Share-for-Share

Overview

Centerra Gold is proposing to acquire all of the shares of Thompson Creek under a B.C. Plan of Arrangement in consideration solely for Centerra shares, with the acquired shares contributed immediately to a new holding subsidiary of Centerra. As there is no nominal cash or other non-share consideration, the Thompson Creek shareholders are not required to file an election form in order to receive (s. 85.1) rollover treatment, so that Centerra will have lower basis in the acquired shares. The U.S. tax disclosure indicates that the exchange is expected to be a “B” reorg, which requires that the sole consideration be shares. The exchange ratio (resulting in the Thompson Creek shareholders holding only 8% of Centerra) reflects that Thompson Creek has a U.S.$673 million deferred revenue obligation under a gold stream arrangement for its B.C. mine, as well as U.S.$823 million of long-term debt. Centerra has renegotiated the gold stream arrangement to reduce the gold delivery obligation and create a copper delivery obligation.

Centerra

A TSX-listed Canadian-based gold mining company engaged in operating, developing, acquiring and exploring gold properties in Asia, North America and elsewhere. A Kyrgyz government-owned entity holds 32% of its common shares.

Thompson Creek

A BCBCA corporation whose shares trade on the TSX and OTCQX and whose principal operating property is the Mount Milligan open-pit copper and gold mine in B.C. It has U.S.$823 million of long-term debt, and U.S.$673 million of deferred revenue obligations under the gold stream arrangement described below.

Gold stream arrangement

Pursuant to a sale agreement dated December 14, 2011, Thompson Creek agreed to sell to Royal Gold 52.5% of the refined gold production from the Mount Milligan mine for an upfront payment of $781.5 million plus $435 an ounce (or the prevailing market price, if lower), when the gold was delivered. Pursuant to a letter of intent, the designated percentage of produced gold to be delivered is to be reduced to 35%, and the percentage of copper to be delivered is to be increased to 15% (with a price paid on delivery equal to 15% of the prevailing market price).

Centerra Holdco

A newly-incorporated wholly-owned B.C. subsidiary of Centerra.

Plan of Arrangement

1. Each Thompson Creek option will be exchanged for a Centerra replacement option. It is intended that s. 7(1.4) apply to such exchange of Company Options..
2. The vesting of each Thompson Creek performance share unit and restricted share unit will be accelerated, with each such PSU and RSU surrendered for one Thompson Creek common share.
3. Each Thompson Creek common share held by a dissenting Thompson Creek shareholder shall be deemed to be transferred to Thompson Creek and Thompson Creek will be obliged to pay the amount determined under the Arrangement.
4. Each issued Thompson Creek common share (other than of dissenting shareholders or Centerra) shall be transferred to Centerra in exchange for 0.0988 of a Centerra common share (with the number of Centerra common shares to be issued rounded down to the next whole number of Centerra common shares). Former Thompson Creek shareholders will hold around 8% of the Centerra shares).
5. The Thompson Creek common shares (now held by Centerra) will be contributed by Centerra to Centerra Holdco in consideration for a corresponding number of common shares in the capital of Centerra Holdco.

In connection with the completion of the Arrangement, Centerra has agreed to contribute to Thompson Creek the amount of cash necessary to redeem all of Thompson Creek's outstanding 9.75% senior secured notes due 2017, 7.375% senior unsecured notes due 2018 and 12.5% senior unsecured notes due 2019. Centerra is effecting a $170 million bought deal offering of subscription receipts and is entering into a $325 million secured revolving and term loan facility.

Canadian tax consequences

S. 85.1 rollover applies to the exchange (unless the holder has, in the holder's income tax return for the year in which the exchange occurs, included in computing income any portion of the capital gain (or capital loss) arising on the exchange otherwise determined.)

U.S. tax consequences

Exchange

The exchange of Thompson Creek common shares for Centerra common shares pursuant to the Arrangement is intended to qualify, for U.S. federal income tax purposes, as a tax-free ''reorganization'' within the meaning of Code s. 368(a)(1)(B).

PFIC rules

Thompson Creek believes that it should not be classified as a PFIC. Centerra believes that it should not be classified as a PFIC for its most recent taxable year, and does not anticipate becoming a PFIC in its current taxable year or in the foreseeable future based on its current and anticipated assets and operations.

Overview

OceanaGold, which is a BC corporation based in Australia, is proposing to acquire all the shares of Romarco under a B.C. plan of Arrangement in consideration for OceanaGold shares (which in ASX trading, are represented by certificates of beneficial interest), so that s. 85.1 would apply. Although it is intended that the exchange qualify as a Code s. 368(a) reorganization, it is believed that Romarco may be a PFIC, and that OceanaGold is not, so that the PFIC rules may apply to the exchange. An exchange of Romarco options for OceanaGold options (rather than having such options converted into Romarco shares to be included in the exchange) has the effect of avoiding the Romarco shareholders becoming the majority owners of OceanaGold.

OceanaGold

A BCBCA corporation whose head office is in Melbourne, Victoria and which is listed on the ASX, NZX and TSX. It holds gold mining properties in a New Zealand subsidiary and a Phillipines subsidiary (held through a Singapore and B.V. structure). Van Eck Associates Corp. and Ingalls & Snyyder LLC hold or have direction of 13.19% and 10.74% of its shares.

Romarco

A BCBCA corporation listed on the TSX and with a South Carolina gold property held in a Delaware subsidiary. The directors and officers group beneficially owned or exercised direction over Romarco Shares and Options representing approximately 0.55% and 2.45%, respectively, of the Romarco Shares. The Baupost Group, LLC and BlackRock Investment Managemnt (U.K.) Ltd. hold or have direction of 13.27% and 12.07% of its shares.

OceanaGold CDIs

OceanaGold participates in the Clearing House Electronic Subregister System ("CHESS") in Australia. It is not presently possible for securities issued by OceanaGold to be settled electronically on CHESS. Accordingly, OceanaGold CDIs have been created and issued to enable OceanaGold Shareholders to trade on the ASX. CDIs are units of beneficial ownership in securities registered in the name of CDN, a wholly-owned subsidiary of the ASX.

Combined Company

Following completion of the Arrangement, the board of directors of the Combined Company will initially be comprised of one Romarco appointment and seven incumbent directors of OceanaGold. The Combined Company had a pro forma market capitalization of approximately C$1.35 billion.

Plan of Arrangement

1. Romarco Shares held by dissenters will be transferred to Romarco for cancellation.
2. Each Romarco Share will be transferred to OceanaGold in exchange for 0.241 of an OceanaGold Share.
3. Each Romarco option will be exchanged for an option to acquire OceanaGold Shares with the intention that ITA s. 7(1.4) apply.

Consequences of Exchange

The maximum number of OceanaGold Shares issuable in exchange for Romarco Shares pursuant to the Arrangement is equal to approximately 98.6% of the 303,677,847 OceanaGold Shares that were issued and outstanding but does not include OceanaGold Shares issuable upon the exercise of the "Replacement Options" that are issuable on completion of the Arrangement. The maximum number of Replacement Options to be issued at closing is 9,759,489 being exercisable thereafter for 9,759,489 OceanaGold Shares, which is equal to 3.2% of the 303,677,847 outstanding OceanaGold Shares which, collectively with the OceanaGold Shares to be issued in exchange for Romarco Shares under the Arrangement, is 309,248,640 OceanaGold Shares or 101.8% of the 303,677,847 OceanaGold Shares that were issued and outstanding. Following completion of the Arrangement, current OceanaGold Shareholders will own approximately 51% of the OceanaGold Shares and current Romarco Shareholders will own approximately 49% of the OceanaGold Shares.

Canadian tax consequences

S. 85.1 rollover. The share exchange will occur on a tax-deferred basis under s. 85.1 unless the Romarco Shareholder chooses to recognize any portion of the capital gain or capital loss otherwise arising by taking the positive step of reporting the capital gain or capital loss in the Romarco Shareholder's tax return under the Tax Act for the Romarco Shareholder's taxation year in which the exchange occurs.

New 55(2) language

In certain circumstances, subsection 55(2) of the Tax Act (as proposed to be amended by Proposed Amendments released on July 31, 2015) will treat a taxable dividend received by a Resident Holder that is a corporation as proceeds of a disposition or a capital gain….

U.S. tax consequences

Reorganization. The Arrangement is intended to qualify as a tax-deferred reorganization under s. 368(a) of the Code. However, even if the Arrangement qualifies as a Reorganization, under the PFIC rules, U.S. Holders may be required to recognize gain (but not loss) on the exchange of Romarco Shares for OceanaGold Shares pursuant to the Arrangement if (a) Romarco was classified as a PFIC for any taxable year during which such U.S. Holder held Romarco Shares, and (b) OceanaGold is not a PFIC for its taxable year that includes the day after the Effective Date. In such instance, a U.S. Holder would generally recognize any gain on such exchange equal to the difference, if any, between (i) the fair market value of the OceanaGold Shares (determined as of the Effective Date) received in exchange for Romarco Shares pursuant to the Arrangement and (ii) the U.S. Holder's adjusted tax basis in the Romarco Shares exchanged therefor. Any gain realized on the exchange would be subject to the "excess distribution rules" unless such U.S. Holder has made a QEF election or a mark-to-market election. Romarco believes that it may have been a PFIC for prior taxable years and that it may be a PFIC during the current taxable year. Although not free from doubt, OceanaGold does not expect to be classified as a PFIC for its taxable year ending December 31, 2015.

NOLs

The Arrangement is expected to result in an ownership change under Section 382 of the Code for Romarco, potentially limiting the use of Romarco's NOL carryforwards in future taxable years.

Overview

Following the spin-off of SpinCo on a s. 86 reorg of Sulliden on the basis of 0.10 of a SpinCo Share for each (common) Sulliden Share, all of the outstanding Sulliden Shares will be exchanged for (common) Rio Alto Shares on the basis of 0.525 of one Rio Alto share for each Sulliden Share. Sulliden, upon amalgamation with Rio Alto NewCo, will become a wholly-owned subsidiary of Rio Alto. Rio Alto expects to issue Rio Alto Shares, equal in number to 86.5% of the non-diluted Rio Alto Shares outstanding immediately prior to the Circular date, thereby requiring Rio Alto shareholder approval. The reorganization is considered to likely qualify as a Code s. 368(a) reorg in light inter alia of SpinCo representing less than 10% of Sulliden's net assets. This likely implies that the transaction is viewed as a reverse triangular merger under s. 368(a)(2)(E) rather than as a forward triangular merger governed by s. 368(a)(2)(D). A 1992 temporary PFIC regulation indicates that the transaction would not qualify for nonrecognition given that Sulliden is a PFIC and Rio Alto is not. The U.S. disclosure suggests that the transaction nonetheless should qualify for nonrecognition if these regulations are not finalized in their current form.

Rio Alto

The main business of Rio Alto (a B.C. company listed on the TSX, NYSE and BVL) is the mining, production and sale of gold from the La Arena Project located in Peru and held in a lower-tier Peruvian subsidiary.

Sulliden

Sulliden (listed on the TSX and BVL) is a QBCA Canadian-based precious metals company focused on the exploration and development of the Shahuindo Project located in Peru and held in a lower-tier Peruvian subsidiary. As a preliminary step, Sulliden will be continued from Quebec to Ontario.

SpinCo

SpinCo is currently a wholly-owned OBCA subsidiary of Sulliden that has been established to acquire and hold the "SpinCo Assets" (principally an exploration project in the Abitibi region of Quebec) and assume related liabilities. It has applied for a TSX listing.

Rio Alto Newco

A wholly-owned OBCA subsidiary of Rio Alto, named "Shahuindo Gold Limited," incorporated at least one day before the effective time of the Plan of Arrangement.

U.S. securities laws

The securities issued under the Arrangement have not been registered under the U.S. Securities Act, and are being issued in reliance on the Section 3(a)(10) exemption.

Ontario Plan of Arrangement

1. Sulliden Shares held by a dissenting shareholder will be deemed to be transferred to Rio Alto.
2. All outstanding Sulliden RSUs and DSUs shall be deemed to have vested, and shall be settled;
3. Sulliden will assign and transfer the SpinCo Assets and SpinCo Liabilities to SpinCo in consideration for SpinCo Shares;
4. Rio Alto will lend Sulliden $25M by way of a non-interest bearing demand promissory note, and subject to Rio Alto's election, Sulliden will subscribe for $10M of Rio Alto Shares.
5. Sulliden will subscribe for $25M of additional SpinCo Shares in cash – or as to $15M in cash and as to $10M trough the transfer of the Rio Alto acquired in 5;
6. Sulliden Options will be exchanged for Sulliden Class A Options and 0.10 of a SpinCo Option;
7. Following the amendment of the authorized share capital of Sulliden to redesignate the Sulliden Shares as Class B Shares (common shares with one vote per share) and create Class A Shares (common shares with two votes per share), Sulliden shall undertake a reorganization of capital whereby each outstanding Class B Share will be exchanged with Sulliden for one Class A Share and 0.10 of a SpinCo Share;
8. Each outstanding Class A Share (other than Class A Shares held by Rio Alto or any affiliate thereof) will be transferred to Rio Alto for 0.525 of a Rio Alto Share;
9. Each Sulliden Class A Option shall be exchanged for a Rio Alto Replacement Option;
10. Each Class A Share held by Rio Alto will be transferred to Rio Alto Newco in consideration of the issue by Rio Alto Newco to Rio Alto of one common share of Rio Alto Newco for each Class A Share so transferred;
11. Rio Alto NewCo and Sulliden shall amalgamate to form Amalco with the same effect as if they had amalgamated under Section 177 of the OBCA.; and
12. The terms of the Sulliden Warrants will be consequentially adjusted.

Canadian tax consequences

S. 86 reorg. The fair market value, however, of the SpinCo Shares at the time of this exchange is expected to be less than the paid-up capital of the exchanged Class B Shares immediately before the exchange and consequently Sulliden Shareholders should not be deemed to receive a dividend from Sulliden…

Share exchange

On the subsequent exchange of Class A Shares for Rio Alto Shares pursuant to the Arrangement, Sulliden Shareholders generally may defer under s. 85.1 realizing any capital gain (or capital loss) that would otherwise arise on this exchange provided they choose not to report, in their return of income for the taxation year in which the exchange occurs, a capital gain or capital loss in respect of such exchange.

U.S. tax consequences

Continuance. The continuance of Sulliden should qualify as a tax-deferred reorganization under Section 368(1)(1)(F) of the Code.

Integrated transaction

The share exchange, amalgamation and the transfer of the SpinCo Share Consideration (collectively, the "Acquisition") "should be treated as a single integrated transaction for U.S. federal income tax purposes. This summary assumes that the Acquisition will be treated for U.S. federal income tax purposes as if Rio Alto NewCo and Sulliden merged to form Amalco as specified in the Plan of Arrangement and the Sulliden Shareholders exchanged their Sulliden Shares for Rio Alto Shares and the SpinCo Share Consideration as part of such merger. If the Acquisition is treated as a single integrated transaction for U.S. federal income tax purposes, the SpinCo Share Consideration is treated as part of the consideration paid by Rio Alto for the Sulliden Shares, and the Substantially All Assets Requirement discussed below is satisfied, although not free from doubt, the Acquisition should qualify as a tax-deferred "reorganization" within the meaning of Section 368(a) of the Code (a "Reorganization"), subject to the PFIC rules described below.

Substantially all requirement

Amalco must acquire "substantially all" of the assets of Sulliden (the "Substantially All Assets Requirement")…For ruling purposes, the IRS defines "substantially all" as at least 70% of the gross assets and at least 90% of the net assets of Sulliden….If the fair market value of the Sulliden Shares on the Effective Date of the Acquisition approximately equals its value on the date of this Circular, Rio Alto and Sulliden believe that the Substantially All Assets Requirement should be satisfied.

Consequences of integrated transaction

Assuming the Acquisition is treated as a Reorganization, and subject to special rules applicable to interests in PFIC, the U.S. Holders of Sulliden Shares should not recognize gain or loss, except to the extent of the SpinCo Share Consideration received, for U.S. federal income tax purposes on the exchange of Sulliden Shares for Rio Alto Shares and the SpinCo Share Consideration pursuant to the Acquisition. In addition, the distribution of the SpinCo Shares not treated as additional consideration paid by Rio Alto for the Sulliden Shares should generally be treated as a taxable distribution.

Treatment of SpinCo share distribution

"Because of the form of the distribution of SpinCo Shares and the fact that the assets of SpinCo will consist, in part, of historic Rio Alto assets, the treatment of the distribution of SpinCo Shares with regard to U.S. Holders receiving such shares is not clear. Specifically, in the event that the Acquisition qualifies as a Reorganization, upon the receipt of the distribution of SpinCo Shares, U.S. Holders receiving such shares may be treated as receiving: (a) additional consideration paid by Rio Alto to U.S. Holders for their Sulliden Shares in the Acquisition to the extent that the value of the SpinCo Shares is attributable to the historic assets of Rio Alto, with the remaining value of such SpinCo Shares treated as a taxable distribution under Section 302(b)(2) or under Section 301 of the Code; (b) additional consideration paid by Rio Alto to U.S. Holders for their Sulliden Shares in the Acquisition to the extent of the entire value of the SpinCo Shares; or (c) a taxable distribution under Section 302(b)(2) or under Section 301 of the Code (because the distribution would not qualify as a tax-free spin-off under Section 355 of the Code). Although the matter is unclear, to the extent that the value of the SpinCo Shares distributed to U.S. Holders is attributable to the historic assets of Rio Alto, this summary assumes that such SpinCo Shares will be treated as additional consideration paid by Rio Alto to U.S. Holders for their Sulliden Shares in the Acquisition."

PFIC rules

"Under proposed U.S. Treasury Regulations, a Non-Electing Shareholder does not recognize gain in a Reorganization where the Non-Electing Shareholder transfers stock in a PFIC so long as such Non-Electing Shareholder receives in exchange stock of another corporation that qualifies as a PFIC for its taxable year that includes the day after the transfer. For purposes of this summary, this exception will be referred to as the "PFICfor-PFIC Exception". However, a Non-Electing Shareholder generally does recognize gain (but not loss) in a Reorganization where the Non-Electing Shareholder transfers stock in a PFIC and receives in exchange stock of another corporation that does not qualify as a PFIC for its taxable year that includes the day after the transfer. While it is anticipated that Sulliden will be classified as a PFIC, based on current business plans and financial projections, Rio Alto does not expect to be classified as a PFIC for the tax year that includes the day after the Effective Date of the Acquisition. Consequently, it is not expected that the "PFIC-for PFIC Exception" will be satisfied, and under the foregoing rules contained in the proposed U.S. Treasury Regulations, a Non-Electing Shareholder will recognize gain (but not loss) on the Acquisition under the rules applicable to excess distributions and dispositions of PFIC stock set forth in Section 1291 of the Code, regardless of whether the Acquisition qualifies as a Reorganization. ...The proposed U.S. Treasury Regulations discussed above were proposed in 1992 and have not been adopted in final form. ... In the absence of the proposed U.S. Treasury Regulations being finalized in their current form, if the Acquisition qualifies as a Reorganization, the U.S. federal income tax consequences to a U.S. Holder should be generally as set forth [above]... ; however, it is unclear whether the IRS would agree with this interpretation."

Overview

TSXV-listed HDG is being acquired under a joint BC plan of arrangement by TSX-listed SASC on the basis of 0.275 of a SASC share for each HDG share. However, to ensure that HDG shareholders do not share significantly in any arbitration award made as a result of the seizure of a Bolivian mine of a subsidiary of SASC, SASC first will undergo a s. 86 reorganization under which its common shares will be exchanged for Class A shares (with rights apparently identical to the common shares) and Class B shares which are redeemable and retractable for 85% of any net arbitration award or settlement, subject to an overriding call right of a SASC subsidiary (Newco) to purchase the shares for the redemption amount. Thus, the HDG shareholders will receive only Class A shares.

Continuance

Both SASC and HDG are CBCA corporations. However, SASC will be continued to BC before the arrangement, as the corporate incest rules in the CBCA would prohibit Newco from exercising the call right described below.

SASC and HDG Arrangement

1. Each SASC common share of a dissenter will be transferred to SASC.
2. Each of the other SASC common shares will be disposed of in exchange for one SASC Class A Share (essentially a common share, and to be redesignated as a common share) and one SASC Class B Share.
3. Each HDG common share of a dissenter will be transferred to HDG.
4. Each remaining HDG common share will be transferred to SASC in exchange for 0.275 of a SASC Class A Share.
5. HDG warrants will be exchanged for warrants on SASC Class A Shares.

Attributes of SASC Class B Shares/Newco call right

• non-voting
• in aggregate have a "Class B Share Total Entitlement" equal to 85% of any final award (or settlement amount) re the appropriation of a Bolivian property of a Bolivian subsidiary exceeds arbitration expenses
• all the shares will be redeemed on the "Redemption Date" (e.g., 60 days after a final award or settlement) based on the Class B Share Total Entitlement, and there also is a retraction right of the holder based on this redemption amount
• notwithstanding the foregoing, a SASC subsidiary (Newco) has an overriding "call" right to purchase all the SASC Class B Shares on the Redemption (or retraction) Date for the redemption amount

Application will be made to list the Class B shares on the TSX.

Canadian tax consequences

S. 86 reorg. No indiction that a deemed dividend could arise. As the relative fair market values of the SASC Class A Share and SASC Class B Share cannot currently be determined, SASC will advise holders on its website shortly after the closing of the Arrangement as to its views on the allocation of the ACB of the SASC common shares between the Clas A and B shares.

Holding and disposing of SASC shares

Dividends received or deemed to be received on a disposition of Class A or B shares generally will be deductible in computing a resident corporation's income.

Non-residents

Standard disclosure re dividends and taxable Canadian property disclosure.

Overview

Pursuant to a B.C. plan of arrangement, Keegan (to be renamed Asanko) will acquire all the PMI shares, so that each PMI shareholder will receive 0.21 common shares of Asanko (held through CDSs), and PMI will become a wholly-owned subsidiary of Asanko. On completion, the former Keegan and PMI shareholders will each own approximately 50% of Asanko inclusive of in-the-money dilutive securities, and the Asanko shares will be listed on the TSX, ASX and NYSE MKT Equities Exchange. The Asanko shares are being issued to the PMI shareholders in reliance on the s. 3(a)(10) exemption in the U.S. Securities Act of 1933.

Keegan/Asanko

Keegan is a TSX-listed and NYSE MKT-listed B.C. company holding the Esaas gold project in Ghana through a 90%-owned Ghana subsidiary (held through two wholly-owned Barbados subsidiaries).

PMI

PMI is a TSX- and ASX-listed B.C. company, with a registered and records office in Vancouver, and an office in West Perth, Australia, which holds the Obatan gold project in Ghana through subsidiaries.

Break fee

$13M (mutual termination fee triggered by: entering into of agreement to effect a "Superior Proposal;" the making of a "Change in "Recommendation;" or failure of the applicable shareholder group to approve).

MI 61-101

As a result of the payment of fees to Macquarie as a financial advisor, Macquarie will be considered to receive a collateral benefit. The 13.29% of the PMI shares held in the Macquarie group will be excluded from the minority approval vote conducted pursuant to MI 61-101.

Directors/CEOs

The Osanko board will consist of three directors from each of Keegan and PMI, with the seventh appointed thereafter. The Keegan CEO will continue as CEO and the PMI CEO will be president.

Plan of Arrangement

Under the Plan of Arrangement:

• PMI shares of dissenters will be transferred to PMI for their fair value

• each outstanding PMI share will be transferred to Keegan for 0.21 of a Keegan share "without any act or formality on the part of the holder"

• each outstanding option to acquire PMI shares will be exchanged for an option to purchase Keegan common shares, with the number of subject shares and exercise price adjusted in accordance with the exchange ratio (so as to ensure that the in-the-money value stays the same)

• there will be a similar exchange of PMI warrants

Canadian tax consequences

Under s. 85.1, the exchange of PMI shares for Asanko shares will not give rise to capital gain (or loss) to a resident shareholder unless such shareholder elects to report such gain (or loss). Dissenters will be deemed to receive a dividend to the extent, if any, that the cash payment exceeds the paid-up capital of their shares.

Standard disclosure re taxable Canadian property rules to non-residents.

US tax consequence

S. 368(a) rollover. Subject to the PFIC rules, an exchange of PMI shares for Asanko shares should qualify as a tax-deferred reorganization under Code s. 368(a). If so, a U.S. holder will not realize gain or loss on the exchange.

PFIC rules

PMI believes that it was a PFIC for one or more of its prior tax years and expects to be a PFIC for its current tax year. Accordingly, the arrangement may be classified as a taxable exchange even if it qualifies as a reorganization, with gain allocated rateably over the holding period, taxed as ordinary income as to the amount allocated to the current tax year and any year prior to the first year in which PMI was classified as a PFIC, with the amount allocated to each of the other tax years being subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year and with interest charges for a deemed deferral benefit being imposed with respect to the resulting tax attributable to each of the other tax years.

These consequences can be mitigated or avoided with a QEF election.

However, Asanko expects to be classified as a PFIC for the current tax year, so that the exception (under proposed Regulations) for transfers of PFIC stock in exchange for stock of another PFIC may apply - so that no gain is recognized on the exchange.

Australian tax consequences

PMI shareholders who make a capital gain on the disposal of their PMI shares generally will be eligible for rollover relief in respect of that gain, claimed by not including the gain in their assessable income. Where rollover relief is elected, the cost base of the PMI shares becomes that of the acquired Asanko shares. A PMI shareholder who makes a capital loss on the disposal of PMI shares cannot choose rollover relief.

Overview

TSX-listed Bonterra is to acquire each outstanding share of TSX-listed Spartan in exchange for 0.1169 common shares of Bonterra under an Alberta Plan of Arrangement, resulting in the former Spartan shareholders holding approximately 35% of Bonterra. This was considered by the Spartan board to be a superior proposal to that under an arrangement agreement with Pinecrest Energy Inc., resulting in a break fee of $12.5M being paid to Pinecrest.

Options

All holders of options granted pursuant to the Spartan options plan (which will vest) have agreed to exercise.

Plan of Arrangement

Under the Plan of Arrangement:

• Spartan shares held by dissenters are transferred to Bonterra, with such dissenters being entitled to be paid the fair value of their shares by Bonterra
• all Spartan shareholders (other than Bonterra) transfer each of their Spartan shares to Bonterra for 0.1169 Bonterra common shares

Break fees

$12.5M by either Bonterra or Spartan.

Canadian tax consequences

S. 85.1 generally will apply to the share-for-share exchange. Dissenters will realize capital gains treatment. Standard disclosure of taxable Canadian property rules for non-residents.