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TORONTO,
ONTARIO--(Marketwire - March 2, 2009) - CASTLE GOLD CORP. ("Castle
Gold", "the Company") (TSX VENTURE:CSG) is pleased to
provide an update on the Company's M&A initiatives. On September
25th, 2008 the Board of Directors of Castle Gold ("Board") announced
formation of a Merger and Acquisitions Advisory Committee which since
has been reconstituted as a special committee of the Board
("M&A Committee"). The M&A Committee's mandate is to
conduct a Strategic Alternative Review ("SAR"), to review the
terms of any possible transaction and to make recommendations to the
Board with respect to any strategic transaction. The Board of Castle
Gold has also retained Gryphon Partners as its financial advisor to
work with the M&A Committee in advancement of the SAR. The M&A
team have been actively engaged in the advancement of the SAR process. This
effort will be further enhanced through the addition of Gryphon
Partners.
The SAR will assess various alternatives available to the company,
including but not limited to, mergers, acquisitions, strategic
alliances, and/or other corporate combinations to maximize shareholder
value. The ideal criteria for M&A Candidates are:
- Excellent mining and management team;
- Gold producer with annual production ranging from of 50,000 to
250,000+ ounces based in the America's (ideally Mexico) with the
potential for expansion;
- An organic growth strategy;
- An acquisition growth strategy; and
- Compelling valuation metrics.
James Mark Plaxton, Chairman of the Board and M&A Committee of
Castle Gold Corp., Comments on Castle Gold's approach to an industry
that is ripe for consolidation: "The Board realises that an
accretive strategic transaction would allow Castle Gold to advance its
organic growth strategy in parallel to another company's providing
Shareholders of both Companies numerous potential benefits: enhanced
gold production (e.g. reaching critical levels of 100,000, 200,000, or
300,000 Oz's p.a.), increase in mineral reserves & resources,
diversification of assets, enhanced and expanded mine
operations/project development team, potential for increased
institutional investor appeal, potential for graduated exchange
listing, potential for marginable shares, potential for increased
research coverage, potential for reduced cost of capital, potential for
increased share trading liquidity, potential for theoretical multiple
expansion, and early mover advantage (potentially generating strong
relative paper potentially permitting aggressive asset and/or company
acquisitions)."
Shareholder Rights Plan Agreement
Effective today, the Board of Directors has implemented a Shareholder
Rights Plan Agreement.
The Board of Directors and management believe that given the valuation
gap that exists between the Company and many of its peers and in the
context of the volatility in share prices in the equity markets over
the recent months, it was in the interests of shareholders to ensure
that in the event of a future take-over bid for the Company's
outstanding common shares, the Rights Plan would provide a mechanism to
ensure that shareholders have adequate time to properly evaluate and
assess the bid without facing undue pressure or coercion. The Rights
Plan also provides the Board with additional time to consider any
take-over bid and, if applicable, to explore alternative transactions
in order to maximize shareholder value.
The TSX has
accepted notice of the Rights Plan, subject to, among other conditions,
confirmation of the Rights Plan by the Company's shareholders within
six months of the Rights Plan's implementation. The Company intends to
offer shareholder's the ability to vote on the transaction at the
upcoming Annual General Meeting, currently being planned to be held on
an as yet identified date in June 2009. Should the Company receive a take-over
bid that failed to meet the Permitted Bid requirements of the Plan,
shareholders would have the ability to vote on the Plan which would
take immediate effect should a take-over bid occur.
The Rights issued under the Rights Plan will become exercisable only if
a person, together with its affiliates, associates and joint actors
acquires or announces the intention to acquire beneficial ownership of
Castle Gold Corporation's common shares which, when aggregated with its
current holdings, total 20% or more of the Company's outstanding common
shares, other than a "Permitted Bid" (as defined in the
Rights Plan).
In the event a take-over bid does not meet the Permitted Bid
requirements of the Rights Plan, the rights issued under the plan will
entitle shareholders, other than any shareholder or shareholders
involved in the take-over bid, to purchase additional common shares of
the Company at a significant discount to the market price of the common
shares at that time. The board of directors is not currently aware of
any pending or proposed take-over bid for the Company.
Resignation of Director
Mr. Richard Adams has tendered his resignation as a director of the
Company to be able to devote more time to his personal and professional
commitments and is transitioning into a less involved consulting role
with the Company. Mr. Adams will remain with Castle Gold as a
consultant providing continuity during the handover of his
responsibility as Audit Committee Chairman to Mr. Milton Baehr and to
assist in other matters as requested by the Board and Management of
Castle Gold.
The Board of Directors would like to thank Mr. Adams for the valuable
contributions he made during his lengthy tenure as a Director of the
Company. Mr. Adams was a member of the management and boards of both
Aurogin Resources Ltd. and Morgain Mineral Inc., respectively, prior to
their amalgamation to form Castle Gold. Mr. Adams assisted in the
design, financing, permitting, construction, and operation of both of
the Company's two producing gold mines and more recently with the
corporate restructuring of Castle Gold.
We thank Mr. Adams for all of his very significant contributions over
the years which helped form today's Castle Gold and both the Board and
Management appreciate that he is remaining with the Company, albeit in
a less involved capacity, considering his current personal and
professional commitments.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with
projects focused in the America's. The Company owns a 100% interest in
the El Castillo gold mine in Mexico and a 50% interest in the El Sastre
gold mine in Guatemala. Castle Gold is also advancing exploration and
development work at its La Fortuna gold-silver-copper project in Mexico
and at its El Sastre and El Arenal project in Guatemala.
TSX-V Trading Symbol: CSG Total Shares Outstanding: 75.3MM Fully Diluted: 81.8MM 52-Week Trading Range: C$0.15 - $0.63
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
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