Royal ROAD Minerals Announces Update ON Proposed Combination with Caza
ROYAL ROAD MINERALS ANNOUNCES UPDATE ON PROPOSED COMBINATION WITH CAZA
January 10, 2017 - Toronto, Ontario: Roya l Road Minerals Limited (TSXV:RYR) (“Royal Road Minerals” or
the “Company”) is pleased to announce and reaffirm its co ntinued intention to make a friendly offer to
acquire all of the outstanding common sh ares of Caza Gold Corp. (TSXV:CZY) (“Caza”) on the same terms
described in its news release da ted December 6, 2016, and to provide an update on its planned timing
for making its proposed offer.
Since issuing the above-mentioned news release, Roya l Road Minerals has made substantial progress in
its preparations for making the proposed offer and, assuming the satisfactory completion of its ongoing
due diligence review of Caza and other pre-bid it ems, Royal Road Minerals now expects to make a
formal offer for the Caza common shares by mailing the offer, together with an associated take-over bid
circular, to the registered holders of Caza’s common shares and convertible securities on or before
January 20, 2017. Royal Road Minerals and Caza h ave amended their previously announced support
agreement to reflect Royal Road Mineral’s current intended timing for making the proposed offer.
Royal Road Minerals is also pleased to announce th at the proposed offer continues to have the full
support of Caza’s board of directors. Under the amended support agreement, Caza confirmed that
Caza’s board of directors has unanimously determined that the Royal Road Minerals proposed offer is in
the best interests of Caza’s shareholders, and resolved to unanimously recommend that the Caza
shareholders tender their common sh ares to the offer, if and when made by Royal Road Minerals in
accordance with the amended support agreement. Royal Road Minerals also entered into amended
lock-up agreements with Caza’s largest shareholde r and its directors and officers that hold Caza
common shares, whereby these shareholders have ea ch agreed to tender all of their Caza common
shares to the offer, if and when made by Royal Ro ad Minerals in accordance with the amended support
agreement. Collectively, these supporting sharehol ders beneficially hold an aggregate of 115,879,351
Caza common shares representing approximately 82% of the outstanding Caza common shares on both
a non-diluted and fully-diluted “in the money” basis.
Readers should note that Royal Road Minerals has not yet commenced the offer and should carefully
review the cautionary statements set out below in th is news release respecting the status of the offer
and the factors that may cause Royal Road Minerals not to make the offer.
Highlights of the Transaction
For each Caza common share, Royal Road Minerals intends to offer 0.16 of a Royal Road Minerals
ordinary share. Royal Road Minerals expect s to issue approximately 22,608,321 ordinary shares
pursuant to the transaction (assuming no exercise of any Caza options or warrants), representing
approximately 34% of Royal Road Minerals’ current outstanding ordinary shares.
Management of Royal Road Minerals expects that the following factors, among others, would be
relevant to Caza shareholders in their assessment of th e proposed offer, if made by Royal Road Minerals
as described herein:
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• Opportunity for participation in Royal Road Min erals’ exploration projects in Colombia. Since
the proposed offer would be a share exchange tr ansaction, Caza shareholders would, upon the
successful completion of the proposed offer through their ownership of Royal Road Minerals
shares, benefit from any future increases in value associated with the continued exploration of
Royal Road Minerals’ portfolio of assets in Colombia.
• Continued participation in the Ca za’s projects in Nicaragua. Shareholders would continue to
participate in any increase in value of the Caza’s projects in Nicaragua by holding approximately
25.3% of the outstanding Royal Road Minerals shar es following any successful completion of the
proposed offer, if made (based on the nu mber of Caza common shares and Royal Road
Minerals’ shares currently outstanding).
• Proven leadership team in place. Following any successful completion of the proposed offer, if
made, Royal Road Minerals would continue to be guided by an experienced board of directors
and management team, which collectively has ex tensive project exploration and development,
acquisition, corporate finance and other relevant industry experience, all of which is necessary
to discover, evaluate and acquire prospective mineral projects, advance projects from the
exploration stage to development, and to create shareholder value by doing so.
• Financial Status of Caza. Caza’s public disclosure shows that it is consuming, rather than
generating, cash and that Caza currently has a s ubstantial working capital deficit. Caza and its
board of directors have, over the past twelve months, conducted a strategic review process and
no buyers for Caza or its assets or alternative transactions have emerged. Given Caza’s serious
financial difficulty, its inability to source additi onal financing, and the lock-up agreements with
supporting shareholders, there is no realistic probability of a “white-knight” emerging and
completing a transaction that is superior to the proposed offer, if made by Royal Road Minerals
shares as described herein.
• Accretive Assets; Enhanced Liquidity. Caza’s current active exploration projects are all located in
Nicaragua. The proposed offer, if made, would a llow Royal Road Minerals and Caza to aggregate
high quality mineral properties, all in Latin America, and would be intended to help each
company to geographically diversify its assets, benefit from combined exploration exposure,
reduce single-project risk and allow for improved financing and growth opportunities. Caza’s
controlling shareholder now beneficially owns 77.5% of the Caza common shares and Caza
warrants to purchase up to 88,160,000 Caza commo n shares, which, if fully exercised on the
date hereof, would increase such beneficial ownership to approximately 86% of the outstanding
Caza common shares. Because of this concentratio n of ownership, there is limited liquidity for
Caza common shareholdings and associated challenges for Caza to raise additional financing and
enter into certain transactions. The proposed offer, if made, would be intended to create a
combined company with a more diversified shareholder base and result in more liquidity for
investors and improved financing opportunities.
• Unanimous Recommendation of the Caza Board. Caza’s board of directors has unanimously
approved the proposed offer and, currently intends to recommend that Caza shareholders
accept the proposed offer, if made by Roya l Road Minerals shares as described herein.
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• Support of Shareholders. Caza’s largest shareholder and a secured creditor, as well as all of the
directors and officers of Caza have entered into the above-mentioned lock-up agreements
pursuant to which they have agreed to deposit to the proposed offer, if made, all Caza common
shares held by them, representing approximat ely 82% of the Caza common shares, subject to
the terms and conditions of such agreements. As a result, there is no impending prospect of a
competing offer for the Caza common shares by a third party.
Royal Road Minerals anticipates that the proposed offer, if made, will be subject to a number of
customary conditions, including: (i) there being deposited under the offer, and not withdrawn, at least
90% of the outstanding Caza common shares (calcu lated on a fully diluted basis), excluding Caza
common shares held by Royal Road Minerals; (ii) re ceipt of all governmental, regulatory and third party
approvals that Royal Road Minerals considers necessary or desirable in connection with the offer; and
(iii) no material adverse change having occurred in the business, affairs, prospects or assets of Caza.
Caza has agreed that it will issue a “deposit period news release” as contemplated under applicable
Canadian securities laws stating an initial deposit pe riod for the proposed take-over bid of 35 days from
the date that Royal Road Minerals commences the take-over bid by making the offer and delivering the
required take-over bid circular to Caza’s shareholders, or such other initial deposit period as Royal Road
Minerals and Caza may otherwise agree of not more than 105 days and not less than 35 days from such
date.
The support agreement between Royal Road Minerals a nd Caza provides that Caza’s board of directors
may, under certain circumstances, terminate the ag reement in favour of an unsolicited superior
proposal, subject to a right by Royal Road Minerals to match the superior proposal in question.
Full details of the Royal Road Minerals intended offer, including any conditions thereof, will be included
in the takeover bid circular that is expected to be mailed to Caza shareholders.
Cautionary Statement on Forward-looking Information
All statements, other than statements of historical fact, contained in this news release, including any
information as to the future financial or operatin g performance of Royal Road Minerals, constitute
“forward-looking information” or “forward-looking statements” within the meaning of certain securities
laws, including the provisions of the Securities Act (Ontario) and the “safe harbour” provisions under the
United States Private Securities Litigation Refo rm Act of 1995 and are based on the expectations,
estimates and projections of management as of the date of this news release unless otherwise stated.
Forward-looking statements are necessarily based up on a number of estimate s and assumptions that,
while considered reasonable by Royal Road Minerals as of the date of such statements, are inherently
subject to significant business, economic and competitive uncertainties and contingencies. The
estimates and assumptions of Royal Road Minerals co ntained in this news release, which may prove to
be incorrect, include, but are not limited to, the vario us assumptions set forth he rein and in Royal Road
Minerals’ take-over bid circular intended to be pr epared and filed in accordance with applicable
securities laws in Canada and Jersey as well as: (1 ) that Royal Road Minerals will make the offer,
commence a formal take-over bid for Caza’s common sh ares or complete the acquisition of Caza in
accordance with the terms and conditions of the above-mentioned amended support agreement or
otherwise; (2) the accuracy of Royal Road Minerals’ understanding of Caza’s projects; (3) the viability of
the Caza project areas and permitting the further exploration and the development of these project
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areas on a basis consistent with Royal Road Minerals’ and Caza’s current expectations; (4) the trading
price of Royal Road Minerals and Caza’s shares; (5 ) there being no significant political developments,
whether generally or in respect of the mining industry specifically, in Nicaragua th at is inconsistent with
Royal Road Minerals and Caza’s current expectations; (6) there being no significant disruptions affecting
Royal Road Minerals’ current business; (7) permi tting Royal Road Minerals to undertake certain
measures regarding Caza’s projects in Nicaragua; and (8) permitting and exploration at Royal Road
Minerals’ La Golondrina project on a basis consistent with its current expectations.
The forward-looking information set forth in this ne ws release is subject to various risks and other
factors which could cause actual results to differ materially from those expressed or implied in the
forward-looking information, including the risk that the proposed offer will not be made and, if made,
that the acquisition of Caza will not be complete d for any reason. Certain of these risks, factors,
estimates and assumptions are described in more deta il in Royal Road Minerals’ most recently filed
management discussion and analysis in the section en titled “Risk Factors”, to which readers are referred
and which are incorporated by reference in this news release. In addition, all forward-looking
statements made in this news release are qualified by the full “Risk Factors” in such management’s
discussion and analysis. These risks, factors, esti mates and assumptions are not exhaustive. Royal Road
Minerals disclaims any intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise, or to explain any material difference
between subsequent actual events and such forward- looking statements, except to the extent required
by applicable law.
Other Information
This news release does not constitute an offer to buy or an invitation to sell, or the solicitation of an
offer to buy or invitation to sell, any of the securities of Royal Road Minerals or Caza. Such an offer
may only be made pursuant to an offer and take-over bid circular filed with the securities regulatory
authorities in Canada. Ro yal Road Minerals plans to file an o ffer and take-over bid circular with
Canadian provincial securities regulators. Investor s and security holders are urged to read the offer
and take-over bid circular regarding the proposed transaction referred to in these documents if and
when they become available, because they will contain important information.
Investors may obtain a free copy of the offer and take-over bid circular if and when they become
available and other documents filed by Royal Road Minerals with applicable Canadian provincial
securities regulators on SEDAR at www.sedar.com. Th e offer and take-over bid circular and these other
documents will also be available for viewing and down load on Royal Road Mine rals’ website at such
time.
Neither the TSX Venture Exchange nor its Regulation Services Pr ovider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:
Royal Road Minerals contact: Dr. Tim Coughlin, President and Chief Execut ive Officer, by phone: USA-Canada toll-
free (800) 638-9205, +44 (0)1534 887166, or +44 (0)7797 742800, or by email at [email protected]