Toronto time) on August 31, 2015 ("Expiry Time"), unless withdrawn or extended.
In the event of the deposit under the Offer of not less than 51% of CB Gold Shares, Red Eagle Mining will make a public announcement and the Offer will remain open for deposits and tenders of Shares for not less than ten additional business days. The Offer is a 'permitted bid' under CB Gold's shareholder rights plan.
The full details of the Offer are set out in the takeover bid circular ("Circular"), accompanying offer documents and the notice of variation and extension (collectively the "Offer Documents"), which Red Eagle Mining has filed with Canadian securities regulatory authorities on SEDAR and mailed to CB Gold's shareholders. CB Gold shareholders are encouraged to carefully review the Offer Documents, which contains the full terms and conditions of the Offer as well as detailed instructions on how to tender their common shares to the Offer. No further action is required for Shares which have already been tendered.
This press release does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer to buy or invitation to sell, any securities of Red Eagle Mining or CB Gold. Such an offer may only be made pursuant to an offer and takeover bid circular filed with the securities regulatory authorities in Canada and pursuant to registration or qualification under the securities laws of any other such jurisdiction.
How to Tender Shares to the Offer
All questions regarding the Offer and how to tender CB Gold Shares should be directed to the Information Agent, Laurel Hill Advisory Group at +1 877 452 7184 (North American Toll-Free) or +1 416 304 0211 (Collect Calls) or by email at [email protected]. Shareholders who wish to accept the Offer may do so before the Expiry Time by delivering to Computershare (the "Depositary") (a) certificates representing the CB Gold shares to be tendered, (b) a properly completed and executed letter of transmittal (the "Letter ofTransmittal") or a manually executed facsimile, and (c) any other documents required by the instructions set out in the Offer Documents. The Letter of Transmittal was included in the Offer Documents and specified the offices of the Depositary at which valid deposits under the Offer may be made. Alternatively, shareholders may follow the procedure for guaranteed delivery using a notice of guaranteed delivery, as described in the Offer Documents. Shareholders whose CB Gold Shares are registered in the name of an investment dealer, stockbroker, bank, trust company or other nominee should contact that nominee for assistance if they wish to accept the Offer.
Red Eagle Mining has engaged National Bank Financial Inc. as its financial advisor and Farris Vaughan Wills & Murphy LLP as its legal counsel in respect of the Offer.
About Red Eagle Mining
Red Eagle Mining is a well-financed gold exploration and development corporation with an experienced mine-development team. Management is focused on building shareholder value through discovering and developing gold projects with low costs and low technical risks in Colombia, a jurisdiction with prolific historic production but until recently limited modern exploration. Red Eagle Mining is developing the 100 square kilometre historic Santa Rosa Gold Project located in the Antioquia Batholith. Construction is underway at the fully permitted and fully financed San Ramon Gold Mine with production expected to commence during 2016.
For further information on Red Eagle Mining please contact:
Director Corporate Development
Red Eagle Mining Corporation
Suite 920 - 1030 West Georgia Street
Vancouver, BC, V6E 2Y3
+1 778 372 2558
+1 604 360 5722 mobile
Neither the 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. This news release includes forward-looking statements that are subject to risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward looking. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements. This news release does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.