Touchstone Gold Limited
AIM : TGL

Touchstone Gold Limited
Atlantis Gold Mines Corp.

Atlantis Gold Mines Corp.

August 07, 2012 09:00 ET

Touchstone Gold Limited and Atlantis Gold Mines Corp. Announce Merger Agreement to Create Leading Colombian Gold Exploration and Development Company

LONDON, UNITED KINGDOM--(Marketwire - Aug. 7, 2012) - Touchstone Gold Limited (AIM:TGL) ("Touchstone") and Atlantis Gold Mines Corp. ("Atlantis") are extremely pleased to announce the signing of a business combination agreement (the "Agreement") to merge the two companies ("the Merger") in a strategic transaction that creates a leading Colombia focused gold exploration and development company (the "Combined Company"). It is anticipated that the combination will represent a significant expansion of highly prospective land packages in an area bordering existing activities and will consolidate operations in a region with a history of high-grade gold discoveries and production.

Highlights:

  • Atlantis shareholders will benefit from Touchstone's 15,000 metres of drill results at Rio Pescado, which include 8.75 grams per tonne ("g/t") gold over 28.25 metres from hole LPD-1279 and 8.70 g/t gold over 16.80 metres from hole LPD-1286.
  • Touchstone shareholders will benefit by having a larger land package along the Segovia-Remedios Gold Belt, covering 309 sq km, which will include over 12km of prospective strike length where Touchstone has already reported highly encouraging drilling results.
  • The Atlantis portfolio encompasses a similar geological setting to Touchstone's Rio Pescado project and has shown numerous large gold anomalies with promising initial results. Previous exploration has identified several prospective targets for gold mineralization, an important addition to the existing exploration programme and upside potential, which Touchstone intends to explore further in the months ahead.
  • The Combined Company is expected to benefit from a strong Colombia based exploration team, with additional technological and geological expertise, as well as extensive experience in the region.
  • The Merger will provide operational synergies and significant exploration and administrative cost savings.
  • The Combined Company will be better positioned to develop the assets through the next phase of exploration.
  • On completion of the Merger, Touchstone and Atlantis shareholders will respectively hold approximately 64% and 36% of the Combined Company on an undiluted basis.
  • Paul Cowley, P.Geo., the Chief Geologist and a director, of Atlantis will join the Touchstone Board of Directors.

David Wiley, the Chief Executive Officer of Touchstone, commented, "We believe this Merger provides an excellent opportunity for the shareholders of both Touchstone and Atlantis to benefit from the consolidation of quality neighbouring assets and to create critical mass in a prolific gold district. The Combined Company's significant portfolio will include over 12km in strike length with a focus on high-grade gold projects in the high potential Frontino/Segovia Gold Belt and South Bolivar regions. The Combined Company will also be able to capitalise on real synergies and extensive geological expertise from our highly experienced personnel. This is a great step forward in our strategy to create a significant exploration and production group focused on Colombia. Post closing, Touchstone will have greater scale, quality and higher grades, all of which should contribute to an enhanced value proposition as the markets recover. We are very excited about this transaction and the future for Touchstone."

Kay Jessel, the President and Chief Executive Officer of Atlantis, stated, "We believe the Combined Company will be well positioned to maximise shareholder value through an enhanced land position in a highly attractive district and a combined team with significant experience in developing assets."

To view "Figure 1. Touchstone and Atlantis Combined Property Location", please click on the following link: http://media3.marketwire.com/docs/810406.pdf

About Touchstone

Touchstone is a gold exploration company and its flagship asset is the Rio Pescado Project in Colombia, comprising four mining concessions over a total area of 39 square kilometres in the highly prospective Segovia Gold Belt. Touchstone owns further options on the Santa Rosa Project, in the South Bolivar area of Colombia, comprising four proposed mining concessions and one mining concession over a total area of 68 square kilometres. With a philosophy of creating value by the systematic exploration and development of Touchstone's existing assets as well as the acquisition of suitable exploration and development mineral projects, Touchstone's long-term intention is to build a significant gold exploration and production company.

About Atlantis

Atlantis is a Colombian gold exploration company whose principal asset is the Segovia Project located along the Segovia Gold Belt. The Segovia Project consists of the San Miguel property, which consists of one concession and one proposed mining concession, and the Frontino Norte property, which consists of four concession contracts and one proposed mining concession. Atlantis owns an 80% interest in the San Miguel property and a 90% interest in the Frontino Norte property.

Agreement

The Agreement will be carried out through a three-cornered merger, where a wholly-owned subsidiary of Touchstone will amalgamate with Atlantis (the "Amalgamation") to form a new amalgamated company ("Amalco"). All of the holders of common shares of Atlantis ("Atlantis Shares") will receive one common share of Touchstone (a "Touchstone Share") for each Atlantis Share held (the "Exchange Ratio"). Following completion of the Agreement, Amalco will indirectly hold all of Atlantis' assets and will be a wholly-owned subsidiary of Touchstone.

As at 2 August, 2012, there were 103,703,705 ordinary shares of Touchstone, 12,784,045 Touchstone stock options, and 586,106 warrants ("Touchstone Warrants") to purchase 586,106 ordinary shares of Touchstone issued and outstanding, and 59,108,300 Atlantis Shares, 325,000 Atlantis stock options, and 6,975,000 warrants ("Atlantis Warrants") to purchase 6,975,000 Atlantis Shares issued and outstanding. Each Atlantis Warrant outstanding immediately prior to the effective date of the Amalgamation will entitle the holder to receive one Touchstone Share, subject to adjustment in certain events, in accordance with the terms of the Merger.

On completion of the Merger, Touchstone and Atlantis shareholders will hold approximately 64% and 36% respectively of the Combined Company on an undiluted basis and 61% and 39%, respectively, on a fully diluted basis assuming the exercise of all outstanding warrants of Touchstone and Atlantis.

The Agreement is subject to various conditions, including Touchstone completing a continuance from the British Virgin Islands to the province of Ontario under the Business Corporations Act (Ontario) (the "Continuance") and adopting a new general by-law (the "New By-law") prior to the effective date of the merger.

Both Boards of Directors have concluded that the Agreement is in the best interests of their respective companies and have unanimously approved the terms of the Agreement. The Atlantis Board of Directors will recommend that Atlantis Shareholders vote in favour of the merger and any related matters. In addition, pursuant to the Agreement, Atlantis directors and officers and certain shareholders representing approximately 18.5% of the issued and outstanding Atlantis Shares have agreed to support the Agreement and each have entered into voting agreements to vote their shares in favour of the Amalgamation and any applicable related resolutions at the Atlantis Meeting.

The Agreement includes Atlantis' director, Paul Cowley, being appointed to the Touchstone Board of Directors following the completion of the Merger. The Touchstone Board of Directors following completion of the Merger will be comprised of David Wiley, Robert Buchan, Fraser Buchan, Paul Cowley, Ilyas Khan and the Earl of Clanwilliam Patrick James Gillford. David Wiley and Brian Morales will continue as Touchstone's Chief Executive Officer and Chief Financial Officer, respectively.

The Transaction includes standard exclusivity and non-solicitation provisions. Each company has agreed to pay a break fee to the other company of C$300,000 upon the occurrence of certain events. In addition, Atlantis has granted Touchstone a right to match any competing non-solicited offer.

Atlantis will convene and hold a special meeting of its shareholders (the "Atlantis Meeting") for the purpose of approving the Amalgamation. The Amalgamation must be approved by at least two-thirds of the votes cast by shareholders of Atlantis at the Atlantis Meeting or by proxy and by at least a simple majority of the votes cast by the minority shareholders of Atlantis at the Atlantis Meeting or by proxy. Touchstone will convene and hold an extraordinary meeting of its shareholders (the "Touchstone Meeting") prior to the Atlantis Meeting for the purposes of approving the Continuance and the New By-law. The Continuance and New By-Law must be approved by 75% of the votes cast by shareholders of Touchstone at the Touchstone Meeting or by proxy. Additionally, as the Continuance is treated for the purposes of the AIM Rules as a cancellation and re-admission to trading on AIM, Touchstone shareholders will also be asked to approve the cancellation of the Touchstone Shares on AIM. Touchstone will apply for the re-admission of its shares to trading on AIM, to take effect immediately following the cancellation, so that trading in Touchstone Shares will not be affected. Touchstone will publish an announcement in accordance with the AIM Rules in connection with such application. The Touchstone Meeting will be announced in due course and the transaction is expected to close September 2012.

Touchstone's financial advisor is GMP Securities L.P. and is being advised on legal matters by Cassels Brock & Blackwell LLP. GMP Securities L.P. is being advised on legal matters by Wildeboer Dellelce LLP. Atlantis is being advised on legal matters by DuMoulin Black LLP.

Full details of the Merger are included in the Agreement which will be filed on SEDAR under Atlantis' profile at www.sedar.com.

This news release has been prepared under the supervision of, and approved by, John Nicholson, P.Geo., B.Sc., who is a "qualified person" as defined under National Instrument 43-101. Mr. Nicholson serves as the Chief Geologist of Touchstone.

Cautionary Note Regarding Forward-Looking Information

Certain information set forth in this press release contains "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking information which include the completion of the Merger and management's assessment of Touchstone's and Atlantis' future plans and operations and are based on Touchstone's and Atlantis' current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking information may be identified by words such as "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking information necessarily involve known and unknown risks and uncertainties, which may cause Touchstone's and Atlantis' actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Touchstone's and Atlantis' inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of resources and reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt exploration and development, including labour stoppages and severe weather conditions; and management's ability to anticipate and manage the foregoing factors and risks. 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. Touchstone and Atlantis 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.

Contact Information

  • Touchstone Gold Limited
    David Wiley
    Chief Executive Officer
    +1 647 260 1247

    Canaccord Genuity Limited
    (Nominated Advisor and Joint Corporate Broker)
    John Prior
    +44 20 7523 8350

    Canaccord Genuity Limited
    (Nominated Advisor and Joint Corporate Broker)
    Adam Miller
    +44 20 7523 8350

    Northland Capital Partners Limited
    (Joint Corporate Broker)
    Gavin Burnell
    +44 20 7796 8800

    Northland Capital Partners Limited
    (Joint Corporate Broker)
    Edward Hutton
    +44 20 7796 8800

    Northland Capital Partners Limited
    (Joint Corporate Broker)
    John-Henry Wicks
    +44 20 7796 8800

    Merlin
    Ian Middleton
    +44 20 7726 8400

    Merlin
    Anca Spiridon
    +44 20 7726 8400

    Atlantis Gold Mines Corp.
    Kay Jessel
    Executive Chairman
    +1 (604) 681-9475