Itafos to Acquire Stonegate Agricom Ltd. BY Way of Plan of Arrangement
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CAN DMS \107114352\9
ITAFOS TO ACQUIRE STONEGATE AGRICOM LTD. BY WAY OF PLAN OF ARRANGEMENT
Toronto, May 19, 2017 - Itafos (TSXV:IFOS) and Stonegate Agricom Ltd. (TSX:ST) (" Stonegate") are
pleased to announce that they have entered into an arrangement agreement dated May 18, 2017 (the
"Arrangement Agreement ") pursuant to which Itafos would acqui re all of the issued and outstanding
common shares of Stonegate (the " Stonegate Shares") not already owned directly or indirectly by it by
way of a court-approved pl an of arrangement under the Business Corporations Act (Ontario) (the
"Arrangement").
Under the terms of the Arrangement Ag reement, each shareholder of Stonegate (a “ Stonegate
Shareholder”) will receive 0.008 of an ordi nary share of Itafos (an “ Itafos Share”) for each Stonegate
Share held. Itafos anticipates issuing an aggrega te of approximately 2,985,777 Itafos Shares to
Stonegate Shareholders pursuant to the Arrangement.
The Arrangement is expected to pr ovide Stonegate Shareholders with the opportunity to participate in a
larger phosphate entity, with a diversified portfolio of phosphate projects and a prospect for growth in the
short to medium term.
The Arrangement is subject to the approval of the Ontario Superior Court of Justice (Commercial List) and
(i) at least two-thirds of the votes cast by Stonegate Shareholders at the Stonegate Meeting (as defined
below); and (ii) a majority of t he votes cast by disinterested Ston egate Shareholders at the Stonegate
Meeting.
In addition to the aforementioned approvals, completion of the Arrangement is subject to other customary
conditions, including the receipt of all necessa ry regulatory and stock ex change approvals. The
Arrangement is expected to close by August 2017.
The Arrangement Agreement contains customary non -solicitation provisions which are subject to
Stonegate’s right to consider and acc ept a superior proposal subject to a matching right in favour of
Itafos. In the event that the Arra ngement is not completed as a result of a superior proposal or for other
certain specified circumstances, Stonegate will pay Itafos a termination fee.
The Arrangement constitutes a “business combination” under Multilateral Instrument 61-101 — Protection
of Minority Security Holder s in Special Transactions (“MI 61-101 ”) for Stonegate and a “related party
transaction” under MI 61-101 for Itafos as Itafos currently indirectly owns 202,450,642 Stonegate Shares,
representing approximately 35.2% of the issued and outstanding Stonegate Shares. Itafos is relying on
the formal valuation exemption in se ction 5.5(b) of MI 61-101, on the bas is that no securities of Itafos are
listed on the Toronto Stock Exchange (the “ TSX”) or other specified markets, and the minority approval
exemption in section 5.7(a) of MI 61-101, on the basis that neither t he fair market value of the Stonegate
Shares to be acquired pursuant to the Arrangement nor the consideration to be paid for the Stonegate
Shares exceeds 25% of Itafos’ market capitalization. As required by MI 61-101, Stonegate will obtain a
formal valuation (the “ Valuation”) from Echelon Wealth Partners Inc. (“ Echelon”) and will seek the
requisite approvals of the Arrangement from Sto negate Shareholders at a special meeting which is
expected to be held in July 2017 (the “Stonegate Meeting”).
The Valuation is being prepared under the supervision of a special committee of the board of directors of
Stonegate consisting of independent and disinterested directors (the “ Stonegate Special Committee ”)
and will be included in the managemen t information circular (the “ Circular”) to be mailed to Stonegate
Shareholders in connection with the Stonegate Meeting. Prior to t he execution of the Arrangement
Agreement, Echelon provided a verbal opinion tha t, based upon and subject to the assumptions,
limitations and qualifications in such opinion, the consideration to be received by Stonegate Shareholders
is fair, from a financial po int of view, to Stonegate Shareholders (o ther than Itafos and its affiliates). A
copy of the fairness opinion will also be included in the Circular. All Stonegate Shareholders (other than
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Itafos and its affiliates) will be treated on the same bas is and no additional consideration or benefit is
available to any Stonegate Shareholder (other than Itafos and its affiliates). In connection with the
Arrangement, all outstanding options of Stonegate w ill be cancelled, and the 100,000,000 outstanding
common share purchase warrants of Stonegate will be exchanged for replacement warrants of Itafos
exercisable to acquire that number of Itafos Shares as is equal to 0.008 multiplied by the number of
Stonegate Shares that the holders of the warrants so transferred and assigned would have acquired if
such holders had exercised such warrants immediately prior to the effective time of the Arrangement.
The Stonegate Special Committee, following a review of the terms and conditi ons of the Arrangement
Agreement and consideration of a number of fact ors, unanimously recommended that the board of
directors of Stonegate (the “ Stonegate Board ”) approve the Arrangement. After receiving the
recommendation of the Stonegate Special Committee an d advice from its adviso rs, the disinterested
members of the Stonegate Board have unanimously det ermined that the Arrangement is in the best
interests of Stonegate and is fair to Stonegate sharehol ders (other than Itafos and its affiliates) and will
recommend that Stonegate Shareholders vote in favour of the Arrangement. Mr. Brian Zatarain, a director
of Stonegate and Chief Executive Officer of Itafos, is a related party and, as such, declared his interest to
the Stonegate Board in connection with the Arrangem ent and did not attend the meetings of the
Stonegate Board relating to the Arrangement. All of the directors and senior officers of Stonegate, as well
Mr. Lloyd I. Miller, III (a Stonegate Shar eholder who beneficially owns, or c ontrols or direct s, directly or
indirectly 21.3% of the Stonegate Shares), have entered into customary support agreements (collectively,
the “Support Agreements”) with Itafos pursuant to which, among other things, they have agreed to vote
their Stonegate Shares in favour of the Arrangement.
If the Arrangement is completed, the Stonegate Shares will be delisted from the TSX.
A copy of the Arrangement Agreement is availabl e through Stonegate’s and Itafos’ filings with the
securities regulatory authorities in Canada in SEDAR at www.sedar.com.
None of the securities to be issued pursuant to the Arrangement Agreement have been or will be
registered under the United States Secu rities Act of 1933, as amended (the “ U.S. Securities Act ”), or
any state securities laws, and any securities issued in the Arrangement are anticipated to be issued in
reliance upon available exemptions from such regist ration requirements pursuant to Section 3(a)(10) of
the U.S. Securities Act and applicable exemptions u nder state securities laws. This news release does
not constitute an offer to sell or the solicitation of an offer to buy any securities.
Itafos will file an updated early warning report in connection with entering into the Arrangement
Agreement and the Support Agreements. A copy of the report will be available under Stonegate’s profile
at www.sedar.com, or by contacting Brian Zatarain, th e Chief Executive Officer of Itafos at
ADVISORS
Echelon Wealth Partners Inc. is acting as the fi nancial advisor to Stonegate in connection with the
Arrangement. Cassels Brock & Blackwell LLP is acti ng as Canadian legal counsel to Stonegate, Neal,
Gerber & Eisenberg LLP is acting as US legal counsel to Stonegate and Norton Rose Fulbright Canada
LLP is acting as legal counsel to Itafos in connection with the Arrangement.
ABOUT ITAFOS
Itafos (TSXV: IFOS) is focused on becoming a signifi cant integrated producer of phosphate based
fertilizers and related produ cts. Itafos has an experie nced team with signific ant experience in the
business of fertilizer operations, management, marketing and finance. Itafos owns and operates the
Itafos-Arraias SSP Operations, which c onsists of an integrated fertilizer producing facility comprised of a
phosphate mine, a mill, a beneficiation plant, a sulp huric acid plant, an SSP plant and a granulation plant
and related infrastructure located in central Brazil. Itafos’ exploration portfolio includes a number of
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additional projects in Brazil, including the Santana Project, a high-grade phosphate deposit located in
close proximity to the largest fertilizer market of Mato Grosso State and animal feed market of Pará State,
and the Araxá Project, a high-grade rare earth element s, niobium and phosphate deposit located in close
proximity to two operating mines, therefore benefiting fr om existing local infrastructure. In addition, Itafos
owns an approximate 31.3% interest in GB Minerals Ltd. which owns the Farim Project, a high-grade
phosphate deposit located in Guinea Bissau and an approximate 35.2% interest in Stonegate Agricom
Ltd. which owns the Paris Hills Project, a high-gra de phosphate deposit located in Idaho, United States
and the Mantaro Project, a highgrade phosphate deposit located in Peru.
ABOUT STONEGATE AGRICOM LTD.
Stonegate Agricom (TSX: ST), which is engaged in acquiring and developing agricultural nutrient
projects, is currently focused on the development of the Paris Hills Phosphate Project located in Idaho.
More information is available at www.stonegateagricom.com.
FORWARD LOOKING INFORMATION
Certain information contained in this news release cons titutes forward looking information. All information
other than information of historical fact is forwar d looking information. The use of any of the words
“intend”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “would”,
“believe”, “predict” and “potential” and similar expressions are in tended to identify forward looking
information. This information involves known and un known risks, uncertainties and other factors that may
cause actual results or events to differ materially from those anticipated in such forward looking
information. No assurance can be given that this in formation will prove to be correct and such forward
looking information included in this news release should not be unduly relied upon.
The forward looking information provided in this news release is based upon a number of material factors
and assumptions including, without limitation: (a) that the Arrangement will be completed in the timelines
and on the terms currently anticipated; (b) that all necessary TSX, TSXV, court and regulatory approvals
will be obtained on the timelines and in the manner cu rrently anticipated; (c) that all necessary Stonegate
Shareholder approvals will be obtai ned; and (d) general assumptions respecting the business and
operations of both Itafos and Stonegate, including that each business will continue to operate in a manner
consistent with past practice and pursuant to certain industry and market conditions.
Forward looking information is subject to a number of risks and other factors that could cause actual
results and events to vary materially from that ant icipated by such forward looking information. In
particular, the completion of the Arrangement is subjec t to a number of risks including, without limitation:
(a) TSX, TSXV, court and regulatory approvals may not be obtained in the timelines or on the terms
currently anticipated or at all; (b) necessary Stonegate Shareholder approvals may not be obtained; (c)
the Arrangement is subject to a number of closing conditions and no assurance can be given that all such
conditions will be met or will be met in the timelines required by the Arrangement Agreement; and (d) the
business, operational and/or financial performance or achievements of Itafos or Stonegate may be
materially different from that currently anticipated. In particular, the benefits anticipated in respect of the
Arrangement are based on the current business, opera tional and financial position of each of Itafos and
Stonegate, which are subject to a number of risks and uncertainties. Readers are cautioned that the
foregoing list of risks, uncertainties and assumptions are not exhaustive.
The forward looking information included in this news release is expressly qualif ied by this cautionary
statement and is made as of the date of this news release. Neither Itafos nor Stonegate undertake any
obligation to publicly update or revise any forward looking information except as required by applicable
securities laws.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this release.
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FURTHER INFORMATION
Itafos
Ugland House
Grand Cayman, Grand Cayman
KY1-1104
Brian Zatarain, Chief Executive Officer
1.713.239.2700
www.itafos.com
Stonegate Agricom Ltd.
Suite 1300 - 20 Adelaide Street East
Toronto, Ontario
M5C 2T6
Ian J. McDonald, Chairman and Chief Executive Officer
416.864.0303
www.stonegateagricom.com