TORONTO, Nov. 19, 2019 (GLOBE NEWSWIRE) -- Tintina Mines Limited (“Tintina” or the “Corporation”) (TSXV:TTS) wishes to provide supplemental disclosure to Tintina’s management information circular dated October 18, 2019 (the “Circular”) in respect of the Annual and Special Meeting of the Shareholders of the Corporation to be held at 10:00 AM (EST) on November 27, 2019. The supplemental disclosure will deal specifically with the proposed transaction (the “Transaction”) with NSR Resources Inc. (“NSR”), focusing on (i) the formation of the special committees for each of the entities involved in the Transaction, (ii) the calculation of the premium to the valuation of NSR, and (iii) the background to the Transaction. This news release should be read in conjunction with the Circular as a whole. Capitalized terms not otherwise defined herein have the meanings ascribed to such terms in the Circular.
Formation of the Special Committee
Given the potential conflict of interest arising from the fact that the directors and officers of each of Tintina and NSR Resources Inc. (“NSR”) are the same individuals, each of the entities attempted to adopt a process that addressed this concern to the extent possible. Each entity took the following steps to reduce the conflict of interest associated with the Transaction:
- On August 12, 2019, the boards of directors of each entity formed a special committee (each, a “Special Committee”) with the objective to have each Special Committee advise its respective entity on the Transaction and potential alternatives to the Transaction.
- The Special Committee of each entity was comprised on the same individuals, being Messrs. Carmelo Marrelli and Ricardo Landeta, because they were the only independent directors of each entity. In an effort to mitigate this conflict of interest, a determination was made that the Chairman of each Special Committee should be different. Thus, Mr. Carmelo Marrelli acted as the Chairman of the Special Committee of Tintina and Mr. Ricardo Landeta acted as the Chairman of the Special Committee of NSR.
- The Chairman of each committee was tasked with taking a lead role in the process for its respective entity in terms of dealing with external parties.
Calculation of the Premium to Valuation
Following receipt of the valuation report from Richter Advisory Group LLP, Tintina’s Special Committee reviewed and considered several options relating to the premium to be added to the value of NSR set out therein. In settling on a 30% premium to be added to that value, Tintina’s Special Committees considered the following factors:
- CMPG royalty agreement. NSR has an agreement with CMPG pursuant to which NSR has a 2% royalty over certain properties in Fourniere Township, Quebec (the “Royalty”). While the Royalty is not producing value at this time, there is no expiry/end date to the Royalty that would limit its potential return in the future. Tintina’s Special Committee thus concluded that while it is not possible at this time to determine when, and if, the Royalty would generate value, its value at the present time, is not nil. Accordingly, Tintina’s Special Committee took the view that NSR shareholders should receive some value for the Royalty in the consideration to be provided for their shares of NSR.
- Market practice. Tintina’s Special Committee reviewed the premiums added in similar other transactions and considered 30% to be within the range of market practice.
- Cost of raising capital in the market. Due to the difficulty in obtaining funding for junior mining issuers in recent years, it was determined that fees associated with raising the equivalent of the cash presently held in NSR through a brokered private placement (taking into account selling commissions, due diligence/marketing allowances, broker/wholesaler fees, organization + offering expenses, etc.) would result in Tintina spending a significant amount (in cash) of what the premium would amount to, making the Transaction that much more valuable in terms of additions to the book value of Tintina.
- Addition over book value. Tintina took the view that to incentivize the NSR shareholders to entertain the transaction, it had to offer them some amount above book value. If Tintina offered a small premium or none at all, NSR shareholders would likely not have thought the transaction to be worthwhile and the alternative was an orderly liquidation where the cash on hand would be distributed to the shareholders. Tintina’s Special Committees considered a range of values between 20% and 40% and based on the factors noted above, determined that 30% was an appropriate premium.
Background of the Transaction
Prior to initiating the process of the proposed transaction with NSR, Tintina’s board of directors and management discussed the Corporation’s current financial condition in that Tintina has a potentially viable mineral property but no funds to advance it and low prospects of funding becoming available in the near future. Maintaining the status quo means that Tintina would likely liquidate imminently, resulting in no additional shareholder value. Instead, it was determined that an assessment of strategic alternatives was necessary in order to continue the business and enhance value for its shareholders.
In analyzing its options, Tintina considered the potential of being acquired by another entity. However, based on past experience, this was determined not to be a viable option.
Tintina then considered the potential for acquiring a new target, of which NSR’s circumstances presented a practical opportunity for this. Tintina was aware of NSR’s cash position, that NSR recently sold its main mineral property and the fact that NSR found itself in a complementary position to Tintina (in possession of funding but with no viable properties to advance). Furthermore, just like Tintina, maintaining the status quo for NSR meant that it would likely liquidate imminently, resulting in no additional shareholder value.
Tintina considered the following potential benefits of the Transaction:
- The complementary positions of each of Tintina and NSR meant that Tintina could use NSR’s funds to continue the exploration and advancement of its existing properties, generating value to Tintina’s shareholders.
- The costs and fees associated with the maintenance of each entity, such as audits, insurance, executive/management/board costs, transfer agent services and legal services would be reduced as they would need to be conducted for one entity only. In that regard, an aggregate reduction in costs was estimated to be approximately $100,000.
- Tintina’s largest shareholder would be diluted, generating a larger public float that could have positive effects on the attractiveness and liquidity of Tintina’s shares.
- There was potential to generate additional value through the Royalty.
Based on this assessment, the Transaction was determined to be the best possible outcome for the shareholders of each of the entities involved.
About Tintina
Tintina is a Canadian-based company with over twenty years of experience in the junior mining industry. Tintina currently owns two main properties, both of which are located in Yukon. The common shares of Tintina are listed for trading on the TSXV under the symbol “TTS”.
For further information, please contact:
Tintina Mines Limited
Mr. Jing Peng
82 Richmond Street East
Toronto, Ontario
M5C 1P1
Phone: (416) 848-9888
Email: jpeng@marrellisupport.ca
Forward-looking Statements
This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and assumptions and accordingly, actual results and future events could differ materially from those expressed or implied in such statements. You are hence cautioned not to place undue reliance on forward-looking statements. All statements other than statements of present or historical fact are forward-looking statements, including statements with respect to the LOI and the likelihood that the definitive agreement(s) will be entered into and that the Transaction will be consummated on the terms and timeline provided herein or at all, the benefits of the Transaction to Tintina and NSR and the receipt of all required approvals including without limitation the shareholders of NSR and applicable stock exchanges. Forward-looking statements include words or expressions such as “proposed”, “will”, “subject to”, “near future”, “in the event”, “would”, “expect”, “prepared to” and other similar words or expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include general business, economic, competitive, political and social uncertainties; the state of capital markets; risks relating to (i) the ability of the Tintina and NSR to fulfill the terms of the Combination Agreement and complete the Transaction (ii) the impact on the respective businesses, operations and financial condition of Tintina and NSR resulting from the announcement of the Transaction and/or the failure to complete the Transaction on terms described or at all, (iii) a third party competing bid materializing prior to the completion of the Transaction, (iv) delay or failure to receive board, shareholder regulatory or court approvals, where applicable, or any other conditions precedent to the completion of the Transaction, (v) unforeseen challenges in integrating the businesses of Tintina and NSR, (vi) failure to realize the anticipated benefits of the Transaction, (vii) other unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant; and other risks described in Tintina’s and NSR’s documents filed with Canadian securities regulatory authorities. You can find further information with respect to these and other risks in filings made with the Canadian securities regulatory authorities and available at www.sedar.com. We disclaim any obligation to update or revise these forward-looking statements, except as required by applicable law.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.