OVERVIEW

 

                                                             


On 24 June 2009 Catalpa and its largest shareholder, Lion Selection Limited (“Lion”) (ASX:LST), signed a Merger Implementation Agreement (“MIA”) to establish Catalpa as a new Australian mid-tier gold producer.

The proposed merger will bring together Catalpa’s 100% owned and operated 100 000+ oz pa Edna May Operations in Western Australia and Lion Selection’s 30% stake in the Newcrest managed, 100 000 oz pa Cracow Gold Operations in Queensland, under Catalpa’s experienced management team. As part of the merger, Catalpa will also acquire a pre-emptive right over Newcrest’s 70% stake in Cracow.
 
Following implementation of the merger, expected in October 2009, Catalpa will be a cashflow positive gold producer from its 30% stake in Cracow and, together with production from Edna May Operations commencing mid 2010, annual production will be increased to 130 000+ oz pa.
 
Catalpa is now positioned to be one of Australia’s four top gold producers, capitalising on the buoyant outlook for gold. The company is expected to attract new investors and have greater liquidity.
 
Benefits to Catalpa Shareholders
Catalpa shareholders will hold shares in a company with the following key attributes:
 
  • A mid-tier Australian gold producer with diversified operations and immediate production
  • Focused and fully funded
  • Experienced Board and management team
  • Significant increase in size and scale of operations
    • Resources increases from 1.5m oz to 1.7m ounces gold
    • Reserves increases from 817,000 oz to 870,000 ounces gold
    • Combined production of 130,000+ ounces gold pa (once Edna May is at full production)
  • Two significant assets:
    • the Edna May Gold Project in Western Australia which, when commissioned in mid 2010, is planned to produce at a rate in excess of 100,000 oz per annum with an estimated life of mine cash operating cost of $636/oz (pre-royalty), a current mine life of around 8 years and 352,317 ounces sold forward at a fixed flat price of A$1,544/oz; and
    • 30% joint venture interest in Cracow Gold Mine in Queensland with a share of current production of around 30,000 oz per annum at a cash cost of A$500 to A$530/oz
  •  Both mines have significant potential to add additional resources and reserves through near mine exploration success
  • Pre-emptive right over Newcrest’s 70% interest in the Cracow Gold Mine
  • Removes Lion’s controlling shareholding with the largest shareholder post merger holding 6.5% of Catalpa ¹

Merger Terms and Conditions

The Merger will be implemented via a Scheme of Arrangement of Lion shareholders, pursuant to which Catalpa will acquire all of the shares in Lion (“Scheme”). Under the Scheme Lion shareholders will receive one Catalpa share for each Lion share they hold (post Catalpa undertaking a 1 for 11 share consolidation). 
In conjunction with the Scheme, Lion will first undertake a demerger of its investment assets and undertake a 10c per share cash distribution to its shareholders.
For details on the Terms and Conditions of the Merger Implementation Agreement, Click Here
 
What Shareholders Should Do
The Merger is unanimously recommended by both the Boards of Lion and Catalpa and each director intends to vote their respective shareholdings in favour of the Merger, in the absence of a superior competing proposal. 
An Extraordinary General Meeting of Catalpa shareholders to approve the share consolidation and the merger will be scheduled to take place in September 2009, the notice of which will be distributed to Shareholders in due course. In the interim, Shareholders may contact the following for further information:
Bruce McFadzean
Managing Director
Catalpa Resources Limited
Ph: + 61 8 9321 3088
 
Warrick Hazeldine / Annette Ellis
Media and Investor Relations
Purple Communications
Ph: +61 8 6314 6300
 
 
 
[1]Based on 144.7m Catalpa shares on issue post completion of the transaction.