Toronto, Ontario--(Newsfile Corp. - April 13, 2015) - Jaguar Financial Corporation (TSXV: JFC) ("Jaguar"), the owner of 19.9% of the issued common shares of Alternative Earth Resources Inc. ("AER"), will vote its shares against the transaction proposed by AER (TSXV: AER) in the non-binding letter of intent signed with Kiska Metals Corporation ("Kiska") (TSXV: KSK) that was announced on April 9, 2015.
The proposed transaction would result in AER issuing 24,482,115 common shares to Kiska, which is an outrageously high number of common shares, and identical to the current number of issued AER shares. AER therefore proposes to hand control to Kiska in exchange for an early stage exploration property with very limited value creation potential in the current anemic market environment for junior mining companies.
Even more troubling, AER management and directors are proposing to hand control to Kiska without any premium paid by Kiska to AER shareholders. Jaguar believes that this proposed transfer of control without a control premium, if completed, will represent a clear breach of AER management's and directors' fiduciary duties.
Consistent with the above noted transfer of control, AER also proposes that Kiska's CEO become CEO of AER while retaining his CEO position at Kiska, and that the AER board of directors be restructured to have five directors.
The Whistler Property's low gold grade raises concerns about its economic viability. Further, the property is situated in an area with limited infrastructure, which Jaguar believes will present significant hurdles to the property's future development. Advancing the Whistler Property forward will require significant capital investment for which there is currently no market appetite.
Market valuations for early stage exploration properties with no foreseeable path to production are likely to remain depressed in the current gold price environment. AER's proposed acquisition of the Whistler Property raises the spectre of value destruction and treasury depletion if additional work is carried out on the project.
Jaguar believes that the structure of the proposed transaction is detrimental to AER shareholders and that the asset is of minimal value. Jaguar will hold management liable for all expenses incurred in the pursuit of this transaction and for all losses and damages. There is a deplorable lack of attention being paid to the owners of AER to enhance their shareholder value rather than destroy it, which Jaguar believes will happen if the proposed transaction is completed.
As at December 31, 2014 AER had approximately US$2.18 million in cash and is therefore in the enviable position of having options at its disposal to create shareholder value. This cash cushion stands in marked contrast to many of AER's peers, and there is a clear opportunity for AER to be opportunistic. If the proposed transaction is completed it is anticipated that a significant portion of this cash will be used to cover transaction related expenses. In fact AER's press release indicates that it is anticipated that AER's cash will be no less than Cdn$2.1 million at closing, substantially reducing AER's future flexibility. The proposed transaction with Kiska is a troubling squandering of the opportunity provided by AER's current cash position. Jaguar will exercise its rights as a shareholder to oppose the proposed transaction and to elect new directors with capital markets expertise.
About Jaguar Financial Corporation
Jaguar is a Canadian merchant bank that generally invests in undervalued, overlooked and underappreciated public companies where Jaguar determines that one or more changes could be made to create shareholder value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release may contain certain forward looking statements which involve known and unknown risks, delays, and uncertainties not under Jaguar's control which may cause actual results, performances or achievements of Jaguar to be materially different from those implied by such forward looking statements.
For additional information on this press release, please contact:
Vic Alboini, Chairman & Chief Executive Officer
647 352-8180
