Teck Resources (TCK) to Acquire Remaining Stake in AQM Copper

November 21, 2016 7:03 AM EST

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Teck Resources Limited (NYSE: TCK) announced today that it has entered into a definitive agreement to acquire all of the issued and outstanding common shares of AQM Copper Inc. (TSX VENTURE: AQM) not already owned by Teck and its affiliates by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). Teck holds 42,258,545 shares of AQM, representing approximately 30% of AQM's issued and outstanding common shares.

AQM's principal asset is a 30% indirect interest in the Zafranal copper-gold project located in southern Peru, approximately 70 kilometers north of Arequipa. Teck holds a 50% indirect interest in the Zafranal project.

Under the arrangement, AQM shareholders will receive CAD$0.23 in cash per AQM common share. The total cash consideration payable to AQM security holders (other than Teck, and including option holders and deferred share unitholders) is approximately CAD$25 million, implying a total equity value for AQM of CAD$35 million on a 100% fully-diluted basis.

The agreement provides for, among other things, a non-solicitation covenant on the part of AQM, subject to customary "fiduciary out" provisions that entitle AQM to consider and accept a superior proposal, a right in favour of Teck to amend its proposal to match any superior proposal and, in certain circumstances, the payment to Teck of a termination payment of CAD$1 million. Holders of approximately 18% of outstanding AQM shares, including all of AQM's directors and officers, have agreed to vote in favour of the transaction. The AQM board is unanimously recommending that AQM security holders vote in favour of the transaction.

Closing of the transaction is subject to customary conditions, including approval by holders of AQM shares, options and deferred share units, and court and regulatory approvals. The transaction is expected to close in January 2017.

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