PMI and Keegan to Merge as Equals to Form Asanko Gold

Wed Dec 5, 2012 6:45am EST

* Reuters is not responsible for the content in this press release.

PMI Gold Corporation ("PMI") (TSX:PMV)(FRANKFURT:PN3N)(ASX:PVM)and Keegan
Resources Inc. ("Keegan") (TSX:KGN)(NYSE MKT:KGN) are pleased to announce
that today they have entered into a definitive arrangement agreement to
combine their respective businesses (the "Merger") and to create a
leading West African gold development company. A joint conference call
hosted by Peter Breese and Collin Ellison will be held at 4:30 pm (EST)
and 1:30 pm (PST) today (8:30 am Thursday in Sydney) to discuss this
transaction. Call-in details are provided at the end of this release.

    The combined company will continue under the name "Asanko Gold Inc."
("Asanko"), reflective of the West Ghana region in which the two
companies hold their principal gold projects. Asanko will be led by Peter
Breese, the current President and CEO of Keegan and Collin Ellison, the
current Managing Director and CEO of PMI. Under terms of the Merger
(which will be effected by means of a statutory plan of arrangement of
PMI), each PMI shareholder will receive 0.21 Asanko shares for each PMI
share (the "Exchange Ratio"). As Keegan is the surviving corporate
entity, existing Keegan security holders will not need to exchange their
securities in the Merger. The Merger will create a combined company with
an aggregate market capitalization expected to be in the $700 million
range. Existing Keegan and PMI shareholders will each own approximately
50% of the combined company, inclusive of currently in-the-money dilutive


    Asanko is set to become the leading gold development company in West
Africa with near term production expected from a unitized project
comprised of two nearby gold deposits - Obotan and Esaase. Other merger
highlights include:

--  Measured and Indicated Resources of combined projects = 6.94 million
    ounces at an average grade of 1.90 grams per tonne (1), (2) ,(3); 
--  Additional Inferred Resources of combined projects = 2.65 million ounces
    at an average grade of 1.87 grams per tonne (1), (2) ,(3); 
--  Strongly capitalized with over $340 million in cash on hand and no debt
--  Obotan can proceed to construction quickly - approximately 200,000
    ounces per year with first gold pour expected in 2014; 
--  Esaase development to be funded from cash flow - additional 150,000 to
    200,000 ounces per year by 2017; 
--  Targeted operational and capital synergies through a 2013 optimization
    analysis - Obotan and Esaase located within a 15 km radius; 
--  Experienced mine development and operational executive and management
    team to build and operate; 
--  Consolidated Asankrangwa gold belt - over 70 km of belt strike anchored
    by the Obotan and Esaase deposits and over 1,000 square kilometers in
--  Planned growth through exploration of numerous high priority targets on
    the belt as well as Kubi and Asumura; 
--  Enhanced capital markets presence - Asanko is expected to appeal to a
    broader shareholder base, increase analytical following and improved
    share trading liquidity; 
--  Merger is expected to be tax neutral or deferred for substantially all
    participants; and 
--  Asanko shares issued to PMI shareholders under the Merger will be free
    of trading restrictions in Canada and United States (except for
    affiliated persons); Asanko shares are required to be listed on the TSX,
    ASX and NYSE MKT Equities Exchange upon completion of the Merger.

    Peter Breese, President and CEO of Keegan, stated: "This is truly a
unique and exciting opportunity to combine these two adjacent and
near-term development projects and to have available some $340 million in
combined cash to fund a Mid-Tier scale production growth profile starting
in about two years. We expect significant synergies through the joint
development of Obotan and Esaase which we expect will ultimately create
one of the largest gold mining and exploration districts in Africa."

    Collin Ellison, Managing Director and CEO of PMI, stated: "We think the
combination of these two companies with adjacent and complementary
deposits, highly prospective exploration holdings on the Asankrangwa
belt, outstanding self-funding financial flexibility and a combined
management strength will allow both groups of shareholders to realize
maximum value through Asanko Gold's path to production and aggressive
growth profile through to Mid-Tier Producer status by 2017."


    The Board of Directors and management of Asanko will draw from the
expertise of both companies. Peter Buck and Shawn Wallace, the respective
Chairmen will become Co-Chairmen, while Peter Breese will become Chief
Executive Officer and Collin Ellison will become Asanko's President.
Other senior management will be determined following completion of the

    On immediate completion of the Merger, the Board will be comprised of
three directors from each predecessor and a seventh director will be
added post-completion. The initial six directors of Asanko will be, from
PMI: Peter Buck, Ross Ashton and John Clarke; and from Keegan: Shawn
Wallace, Colin Steyn and Gord Fretwell.


    The proposed Merger will be effected by way of court-approved plan of
arrangement of PMI (the "Arrangement") under the Business Corporations
Act of British Columbia. Full details of the Merger will be included in
joint management information circulars for both PMI and Keegan which will
be mailed to their respective shareholders in late January 2013. The
Merger will be subject to approval of 50% plus one of the votes cast by
Keegan shareholders and by 2/3 of the votes cast by PMI shareholders at
their respective special meetings of shareholders which will both be held
on the same day targeted for late February, 2013. In addition to the
shareholder approvals and a court approval, the Merger is subject to
applicable regulatory approvals and the satisfaction of other customary
closing conditions, including Asanko obtaining an ASX listing for its
shares. A copy of the arrangement Agreement will be posted at and a summary will be included in the joint information

    Pro-forma the Arrangement, Asanko will have approximately 171.7 million
shares outstanding, 11.4 million options outstanding and 9.8 warrants
outstanding. PMI options and warrants will be cancelled and replaced by
equivalent length options and warrants of Asanko which will be adjusted
as to number and exercise based on the Exchange Ratio. Pro-forma
ownership of Asanko is approximately 50% PMI and 50% Keegan including
currently in-the-money dilutive securities.

    Asanko will maintain its TSX and NYSE MKT listings, and will forthwith
apply to list on the ASX subject to completion of the Merger. In the
United States the issuance of securities of Asanko under the Merger will
be conducted in reliance on the exemption from registration found under
section 3(a)(10) of the Securities Act of 1933. Asanko will continue to
be a foreign private issuer under United States securities laws.

    The Arrangement Agreement includes mutual deal protection provisions,
including no solicitation obligations, right to match, a mutual $13
million break fee and customary fiduciary-out provisions in the event of
a superior proposal being received by either company.

    Both companies' Boards of Directors have determined that the proposed
business combination is in the best interests of their respective
shareholders based on a number of factors, including verbal fairness
opinions received from each of their respective financial advisors. These
opinions are subject to certain assumptions and limitations and opine on
the fairness, from a financial point of view, of the consideration to be
received by their respective shareholders pursuant to the Merger. These
factors will be further discussed in the joint information circular. Each
company's Board of Directors has unanimously approved the terms of the
proposed Merger and will recommend that their respective shareholders
vote in favour of the Merger at their respective shareholder meetings. In
addition, directors and officers of both companies have entered into
voting lock-up agreement to vote in favour of the Merger.


    PMI has retained Macquarie Capital Markets Canada Ltd. to act as
financial advisor and Stikeman Elliott LLP to act as legal advisor.

    Keegan has retained Canaccord Genuity to act as financial advisor and
McMillan LLP to act as legal advisor.


    (1). Mineral Resources for Esaase stated using a 0.8 g/t Au cut-off, NI
43-101 Technical Report filed on SEDAR November 23, 2012 and Mineral
Resources for Obotan stated using a 0.5 g/t cut-off, NI 43-101 Technical
Report filed on SEDAR on May 25, 2012.

    (2). NI43-101/JORC Code compliant Mineral Resource inventory for Obotan
consist of Measured Resources of 15.57Mt grading 2.47g/t Au for 1.23Moz;
Indicated Resources of 29.21Mt grading 2.00g/t Au for 1.88Moz; and
Inferred Resources of 21.91Mt grading 1.99g/t Au for 1.40Moz, as reported
in the NI43-101 Technical Report filed on SEDAR on May 25, 2012.

    (3). Figures shown exclude PMI's Kubi Gold Project consisting of NI
43-101/JORC Mineral Resources estimate of Measured 0.66 Mt grading 5.30
g/t for 112k oz, Indicated 0.66Mt grading 5.65 g/t for 121 k oz, Inferred
0.67Mt grading 5.31 g/t for 115k oz. The preceding information relates to
Mineral Resources at the Kubi Main Deposit, Ghana, is based on a resource
estimate that has been audited by Simon Meadows Smith, who is a full time
employee of SEMS Exploration Services Ltd, Ghana. Simon Meadows Smith is
a Member of the Institute of Materials, Minerals and Mining (IMO3),
London and has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves, and under
NI43-101. Simon Meadows Smith consents to the inclusion in press release
of the matters based on information in the form and context in which it


    A joint conference call hosted by Peter Breese and Collin Ellison will be
held today (Wednesday) at 4:30 pm (ET), 1:30 pm (PT), 9:30 pm (London),
Thursday 5:30 am (Perth) and 8:30 am (Sydney) to discuss this merger.
Details are as follows:

    Live Webcast Information:

    Event Title: PMI and Keegan Resources Merger Announcement

    To view the live webcast:

    Webcast replay available until: December 11, 2013 at

    Teleconference Information (all numbers are Toll-Free):

    Live Participant Dial In (North America): 877-407-8033

    Live Participant Dial In (International): 201-689-8033

    Conference ID #: 405440

    Teleconference Replay available until: December 19, 2012 at 11:59pm

    Replay Number (North America): 877-660-6853

    Replay Number (International): 201-612-7415

    Conference ID #: 405440

    Webcasts will also be available at Keegan's website at and PMI's website at

    About PMI Gold Corporation

    PMI is an international gold company which is focused on developing a
substantial West African gold business spanning three emerging mining
centres in south-west Ghana, one of the world's most prolific gold
producing regions. PMI has a strong portfolio of assets in Ghana, with a
dominant 70km contiguous landholding in the Asankrangwa Gold Belt with
interests in 9 concessions which comprises the 100% owned Obotan Gold
Project and the 100% owned Asanko Regional Exploration Project. PMI also
holds 2 mining leases and 2 concessions within the Ashanti Gold Belt
which comprises the advanced exploration Kubi Gold Project. The Obotan
Gold Project (Measured Resources of 15.57Mt grading 2.47g/t Au for
1.23Moz; Indicated Resources of 29.21Mt grading 2.00g/t Au for 1.88Moz;
and Inferred Resources of 21.91Mt grading 1.99g/t Au for 1.40Moz, based
on a 0.5g/t Au cut-off) is scheduled to start gold production in 2014 and
expected to produce an average of 221,500 oz Au per year over the first
five years. Mineral Resources is based on a resource estimate audited by
Mr Peter Gleeson, who is a full time employee of SRK Consulting. Mr
Gleeson is a Member of the Australian Institute of Geoscientists (MAIG)
with sufficient experience relevant to the style of mineralization and
type of deposit under consideration and to the activity undertaken to
qualify as a Competent Person as defined in the 2004 Edition of the
Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves' and as defined in terms of NI43-101 standards for
resource estimation of gold. Mr Gleeson has more than 5 years' experience
in the field of Exploration Results and of resource estimation in general
and consents to the inclusion of matters based on information in the form
and context in which it appears.

    PMI trades on the TSX, ASX and Frankfurt under the symbols PMV, PVM and
PN3N.F, respectively.

    Collin Ellison, Bsc Mining, MIMMM, C.Eng is the Qualified Person within
the definition of that term under NI 43-101, who has assumed
responsibility for the technical disclosure relating to PMI in this

    The NI43-101 technical report outlining the Obotan Project Mineral
Resources and Reserve Estimate and the results of the Feasibility Study
on September 17, 2012 was prepared by GR Engineering Services Limited,
and co-authored by P. Gleeson, B.Sc. (Hons), M.Sc, MAIGS, MGSA, J. Price,
FAusIMM(CP), FGS, MIE(Aust.), R Cheyne, BEng. (Mining), FAusIMM, CEng
(IEI), and G. Neeling, BAppSc. (Multidisciplinary) FAusIMM, each of whom
is independent for the purposes of NI 43-101. 

    About Keegan Resources Inc.

    Keegan is a gold development company which has been focussing on near
term gold production at its high grade multi-million ounce Esaase gold
project in Ghana. The Company offers investors the opportunity to share
ownership in the rapid exploration and development of high quality pure
gold assets. Keegan is focused on its wholly owned flagship Esaase gold
project (3.83 million ounces of gold in the Measured and Indicated
category with an average grade of 1.73 g/t Au and 1.25 million ounces of
gold in the Inferred category with an average grade of 1.75 g/t Au, based
on a 0.8 g/t Au cut-off) located in Ghana, West Africa; a highly
favourable and prospective jurisdiction. Managed by highly skilled and
successful technical and financial professionals, Keegan is well financed
with no debt. The Company is also strongly committed to the highest
standards for environmental management, social responsibility, and health
and safety for its employees and neighbouring communities. 

    Keegan trades on the TSX and the NYSE MKT under the symbol KGN. 

    Greg McCunn, P.Eng. of Keegan Resources is the Qualified Person under NI
43-101 who has assumed responsibility for the technical disclosure
relating to Keegan in this release.

    Charles J. Muller, B.Sc. Geology (Hons), Pr.Sci.Nat., MGSSA, a Director
of Minxcon Pty Ltd. of Johannesburg, South Africa and an independent
Qualified Person under NI 43-101 is responsible for any disclosure
related to Keegan's Mineral Resources in this release.

    Cautionary Note Regarding Forward-Looking Statements and Information:

    This PMI and Keegan joint press release contains "forward-looking
information", as such term is defined in applicable Canadian securities
legislation and "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Such
statements concern PMI's and Keegan's future financial or operating
performance and other statements that express management's expectations
or estimates of future developments, circumstances or results. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "expects", "believes", "anticipates",
"budget", "scheduled", "estimates", "forecasts", "intends", "plans" and
variations of such words and phrases, or by statements that certain
actions, events or results "may", "will", "could", "would" or "might",
"be taken", "occur" or "be achieved". Such forward-looking information
may include, without limitation, statements regarding the completion and
expected benefits of the proposed Merger and other statements that are
not historical facts. Forward-looking information is based on a number of
assumptions and estimates that, while considered reasonable by management
based on the business and markets in which PMI and Keegan operate, are
inherently subject to significant operational, economic and competitive
uncertainties and contingencies. Assumptions upon which forward looking
statements relating to the plan of arrangement have been made include
that PMI and Keegan will be able to satisfy the conditions in the
Arrangement Agreement, that ongoing due diligence investigations of each
party will not identify any materially adverse facts or circumstances,
that the required approvals will be obtained from the shareholders of
each of PMI and Keegan, that all required third party, and that
regulatory and government approvals will be obtained.
PMI and Keegan caution that forward-looking information involves known
and unknown risks, uncertainties and other factors that may cause PMI's
and Keegan's actual results, performance or achievements to be materially
different from those expressed or implied by such information, including,
but not limited to: gold price volatility; fluctuations in foreign
exchange rates and interest rates; between actual and estimated reserves
and resources or between actual and estimated metallurgical recoveries;
costs of production; capital expenditure requirements; the costs and
timing of construction and development of new deposits and expansion of
existing operations; the success of exploration and permitting
activities; parts, equipment, labor or power shortages or other increases
in costs; mining accidents, labour disputes or other adverse events; and
changes in applicable laws or regulations. In addition, the factors
described or referred to in the section entitled "Risk Factors" in PMI's
Annual Information Form for the year ended June 30, 2012 or under the
heading "Business Description - Risk Factors" in Keegan's Annual
Information Form for the financial year ended March 31, 2012, both of
which are available on the SEDAR website at, should be
reviewed in conjunction with the information found in this press release.
Although PMI and Keegan have attempted to identify important factors that
could cause actual results, performance or achievements to differ
materially from those contained in forward-looking information, there can
be other factors that cause results, performance or achievements not to
be as anticipated, estimated or intended. There can be no assurance that
such information will prove to be accurate or that management's
expectations or estimates of future developments, circumstances or
results will materialize. As a result of these risks and uncertainties,
the proposed Merger could be modified, restricted or not completed, and
the results or events predicted in these forward looking statements may
differ materially from actual results or events. Accordingly, readers
should not place undue reliance on forward-looking information. The
forward-looking information in this press release is made as of the date
of this press release, and PMI and Keegan disclaim any intention or
obligation to update or revise such information, except as required by
applicable law and neither Keegan not PMI assume any liability for
disclosure relating to the other company herein.

    Cautionary Note to US Investors Regarding Mineral Reporting Standards:

    PMI and Keegan prepare their disclosure in accordance with the
requirements of securities laws in effect in Canada, which differ from
the requirements of US securities laws. Terms relating to mineral
resources in this press release are defined in accordance with National
Instrument 43-101 - Standards of Disclosure for Mineral Projects under
the guidelines set out in the Canadian Institute of Mining, Metallurgy,
and Petroleum Standards on Mineral Resources and Mineral Reserves. The
Securities and Exchange Commission (the "SEC") permits mining companies,
in their filings with the SEC, to disclose only those mineral deposits
that a company can economically and legally extract or produce. PMI and
Keegan use certain terms, such as, "measured mineral resources",
"indicated mineral resources", "inferred mineral resources" and "probable
mineral reserves", that the SEC does not recognize (these terms may be
used in this press release and are included in the public filings of each
of PMI and Keegan which have been filed with securities commissions or
similar authorities in Canada).

Keegan Resources Inc.
Peter Breese
President and CEO
1-604-683-8193 or 1-800-863-8655

Keegan Resources Inc.
John Eren
VP Investor Relations
1-604-683-8193 or 1-800-863-8655

Rebecca Greco
Fig House Communications
1-416-822-6483 or 1-888-682-8089

Nicholas Read
Read Corporate
61-8- 9388 1471
PMI Gold Corporation
Collin Ellison
Managing Director and CEO

Copyright 2012, Market Wire, All rights reserved.

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