La Ronge Gold Corp. announced that it has signed a definitive agreement to acquire the assets and business of Canfrac Sands Ltd., a private company producing and selling frac sand in the Western Canada Sedimentary Basin.
The agreement contemplates a cash purchase price of $4.5 million, subject to standard industry adjustments, plus reimbursement of up to $1 million in certain pre-approved capital expenditures made by Canfrac prior to the closing to improve the purchased assets for the benefit of La Ronge. Pursuant to the Agreement, La Ronge will deliver a $1 million deposit into trust with Canfrac’s lawyers.
If La Ronge terminates the transaction, the deposit will be treated as a break fee payable to Canfrac in exchange for equity in the amount of 22 percent of Canfrac’s issued common shares and a nominee to Canfrac’s Board of Directors.
If Canfrac terminates the transaction, the deposit will be returned to La Ronge. In the event that the acquisition is completed, the deposit will be applied to reimburse Canfrac in the amount of any pre-approved capital expenditures referred to above, with any excess returned to La Ronge.
Completion of the transaction, expected on or before June 19, 2014, remains subject to a number of conditions, including the completion of financing and the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.
Pursuant to the acquisition, La Ronge will conduct a brokered private placement in two tranches to raise gross proceeds of up to $7 million, with an overallotment option for gross proceeds of up to an additional $1 million.
Canaccord Genuity Corp. has agreed to act as lead agent for the private placement on a commercially reasonable efforts basis. The securities issued will be subject to a four-month hold period from the date of issue of the subscription receipts. The completion of the private placement and payment of any commission and fees remain subject to the receipt of all necessary approvals, including the approval of the Exchange.