Waterton makes $59 mln bid to own Arizona’s Chaparral Gold

Canadian private equity firm Waterton Global Resource Management is making an offer to acquire 100% of the common shares of Chaparral Gold Corp (TSX: CHL) not already held by the firm at a price of $0.50 per share. The deal is valued at $58.8 million, according to one estimate. Waterton currently owns 2.9% of the shares in Chaparral, a Scottsdale, Arizona-based precious metals producer focused on development projects in Nevada. The company has issued a statement about Waterton’s unsolicited proposal, saying that net of the Chaparral’s working capital it implies a negative value for mineral properties. As previously reported by peHUB, Waterton is currently raising its second mining-focused fund, targeted at US$750 million.


Waterton to Make Offer to Acquire Chaparral Gold Corp.

Offers shareholders attractive premium, immediate liquidity, cash consideration

Low likelihood of competing offer, no financing conditions

TORONTO, Feb. 18, 2014 /PRNewswire/ – Waterton Precious Metals Fund II Cayman, LP (“Waterton”) today announced that it intends to commence, through its subsidiary Waterton Precious Metals Bid Corp., an offer to acquire all of the issued and outstanding common shares of Chaparral Gold Corp. (TSX: CHL) (“Chaparral”) not already held by it and its affiliates at a price of C$0.50 in cash per share (the “Offer”). The Offer represents a premium of approximately 22.5% based on the volume-weighted average price of the Chaparral shares on the TSX for the twenty (20) trading days ended February 14, 2014 and a premium of approximately 14.9% over the closing price of the Chaparral shares on the TSX on February 14, 2014. Waterton currently owns 3,403,500 Chaparral shares, representing approximately 2.9% of the issued and outstanding Chaparral shares.

Benefits to Chaparral Shareholders
Waterton believes that the Offer will be attractive to Chaparral shareholders for the following reasons:
Attractive Premium: The Offer represents a premium of approximately 22.5% based on the volume-weighted average price of the Chaparral shares on the TSX for the twenty (20) trading days ended February 14, 2014 and a premium of 14.9% over Chaparral’s closing price on February 14, 2014.

Immediate Liquidity: The Offer provides shareholders with immediate liquidity and the ability to fully monetize their investment at a price higher than the Chaparral shares have ever traded on the TSX.

Cash Consideration and Certainty of Value: The Offer provides shareholders with immediate cash consideration for their shares, allowing shareholders to realize certain value for Chaparral’s assets in excess of the value currently being ascribed to those assets by the stock market. The Offer also allows shareholders to avoid ongoing operational and funding risks associated with Chapparal, and to sell all of their shares at a fixed price – free of broker commissions and fees.

Low Likelihood of a Competing Offer: Competing bidders are unlikely to be willing to pay the premium being paid under the Offer, as there are limited potential bidders that, like Waterton Precious Metals, have a presence in Nevada and would be attracted to Chaparral’s development-stage assets.

Fully-Financed Cash Offer: The Offer is not conditional on obtaining financing and the Offeror has sufficient committed funding to fund the entire consideration payable for the Shares.

About the Offer
The Offer will be open for acceptance until 5:00 p.m. (Toronto time) on March 27, 2014 unless the Offer is extended or withdrawn. The Offer will be subject to customary conditions, including there being validly deposited under the Offer such number of Chaparral shares which, together with the Chaparral shares directly or indirectly owned by Waterton and its affiliates, constitutes at least 662/3% of the total outstanding Chaparral shares (on a fully diluted basis), no material adverse changes, and receipt of all necessary governmental or regulatory approvals. The Offer is fully financed and is not conditional on financing.

The full details of the Offer will be included in the formal offer and take-over bid circular and accompanying offer documents, which Waterton expects to file on or before February 19, 2014 with the applicable Canadian securities regulatory authorities. Materials filed with the Canadian securities regulatory authorities are available electronically without charge at www.sedar.com. These materials may also be obtained without charge from Kingsdale Shareholder Services Inc., the depositary and information agent for the Offer, by contacting them at 1-877-659-1818 (North American Toll Free Number) or 1-416-867-2272 (outside North America).

Advisors and Counsel
Waterton has retained National Bank Financial Markets to act as its financial advisor in connection with the Offer. Waterton’s legal counsel are Stikeman Elliott LLP and Allen & Overy LLP.

Important Notice
This press release does not constitute an offer to buy or the solicitation of an offer to sell any of the securities of Chaparral. Waterton encourages shareholders of Chaparral to read the formal Offer and take-over bid circular and other accompanying offer documents (and any amendments or supplements to any of the foregoing) when they are available, as they will contain the full terms and conditions of the Offer and other important information as well as detailed instructions on how Chaparral shareholders can tender their Chaparral shares to the Offer. This news release is not a substitute for these offer documents. The Offer will be made in the United States in compliance with Section 14(e) of, and Regulation 14E under, the U.S. Securities Exchange Act of 1934, as amended and otherwise in accordance with the requirements of Canadian law. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to the timetable and settlement procedures that are different from those applicable under U.S. domestic tender offer procedures and laws. For assistance in depositing Chaparral shares to the Offer, Chaparral shareholders should contact Kingsdale Shareholder Services Inc., the depositary and information agent for the Offer, at 1-877-659-1818 (North American Toll Free Number) or 1-416-867-2272 (outside North America).

About Waterton
Waterton is a leading mining-focused private equity fund dedicated to developing high quality precious metals projects located in stable jurisdictions. Waterton’s cross-functional, fully-integrated, in-house team of professionals have significant mining, financial and legal expertise. Waterton’s proactive approach to asset management, significant sector knowledge and ability to leverage extensive industry relationships has resulted in a strong track record of managing investments in the precious metals sector.

If you have any questions, or need assistance in depositing your Shares in Canada,
please contact the Depositary and Information Agent for the Offer:

Kingsdale Shareholder Services, Inc.
Toll Free (North America): 1-877-659-1818
Outside North America Call Collect: 1-416-867-2272
Email: contactus@kingsdaleshareholder.com

Media Inquiries:

Riyaz Lalani
Bayfield Strategy, Inc.

Forward-Looking Statements
Certain statements in the press release are forward-looking information and forward-looking statements within the meaning of applicable securities Laws (collectively, “forward-looking statements”) which are prospective in nature, and include statements relating to the timing, term and benefits of the Offer. Forward looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward looking statements. These statements generally can be identified by the use of forward looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Such forward-looking statements are based on estimates and assumptions made by Waterton in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that Waterton believes is appropriate in the circumstances, including the timing, and the terms and benefits of the proposed Offer. Many factors could cause the actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, general business and economic conditions globally or in particular geographic regions in which Chaparral conducts business, the failure to meet certain conditions of the Offer, legislative and regulatory changes or actions, claims asserted against Waterton or its affiliates, competition, liquidity risk, changes in capital or securities markets and interest rate and foreign currency fluctuations. Such forward looking statements should therefore be construed in light of such factors, and Waterton is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

SOURCE Waterton Precious Metals Fund II Cayman, LP

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