Pursuant to the Agreement, Tamaka will become a wholly owned subsidiary of First Mining and the holders of common shares of Tamaka will receive an aggregate of 92.5 million common shares of First Mining (the "Transaction"). The parties to the Transaction are at arm’s length.
The Goldlund property consists of 167 claims and three leases covering approximately 26,600 hectares in northwestern Ontario located approximately 60 km from the town of Dryden. The property has been extensively explored and hosted an underground and open pit mine between 1982 and 1985.
Tamaka commissioned a technical report relating to the Goldlund Gold Project by WSP Canada Inc. dated May 2016 and entitled "Technical Report and Resource Estimation Update on the Goldlund Project". This technical report has not been publicly filed and was not approved by First Mining.
The report was reviewed by the management of First Mining and its Qualified Persons, particularly with respect to the assumptions and the risks regarding those assumptions used in the resource estimates.
First Mining relied on this report only as a general guide in making its decision to acquire Tamaka and (indirectly) the Goldlund Project. First Mining’s Qualified Persons have not done sufficient work to classify the resource estimates in this report as current mineral resources or mineral reserves.
Accordingly, First Mining regards these estimates as historical estimates and is not relying on them as current resource estimates. First Mining recommends caution when relying on any of the historical resource estimates relating to the Goldlund Gold Project.
The resource was calculated as a pit shell analysis based on a database of 1,604 drill holes, 246 underground wall sampling cuts and 224 trench sampling cuts. The calculation used a base case of US$1,200/oz. gold price and a cut-off grade of 0.4 g/t Au. The pit was estimated to a maximum depth of 200 metres with a 6.1:1 strip ratio.
It is the Company’s intent to commission a new 43-101 compliant resource estimate and technical report following completion of the Transaction. Completion of a new resource estimate will require additional analysis of the previous assay results however it is not expected to require any additional exploration.
A particular focus of First Mining will be to consider the prior treatment of assay intervals, grade capping and compositing strategies, together which, in the view of the Company, may result in an adjustment to the results from the May 2016 WSP study.
Keith Neumeyer, Chairman of First Mining, stated: "With the acquisition of Tamaka and its Goldlund property, First Mining continues to build its portfolio of attractive gold development properties in central Canada. The Goldlund project, along with our recently announced and nearby Cameron acquisition, places First Mining at a commanding position in the world renowned Kenora mining district of Ontario.
"We believe Goldlund possesses tremendous exploration upside, and has excellent existing infrastructure, including roads and power. Over the last twelve months, we have aggressively assembled a significant package of 28 projects, including Goldlund and Cameron, containing significant gold resources.
"Our track record of accumulating high quality gold assets is unparalleled in the global mining industry. Going forward, we will continue to look for other compelling opportunities, however after such an aggressive and successful campaign of acquisitions, we expect that our focus will start to evolve towards adding value to our current portfolio."
Under the terms of the Agreement, on closing the holders of common shares of Tamaka will receive an aggregate of 92.5 million common shares of First Mining.
In addition, all outstanding stock options of Tamaka will become exercisable for First Mining common shares on the same exchange ratio as applied to the Tamaka common shares and will be governed by First Mining’s Stock Option Plan.
All outstanding warrants of Tamaka will also become exercisable for common shares of First Mining on the same exchange ratio as applied to the Tamaka common shares. Following the completion of the Transaction, the current shareholders of Tamaka will hold approximately 18.8% of the issued and outstanding shares of First Mining (assuming completion of the previously announced acquisition of the Cameron property by First Mining).
Each of the directors and officers of Tamaka together with certain other shareholders of Tamaka, who hold in the aggregate approximately 53.2% of the issued and outstanding Tamaka shares (assuming no exercise of existing Tamaka stock options or warrants) have entered into irrevocable lock-up and voting support agreements with First Mining and have agreed to vote in favor of the Transaction at a special meeting of Tamaka shareholders.
It is a condition to closing that certain shareholders who hold in the aggregate approximately 39.6% of the outstanding shares of Tamaka, will deposit the First Mining shares which they receive under the Transaction into escrow.
Twenty percent of such shares will be released from escrow on the date one year following closing of the Transaction and an additional 20% will be released every six months thereafter, with the final tranche released on the date which is three years after closing.
The Transaction will require the approval of at least two-thirds of the votes cast by the shareholders of Tamaka, voting on such resolution at a special meeting expected to take place in late June 2016. The Transaction is also subject to the approval of the TSX Venture Exchange and the satisfaction of certain other closing conditions customary in transactions of this nature.
