Golden Reign and Marlin GOLD Enter into Arrangement Agreement to Combine Businesses and Amend Stream Agreement with Sailfish Royalty
LEGAL_29560853.1
GOLDEN REIGN AND MARLIN GOLD ENTER INTO ARRANGEMENT AGREEMENT TO
COMBINE BUSINESSES AND AMEND STREAM AGREEMENT WITH SAILFISH ROYALTY
VANCOUVER, August 7, 2018 - Golden Reign Resources Ltd. (TSX-V: GRR) (“Golden Reign”), Marlin
Gold Mining Ltd. (TSX-V: MLN) (“ Marlin”) and Sailfish Royalty Corp. (TSX-V: FISH) (“ Sailfish”) are
pleased to announce that Golden Reign and Marlin have entered into a definitive agreement (the
“Arrangement Agreement”), unanimously approved by each of the boards of directors of Golden Reign
and Marlin, pursuant to which Golden Reign and Marlin propose to complete the previously announced
business combination whereby Golden Reign will acqu ire all of the issued and outstanding shares of
Marlin (following completion of the Marlin Reorganization (as defined below) and satisfaction of all closing
conditions of the business combinatio n) by way of plan of arrangement (the “ Transaction”). As a
condition to closing the Transaction (the “ Closing”), Sailfish has agreed to restructure its existing gold
stream on San Albino, as further discussed below.
The Arrangement Agreement
Under the terms of the Arrangement Agreement, Golden Reign will acquire all of the outstanding Marlin
common shares in exchange for 0.5138 of a Golden Reign common share (each whole common share, a
“GRR Share ”) for each Marlin common share acquired (the “ Consideration”). In addition, Marlin will
distribute an aggregate of 18,148,654 GRR Shares currently held by Marlin to the Marlin Shareholders on
the basis of 0.1022 GRR Shares for each Marlin co mmon share, bringing the total GRR Shares to be
received by Marlin shareholders to 0.6160 of a GRR Share for each Marlin common share outstanding at
Closing. The Transaction will result in Marlin and certain of its subsidiaries, including Oro Gold de Mexico
and Marlin Gold Trading, becoming wholly-owned subsidiaries of Golden Reign (the “ Combined
Company”). In addition to certain terms and conditions de scribed in this news release, the Arrangement
Agreement includes customary provisions, including co venants not to solicit other acquisition proposals
and the right to match any superior proposals. Termination fees of C$1 million will be paid to Marlin or
Golden Reign in certain circumstances should the Transaction not be completed.
Upon completion of the Transaction, it is expected that the shareholders of Marlin, as of the closing time,
will own, in aggregate, approxim ately 45% of the issued and outstanding common shares of the
Combined Company (including the current Marlin shareholding of Golden Reign) and the shareholders of
Golden Reign, as of the closing time, will own, in aggregate, approximately 55% of the issued and
outstanding common shares of the Combined Company.
“By acquiring Marlin, post spin-out of certain loan s and assets, shareholders of Golden Reign (to be
renamed Mako Mining Corp.) will benefit from the producing La Trinidad Gold Mine in Mexico, over
$6,000,000 in cash and no debt, and an unencumbered, fully permitted, high grade gold development
asset in Northern Nicaragua. With the issuance of new shares at an exchange ratio of 0.5138, Golden
Reign will be issuing 91.2 MM new shar es in connection with this transa ction, which will bring its shares
issued and outstanding to 283.4 MM”, stated Kevin Bullock, CEO of Golden Reign. He went on to say “by
amending the current Gold Purchase Agreement with Sailfish, Golden Reign will benefit from building a
fully permitted, unencumbered asset with security and provisions commensurate with a standard, third
party NSR agreement.”
Akiba Leisman, Executive Chairman of Marlin and Chief Executive Officer of Sailfish stated: “Since Marlin
and Sailfish’s original involvement with Golden Reign in 2014, it was our belief that the San Albino Gold
Deposit is the most attractive development asset in the Americas today. At Closing, Marlin’s
shareholders will own 45% of the Combined Company and will be able to participate in this opportunity for
decades to come. Furthermore, the restructuring of the Gold Purchase Agreement will not only make the
San Albino Gold Deposit even more robust, but in re turn, Sailfish will have a diversified suite of assets
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including additional royalties, cash and an exploration property in a world-class mining jurisdiction. Upon
completion of the Transaction, Sailfish will be well-cap italized, have no funding obligations and intends to
aggressively grow its royalty business”.
Marlin Reorganization
Under the terms of the Arrangement Agreement, as a condition to Closing, Marlin has agreed to
undertake a corporate reorganization, pursuant to which it will (i) sell its Commonwealth silver and gold
property in Cochise County, Arizona, to Wexford Capital LP or funds controlled by it (“Wexford”), Marlin’s
controlling shareholder, which will extinguish all of Marlin’s loans and any other debts and liabilities owing
to Wexford; (ii) assign to Sailfish its 1% net smelter return royalty on the Parral 2 claims on the La Cigarra
project owned by Kootenay Silver Inc. (the “La Cigarra Royalty”) and its 1.5% net smelter return royalty
on the majority of the concessions at the El Compas project operated by Endeavour Silver Corp. (the “El
Compas Royalty”), and grant an option to Sailfish to purchase its Gavilanes property in Mexico, all as
partial consideration for Sailfish agreeing to enter into the amendment to the existing gold stream on San
Albino; (iii) wind-up certain of its non-material su bsidiaries that will not be acquired by Golden Reign
under the Transaction; and (iv) arrange for the sale of 17,155,191 common shares of Golden Reign,
currently held by Marlin, at a price of $0.1539 on a private placement basis, pursuant to which Wexford
will purchase at least 85% of such Golden Reign common shares and an aggregate of at least 993,464 of
such Golden Reign common shares will be purchased by current stock option holders of Marlin,
consisting of Akiba Leisman, Marlin’s Executive Chai rman, and Cesar Gonzalez, Marlin’s VP Corporate
Development. The full amount of the gross proceeds fr om such private placem ent of $2,640,183.89 will
remain in Marlin on the Closing of the Transaction. These pre-Closing transactions being completed by
Marlin are collectively referred to herein as the “Marlin Reorganization”.
As a result of the Marlin Reorganization, Golden Reign will acquire Marlin and certain of its material
subsidiaries on a debt free and working capital neutral basis.
Revised Stream Agreement
Another key condition to the closing of the Transact ion is that Golden Reign and its subsidiaries, Marlin
and Sailfish enter into a mutually acceptable agreem ent to restructure the existing gold stream on San
Albino (the “ Amended and Restated Gold Purchase Agreement ”). Accordingly, concurrent with the
signing of the Arrangement Agreement, Golden Reign and its subsidiaries, Marlin and one of its material
subsidiaries and Sailfish have entered into a master agreement (the “ Master Agreement”) whereby the
parties have agreed:
(a) to the substantial form of and the terms and conditions of the Amended and Restated Gold
Purchase Agreement, equivalent to a 3% net smel ter returns royalty, to be entered into effective
as of the closing of the Transaction, with re spect to a certain area of interest on San Albino
concession (the “ AOI”), which includes as a schedule to the Amended and Restated Gold
Purchase Agreement, the substantial form of and terms and conditions of a new royalty
agreement to be entered into between Golden Re ign and its subsidiaries, and Sailfish, with
respect to a 2% net smelter returns royalty on production from the San Albino concession
(exclusive of the AOI) and the El Jicaro concession;
(b) that Marlin will make cash payments to Sailfish in respect of any amounts recovered by Marlin in
certain lawsuits Marlin has filed against the Mexican tax authority for the purpose of obtaining
previously denied Mexican value added tax re funds for an aggregate of $37,379,097 Mexican
pesos ($7,490,437 Mexican pesos of which have alr eady been received), before certain interest
and inflation adjustments and applicable legal fees;
(c) that Sailfish will extinguish Golden Reign’s pr epayment liability associated with the existing gold
stream on San Albino prior to Closing;
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(d) that Sailfish’s existing funding obligation of approximately US$13.9 million will be eliminated prior
to Closing; and
(e) to the substantial form of and the terms and conditions of certain assignment, option and royalty
agreements, that will be entered into as parti al consideration to be paid to Sailfish in
consideration for entering into the Amended and Restated Gold Purchase Agreement. Such
agreements provide for Marlin’s assignment to Sailfish, for no additional consideration, of the El
Compas Royalty and La Cigarra Royalty in Mexico . Such agreements also provide for Marlin’s
agreement to transfer its Gavilanes property in Mexico, to a designee of Sailfish.
Management Team and Board of Directors
Upon Closing, senior management of the Combined Company will consist of Kevin Bullock as Chief
Executive Officer, Jesse Muñoz as Chief Operating Officer and Scott Kelly as Interim Chief Financial
Officer. The board of directors of the Combined Company is expected to be comprised of seven
members, consisting initially of three directors as determined by Golden Reign (which will include Kevin
Bullock) and three directors as determined by Marlin, which shall include at least one independent
director. Golden Reign and Marlin will jointly determine one additional independent board member who
will serve as non-executive chairman.
Following Closing, it is expected that the name of the parent company will be changed from Golden Reign
to “Mako Mining Corp.” or such other name as may be mutually determined by Golden Reign and Marlin.
Special Committee and Board Recommendations
The boards of directors of Golden Reign, Marlin an d Sailfish, respectively, have each appointed a special
committee to consider the Proposed Transaction, as well as any strategic alternatives.
The special committee comprised of two independent Marlin directors (the “ Marlin Special Committee”)
received an oral fairness opinion (to be supplemented by a written report) from Red Cloud Klondike Strike
Inc. stating that in its opinion, and based upon an d subject to certain assumptions, limitations and
qualifications, the Consideration to be received by Mar lin shareholders is fair, from a financial point of
view, to Marlin shareholders.
The special committee comprised of three independent Golden Reign directors (the “ Golden Reign
Special Committee”) received a fairness opinion from PI Financial Corp. stating that in its opinion, and
based upon and subject to the assumptions, limitati ons and qualifications set forth therein, the
Consideration is fair, from a financial point of view, to Golden Reign shareholders.
The special committee comprised of three independent Sailfish directors (the “ Sailfish Special
Committee”) received a fairness opinion from Noble Capital Markets stating that in its opinion, and based
upon and subject to the assumptions, limitations and qua lifications set forth therei n, the restructuring of
the gold stream on San Albino as contemplated by the Ma ster Agreement is fair, from a financial point of
view, to Sailfish shareholders.
Marlin’s board of directors has dete rmined that the Transaction is in t he best interests of Marlin and its
shareholders, having taken into account advice from its financial advisor and the recommendations of the
Marlin Special Committee, and has unanimously approv ed the Transaction and the entering into of the
Arrangement Agreement and recommends that Marlin’s sh areholders vote in favour of the Transaction.
The directors, senior officers and certain prin cipal shareholders of Marlin, who together control
approximately 85.8% of the outsta nding Marlin common shares, have signed voting support agreements
and confirmed their intention to vote their Marlin common shares in favour of the Transaction.
Golden Reign’s Board of Directors has determined that the Transaction is in the best interest of Golden
Reign and its shareholders, having taken into ac count advice from its financial advisor and the
recommendations of the Golden Reign Special Committee, and has unanimously approved the
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Transaction and the entering into of the Arrangem ent Agreement and recommends that Golden Reign
shareholders vote in favour of the issuance of the GRR Shares in connection with the Transaction,
including to Wexford who will become a new “Contr ol Person” of the Combined Company within the
meaning of the TSX Venture Exchange policies on clos ing of the Transaction. The directors and senior
officers of Golden Reign, who control approximately 14.9% of the outstanding Golden Reign common
shares, have signed voting support agreements and conf irmed their intention to vote their Golden Reign
common shares in favour of the issuance of the GRR Shares in connection with the Transaction.
Sailfish’s board of directors has determined that the re structuring of the gold stream on San Albino as
contemplated by the Master Agreement is in the be st interests of Sailfish and its shareholders, having
taken into account advice from its financial advis or and the recommendations of the Sailfish Special
Committee, and has unanimously appr oved the gold stream restructuri ng and the entering into of the
Master Agreement and recommends that Sailfish’s shareholders vote in favour of that transaction.
Transaction Conditions and Timing
The Transaction will be carried out by way of a court-approved plan of arrangement under the Business
Corporations Act (British Columbia) and will require the approval of: (i) at least 66 2/3% of the votes cast
by the holders of Marlin common shares; and (ii) a simple majority of the votes cast by holders of Marlin
common shares after excluding any votes of certain persons required to be excluded under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), at a
special meeting of shareholders currently expected to take place in the fall of 2018.
Golden Reign shareholders will also be asked to ap prove the issuance of the GRR Shares in connection
with the Transaction by a simple majority of the votes cast by holders of Golden Reign common shares
after excluding any votes of cert ain persons required to be excluded under MI 61-101 at a special
meeting of shareholders currently expected to take place in the fall of 2018.
Additionally, Sailfish shareholders will be asked to approve the restructurin g of the San Albino gold
stream by a simple majority of the votes cast by holders of Sailfish common shares after excluding any
votes of certain persons required to be excluded under MI 61-101 at a meeting of shareholders currently
expected to take place in the fall of 2018.
In addition to obtaining the shareholder and court approvals, and the parties entering into the documents
contemplated by the Master Agreement and the Am ended and Restated Gold Purchase Agreement, the
Transaction is subject to closing conditions customar y in transactions of this nature. Marlin and Golden
Reign currently anticipate that the Transaction will be completed in October 2018. The effect of Marlin
shareholders voting for the resolution to approve the Transaction and the Transaction becoming effective
will be the cancellation of the comm on shares of Marlin from tradi ng on the TSX Venture Exchange
following Closing.
None of the GRR Shares to be issued pursuant to t he Transaction have been or will be registered under
the United States Securities Act of 1933 , as amended (the “U.S. Securities Act”), or any state securities
laws, and any GRR Shares issued pursuant to the Tr ansaction are anticipated to be issued in reliance
upon available exemptions from such registration requ irements pursuant to Section 3(a)(10) of the U.S.
Securities Act and applicable exemptions under state securities laws. This press release does not
constitute an offer to sell, or the solicitation of an offer to buy, any securities.
Further information regarding the Transaction will be included in the respective management proxy
circulars of Golden Reign and Marlin, which are currently expected to be mailed to Golden Reign and
Marlin shareholders, respectively, in the late summer or early fall of 2018. Copies of the Arrangement
Agreement and management information circulars will be available on SEDAR at www.sedar.com.
Golden Reign Bridge Loan
As previously announced, Golden Reign and Marlin ent ered into a definitive bridge loan agreement for a
bridge loan from Marlin to Golden Reign of C$4,000,000, having a term of one year and bearing interest
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at 8% per annum (the “Bridge Loan”). On Closing, the Bridge Loan will become intercompany debt and
terminated. In the event that (a) Golden Reign shareholders vote not to approve the Transaction, or (b) or
the Arrangement Agreement is termin ated in accordance with its terms, then all accrued interest under
the Bridge Loan will become immediately due and the ma turity date of the Bridge Loan will accelerate to
the earlier of the original maturity date or the date th at is four months from t he negative shareholder vote
or termination of the Arrangement Agreement.
Participation and Standstill Agreement
Effective as of the Closing, the Combined Company and Wexford will enter into a participation rights
agreement pursuant to which the Combined Company will gr ant to Wexford a right to participate in future
equity financings of the Combined Company to main tain its then current equity ownership in the
Combined Company on terms no less favourable than those offered to other investors in such financings,
for so long as Wexford owns at least 20% of the issued and outstanding common shares of the Combined
Company, and Wexford will be subject to a standstill prohibiting Wexford from increasing its equity
ownership in the Combined Company beyond 45% (on a fully-diluted basis) without the prior written
consent of the board of directors of the Combined Company.
About Golden Reign
Golden Reign Resources Ltd. is a publicly listed (TSX-V: GRR) mineral exploration company engaged in
exploring the San Albino-Murra Property and the El Jica ro Property, both of which are located in Nueva
Segovia, Nicaragua. The company’s prime objective is to bring its San Albino Gold Deposit into
production quickly and efficiently, building cash flow to further advance a number of its other prospective
exploration targets. The Company’s land package comprises 13,771 hectares (138 km2) of prospective
ground for gold and silver mineralization. Hundreds of historical mines and workings exist within the
Corona de Oro Gold Belt, which is approximately 3 kilometres wide by 20 kilometres long and is spanned
by the company’s land package. For additional information please visit our website at
www.goldenreign.com and SEDAR www.sedar.com.
About Marlin Gold
Marlin is a growth-oriented gold and silver mining company focused on the Americas. The company owns
three properties located in Mexico and the USA and a portfolio of royalties. Marlin's priority is to profitably
operate its La Trinidad Mine, conduct further exploration on its other projects and enhance shareholder
value through a strategic relationship with Sailfish Royalty Corp. (TSX-V:FISH). Marlin is backed by a
well-funded investor with a successful track record in the resources sector. The La Trinidad Mine in
Sinaloa, Mexico declared commercial production on No vember 1, 2014 and is one of the highest grade
open pit heap leach gold mines in Mexico.
About Sailfish Royalty
Sailfish is a yield-focussed royalt y company. Sailfish owns the TZ Royalty, which is a 3.5% royalty on
revenues derived from the sale of gold on Eldor ado Gold Corp.’s advanced stage Tocantinzinho gold
project, and also holds a gold stream agreement on the San Albino gold project in Northern Nicaragua.
For further information: Kevin Bullock, Chief Executive Office r, Golden Reign Resources Ltd.,
telephone: (647) 388-1842, e-mail: kevin@goldenre ign.com; Akiba Leisman, Executive Chairman and
Interim CEO, Marlin Gold Mining Ltd., telephone: 203-862-7059, e-mail: [email protected]; and
Cesar Gonzalez, Director and Vice President of Corporate Development, Sailfish Royalty Corp.,
telephone: 230-862-7007, e-mail: [email protected].
Forward-Looking Statements: Some of the statements contained herein may be considered “forward-
looking information” within the meaning of applicable securities laws which may include, but is not limited
to, statements with respect to management’s assessm ent of the anticipated benefits to Marlin, Golden
Reign and Sailfish shareholders of the Transaction and matters contemplated by the Master Agreement
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and the Amended and Restated Gold Purchase Agr eement, anticipated shareholder meeting dates,
timing for Closing and the delisting of the Marlin S hares from the TSX Venture Exchange. Often, but not
always, forward-looking statements can be identified by the use of words and phrases such as “plans,”
“expects,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or
“believes” or variations (including negative variatio ns) of such words and phrases , or state that certain
actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved.
Forward-looking information is based on certain expectations and assumption that are considered
reasonable at the time, however undue reliance should not be placed on the forward looking information
as the companies can give no assu rance that they will provide to be correct. As forward-looking
statements address anticipated future events and conditi ons, such forward-looking information is subject
to a variety of risks and uncertaint ies which could cause actual events or results to differ materially from
those reflected in the forward-looking information, incl uding, without limitation, the risk that the Marlin
Reorganization is not completed as contemplated; t hat the requisite court, regulatory and/or shareholder
approval is not obtained; uncertainti es associated with negotiations; misjudgements in the course of
preparing forward-looking information; that the Transaction may not close when planned or at all or on the
terms and conditions set forth in the Arrangement Agreement; the benefits expected from the Transaction
not being realized; risks related to t he integration of the acquisition of Marlin and its business; general
business, economic, competitive, political and social uncertainties; legal challenges to permits or
permitting applications; the actual results of current and future exploration and production activities; the
actual results of reclamation activities; conclusion s of economic evaluations; meeting various expected
cost estimates; changes in project parametres and/ or economic assessments as plans continue to be
refined; future prices of metals; possible variations of mineral grade or recovery rates; the risk that actual
costs may exceed estimated costs; failure of plan t, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the mining industry; political instability, that the repayment of
the Bridge Loan is accelerated, that any party is unable to satisfy all closing conditions to completion of
the Transaction (including extinguishing or amending the existing gold stream agreement with Sailfish),
that any anticipated reconstitution of the board of directors and management of the Combined Company
is not as anticipated, and other risks and uncertainties including those discussed in each company’s
disclosure documents which can be found under each company’s profile at www.sedar.com.
Although Golden Reign, Marlin and Sailfish have attempt ed to identify important factors that could cause
actual actions, events or results to differ materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to differ from those anticipated, estimated
or intended. Forward-looking statements contained here in are made as of the date of this press release
and Golden Reign, Marlin and Sailfish each disclaim s any obligation to update any forward-looking
statements, whether as a result of new information, future events or results, except as may be required by
applicable securities laws. There can be no assuranc e that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Se rvices Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts resp onsibility for the adequacy or accuracy of this
release.