Newcastle Gold Ltd.

Newcastle Gold to merge with Catalyst Copper

2016-03-22 12:27 ET - News Release

Also News Release (C-CCY) Catalyst Copper Corp (3)

Mr. Marty Tunney of Newcastle reports

NEWCASTLE GOLD AND CATALYST COPPER ANNOUNCE MERGER TO STRENGTHEN BOARD AND PROVIDE FINANCIAL FLEXIBILITY

Newcastle Gold Ltd. and Catalyst Copper Corp. have entered into an agreement to combine their respective businesses to create a new company, anchored by the substantially permitted Castle Mountain gold project located in California, with the goal of creating a new mid-tier gold company.

The combined company will provide shareholders with exposure to a significant, substantially permitted gold resource at Newcastle's Castle Mountain gold project, including 480,000 measured ounces of gold at 0.86 gram per tonne, 3.7 million indicated ounces at 0.57 g/t and 760,000 inferred ounces at 0.58 g/t(1), as well as a strengthened management team led by Richard Warke, as executive chairman, and including high-profile and experienced board members Jim Gowans and Frank Giustra. The combined company will continue to be named Newcastle Gold.

Highlights of the strengthened Newcastle:

• Highly experienced board and management team with a proven record of success to drive value on the Castle Mountain gold project;
• Operational strength and access to extensive project and technical skills to supplement and strengthen existing management team;
• Addition of significant expertise in respect of United States permitting matters;
• Addition of extensive capital markets experience;
• $3.75-million of capital to provide Newcastle with financial flexibility, with the objective of fully financing Newcastle to maximize the potential of the Castle Mountain gold project.

Mr. Warke

Mr. Warke was responsible for the founding and success of several resource companies, including Arizona Mining Inc., where he is currently the executive chairman, Augusta Resource Corp., which was sold in 2014 for $666-million, and the former Ventana Gold Corp., which was sold in 2011 for $1,533-million. Mr. Warke has more than 25 years of experience in corporate finance and marketing in the global resource industry, and has been involved in raising over $1-billion in equity for various resource companies.

Mr. Gowans

Mr. Gowans was formerly co-president of Barrick Gold Corp. from July, 2014, to August, 2015, and executive vice-president and chief operating officer from January to July, 2014. Prior to that, Mr. Gowans has held the most senior executive roles with mining companies, including Debswana Diamond Company (Pt.y) Ltd., De Beers Canada Inc., International Nickel Indonesia tbk PT and Placer Dome Inc. Mr. Gowans has more than 30 years of experience in exploration, development, construction and operations in the mining industry. Currently president and chief executive officer of Arizona Mining, chairman of Dominion Diamond Corp., and a director of Cameco Corp. and Gedex Inc. Mr. Gowans previously served as the president of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).

Mr. Giustra

Mr. Giustra has an established record of building natural resource companies, including Wheaton River, Silver Wheaton and Endeavour Mining. In 1997, Mr. Giustra established The Radcliffe Foundation, which supports a wide variety of international and local charities. Mr. Giustra is a board member of Lions Gate Entertainment, Endeavour Mining, Petromanas Energy and Thunderbird Films. In addition, Mr. Giustra sits on boards of the Clinton Giustra Enterprise Partnership, The Bill, Hillary and Chelsea Foundation, International Crisis Group, and Streethome Foundation.

Transaction summary

The agreement provides that the parties will complete a business combination, pursuant to which Newcastle will acquire all of the outstanding common shares of Catalyst in exchange for common shares of Newcastle, either by way of amalgamation or plan of arrangement. The exchange ratio will be such that on a postmerger basis the outstanding shares of Newcastle will be held as to 60 per cent by the shareholders of old Newcastle and as to 40 per cent by the shareholders of Catalyst. It is a condition of the transaction that, prior to completion of the business combination, stock options and warrants of Catalyst will be exercised such that Catalyst will have not less than $3.75-million cash (less any amounts invested pursuant to the private placement, described below). The implied premium to Catalyst shareholders on a fully diluted basis, based on respective share prices at close on March 21, 2016, is 3 per cent.

The agreement also provides that Catalyst will subscribe for up to $600,000 of Newcastle shares by way of a private placement at an issue price of 27.5 cents per common share, of which $100,000 will be closed on in the next few days.

The agreement contemplates that the parties will enter into a long-form definitive agreement containing conditions, representations and deal-protection provisions customary for a transaction of this nature. Completion of the transaction is subject to receipt of all necessary regulatory, court and shareholder approvals.

The postmerger board of Newcastle will consist of Richard Warke, David Adamson, Mark Wayne, David Reid, Jim Gowans, Frank Giustra and Colin Sutherland.

Newcastle has retained GMP Securities LP as its exclusive financial adviser in respect of the transaction.

Benefits to Newcastle shareholders

The new board will add significant new expertise to Newcastle in areas viewed as critical to Newcastle's success, including enhanced capital markets experience, and access to critical technical skills and permitting experience in the United States.

The transaction is expected to maximize the ability of Newcastle to secure adequate funds to ensure that development of the Castle Mountain gold project is optimized. The transaction is also expected to enhance Newcastle's market capitalization and expand its shareholder base, which Newcastle anticipates will provide additional shareholder liquidity.

The transaction is expected to provide optionality to copper through Catalyst's 60-per-cent-owned La Verde copper project, located in the Michoacan state of west-central Mexico.

David Adamson, chief executive officer of Newcastle, said: "This is an exciting step forward for Newcastle shareholders, one which best ensures that the true value of our outstanding gold resource at Castle Mountain is realized. We think the combined company will create a unique and attractive go-to gold vehicle focused on realizing shareholder value."

Benefits to Catalyst shareholders

The transaction is expected to provide Catalyst shareholders exposure to a world-class gold deposit and maintain optionality on Catalyst's La Verde copper project.

The transaction is expected to provide an opportune entry point at a time when considerable derisking has occurred on the Castle Mountain gold project but the value for which has not yet been recognized by the market.

The transaction is also expected to enhance Catalyst's market capitalization and expand its shareholder base, which Catalyst anticipates will provide additional shareholder liquidity.

Richard Warke, president and chief executive officer of Catalyst, said: "The combination with Newcastle gives us a great foothold in gold and a great base to build upon. We are excited that the Castle Mountain gold project has tremendous upside and plan to fully test that in 2016, and we are looking forward to working with the existing Newcastle management team to pursue this exciting opportunity."

Ian R. Cunningham-Dunlop, PEng, Newcastle's vice-president, exploration, is the designated qualified person for this news release within the meaning of National Instrument 43-101. He has reviewed and verified that the technical information contained in this release is accurate and has approved of the written disclosure of the same.

(1) "The NI 43-101 Technical Report and Updated Mineral Resource Estimate for the Castle Mountain Project, San Bernardino County, California, USA," dated Jan. 15, 2016, prepared by James N. Gray, PGeo, of Advantage Geoservices Ltd., R. Bob Singh, PGeo, of North Face Software Ltd., William J. Pennstrom Jr., registered member/SME of Pennstrom Consulting Inc., Kevin Kunkel, PGeo, and Ian R. Cunningham-Dunlop, PEng, in accordance with disclosure and reporting requirements set forth in National Instrument 43-101. Mr. Gray, Mr. Singh and Mr. Pennstrom are independent qualified persons as defined by NI 43-101. Garth D. Kirkham, PGeo, of Kirkham Geosystems Ltd. performed a third party peer review of the mineral resource estimate and the report prior to filing. This report is available at SEDAR.

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