Glen Eagle Resources Signs Definitive Agreement With Kinbauri Gold Corp.
Glen Eagle Resources Inc. announce that the transaction with Kinbauri Gold Corp. is moving towards completion whereby all terms have been agreed to in a definitive subscription agreement and signed off by both parties pursuant to the binding letter of intent as announced on April 17, 2009.
Under the terms of the subscription agreement, Glen Eagle will invest C$32M to acquire a 45% interest in Kinbauri Espana S.L. (“Espana”), which holds a 100% interest in the El Valle/ Carles gold/copper project (the “Project”) and other exploitation concessions within the Rio Narcea Gold Belt in Northwestern Spain. The initial investment of C$32M will be allocated as to EUR3,068,850 to purchase class B voting participations of Espana and the balance will be advanced as a non-recourse shareholder loan to be paid back in accordance with the shareholders’ agreement to be entered into by the parties. All disbursements of cash or kind will be strictly according to participating interest whether by dividend or loan repayment. The subscription agreement also grants Glen Eagle the right to acquire a further 5% interest for an additional C$5M, to be allocated as to EUR673,650 to purchase class B voting participations with the balance being advanced as a loan on the same terms as the initial loan. The subscription agreement does not contain a break up fee. Due to the registration process in Spain, the transaction is anticipated to close on or about May 29, 2009, and is subject to all necessary regulatory approvals. Kinbauri and Glen Eagle have received conditional approval from the TSX Venture Exchange. M Partners Inc. is acting as financial advisor to Kinbauri.
In addition to the subscription agreement, Kinbauri, Espana and Glen Eagle will enter into a shareholders’ agreement on closing of the transaction. Under the terms of the shareholders’ agreement, Espana will have a board of directors consisting of five nominees, three to be appointed by Kinbauri and two to be appointed by Glen Eagle. In addition, a management committee of Espana comprised of five nominees will be established to approve annual budgets with respect to the Project, with three nominees appointed by Kinbauri and two nominees appointed by Glen Eagle. The shareholders’ agreement also contains a provision for the dilution of a non-participating shareholders’ interest and upon either parties’ interest being diluted under 10%, it will be converted into a 2.5% net smelter return royalty. Distributions will be determined by the directors of Espana, declared quarterly and paid to each shareholder strictly in accordance to their participating interest. Either party has the ability to take their distribution in production from the Project. In addition, either party has the option to purchase production from the Project on standard commercial terms.
Kinbauri will be the operator of the Project under the terms of an operator agreement to be entered into on closing of the transaction.
