Opta Minerals Inc.

Opta Minerals Inc.

July 13, 2012 13:35 ET

Opta Minerals Announces Agreement to Make C$0.60 Per Share Cash Offer for WGI Heavy Minerals

WATERDOWN, ONTARIO and COEUR D'ALENE, IDAHO--(Marketwire - July 13, 2012) - Opta Minerals Inc. ("Opta Minerals") (TSX:OPM) and WGI Heavy Minerals, Incorporated ("WGI") (TSX:WG) jointly announced today that the parties have entered into a support agreement (the "Support Agreement"), pursuant to which Opta Minerals has agreed, subject to the terms and conditions of the Support Agreement, to make an offer to acquire all of the outstanding common shares of WGI for C$0.60 in cash per share by way of a take-over bid (the "Offer").

The Offer price of C$0.60 per WGI common share represents a premium of 140% to the closing price of WGI common shares on the TSX on July 12, 2012 (the last trading day prior to the announcement of the Offer) and 114% to the volume weighted average price of WGI common shares on the TSX for the 20-day period ended July 12, 2012. The Offer values WGI at approximately C$15.45 million on a fully-diluted basis. The 52 week high for the WGI common shares on the TSX is C$0.51 (on July 15, 2011).

In connection with the execution of the Support Agreement, all of the directors and officers of WGI and certain of its significant shareholders, collectively holding approximately 61.3% of the outstanding WGI common shares on a fully-diluted basis, entered into lock-up agreements with Opta Minerals, pursuant to which they have agreed to tender to the Offer all of the WGI common shares held by them (including common shares issuable upon exercise of options).

The Board of Directors of WGI, upon the recommendation of its special committee after consultation with its advisors, has unanimously determined that the Offer is in the best interests of WGI and its shareholders and recommends that WGI shareholders tender their shares to the Offer. MPA Morrison Park Advisors Inc. has provided an opinion to the Board of Directors of WGI to the effect that the consideration to be received under the Offer is fair, from a financial point of view, to WGI's shareholders.

David Kruse, President and Chief Executive Officer, commented, "We are very pleased to propose this all cash Offer. WGI will be a strategic acquisition for our industrial minerals segment and will be integrated with our other businesses. WGI will further expand our geographic reach to better service current and potential customers throughout the Americas, Europe, Asia and the Middle East. The acquisition of WGI will also provide Opta Minerals the opportunity to further leverage our business in the industrial minerals, steel and magnesium segments."

Greg Emerson, President and Chief Executive Officer of WGI said, "The Offer reflects a significant premium to the recent trading price of WGI's shares. The Offer, WGI's alternative strategies and the current circumstances of the company have been reviewed carefully by a special committee of the Board of Directors. We believe the Offer provides fair value to our shareholders and a liquidity opportunity which has the unanimous support of our Board of Directors."

Pursuant to the Support Agreement, WGI has a 20 day "go shop" period during which WGI is permitted, subject to certain conditions, to solicit and engage in discussions and negotiations with respect to potential competing acquisition proposals that may lead to a superior proposal. The go-shop period ends on August 2, 2012. Following the expiry of the go shop period, WGI may not solicit other acquisition proposals, but it is entitled to consider unsolicited acquisition proposals made by third parties and accept superior proposals. Opta Minerals has the right following the expiry of the go-shop period to match any acquisition proposal received by WGI that constitutes a superior proposal. The Support Agreement provides for the payment by WGI to Opta Minerals of a termination fee of US$500,000 prior to the expiry of the go-shop period and US$800,000 thereafter in certain circumstances, including in the event that WGI gives notice to terminate the Support Agreement in order to enter into a superior proposal.

The Offer will be subject to certain customary conditions, including there being deposited under the Offer and not withdrawn at the expiry time of the Offer such number of WGI common shares that represents at least 66 2/3% of the outstanding WGI common shares calculated on a fully-diluted basis and there shall not have occurred any change, condition, event or development which has had, or which could reasonably be expected to have, a material adverse effect in respect of WGI. Opta Minerals may waive the conditions of the Offer in certain circumstances. The Offer is not subject to any financing condition.

Provided that the minimum tender condition is met and Opta Minerals takes up and pays for the WGI common shares tendered to the Offer, Opta Minerals has agreed to take steps available to it under relevant corporate and securities laws to acquire any WGI common shares that remain outstanding following the completion of the Offer.

Full details of the Offer will be included in Opta Minerals' take-over bid circular, which is expected to be mailed with related documents to WGI shareholders on or prior to July 24, 2012, together with a directors' circular which will set out the unanimous recommendation by the Board of Directors of WGI that WGI shareholders accept the Offer. The Offer will be open for acceptance for a minimum of 35 days following the date of mailing.

WGI has engaged McCarthy Tétrault LLP as its legal advisor in connection with the Offer. Opta Minerals has engaged Wildeboer Dellelce LLP as its legal advisor in connection with the Offer.

Copies of the Support Agreement, lock-up agreements, take-over bid circular, directors' circular and certain other related documents will be filed with securities regulators and will be available on SEDAR at www.sedar.com.

WGI also announced today the settlement of certain claims that were alleged against it by V.V. Mineral in connection with the sale of Transworld Garnet India (Pvt.) Ltd. ("TGI") to V.V. Mineral in August 2008. WGI currently has a marketing and sales agreement with V.V. Mineral and TGI with respect to the distribution of approximately 60,000 tonnes per year of garnet. In connection with this settlement, entered into concurrently with the Support Agreement, WGI will pay US$1.0 million into escrow immediately in exchange for a full and final release of such claims and related future claims with such amount being released from escrow to an affiliate of V.V. Mineral upon the earlier of: (a) the acquisition of 66 2/3% of WGI's outstanding common shares; and (b) 180 days from the effective date of the settlement (the "Outside Release Date"). If the escrowed amount is released on the Outside Release Date, WGI can make an election to keep US$500,000 of the escrow amount in consideration for the cancellation of the release of liability and only the remaining US$500,000 would be paid to an affiliate of V.V. Mineral.

About Opta Minerals

Opta Minerals is a vertically integrated provider of custom process optimization solutions and related materials for use primarily in the steel, foundry, loose abrasive cleaning and municipal water filtration industries. The company currently has production and distribution facilities in Ontario, Québec, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, Kosice, Slovakia, and Romans-sur-Isère, France and has one of the broadest product lines in the industry.

About WGI Heavy Minerals

The principal business of WGI is the processing and sale of industrial abrasive minerals and the sourcing, assembly and sale of ultra-high pressure waterjet cutting machine replacement parts and components. The company, through its subsidiaries, markets and sells abrasive products and services and waterjet replacement parts globally.

Forward Looking Information

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release include, without limitation, statements relating to: the making of the Offer; the consummation of the Offer, including any second step transaction necessary to acquire WGI shares not tendered to the Offer; the mailing of the take-over bid circular and directors' circular (and other related Offer documents) and anticipated timing thereof; the potential benefits to be derived by Opta Minerals from the acquisition of WGI, including expected efficiencies and synergies, expanded product offering and geographic reach and the opportunity to further leverage Opta Minerals' business in the industrial minerals, steel and magnesium segments. Words such as "may", "would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "potential" and similar expressions may be used to identify these forward-looking statements although not all forward-looking statements contain such words.

Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, risks associated with the Offer and acquisitions generally, such as: the failure to satisfy the conditions of the Offer (including the minimum tender condition); completion of the acquisition may be more costly than expected; the inability of Opta Minerals to successfully integrate the businesses of WGI; the inability of Opta Minerals to achieve the anticipated benefits from the acquisition or it may take longer than expected to achieve those benefits; and the risk of unexpected costs or liabilities relating to the acquisition. Other risks include: the impact of general economic conditions; industry conditions; currency fluctuations; risks associated with foreign operations; governmental and environmental regulation; competition from other industry participants; cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; mining risks; and the other risks identified in the "Risk Factors" section of Opta Minerals' Annual Information Form and its management's discussion and analysis for the three-month period ended March 31, 2012 and the "Risk Factors" section of WGI's Annual Information Form and its management's discussion and analysis for the three-month period ended March 31, 2012 (copies of which, in each case, may be obtained at www.sedar.com) should be considered. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and reader should not place undue reliance on the forward-looking statements. These forward-looking statements are made as of the date of this press release and, other than as required by law, neither Opta Minerals nor WGI intends to or assumes any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

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