Explorator Resources Inc.
TSX VENTURE : EXO

Explorator Resources Inc.

March 25, 2011 20:47 ET

Sociedad Punta del Cobre to Acquire Explorator Resources

TORONTO, ONTARIO and SANTIAGO, CHILE--(Marketwire - March 25, 2011) - Explorator Resources Inc. (TSX VENTURE:EXO) ("Explorator" or the "Company") and Sociedad Punta del Cobre S.A. ("Pucobre") are pleased to announce that they have entered into an acquisition agreement whereby a wholly-owned subsidiary of Pucobre will offer to acquire all of the issued and outstanding common shares of Explorator that Pucobre does not already own for $0.685 in cash per share. The acquisition cost to Pucobre will be approximately $55 million for approximately 83% of the Company, on a fully-diluted basis (and assuming the cashless exercise or acquisition of all options and warrants that are in the money). All amounts are in Canadian dollars, unless otherwise noted.

The $0.685 per share cash consideration represents a 37% premium over the closing price of Explorator's common shares on the TSX Venture Exchange on March 25, 2011 and a 36% premium based on the 20-day volume weighted average price of the common shares over the period ended March 25, 2011.

Explorator's Board of Directors has unanimously approved the acquisition and recommends that its shareholders vote their shares in favour of the acquisition, following receipt of a fairness opinion from its financial advisor.

The acquisition is to be completed by way of a statutory plan of arrangement and is subject to customary closing conditions, including the approval of 66â…”% of the votes cast by Explorator shareholders and a simple majority of the votes cast by Explorator shareholders (other than Pucobre) at a special meeting, which is currently anticipated to take place in May 2011. The acquisition will also require court approval. Closing will take place soon after Explorator shareholders approve the acquisition and on obtaining the requisite court approval. The information circular for the acquisition is expected to be mailed to Explorator securityholders in April 2011.

Each of Explorator's directors and officers, as well as certain other arm's length shareholders of Explorator, have entered into a lock-up agreement with Pucobre under which they will vote approximately 28.60% of Explorator's outstanding common shares in favour of the transaction.

Explorator has agreed not to solicit or initiate any discussion regarding any other business combination or sale of material assets. Explorator has also granted Pucobre a right to match any superior proposal and a termination fee payable to Pucobre by Explorator if the acquisition agreement is terminated as a result of Explorator recommending or approving an acquisition proposal or entering into an agreement with respect to a superior proposal or similar circumstances. Explorator has waived the application of its shareholder rights plan to the acquisition.

"We are pleased to take this step with Pucobre and believe the acquisition will benefit Explorator's shareholders," said David Prins, the President and CEO of Explorator.

Explorator's financial advisor is Raymond James Ltd. and its legal counsel is Fraser Milner Casgrain LLP. Raymond James has also provided an opinion to the Board of Directors of Explorator that, as of the date of the signing of the acquisition agreement, and subject to the assumptions and limitations on which the opinions are based, the consideration to be received under the offer is fair, from a financial point of view, to Explorator's shareholders, other than Pucobre. Pucobre's financial advisor is TD Securities Inc. and its legal counsel is Bennett Jones LLP.

Pucobre currently owns 15,317,796 shares and 2,937,500 share purchase warrants, representing approximately 17% of the issued and outstanding Explorator shares. Assuming the exercise of the 2,937,500 warrants, Pucobre would own 18,255,296 shares or approximately 19.6% of the issued and outstanding shares on a partially diluted basis. Pucobre has entered into the acquisition agreement in order for its wholly-owned subsidiary to acquire all of the outstanding shares of Explorator (including shares issuable on the exercise of convertible securities of Explorator) that Pucobre does not already own for $0.685 cash per share.

OTHER INFORMATION:

A copy of the release, as well as other information related to the Company, is available on the Company's web site at www.explorator.ca and on SEDAR at www.sedar.com.

EXPLORATOR RESOURCES INC.

David Prins, President & CEO, Explorator Resources Inc.

ABOUT EXPLORATOR RESOURCES:

Explorator Resources is a Canadian-based mining exploration company with a 49% interest in the El Espino Copper-Gold Project in Chile (the "Project"). Pucobre acquired the remaining 51% of the Project in March 2009 in return for an investment of up to US$18.5 million, with US$7.0 million used to exercise the option to purchase agreement on the Project and the remaining funds directed at the continued exploration and evaluation activities.

The Project lies within the prolific copper-gold mineral area of the Cordillera de la Costa, 240 km north of Santiago. An Updated Preliminary Economic Assessment (see press release dated Jan 24, 2011) defined the potential for an average annual payable production of 120 million pounds of copper and 61,000 ounces of gold over a 13.5 year mine life (life-of-mine payable production of 1.621 billion lbs copper and 828,000 oz. gold) at an average cash cost for the base case of US$1.02/lb, net of gold credits (based on a gold price of US$1,059/oz.)

ABOUT PUCOBRE

Pucobre is a publicly traded Chilean based mining company, listed on the Santiago Stock Exchange, with existing operations in the Atacama region of Northern Chile. During the fiscal year ended December 31, 2010, Pucobre had revenues of US$263 million and a net income of US$90 million. Pucobre operates two underground mines and one open pit mine, processing the ore in its own facilities.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release may contain forward-looking information within the meaning of Canadian securities laws. Such forward-looking information are identified by words such as "estimates", "intends", "expects", "believes", "may", "will" and included, without limitation, statements regarding the company's plan of business operations, production levels and costs, potential contractual arrangements and the delivery of equipment, receipt of working capital, anticipated revenues, mineral reserve and mineral resource estimates, and projected expenditures. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, metal prices, risks inherent in the mining industry, financing risks, labour risks, uncertainty of mineral reserve and resource estimates, equipment and supply risks, regulatory risks and environmental concerns. Most of these factors are outside the control of the company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.

Neither the 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

  • Explorator Resources Inc.
    David Prins
    President & CEO
    +56 2 793-4925
    www.explorator.ca