Merger of Equals Creates New Gold Company-Increased Production and Expanded Reserve Base Set To Grow Shareholder Value
News Desk
TORONTO, ONTARIO--(CCNMatthews - March 5, 2007) - Aurogin Resources
Ltd. ("Aurogin") (TSX VENTURE:AUQ - News) and Morgain Minerals Inc.
("Morgain") (TSX VENTURE:MGM - News) are pleased to announce that
their Boards of Directors have unanimously approved a letter of intent
to combine the companies in a merger of equals to create a new gold
producer ("Newco").
Highlights:
Upon successful completion of the transaction and continued execution
of existing operating and development plans, on a proforma basis,
Newco will have the following attributes:
- Measured and indicated resources of greater than 1 million ounces of
gold with additional indicated resources of 470,000 ounces of gold
(see table below);
- In 2007, two operating gold mines located in Mexico and Guatemala;
- Excellent pipeline of exploration and development projects including
Fortuna in Mexico and the El Arenal, Bridge and Lupita Zones in
Guatemala;
- 2007 estimated gold production of 35,000 ounces, with Newco's share
being 22,000 ounces growing to 35,000 ounces in 2008;
- Immediate operating and management synergies; and
- Three year goal of 100,000 ounce annual gold production.
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Measured & Indicated Inferred
Resource Tonnes Grade Ounces Tonnes Grade
Ounces
Table (000) (g/t) Gold (000) (g/t)
Gold
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Aurogin El Sastre (1) 370 4.14 49,251 1,165 3.13
117,265
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Lupita (2) 13,000 1.24
518,000
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Total 370 4.14 49,251 14,165 1.39
635,265
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Aurogin's Share 185 4.14 24,626 9,916 1.39
444,686
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Morgain El
Castillo (3) 58,043 0.54 1,015,184 1,700 0.45
24,595
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Total 58,228 0.56 1,039,810 11,616 1.26
469,281
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(1) El Sastre Technical Report March 23, 2005
(2) Luptia Technical Report February 8, 2006
(3) El Castillo Pre-Feasibility Report October 20, 2006
"Merging our respective companies will create exceptional value for
our shareholders," said Rick Adams, Director of both Aurogin and
Morgain. "By combining our current operations with those close to
production, combining our pipeline of exploration and development
projects and combining management from both companies into a world
class team, we will have significantly enhanced our production
profile, gold reserve and resource base and our ability to continue to
grow shareholder value."
"The Boards of Directors of both companies have unanimously approved
the transaction and are in the process of seeking independent opinions
that the transaction is fair, from a financial point of view, to the
shareholders of both Aurogin and Morgain. We believe that our
companies are a tremendous fit due to complementary strengths
including the management teams, geographic synergies and project
pipelines of similar value," said Chris Babcock, President and Chief
Executive Officer of Morgain. "This combination will create a larger,
more valuable gold company which will be well positioned to generate
additional value for all shareholders through organic growth and
strategic acquisitions. This is a win-win for shareholders of both
companies."
Summary of the Transaction
While the specific legal form of the business combination is still
being finalized, the transaction will result in one new corporate
entity, Newco. Each shareholder of Aurogin will receive one (1) common
share of Newco for each two (2) Aurogin shares held immediately prior
to the date on which the transaction becomes effective by its
registration with the Registrar of Companies for British Columbia (the
"Effective Date"). Each shareholder of Morgain will also receive one
(1) common share of Newco for each two (2) Morgain common shares held.
Newco will apply to list its shares on the TSX Venture Exchange.
All validly subsisting options, warrants and rights to acquire shares
of Aurogin or Morgain will be exercisable to acquire that number of
common shares of Newco, on an adjusted basis as to the price and
number in reference to the share exchange ratio. The term of all
outstanding options and warrants will remain unchanged.
The transaction is subject to the parties completing due diligence and
entering into a further definitive agreement providing for the
specific mechanics for completing the transaction. The Boards of
Directors of both companies have unanimously recommended the
transaction to shareholders and are currently in the process of
seeking independent opinions that the transaction is fair, from a
financial point of view to the respective shareholders of each
company. The transaction is subject to all requisite regulatory, court
and shareholder approvals and acceptances, and the satisfaction of all
conditions precedent and other conditions customary in transactions of
this nature. The transaction is expected to require the approval of at
least two-thirds of the votes cast by both Aurogin and Morgain
shareholders present in person or by proxy at respective meetings of
the two shareholder groups expected to take place in June.
Board of Directors
It has been proposed that the Board of Directors of Newco shall be
comprised of seven Directors including, Chester Millar, Morgain's
Chairman, John Paterson, President and Chief Executive Officer of
Aurogin, Chris Babcock, President and Chief Executive Officer of
Morgain, Edward Thompson, a Director of Aurogin, Rick Adams, VP
Corporate Development and Director of both companies, Darren Koningen,
VP Engineering of both companies and a Director of Morgain and Rodrigo
Sanchez-Mejorada, a newly appointed Director of Morgain.
The head office of Newco will be located in Toronto.
Advisors and Counsel
Aurogin's legal counsel is Tupper, Jonsson & Yeadon and Morgain's
legal counsel is Axium Law Corporation.
Aurogin is currently a Canadian junior gold producer focused on the
acquisition and development of profitable gold deposits in the
Americas. Its 50% owned El Sastre Main Zone gold mine is only one part
of the overall El Sastre Project, an expanding resource that includes
at least four mineralized zones. Aurogin is debt free and anticipates
funding its 2007 exploration program out of free cash flow generated
from the El Sastre Main Zone gold mine.
Morgain is a Vancouver based emerging gold exploration and development
company focused on the acquisition and development of profitable gold
mines in Mexico. Morgain is currently developing its 100% owned
Castillo Gold Project located in the State of Durango, Mexico.
ON BEHALF OF AUROGIN RESOURCES LTD.
Edward Thompson, Director
Issued: 63,684,721 common shares
ON BEHALF OF MORGAIN MINERALS INC.
Christopher E. Babcock, President and Chief Executive Officer
Issued: 72,529,908 common shares
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
The technical and pre-feasibility reports referred to above contain
"forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities legislation. Forward-looking statements include,
but are not limited to, statements with respect to the future price of
metals, timing of exploration activities, mine life, economic
viability and estimated internal rate of return, estimation of mineral
resources, the results of drilling, estimated future capital and
operating costs, future stripping ratios, projected mineral recovery
rates and plans for developing, the projects. Generally, these forward-
looking statements can be identified by the use of forward-looking
terminology such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or variations
of such words and phrases or state that certain actions, events or
results "may", "can", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of the companies to be materially different from those
expressed or implied by such forward-looking statements, including but
not limited to: risks related to the exploration and potential
development of the projects, risks related to international
operations, the actual results of current exploration activities,
conclusions of economic evaluations, changes in project parameters as
plans continue to be refined, future prices of metals. Although the
companies have attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be
no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements. The companies do not
undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with applicable
securities laws.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy of this news release.
Contact:
Rick Adams
Aurogin Resources Ltd.
VP Corporate Development
(416) 214-4809
Greg Taylor
Aurogin Resources Ltd.
VP Investor Relations
(416) 605-5120
Email: in...@aurogin.com
Website: www.aurogin.com
(604) 662-4505 or Toll Free: 1-877-642-6200
Coal Harbour Communications Inc.
Website: www.morgainminerals.com
Source: Morgain Minerals Inc., Aurogin Resources Ltd.