Alexis Minerals Corporation
TSX : AMC

Alexis Minerals Corporation
Garson Gold Corp.
TSX VENTURE : GG

Garson Gold Corp.

October 20, 2009 13:18 ET

Alexis Minerals Corporation Enters Binding Agreement to Acquire All Shares of Garson Gold Corp.

Both Boards Unanimously Support Transaction

TORONTO, ONTARIO and VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 20, 2009) -

NOT FOR ISSUE IN THE UNITED STATES OR TO U.S. NEWSWIRE SERVICES

Alexis Minerals Corporation (TSX:AMC) ("Alexis") and Garson Gold Corp. (TSX VENTURE:GG) ("Garson") jointly announce that they have entered into a definitive support agreement pursuant to which Alexis will offer to acquire (the "Offer") all of the outstanding common shares of Garson (the "Shares"), not currently held by Alexis in exchange for Alexis common shares. Alexis has agreed to offer shareholders of Garson, other than Alexis, (the "Shareholders") 0.29 of an Alexis common share for each Garson common share held. The consideration under the Offer is valued at $0.1325 and represents a 79.5% premium to Shareholders using the 20-day volume weighted average prices of both companies (Alexis: $0.4569, Garson: $0.0738) and a 41.9% premium using closing prices on October 19, 2009 (Alexis: $0.465, Garson: $0.095). The implied fully-diluted total equity value of Garson under the Offer is $33.2 million using 20-day volume weighted average prices. The net acquisition cost for Alexis, adjusted for historic purchases of shares and warrants, is $28.8 million. The Board of Directors of Garson, having received a recommendation from its special committee of independent directors (the "Special Committee"), has unanimously approved this transaction and will recommend that Shareholders tender to the Offer.

The successful completion of this transaction will establish Alexis as a diversified junior Canadian gold company, well positioned to deliver near and long-term value to its shareholders through production growth and exploration upside. Alexis, upon completion of this transaction, will have the following profile:

  • Established production at Alexis' Lac Herbin Mine in Val d'Or, with annual production of 35,000 – 40,000 ounces of gold

  • Near-term production growth to 75,000 – 80,000 ounces of gold per year through the addition of the Lac Pelletier Mine in Rouyn-Noranda, expected to produce 10,000 ounces of gold in 2009, growing to 35,000 – 40,000 ounces in 2010

  • Medium-term targeted production growth to 150,000 ounces of gold per year with the addition of production at the New Britannia Gold Mine ("NBM") in Snow Lake, with a focus on the Main Mine and No. 3 Zone (subject to completion of a positive feasibility study)

  • Measured and Indicated Resources of 865,495 ounces of gold and Inferred Resources of 479,627 ounces of gold, representing an increase of 108% and 195%, respectively

  • Two mills (Aurbel – 1,400 tpd capacity and NBM – 2,150 tpd capacity) strategically located in highly prospective areas of significant historic production, providing a platform for regional consolidation and future production growth, including custom milling

  • Excellent exploration potential within highly prospective land packages in three world-class gold and base metal mining camps

  • Clean balance sheet with minimal debt

  • Strong management team with significant experience in exploration for gold and base metals, and demonstrated abilities in the development and construction of successful producing operations

Through the acquisition of Garson, Alexis is acquiring the past producing New Britannia Gold Mine, located in Snow Lake, Manitoba. The NBM assets include the New Britannia Mine with associated plant, infrastructure, and equipment including a fully permitted 2,150 tonne per day modern mill and tailings facility. The property consists of approximately 4,840 hectares of mineral claims and leases containing over ten known mineralized zones, including four gold deposits with 43-101 resources, three of which are historic production sites. The Flin Flon-Snow Lake camp is highly prospective for gold mineralization and hosts the Lalor gold project, owned by HudBay Minerals Inc.

David Rigg, President and CEO of Alexis, commented, "This acquisition more than doubles our current gold resources at an acquisition cost of approximately C$40 per ounce of gold. This acquisition cost is in line with the average cost of recent market acquisitions by peer group companies and well below our current trading multiple of approximately C$110 per ounce of gold. The acquisition complements our Quebec-based production, development and exploration assets and approach. Alexis will now be active in two best-of-class Canadian mining jurisdictions and will own significant mine and mill infrastructure providing for production opportunities with low estimated cost structures. Alexis is determined to achieve recognition as a mid-tier gold producer and our resources now support this objective. The potential to grow total gold production to above 150,000 ounces of gold per year in the medium-term will allow us to achieve this objective. Alexis remains unhedged, strongly leveraged to current high gold prices and has demonstrable growth potential in a period of positive market sentiment toward long-term gold prices. We believe that the similar gold and base metal characteristics of the Snow Lake, Rouyn-Noranda and Val d'Or areas provide significant exploration potential."

David Tafel, CEO of Garson, commented, "Combining with the seasoned Alexis mining team will result in a well funded mining company capable of reactivating the New Britannia Gold Mine. Additionally, as a result of this transaction, Garson shareholders will participate in the upside potential of the Alexis mining and exploration projects. The Alexis offer has the full support of the Board of Directors and the Special Committee created has determined the offer to be fair and in the best interests of Garson shareholders."

Historical production at NBM occurred from 1949 to 1958 and 1995 to 2005 and totaled 12.1 million tonnes at 4.23 g/t Au for 1.44 million ounces. For the period of 1997 to 2002, production at NBM averaged over 100,000 ounces of gold per year. The properties currently host Measured and Indicated Resources of 2.61 million tonnes at 5.7 g/t Au for 449,000 ounces and Inferred resources of 1.89 million tonnes at 5.2 g/t Au for 317,000 ounces. Near term production targets include the Main Mine and the No. 3 Zone, both of which are high grade deposits with exploration upside at depth and potentially along strike. In April 2009 Garson released the results of a Preliminary Assessment which evaluated the economics of restarting the New Britannia mill to mine and process ore from the No. 3 Zone on a small scale(1). The assessment was based on a three mine life with average annual production of 40,000 ounces of gold per year with processing occurring at a rate of 270,000 tonnes per year (approximately 35% of capacity). The study concluded that gold can be produced at NBM for less than US$400 per ounce with upside potential through mining and processing additional satellite deposits to increase the utilization of the mill.

Alexis plans on conducting exploration during winter 2010 to focus on open pit targets (principally the Boundary Zone), other known zones with historic resources but no recent 43-101 reporting, and on structural targets identified across the property. Alexis also plans to advance a feasibility study on combined Zone 3 and Main Mine production. The feasibility is expected to be completed during Q2-2010.

Summary of the Transaction

The acquisition of Garson will be completed by way of a take-over bid whereby Alexis will offer to acquire each outstanding Garson common share (not currently held by Alexis) in exchange for 0.29 of an Alexis common share. In a press release dated September 10, 2009, Alexis disclosed that it currently holds 31,260,000 common shares and 13,500,000 warrants of Garson. In the event that Alexis acquires 100% of the currently outstanding shares it does not already hold, the combined company will be held approximately 74% by existing Alexis shareholders and 26% by existing Garson shareholders (on a basic basis). The total number of common shares outstanding will be approximately 199.7 million, on a pro forma basis.

The Board of Directors of Garson has unanimously approved the offer and will recommend that Shareholders tender their shares to the bid. Garson has been granted the option to appoint one member to the Board of Alexis upon completion of the transaction. The Board of Directors of Alexis has also unanimously approved the Offer.

Each senior officer and each member of the Board of Directors of Garson has agreed to tender their Shares to the Offer, which together represents approximately 2.2% of the Shares. In addition, Kinross Gold Corporation has agreed to tender its Shares in Garson to the Offer, representing approximately 7.7% of the Shares.

A take-over bid circular containing the full details of the Offer (together with a Garson Board of Directors circular) and other related documents are expected to be mailed to Shareholders on or about October 30, 2009.

Alexis has agreed to provide interim financial support to Garson through a loan of $500,000 to fund the ongoing work program at New Britannia and for general corporate purposes. The loan will bear interest at 10% per annum, payable quarterly in arrears. The principal amount of the loan will be due no later than one year from the date of the loan. Further details of the loan agreement will be included in the take-over bid circular.

The Offer provides for, among other things, a non-solicitation covenant from Garson, Alexis' right to match any superior proposal for Garson, the payment to Garson of a termination fee of $800,000 under certain circumstances and the payment by each party to the other of a reimbursement of expenses of $250,000 under certain circumstances. The Offer is conditional on the deposit to the Offer of at least 66 2/3% of the outstanding Garson Shares, as well as receipt of any necessary regulatory approvals and satisfaction or waiver of other customary conditions. The Offer, unless extended, will expire 36 days after it begins.

Alexis' financial advisor is Cormark Securities Inc. and its legal advisors are Cassels Brock & Blackwell LLP. Garson's financial advisor is Haywood Securities Inc. and its legal advisors are Fraser Milner Casgrain LLP and Du Moulin Black LLP. Haywood Securities Inc. has provided an oral opinion to the Special Committee that, subject to Haywood Securities' assumptions and limitations and its review and analysis of current market conditions, the consideration to be received by the Shareholders, other than Alexis and its affiliates or associates, pursuant to the Offer is fair, from a financial point of view.

(1) NI 43-101 Technical Report Preliminary Assessment of the No. 3 Zone. Completed for Garson Gold Corp. by Micon International Ltd. May 30, 2009

Conference Call

A conference call is scheduled for Tuesday, October 20, 2009 at 3:00 pm ET.

Toronto Area, call-in number: (416) 340-8018

North American toll-free call-in number: 866-223-7781

A live audio webcast of the teleconference will also be available on Alexis' website at www.alexisminerals.com.

Shareholders who have questions about the Offer can also contact Kingsdale Shareholder Services ("Kingsdale") at 1-866-481-2532. Kingsdale has been retained by Alexis to act as Information Agent for the Offer.

About Alexis Minerals Corporation

Alexis Minerals Corporation is a Canadian mining company listed on the Toronto Stock Exchange (symbol "AMC"). In Quebec, Alexis owns one producing gold mine in Val d'Or and is exploring and bulk sampling a second Mine in the Rouyn-Noranda area. Alexis expects to earn a 100% interest in the Lac Pelletier gold property in Rouyn-Noranda in 2010 upon a positive feasibility study. Alexis undertakes exploration in the mineral rich Val d'Or (100% ownership of 212 sq. km.) and Rouyn-Noranda Mining Camps (50% ownership of 785 sq.km and in joint venture with Xstrata Copper). Further information about Alexis Minerals can be found at its website: www.alexisminerals.com.

About Garson Gold Corp.

Garson Gold holds a 100% interest in The New Britannia Gold Mine (NBM) Project in Snow Lake Manitoba and the Copper Prince and the McMillan Gold Mine properties located in Ontario. Garson's flagship project is the NBM, which covers approximately 4,840 hectares and hosts the historic New Britannia Gold Mine which operated from 1949 to 1958 and again from 1995 to 2005 and produced approximately 1.44 million ounces of gold. The resource estimate at the NBM property, audited by Micon International Ltd. in accordance with CIM classifications pursuant to National Instrument 43-101, is available for viewing on SEDAR (www.sedar.com) and www.garsongold.ca. Infrastructure at the New Britannia Gold Mine includes a fully-permitted 2,150 tonne per day modern mill and tailings facility, and associated plant, and equipment.

Forward-Looking Information

This document contains certain "forward-looking information" under applicable securities laws concerning the proposed transaction and the business, operations and financial performance and condition of the combined company, Alexis and Garson Gold. Forward-looking information includes, but is not limited to, statements with respect to estimated production and mine life of the various mineral projects of Alexis and Garson Gold; synergies and financial impact of completed or proposed acquisitions; the benefits of the acquisitions and the development potential of the properties of Alexis and Garson Gold; the future price of gold; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Forward-looking information may be 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 is based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Assumptions upon which such forward-looking information is based include Alexis' ability to successfully complete the Alexis offer for Garson Gold; the successful completion of new development projects, planned expansions or other projects within the timelines anticipated and at anticipated production levels; the accuracy of mineral reserve and resource estimates, grades, mine life and cash cost estimates; whether mineral resources can be developed; title to mineral properties; financing requirements; and general economic conditions. Many of these assumptions are based on factors and events that are not within the control of Alexis and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking information includes changes in market conditions, variations in ore grade or recovery rates, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, the business of the companies not being integrated successfully or such integration proving more difficult, time consuming or costly than expected as well as those risk factors discussed or referred to in the annual Management's Discussion and Analysis and Annual Information Form for each of Alexis and Garson Gold, as applicable, filed with the securities regulatory authorities in Canada and available at www.sedar.com. Although Alexis has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Alexis undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking information to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this document.

Important Notice

This document does not constitute an offer to buy or an invitation to sell, any of the securities of Alexis or Garson Gold. Such an offer may only be made pursuant to a registration statement and prospectus filed with the U.S. Securities and Exchange Commission and an offer to purchase and circular filed with Canadian securities regulatory authorities. Investors and security holders are urged to read the offer and take-over bid circular, if any, and any other relevant documents filed with the SEC and Canadian securities regulators, regarding the proposed business combination transaction because they contain important information. Investors may obtain a free copy of the offer and take-over bid circular and other documents filed by Alexis on SEDAR or on Alexis' website at www.alexisminerals.com or by directing a request to Alexis' investor relations department. The securities described in this press release 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 unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. This press release is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources

This presentation uses the terms "Measured, "Indicated" and "Inferred" Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

National Instrument 43-101

David Rigg, the President and CEO of Alexis and a Qualified Person under NI 43-101, has read and approved the scientific and technical information in this document. Jamie Lavigne, P. Geo., Vice President Exploration for Garson Gold Corp. and Qualified Person under NI 43-101 has read and approved the technical information in this document. This presentation contains information relating to a preliminary assessment that includes Inferred mineral resources which are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary assessment will be realized. See Garson Gold press release of April 28, 2009 for a description of the qualifications and assumptions relating to the preliminary assessment.

 

Reserves and Resources
 
Table of Proven and Probable Reserves:
    
Category / DepositTonnesGrade (g/t)Resource (oz Au)
    
Proven   
 Lac Herbin (1)97,9009.028,400
 Lac Pelletier (2)9,2588.02,381
Probable   
 Lac Herbin (1)519,5007.0117,600
 Lac Pelletier (2)474,1047.6115,747
    
Total Proven & Probable1,100,7627.5264,128
    
Table of Measured and Indicated Resources:
    
Category / DepositTonnesGrade (g/t)Resource (oz Au)
    
Measured   
 Lac Herbin (1)124,8009.237,100
 Lac Pelletier (2)61,0006.212,140
 NBM Main Mine (3)79,0004.812,000
Indicated   
 Lac Herbin (1)731,5007.2169,500
 Lac Pelletier (2)856,8837.2197,755
 NBM Main Mine (3)2,132,0005.1352,000
 No. 3 Zone Main (4)394,0006.785,000
    
Total Measured & Indicated4,379,1836.1865,495
    
Table of Inferred Resources:
    
Category / DepositTonnesGrade (g/t)Resource (oz Au)
    
Inferred   
Lac Herbin (1)420,5006.080,500
Lac Pelletier (2)391,7706.582,127
NBM Main Mine (3)305,0004.645,000
No. 3 Zone Main (4)261,0007.965,000
No. 3 Zone Footwall (4)314,0005.051,000
Birch Zone (3)569,0004.481,000
Squall Margaret Upper (5)100,0004.916,000
Squall Margaret Lower (5)337,0005.459,000
    
Total Inferred Resources2,698,2705.5479,627
    
 Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
    
1.NI 43-101 Technical Report Reserves Calculation on Lac Herbin Mine, Val d'Or, Quebec. Completed for Alexis Minerals Corporation by Francois Chabot, M.Sc., Golder Associates Ltd., September 2009.
2.NI 43-101 Technical Report Pre-Feasibility Study on Lac Pelletier Project, Rouyn-Noranda, Quebec. Completed for Alexis Minerals Corporation by Francois Chabot, M.Sc., Golder Associates Ltd., August 2009.
3.NI 43-101 Technical Report on the New Britannia Mine Property and Review of the Mineral Resource Estimate, Snow Lake, Manitoba. Completed for Garson Resources, Pegasus Mine Ltd., and Piper Capital Inc. by William J. Lewis, P. Geo and Richard Gowans, P. Eng., Micon International Ltd., October 2006.
4.NI 43-101 Technical Report Audit of the No. 3 Zone Mineral Resource Estimate on the New Britannia Mine Property, Snow Lake, Manitoba. Completed for Garson Gold Corp. by William J. Lewis, P. Geo and Charley Murahwi, M.Sc., Micon International Ltd., July 20, 2008.
5.NI 43-101 Technical Report on the Squall Lake Property, The Pas Mining Division Snow Lake Manitoba. Completed for Garson Resources Ltd. By D Beilhartz, P. Geo., April 2006.

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.

Contact Information

  • Alexis Minerals Corporation
    David Rigg
    President and CEO
    (416) 861-5889
    (416) 861-8165 (FAX)
    or
    Alexis Minerals Corporation:
    Bruce Barch
    VP Investor and Corporate Affairs
    (416) 861-5905
    (416) 861-8165 (FAX)
    bruce.barch@alexisminerals.ca
    or
    Alexis Minerals Corporation:
    Louis Baribeau
    Relationniste
    (514) 667-2304
    lb@decorporateconsultants.ca
    or
    Garson Gold Corp.
    David Tafel
    CEO and Director
    (604) 484-2161 x223
    (604) 683-8544 (FAX)
    or
    Garson Gold Corp.
    Julie Lassonde
    President
    (647) 302-7851
    or
    Garson Gold Corp.
    Michelle Hohn
    VP Corporate Communications
    (604) 484-2161 x226
    (604) 683-8544 (FAX)
    mhohn@garsongold.ca