Resource World Magazine

J U N E / J U L Y 2 0 1 6 www.resourceworld.com 13 miNiNg EndEavour Mining coMplEtEs truE gold acquisition Endeavour Mining Corp. [EDV-TSX; EDVMF-OTCQX] and True Gold Mining Inc. have successfully completed the pre- viously announced acquisition of True Gold. Pursuant to a court-approved plan of arrangement, shareholders of True Gold received 0.044 of an Endeavour ordinary share for each True Gold common share held. In addition, La Mancha Holding S.àr.l. exercised its anti-dilution right to maintain its 30% stake and invested CDN $82.6 million via an equity placement for 7,546,777 Endeavour ordinary shares. Following the transaction close, Endeavour's issued and outstanding shares totaled approximately 84.3 million and its market capitalization amounted to approximately CDN $1.3 billion, based on Endeavour's closing price on the TSX on April 25, 2016. Endeavour Mining is an intermediate gold mining company which operates four West African mines in Côte d'Ivoire, Mali, and Ghana. In 2016, it expects to produce between 535,000 and 560,000 ounces at an all-in sustaining cost of US $870 to US $920/oz, after adjustment of the recent Youga sale and excluding the Karma Mine. nEvsun rEsourcEs and rEsErvoir MinErals to MErgE Nevsun Resources Ltd. [NSU-TSX; NYSE MKT] and Reservoir Minerals Inc. [RMC- TSXV] have signed a definitive agreement to merge. The combination creates a diver- sified, mid-tier, base metals company with a cash producing, operating asset in Bisha, a high-grade, open pit copper-zinc mine in Eritrea, and 100% ownership in the Upper Zone of the Timok copper project in Serbia, a high-grade copper and gold development project. The combined com- pany will be well funded with Nevsun's existing strong balance sheet and operat- ing cash flow. Under the terms of agreement, Nevsun agreed to acquire all of the outstanding common shares and restricted share units of Reservoir on the basis of two com- mon shares and $0.001 in cash for each Reservoir common share for a total value of about US $365 million. Based on the closing price of Nevsun common shares on April 22, 2016, the consideration rep- resents a premium of 35% to Reservoir's 20-day volume weighted average price. Upon completion of the arrangement, Nevsun shareholders will own approxi- mately 67% of the combined company and current Reservoir shareholders will own the remaining 33%. Concurrently, the two companies have also entered into a funding transaction com- prised of a private placement for 19.99% of Reservoir's outstanding common shares and a loan transaction. Nevsun has subscribed for 12,174,928 shares of Reservoir at CDN $9.40 per share, for a total subscription price of CDN $114,444,323, increasing Reservoir's total shares outstanding to 60,905,093, and provided an unsecured cash loan of US $44,703,429 to Reservoir. The com- bined funding transaction provides US $135,000,000 in financing to enable Global Reservoir Mineral (BVI) Inc., a wholly- owned subsidiary of Reservoir, to exercise its right of first offer (ROFO) in respect of its joint venture with Freeport International Holdings (BVI) Inc. in the Timok copper project. Upon Global Reservoir closing the exercise of the ROFO, Global Reservoir will have a 100% interest in the Upper Zone and a 60.4% interest in the Lower Zone of the Timok copper project under two joint venture agreements with Freeport and will become the operator of the project. Freeport may increase its ownership in the Lower Zone to 54% under the terms of the original Timok JV agreement, with Global Reservoir holding the remaining 46%. Upon comple- tion of the combination, Global Reservoir will be a wholly-owned subsidiary of the combined company. "This transaction diversifies Nevsun's asset base, putting our cash balance to work in a strategic and high return invest- ment that will deliver significant value to our shareholders," said Cliff Davis, Nevsun's President and CEO. "The Upper Zone, with its high-grade copper-gold resource and nearby infrastructure in a mining friendly jurisdiction, adds signifi- cant growth to Nevsun. With ongoing cash flow generation from our Bisha Mine, we have the financial strength and proven technical ability to move the Timok Project forward in a timely manner." "This is an excellent outcome for Reservoir and its shareholders, deliver- ing premium value, and most importantly (it) will expedite the development of the Timok Copper-Gold Project to the ben- efit of all stakeholders," said Dr. Simon Ingram, Reservoir's President and CEO. "Reservoir's board of directors determined that this transaction is the best funding alternative for our shareholders to fund the Timok ROFO. Nevsun is a proven mine developer with the technical experience and strong balance sheet to enable Timok development. Reservoir shareholders retain exposure to the development poten- tial of Timok and also gain exposure to the operating Bisha Mine's cash flow and additional exploration potential. The com- bined company will be in a strong position to efficiently advance the Timok Project to production." The boards of Nevsun and Reservoir have received fairness opinions from independent financial advisors, and rec- ommend their respective shareholders vote in favour of the arrangement. The arrange- ment is expected to close late in the second quarter of 2016. n

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