Buffalo Gold And Sargold Propose Merger
Monday, July 16th, 2007
Buffalo Gold Ltd. and Sargold Resource Corporation are pleased to announce they have signed a letter of intent (“LOI”) to enter into a friendly merger (“the Transaction”). Under the LOI, all outstanding securities of Sargold will be exchanged for common shares and common share purchase warrants and options of Buffalo.
Highlights of the Transaction
Under the terms of the Transaction, shareholders of Sargold will receive either one common share, common share purchase warrant or option of Buffalo in exchange for each 3.5 Sargold common shares, common share purchase warrants or options which they hold immediately prior to the effective date of the Transaction, or at Sargold’s option, a ratio calculated on the basis of firstly, the weighted average price of Buffalo shares on the TSX Venture Exchange for the ten trading days immediately prior to the execution date of a definitive agreement (converted into Canadian dollars on the basis of the average closing exchange rate quoted by the Bank of Canada for the 10 banking days immediately prior to the execution date of the definitive agreement) and secondly, the price of the Sargold shares being CAD$0.30. This represents an approximate 80% premium on Sargold shares, based on the July 11, 2007 closing price of the shares of both companies. Following completion of the Transaction, Sargold shareholders will hold an approximate 25% equity ownership in the merged company.
Both Buffalo and Sargold have agreed to pay the other a break fee of $1,000,000 in certain circumstances if the Transaction is not completed.
Completion of the Transaction is subject to satisfaction of a number of conditions, including, but not limited to, the negotiation and execution of a definitive agreement, and the receipt of all required approvals, including those from the Shareholders of Sargold and the TSX Venture Exchange. There can be no assurance that the Transaction will be completed as proposed or at all. In order to consider the Transaction and make recommendations to the Board of Directors of Sargold, an independent special committee of Sargold’s Board of Directors will be appointed. It is intended that a meeting of the shareholders of Sargold will be held as soon as possible to seek approval of the Transaction and it is anticipated that this meeting will be held on or before October 31, 2007.