TORONTO, ONTARIO--(Marketwire - March 25, 2013) -
This news release is not for distribution in the United States or over United States wire services
Dundee Precious Metals Inc. (DPM.TO)(DPM-WTA.TO) ("DPM" or the "Company") is pleased to announce that the Toronto Stock Exchange ("TSX") has conditionally approved a warrant incentive program designed to encourage the early exercise of its 20,439,500 listed warrants that otherwise expire on November 20, 2015 (the "Warrants").
The proposal is to be effected by way of an amendment to the indenture governing the Warrants (the "Warrant Amendment") to provide holders of Warrants (the "Warrantholders") an opportunity to receive a premium to the intrinsic or "in-the-money" value of their Warrants and the trading price of the Warrants upon the early exercise of their Warrants. Each Warrant currently entitles a Warrantholder to acquire one common share of the Company (an "Underlying Share") at a price of Cdn.$3.25 (the "Current Exercise Price") at any time prior to 5:00 p.m. (Toronto time) on November 20, 2015.
Pursuant to the proposed Warrant Amendment, each Warrant would entitle the holder thereof to a Cdn.$0.40 reduction in the Current Exercise Price of the Warrants (the "Exercise Price Reduction"), in the event that the Warrantholder exercises his or her Warrants during a period of 30 days (the "Early Exercise Period") expected to commence on or about May 10, 2013. A Warrantholder who chooses to exercise his or her Warrants during the Early Exercise Period will pay an exercise price of Cdn.$2.85 per common share rather than the Current Exercise Price. Each Warrant that is not exercised during the Early Exercise Period will continue to entitle the holder to acquire one Underlying Share at the Current Exercise Price until November 20, 2015. The Warrants will continue to trade on the TSX during the Early Exercise Period.
|Illustrative Early Exercise of 100 Warrants|
|Warrants Owned||What is Paid on Exercise||What is Received|
|100||Cdn.$285 (Cdn.$2.85 per Warrant)1||100 common shares|
|(1) Instead of Cdn.$325 or Cdn.$3.25 per Warrant|
In the event that all of the Warrants are exercised during the Early Exercise Period, the Company would:
- receive net proceeds of approximately Cdn.$58.3 million, on or before June 9, 2013; and
- issue 20,439,500 common shares.
The proceeds raised from the early exercise of the Warrants will further strengthen the Company's balance sheet and support its planned growth capital expenditures.
The Company believes that the trading pattern of the Warrants is currently substantially the same as the trading pattern of the common shares of the Company, and that the trading price of the Warrants does not include a significant option value component in addition to the intrinsic or the "in-the-money" value of the Warrants. Management of the Company is therefore proposing to provide an incentive to Warrantholders to encourage the exercise of the Warrants during the Early Exercise Period. The Company has entered into support agreements with certain Warrantholders who hold approximately 32% of the issued and outstanding Warrants, and have thereby agreed to vote their securities of DPM in favour of the Warrant Amendment and to exercise their Warrants during the Early Exercise Period.
The following table compares the trading value and the intrinsic value of the Warrants for the 10 trading days prior to March 22, 2013, the last trading day prior to the date of this news release.
|10 Trading Day Premium|
|(March 11, 2013 to March 22, 2013)|
|Stock Symbol||Trading Price||Intrinsic Value||Percentage of Premium to Trading Price|
The independent members of the board of directors of the Company approved the submission of the Warrant Amendment to Warrantholders and shareholders of the Company for their approval at meetings scheduled to be held on May 9, 2013. In connection with the proposed Warrant Amendment, the Company has engaged Dundee Securities Ltd. ("Dundee Securities") and GMP Securities L.P. ("GMP") to act as financial advisors (the "Financial Advisors") to the Company and the directors of the Company in connection with the Exercise Price Reduction. GMP has provided a fairness opinion to the board of directors indicating that the Exercise Price Reduction is fair, from a financial point of view, to Warrantholders and shareholders (in both cases excluding insiders of the Company).
The Warrant Amendment requires final approval of the TSX, approval by holders of 66 2/3% of the Warrants, voting in person or by proxy at the meeting of holders of Warrants, and approval by a simple majority of those holders of Warrants that are not insiders of the Company. The transaction also requires approval of a simple majority of the votes cast by shareholders, excluding insiders, at the meeting of shareholders.
The Underlying Shares to be issued upon exercise of the Warrants have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption therefrom is available.
Dundee Precious Metals Inc. is a Canadian based, international gold mining company engaged in the acquisition, exploration, development, mining and processing of precious metals. The Company's principal operating assets include the Chelopech operation, which produces a gold, copper and silver concentrate, located east of Sofia, Bulgaria; the Deno Gold operation, which produces gold, copper, zinc and silver concentrate, located in southern Armenia; and the Tsumeb smelter, a concentrate processing facility located in Namibia. DPM also holds interests in a number of developing gold properties located in Bulgaria, Serbia, and northern Canada, including interests held through its 53.1% owned subsidiary, Avala Resources Ltd., its 47.3% interest in Dunav Resources Ltd. and its 10.7% interest in Sabina Gold & Silver Corp.
This news release contains "forward-looking statements" that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements with respect to the Warrant Amendment, receipt of all necessary approval thereof, future growth opportunities, the future price of gold and silver, the estimation of mineral reserves and resources, the realization of mineral estimates, the timing and amount of estimated future production and output, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any other future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: the uncertainties inherent to receiving all necessary approvals for the Warrant Amendment, the availability of future growth opportunities, the actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold, copper, zinc and silver; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, fluctuations in metal prices, as well as those risk factors discussed or referred to in documents filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available at www.sedar.com.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Unless required by securities laws, the Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.
This press release is not an offer of securities for sale in the United States. The securities have not been and will not be registered under the U.S. Securities Act of 1933. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities that may be made in the United States will be made by means of a prospectus that may be obtained from the issuer and that will contain detailed information about the Company and management, as well as financial statements.
|IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE CONCERNING THE|
|EARLY EXERCISE WARRANT TRANSACTION, PLEASE CONTACT:|
|Kingsdale Shareholder Services Inc.|
|North America Toll-Free Phone: 1-866-581-0512|
|Outside North America Call Collect: 416-867-2272|
President & Chief Executive Officer
Dundee Precious Metals Inc.
Senior Vice President, Investor & Regulatory Affairs and