Rio Alto, Sulliden Gold Plan To Combine - Quick Facts

(RTTNews) - Rio Alto Mining Ltd. (RIO.TO, RIOM) and Sulliden Gold Corp. Ltd. (SUE.TO ) Wednesday announced their plan to combine their respective businesses, to become a new mid-tier gold producer in the gold mining district of Peru.The merger will have Rio Alto's currently producing, low cost La Arena gold oxide mine and adjoining sulphide copper-gold deposit with Sulliden's low cost, scalable Shahuindo gold development project located in Cajabamba, northern Peru.

The newly incorporated company, SpinCo, is expected to have a near-term production potential of nearly 300,000 ounces of gold per year.

Following the transaction, Rio Alto will buy each outstanding Sulliden common share for 0.525 of a Rio Alto common share. In addition, Sulliden shareholders will receive 0.10 of a common share in SpinCo, for each Sulliden common share held. SpinCo will hold Sulliden's 100% interest in the East Sullivan Property in Val-d'Or, Quebec and will be capitalized with about C$25 million in cash which at Rio Alto's option may be provided entirely in cash or C$15 million in cash and C$10 million in common shares of Rio Alto.

The Exchange Ratio represents consideration to Sulliden shareholders of C$1.12 per Sulliden common share based on the closing price of Rio Alto common shares of C$2.13 per share on the Toronto Stock Exchange as at May 20, 2014

Upon completion of the transaction, Rio Alto shareholders and Sulliden shareholders will own approximately 52% and 48%, respectively, of the outstanding Rio Alto common shares, on a basic basis. Two nominees of Sulliden will be appointed to the Rio Alto Board of Directors, with the existing seven directors of Rio Alto continuing as directors. Rio Alto's financial advisor is GMP Securities L.P. and its legal counsel is Davis LLP.