Corporate M&A

Canadian Mining Company Cadillac Ventures Acquires KFG Resources

By Shivangi Jain
February 10, 2021
2 minutes read
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TSX-listed mining company Cadillac Ventures Inc. has entered into a definitive arrangement agreement to acquire Mississippi-based KFG Resources Ltd., in a transaction valued at approximately US$0.95 million, including debt and working capital adjustments. The transaction has been approved by the board of directors of both companies.

In November 2020, Cadillac and KFG had signed a non-binding Letter of Intent (LoI) to pursue an amalgamation or similar transaction involving the combination of the two companies.

Under the terms of the arrangement agreement, KFG shareholders will receive approximately 50.5 million common shares of Cadillac, valued at C$0.0250 per share (based on Cadillac’s closing share price on February 8th, 2020, the last trading day prior to the transaction announcement), amounting to a total estimated equity offer value of about C$1.26 million (approximately US$0.9 million). Adjusting for KFG’s reported long-term debt and a working capital surplus, the total transaction value is approximately US$0.95 million.

The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). Upon completion, KFG will become a wholly-owned subsidiary of Cadillac, and KFG common shares will be delisted.

KFG, through its wholly-owned subsidiary KFG Petroleum Corp. is engaged in oil & gas exploration and production activities in Mississippi and Saskatchewan, with a primary focus on producing oil reserves in the Spring Hill lease in the Fayette field located in Jefferson County, Mississippi. In addition, KFG also owns interests in two shut‐in gas wells and twelve additional oil wells in Mississippi. Total proven (1P) and proven plus probable (2P) reserves attributable to KFG stood at 132.7 and 233.1 thousand barrels of oil (Mbbls), respectively, and the company reported average daily production of approximately 40 barrels of oil per day (bbls/d) during the three-month period ending October 30th, 2020.

Pickering, Ontario-based Cadillac Ventures is development focused exploration company, whose operations are currently focused its 51%-owned Burnt Hill tungsten tin property located outside of Fredericton, New Brunswick.

The transaction is subject to customary closing conditions, including the receipt of the shareholder, regulatory, court, and stock exchange approvals.

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