Fri Sep 17, 2010 Continental Signs Agreement To Be Acquired By
Jinchuan Group For $432 Million
September 17, 2010, Vancouver, BC -- Continental Minerals
Corporation (TSX-V:KMK, OTCBB:KMKCF) ("Continental" or the
"Company") announces that it has signed a letter agreement to be
acquired (the "Acquisition") by Jinchuan Group Ltd ("Jinchuan"), a
large China-based mining group for aggregate cash consideration of
approximately C$432 million pursuant to an arrangement under the
Business Corporations Act (British Columbia) (the "Arrangement").
The letter agreement provides for the acquisition of 100% of
Continental's approximately 166 million common shares on a fully
diluted basis for C$2.60 per share. The Acquisition price of $2.60
per share to be paid to Continental securityholders represents a 13%
premium to the closing trading price of Continental's common shares
on September 14, 2010, the last trading day prior to this
announcement, and an 18% premium to the volume weighted average
trading price of Continental's common shares over the last 30
trading days ending on September 14, 2010.
Each Continental stock option currently outstanding that is
exercised by the record date for participation in the Arrangement
(which date will be announced in a future news release), will
participate fully in the Arrangement. Option holders will be
entitled to vote on the Arrangement with common shareholders on an
as-if exercised basis (as a single class) at the special meeting of
Continental securityholders to be convened to consider the
Arrangement.
The Board of Directors of Continental is also proposing to
include in the Arrangement a special cash distribution of up to
C$0.10 per Continental share outstanding immediately prior to
completion of the Acquisition. The Board, having extensively
discussed the Acquisition terms with its financial and legal
advisors, has determined that the Arrangement is fair to the
Company's securityholders and is in the best interests of the
Company. Therefore, the Board will be recommending that Continental
securityholders vote in favour of the Arrangement. The letter
agreement is binding in certain respects only and therefore
completion of the Arrangement is subject to the execution of
definitive agreements and other conditions, including approval of
Continental's securityholders, approval of the Arrangement by the
British Columbia Supreme Court, certain Chinese and Canadian
regulatory approvals and customary closing conditions for
transactions of this nature.
The definitive agreements in respect of the Arrangement will
include an arrangement agreement and voting lock-up agreements with
each of the directors and officers of the Company and certain
shareholders of the Company pursuant to which such persons will
agree to support the Arrangement.
The definitive agreements will contain customary representations,
warranties and covenants of each of Jinchuan and Continental. In
addition, Continental has agreed in the letter agreement that it
will not solicit or initiate discussions regarding any other
business combination or sale of its shares or material assets until
thirty days from the date of execution of the letter agreement,
except in respect of unsolicited proposals that the Continental
Board of Directors in good faith determines could reasonably be
expected to result in a superior offer. Continental has also granted
Jinchuan a right to match competing unsolicited proposals. The
arrangement agreement will provide for a $13.4 million break fee
which could be payable by either party in certain events. The fee
would be payable by Jinchuan to Continental if the Arrangement is
not completed by Jinchuan as a result of a breach by it of certain
of its obligations under the arrangement agreement. The break fee
would be payable by Continental to Jinchuan in certain customary
events such as the withdrawal by the Continental board of support
for the Acquisition, if the board recommends an alternative
transaction or if an alternative transaction completes within 12
months of termination of the Acquisition, if Continental breaches
certain non-solicitation covenants or it fails to timely convene a
Continental securityholders meeting to consider the Arrangement.
Jinchuan has further agreed that, after receipt of Chinese
regulatory approval of the Acquisition and prior to the Continental
securityholders meeting at which the Arrangement is to be
considered, it will transfer the entire aggregate cash consideration
payable under the Arrangement to Canada.
After execution of the definitive agreements in respect of the
Arrangement, Continental will be convening a special meeting of its
securityholders to consider the Arrangement. To meet a Jinchuan
condition of the Acquisition, the Arrangement will also accelerate
the redemption or exchange of Continental's class of preferred
shares for certain underlying marketable securities valued at
approximately $25 million. Continental currently anticipates that
the special meeting will be held in November 2010 and that an
information circular containing detailed disclosure regarding the
Arrangement will be mailed to Continental's securityholders during
October 2010. The Arrangement will require the approval of
securityholders of Continental at the meeting in accordance with the
terms of the orders to be granted by the Supreme Court of British
Columbia, Business Corporations Act (British Columbia) and
Multilateral Instrument 61-101 "Protection of Minority Security
Holders in Special Transactions". The information circular will be
filed and available for public download at www.sedar.com and in the
United States at www.sec.gov concurrently with mailings to
securityholders.
Advisers
BMO Capital Markets is sole financial advisor to Continental in
connection with the proposed Arrangement. McCarthy Tétrault LLP acts
as counsel to the special committee of the Board and Lang Michener
LLP acts as general counsel to Continental.
Sino Resources Capital Pty Ltd. and Blake, Cassels & Graydon
LLP are the financial and legal advisors to Jinchuan respectively in
respect of the Arrangement.
About Continental
Continental is a TSX Venture Exchange listed resource company
associated with the Vancouver-based Hunter Dickinson Group of mining
companies. Since 2005, Continental has focused on exploring and
unlocking the value of its large Xietongmen copper-gold property in
Tibet Autonomous Region, PRC.
About Jinchuan
Jinchuan Group is a large integrated non-ferrous metallurgical
and chemical engineering enterprise engaged in mining,
concentrating, metallurgy and chemical engineering. It produces
nickel, copper, cobalt, rare and precious metals and also some
chemical products such as sulfuric acid, caustic soda, liquid
chlorine, hydrochloric acid and sodium sulfite, together with some
further processed nonferrous metals products. The output of nickel
and platinum group metals respectively accounts for more than 90% of
the total in China. Jinchuan Group Ltd. is the largest producer of
nickel-cobalt in China.