TORONTO, ONTARIO, Oct. 28, 2009 (Marketwire) --
TORONTO, ONTARIO -- (Marketwire) -- 10/28/09 -- CASTLE GOLD CORPORATION (TSX VENTURE: CSG) is pleased to announce today that it has entered into a support agreement with Argonaut Gold Inc. ("Argonaut") in connection with the proposed acquisition (the "Offer") by Argonaut of all of the common shares of Castle Gold Corporation ("Castle Gold"). Under the terms of the Support Agreement, Argonaut will offer to acquire, by way of a take-over bid, all of the issued and outstanding Common Shares at a price of C$1.25 per fully diluted share, subject to an increase in such price by C$0.01 for every 1% increase in the price of gold calculated from a starting gold price of US$1,050 to the 5 day average London Gold Fix (PM) price for December 18, 21, 22, 23 and 24, 2009, provided that the maximum final Offer price shall not exceed C$1.50 per Common Share.
The Board of Directors of the Company upon consultation with its financial and legal advisors, has unanimously determined that the Offer is fair to shareholders, that the Offer is in the best interests of Castle Gold and the shareholders, and accordingly, has unanimously approved the entering into of the Support Agreement and the making of a recommendation that shareholders accept the Offer. All members of the Board and Management have entered into Shareholder lock-up agreements for their issued and outstanding Common Shares and agreed to tender such Common Shares to the Offer. The Board has received a verbal opinion that, subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be received under the Offer is fair, from a financial point of view, to Castle Gold's shareholders.
The Offer is subject to certain conditions that are required to be satisfied prior to take-up and payment by Argonaut. Argonaut must raise the capital necessary on or before November 23, 2009 to pay the final offer price to shareholders. In addition, at least 66 2/3% of the Common Shares outstanding calculated on a fully-diluted basis must be validly deposited pursuant to the Offer and not withdrawn by 5:00 pm (Toronto time) on December 30, 2009.
To date Shareholders representing 43% of the issued and outstanding Common Shares have entered into Shareholder lock-up agreements and agreed to tender such Common Shares to the Offer.
Castle Gold may terminate the Support Agreement under certain circumstances, including if the Board determines in good faith that it has received a Superior Proposal (as such term is defined in the Support Agreement). If Castle Gold terminates the Support Agreement in order to accept a Superior Proposal, it must pay a break fee of C$3 million.
