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TORONTO, Dec. 4 /CNW/ - Guyana Goldfields Inc. ("Guyana") (TSX: GUY) and Aranka Gold Inc. ("Aranka") (TSX-V: ARK) are pleased to announce today that they have entered into a binding letter agreement, pursuant to which Guyana will acquire all of the issued and outstanding common shares of Aranka by way of court approved plan of arrangement (the "Arrangement"). Each of the companies set up independent committees to assess and review the terms of the Arrangement and to make recommendations to the board of directors of each of the respective companies. The independent committees of both companies unanimously recommended that their respective board of directors approve the entering into of the binding letter agreement.
Pursuant to the Arrangement, shareholders of Aranka will receive one common share of Guyana in exchange for every 3.25 common shares of Aranka. All of the outstanding 1,700,000 options of Aranka will be cancelled and the option plan will be terminated. The consideration to be received by the Aranka shareholders under the Arrangement represents a premium of approximately 15.8% over the weighted average closing price of the Aranka common shares on the TSXV for the 20 trading days ending on December 2, 2008 (based on the weighted average closing price of the Guyana shares on the TSX for the 20 trading days ending December 2, 2008).
Based on the current 51,122,143 issued and outstanding common shares of Guyana (on a non-diluted basis) and the current 25,343,556 issued and outstanding common shares of Aranka (on a non-diluted basis), the number of common shares of Guyana following completion of the Arrangement (on a non-diluted basis) is expected to be 58,920,160, with current Guyana shareholders owning 87% of Guyana (on a non-diluted basis) and current Aranka shareholders owning 13% of Guyana (on a non-diluted basis).
Guyana and Aranka are currently 50/50 joint venture partners on most of Aranka's properties that are located in Guyana. Mr. Patrick Sheridan is the President and Chief Executive Officer of both companies, and a control person (within the meaning of securities laws) of Aranka. At the meetings of the board of directors of each of Aranka and Guyana held to approve the Arrangement, Mr. Sheridan recused himself and refrained from voting on all matters relating thereto.
Commenting on the Arrangement, Mr. Sheridan said that "This transaction combines all of the Guyana properties. The combined entity will have approximately $20 Million in cash and short term deposits to advance the bankable feasibility study on the Aurora project, as well as to continue to explore the 275,000 acre Aranka area properties".
Aranka may not enter into a bona fide superior unsolicited written offer or proposal relating to a competing business transaction unless it has provided Guyana with the right to match the consideration offered. If the Arrangement is terminated as a result of a competing business transaction that is a bona fide superior, unsolicited, written offer or proposal, Aranka shall pay a break fee of $225,000 to Guyana.
Completion of the Arrangement is subject to, among other things, receipt of approval of Aranka's shareholders, receipt of a final order of the court approving the Arrangement, receipt of all regulatory approvals on or prior to March 31, 2009 and the directors and officers of Aranka entering into shareholder support agreements with Guyana.
The Aranka meeting is expected to be held in late January 2009, with the Arrangement expected to close shortly thereafter. Guyana will be entitled to terminate the Arrangement if more than 5% of Aranka shareholders exercise their right to dissent in connection with the Arrangement.
The Arrangement cannot close until the required approval is obtained from Aranka shareholders. There can be no assurance that the Arrangement will be completed as proposed or at all. Readers are cautioned that except as disclosed in the information circular of Aranka to be prepared in connection with the Arrangement, any information released or received with respect to the Arrangement may not be accurate or complete and should not be relied upon.
About Guyana
Guyana is a Canadian based mineral exploration company primarily focused on the exploration and development of gold deposits in the Guiana Shield of South America. The Guiana Shield is in the northern part of the Amazon Craton and covers parts of Guyana, Venezuela, Suriname, French Guyana and northern Brazil. Guyana holds advanced exploration projects in various stages of development and has been operating in Guyana continuously since 1996. As at the date hereof, Guyana has approximately $14.9 million in cash and short-term bank guaranteed investment certificates and no debt.
About Aranka
Aranka is a junior exploration company focusing on early stage gold exploration in the Guiana Shield. The company also holds significant silver assets, including the former Langis Silver mine in the Cobalt Camp, Ontario, Canada. As at the date hereof, Aranka has approximately $5.7 million in cash and short-term bank guaranteed investment certificates and no debt.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
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