Crescent Gold Limited
TSX : CRA
ASX : CRE
FRANKFURT : CRE5

Crescent Gold Limited
Focus Minerals Ltd.
ASX : FML

Focus Minerals Ltd.

June 19, 2011 21:33 ET

Recommended Takeover of Crescent Gold by Focus Minerals

PERTH, WESTERN AUSTRALIA--(Marketwire - June 19, 2011) -

  • Transaction to make Focus one of Australia's Top 5(1) Gold Producers with a 230,000oz production target in 2012 from multiple open pit and underground operations
  • Focus offering oneshare for every 1.18 Crescent shares in an off-market bid
  • Offer represents 30.5% premium to Crescent's last close price of $0.05 per share(2)
  • Crescent Directors unanimously recommend shareholders accept the offer, in the absence of a Superior Proposal
  • Pre Bid Agreement in favour of Focus for 19.9% of Crescent from Deutsche Bank group
  • Increased management depth and operational experience to maximise the value of Crescent's assets
  • Combined group will have a JORC Resource inventory of 4.3Moz of gold(3)
  • Strong rerating potential with the merged proforma EV/Resource multiple at a 39% discount to the current peer average of A$107/oz
  • Significant synergies in combining two major West Australian mining regions: Focus' established Coolgardie operations with Crescent's significant open pit operations at the Laverton Gold Project
  • Combined group will have the financial strength to unlock Crescent's extensive exploration upside across 1,400km2of tenements

Focus Minerals Limited ("Focus") (ASX:FML) and Crescent Gold Limited ("Crescent") (TSX:CRA)(ASX:CRE)(FRANKFURT:CRE5) are pleased to jointly announce that they have agreed to merge the companies by way of a conditional off-market takeover bid by Focus for all of the issued shares in Crescent ("Offer").

The Crescent Board unanimously recommend the Offer, and intend to accept the Offer in respect of their Crescent holdings, in the absence of a Superior Proposal.

The transaction will make Focus one ofAustralia's Top 51 gold producers with targeted annual production of 230,000oz, a combined JORC resource base of 4.3Moz of gold3, and outstanding growth potential across two major Western Australian mining regions.

OFFER DETAILS

Focus and Crescent have executed a Bid Implementation Agreement ("BIA"), under which Focus agreed to make the Offer. The consideration being offered to Crescent Shareholders is one Focus share for every 1.18 Crescent shares, which represents a premium of 30.5% to Crescent's closing price on 17 June 2011(4).

The Offer is subject to customary conditions, including the following:

  • Minimum acceptance of 90%;
  • No Material Adverse Change; and
  • No prescribed occurrences.

The Offer conditions are set out in Schedule 2 of the BIA in Annexure C. Full particulars of the Offer will be provided in the Bidder's Statement.

The transaction has the support of Crescent's major shareholder, Deutsche Bank AG who has agreed to accept the Offer in respect of a 19.9% stake in Crescent pursuant to a Pre-Bid Agreement with Focus.

At the closing price of Focus shares on 17 June 2011 of 7.7 cents per share, the Offer represents an offer price of 6.5 cents per Crescent share, representing a premium of 30.5% on the closing price of Crescent shares on 17 June 2011 of 5 centsper share, a 29.10% premium to the 5day volume weighted average price ("VWAP") of Crescent shares of 5.1 cents per share and a 20.75% premium to the 30day VWAP of Crescent shares of 5.4 cents per share.

The Offer will be extended to any Crescent shares that are issued during the Offer period as a result of the exercise of Crescent options or conversion of convertible notes on issue before the Offer opens. However, Focus also intends to enter into private treaty arrangements with Crescent option holders to acquire their options in exchange for Focus shares on a ratio determined by reference to the respective exercise price and expiry date of their options.

TRANSACTION HIGHLIGHTS

The Boards of Focus Minerals and Crescent Gold consider that the combination of the two companies will provide significant strategic and financial benefits to both sets of shareholders:

Mr Campbell Baird, Chief Executive Officer of Focus Minerals said: "The merger of Crescent Gold and Focus Minerals provides a unique opportunity for both businesses to fast track their growth aspirations making Focus one of Australia's Top 5 gold producers.

"Once this transaction is complete this creates a strong platform for both companies' shareholders to benefit from a substantial value uplift from a significant increase in combined production, a doubling of gold resources, and the ability to step up exploration within Crescent's extensive landholding," Mr Baird said.

Mr Mark Tory, Managing Director of Crescent Gold said: "The Board of Crescent Gold considers the transaction to be a compelling opportunity for Crescent Shareholders to capture a premium for their shareholding and become part of a major new Australian gold producer. Post-acquisition, Crescent shareholders will be part of an entity with an exciting production and exploration growth profile, strong balance sheet, diversified asset portfolio, and a strong track record in mine operations."

Key compelling benefits for both Focus Minerals and Crescent Gold shareholders include:

  • Creates a Top 5 Australian Gold Producer – With a targeted annual production of 230,000oz in 2012 and outstanding growth potential across two major Western Australian mining regions, the combined company will become a top 51Australian gold producer.
  • Proven Track Record of Mine Operation – Focus has a deep management team with proven development and mine operation capabilities, having recommissioned the Three Mile Hill processing plant 18 months ago and opened two new mining operations in the last three months. Focus will use this operational expertise to maximise the value of Crescent's assets.
  • Significant Resource Growth Potential – The combined group will have a very significant JORC Resource inventory of 4.3Moz3. Both the Laverton and Coolgardie regions have demonstrated the opportunity for significant resource growth on targeted exploration programmes. Focus brings the immediate funds to accelerate exploration at Laverton, with strong group revenues providing a basis to fund further exploration to expand group resources.
  • Strong Operating Cash Flows – The transaction will create a combined group with very strong anticipated operating cash flow.
  • Valuation Uplift – The implied EV/Resource ratio of the combined entity is A$66/oz which is a 39% discount to the ASX listed gold producers average of A$107/oz, implying a significant opportunity for a revaluation of the combined group.

EXCLUSIVITY ARRANGEMENTS AND PRE-BID WITH CRESCENT SHAREHOLDER

The Board of Directors of Crescent has unanimously recommended that, in the absence of a Superior Proposal all Crescent shareholders accept the Offer, and all directors intend to accept the offer.

Pursuant to the BIA, Focus and Crescent have agreed customary exclusivity arrangements, including "no shop" and "no talk" provisions. The BIA also confers a matching right on Focus. See Annexure C for a copy of the BIA.

Focus has entered into a pre-bid acceptance agreement with Crescent's major shareholder, Deutsche Bank group, which through its wholly owned subsidiary Gulara Pty Ltd owns 29.23% of Crescent. The pre-bid agreement is in respect of 19.9% of Crescent. Separately, Focus has also been informed by Deutsche that its present intention is to accept the Offer in respect of the remaining 9.33%of Crescent shares it holds, no later than five days prior to the end of the Offer period, subject to there being no Superior Proposal. Deutsche Bank has no obligation to accept the Offer in respect of the remaining 9.33% stake and may dispose of these shares to a third party at any time.

LOAN & WORKING CAPITAL FACILITY ARRANGEMENTS

In May 2011 Focus provided a $3 million secured loan to Crescent which upon shareholder approval will turn into a convertible note. Once approved, that convertible note will be convertible into Crescent shares at the conversion price of the lower of $0.05 and 85% of 5 day VWAP of Crescent shares, with 1 free attaching option for each two shares provided.

In addition, on 17 June 2011, Focus provided a $10 million working capital facility to Crescent, which subject to shareholder approval, may be converted into convertible notes. These convertible notes will be convertible to Crescent shares on substantially the same terms as the May 2011 convertible note.

INDICATIVE TIMETABLE

The indicative timetable in relation to the Offer is set out below.

Monday, 20 June 2011Announcement of Transaction
Monday, 4 July 2011Focus lodges its Bidder's Statement with ASIC and ASX and serves it on Crescent
Monday, 4 July 2011Crescent lodges its Target's Statement with ASIC and ASX and serves it on Focus
Thursday, 7 July 2011Joint despatch of Bidder's Statement and Target's Statement
Thursday, 7 July 2011Offer Opens
Monday, 8 August 2011Close of Offer (unless extended)

OTHER MATTERS

Focus' corporate adviser is Hartleys Limited and its legal advisor is Mallesons Stephen Jaques. Crescent's corporate adviser is Gryphon Partners and its legal advisor is Blakiston & Crabb.

The Bid Implementation Agreement between Crescent Gold Limited and Focus Minerals Ltd. can be found at www.crescentgold.com or www.SEDAR.com.

Background of Crescent

Crescent Gold Limited (ASX:CRE) is an Australian gold producer and explorer based in Perth, Western Australia. With a primary focus on gold mining and exploration, the Company is actively advancing its flagship asset, the Laverton Gold Project, located 250km northeast of Kalgoorlie in Western Australia. Crescent maintains a dominant land position of more than 1,400km2 of highly prospective tenements in a world recognised and well-endowed mineralised geological domain. Crescent has 30Mt of Measured, Indicated and Inferred Mineral Resources that contain more than 2.1Moz of gold, and a Probable Ore Reserve position of 445,000 ounces (both as at 30 June 2010). A statement of ore reserves and mineral resources of Crescent at Laverton are set out in Annexure B.

Background of Focus

Focus Minerals Ltd (ASX:FML) is a gold producer based in Western Australia's Eastern Goldfields. The company holds the mineral rights to more than 420km2 of tenements and is the largest landholder in the Coolgardie Gold Belt located 560km east of Perth and 35km west of the 'Super Pit' in Kalgoorlie-Boulder. Focus is currently in production from underground and open pit mining at its flagship Tindals Mining Centre operation in Coolgardie, adjacent to its 1.3Mtpa Three Mile Hill processing plant, and from The Mount, a new high-grade underground mine, located 85km to the south of the processing plant. In addition Focus recently acquired 100% ownership in the highly prospective Treasure Island Gold Project, situated at Lake Cowan at the southern end of the Boulder-Lefroy fault. A statement of Focus Minerals resources, and reserves and stocks as at 31 March 2011 is set out in Annexure A.

To view Annexure A, please visit the following link: http://media3.marketwire.com/docs/cra619a.pdf.

Competent Person's Statement

The information in this report that relates to Exploration Results and Minerals Resources is based on information compiled by Dr Garry Adams who is a member of the Australasian Institute of Mining and Metallurgy. Dr Adams is a full time employee of Focus Minerals and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Dr Adams consents to the inclusion in the report of the matters based on the information in the form and content in which it appears.

The information in this report that relates to Ore Reserves is based on information compiled by Mr Brad Valiukas who is a Member of the Australian Institute of Mining and Metallurgy. Mr Valiukas is a full time employee of Focus Minerals and has sufficient exploration experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Valiukas consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

ANNEXURE B

Crescent Ore Reserves and Mineral Resources

Laverton Ore Reserves as at 30 June 2010*
CategoryTonnes ('000)Grade (g/t)Contained Gold ('000)
Proved---
Probable6,5002.1445
Total6,5002.1445
Laverton Mineral Resources as at 30 June 2010*
CategoryTonnes ('000)Grade (g/t)Contained Gold ('000)
Measured4311.723
Indicated19,2002.21,357
Inferred11,0002.0695
Total30,6312.12,075
* Does not include maiden JORC Reserve of 54,000 oz and Resource upgrade to 179,000 oz on the Apollo deposit, announced to ASX on 7 June 2011

Competent Person's Statement

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves of the Laverton Gold Project is based on information compiled by Jeff Ion, who is a Member of the Australian Institute of Geoscientists. Jeff Ion has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and a Qualified Person under "Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects". Jeff Ion consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Jeff Ion is employed by Crescent Gold Limited.

  1. Top 5 based on forecast production volume comparing annual production targets in CY12 of 100,000oz for Crescent and 130,000oz for Focus, as compared to CY11 production targets of other ASX primary listed gold producers.
  2. Based on Focus' last close price of 7.7 cents per share on 17 June 2011.
  3. Combined JORC Resource of 4.3Moz, based on latest Resource statements from both Companies. As at 31 March 2011, Focus had a reported JORC Resource of 26.5Mt @ 2.6g/t for 2.25Moz. As at 30 June 2010, Crescent had a reported JORC Resource of 30.5Mt @ 2.08g/t for 2.08Moz
  4. Based on Focus' last close price of 7.7 cents per share on 17 June 2011.

Contact Information

  • Focus Minerals Ltd.
    Campbell Baird
    Chief Executive Officer
    +61 (0)8 9215 7888

    Focus Minerals Ltd.
    Neil Le Febvre
    Investor Relations Manager
    +61 (0)8 9215 7888

    Crescent Gold Limited
    Mark Tory
    Managing Director
    + 61(0)8 6380 7100
    www.crescentgold.com

    Read Corporate
    Paul Armstrong / Nicholas Read
    Media Relations
    +61 (0)8 9388 1474

    Hartleys Limited
    Grey Egerton-Warburton
    Head of Corporate Finance
    +61 (0)8 9268 2888

    Gryphon Partners
    Greg Martyr
    Executive Director
    +61(0)2 9252 3242