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QuestEx to be Bought by Skeena Resources in Cash, Stock Deal

VANCOUVER, BC, March 30, 2022 /CNW/ - QuestEx Gold & Copper Ltd. (TSXV: QEX) (OTCQX: QEXGF) ("QuestEx" or the "Company") is pleased to announce that the Company has entered into a definitive agreement (the "Arrangement Agreement") with Skeena Resources Limited ("Skeena") whereby Skeena will acquire all of the issued and outstanding shares of QuestEx that Skeena does not currently own pursuant to a court-approved plan of arrangement (the "Transaction"). Skeena currently owns 5,668,642 common shares of QuestEx, or approximately 14.0% of outstanding QuestEx common shares.

Concurrent with signing of the Arrangement Agreement, Newmont Corporation ("Newmont") has entered into an asset purchase agreement with Skeena to acquire the Heart Peaks, Castle/Moat and North ROK/Coyote properties from Skeena, along with related assets, for approximately C$27.0 million (the "Asset Purchase Agreement").

Highlights of the Transactions

  • Under the terms of the Transaction, each of the issued and outstanding common shares of QuestEx that Skeena does not currently own will be exchanged for C$0.65 cash plus 0.0367 of a Skeena common share (the "Consideration").

  • The Transaction has strong shareholder support, with management and directors of QuestEx, Newmont and funds managed or advised by Delbrook Capital Advisors entering into voting support agreements representing, in aggregate, approximately 26.6% of the outstanding common shares of QuestEx and 26.3% of the securities entitled to vote on the resolution approving the Transaction.

  • The Consideration implies C$1.20 per QuestEx common share based on the preceding 5-day volume-weighted average price ("VWAP") of Skeena on the Toronto Stock Exchange for the period ending March 29, 2022. This represents a 58% premium to the closing price of QuestEx common shares on the TSX Venture Exchange on March 29, 2022.

  • The implied equity value of the Transaction on a 100% and fully-diluted basis is equal to approximately C$56.5 million.

  • Upon completion of the Transaction, QuestEx shareholders other than Skeena and Newmont will own approximately 1.5% of Skeena common shares on a pro forma basis.

Benefits to QuestEx Shareholders

  • Attractive premium of 58% to the closing price of QuestEx shares as of March 29, 2022.

  • Enhanced trading liquidity and financial strength.

  • Ongoing exposure to the QuestEx mineral tenures retained by Skeena in the Golden Triangle and Toodoggone areas of British Columbia.

  • Exposure to Skeena's strong management team, technical capabilities and diversified portfolio of development projects.

  • Near-term milestones for Skeena, including ongoing infill and other exploration and a Feasibility Study expected for the Eskay Creek project in 2022.

  • Expected reduction in dilution, financing, development, and execution risk.

Joe Mullin, Chief Executive Officer of QuestEx, comments: "We are excited to announce the Transaction with Skeena today. It provides QuestEx shareholders with consideration that includes cash and Skeena shares, with continued exposure to the Golden Triangle. The Transaction is at a significant premium to our recent share price and a positive outcome for our Company's shareholders. We appreciate the support of our shareholders, the QuestEx team, our Board and advisors. We also want to thank the First Nations on whose traditional territory we have worked on and been guests, in particular the Tahltan First Nation."

Transaction Summary

The Transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), requiring the approval of: (i) at least 66 2/3% of the votes cast by the shareholders, option holders and certain warrant holders of QuestEx, voting together as a single class (the "Arrangement Resolution"); and (ii) a simple majority of the votes cast by holders of QuestEx shares, excluding votes attached to QuestEx common shares held by Skeena, Newmont and any other person as required under Multilateral Instrument 61-101 "Protection of Minority Security Holders in Special Transactions" ("MI 61-101") (the "Minority Vote"), at a special meeting of QuestEx's securityholders called to consider, among other matters, the Transaction.

Newmont, funds managed or advised by Delbrook Capital Advisors and the directors and officers of QuestEx, holding approximately 26.6% of the issued and outstanding common shares of QuestEx, and approximately 25.6% of the securities entitled to be voted on the Arrangement Resolution, have entered into voting support agreements with Skeena, pursuant to which they have agreed, among other things, to vote their QuestEx securities in favour of the Transaction. Together with the shares already owned or held by Skeena, this represents approximately 40.6% of the QuestEx securities that will be voted in support of the Arrangement Resolution.

In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals including, but not limited to, TSX Venture Exchange approval and the satisfaction of certain other closing conditions customary in transactions of this nature. The Arrangement Agreement contains customary provisions including non-solicitation, "fiduciary out" and "right to match" provisions, as well as a C$1.5 million termination fee payable to Skeena under certain circumstances. The Arrangement Agreement, which describes the full particulars of the Arrangement, will be made available on SEDAR under the issuer profile of QuestEx at Full details of the Transaction will be included in the QuestEx management information circular which is expected to be mailed to shareholders, option holders and certain warrant holders near the end of April 2022 and made available on SEDAR under the issuer profile of QuestEx at Security holders of the Company are urged to read the management information circular and the Arrangement Agreement.

The shareholder meeting is expected to be held near the end of May 2022 and the Transaction is expected to close shortly thereafter.

Board of Directors' and Special Committee Recommendations

The Arrangement Agreement has been unanimously approved by the Boards of Directors of QuestEx and Skeena. The Board of Directors of QuestEx has evaluated the Arrangement Agreement with the Company's management and legal and financial advisors and, following receipt and review of a unanimous recommendation from the special committee of the Board of Directors (the "QuestEx Special Committee"), comprised entirely of independent directors of QuestEx, in favour of the Transaction, the QuestEx Board of Directors unanimously determined that the Arrangement Agreement is in the best interests of the Company, and unanimously recommend that QuestEx securityholders vote in favour of the Transaction.

Fort Capital Partners has provided a fairness opinion to the Board of Directors of QuestEx and Evans & Evans, Inc. has provided a fairness opinion to the QuestEx Special Committee. Each of the opinions stated that, as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to be paid under the Transaction is fair, from a financial point of view, to QuestEx shareholders, other than Skeena.

Advisors and Counsel

Fort Capital Partners is acting as financial advisor to QuestEx and DuMoulin Black LLP is acting as QuestEx's legal advisor. QuestEx's Special Committee engaged Evans & Evans, Inc. to provide an independent fairness opinion. Gowling WLG (Canada) LLP is acting as counsel to the QuestEx Special Committee.

About QuestEx

QuestEx Gold & Copper Ltd. is exploring for gold and copper with a focus on the Golden Triangle and Toodoggone areas of British Columbia, Canada. It has a 100% ownership interest in one of the largest portfolios of mineral tenures in British Columbia's metal-rich Golden Triangle. The portfolio includes the 312 square km KSP property, which is surrounded by some of the most important past and current mining and development projects in British Columbia (e.g. Eskay Creek, Snip, Brucejack, KSM, Johnny Mountain). In the northern corner of the Golden Triangle in the Red Chris mining district, QuestEx's portfolio includes the Castle property, a porphyry copper-gold project located adjacent to Newmont's Saddle property, and along trend of the Saddle North porphyry copper-gold deposit (more than 10 million ounces gold, in all categories). Other properties include North ROK, Coyote, and Kingpin in the Golden Triangle, Sofia in the Toodoggone district and Heart Peaks and Hit in other strategic districts within British Columbia.

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