Shares for Shares and Nominal Cash

Overview

PCC, whose subordinate voting common shares trade on the TSX, holds approximately 2/3 of the common shares of the Company, with the balance of those common shares trading on the TSX. In order to eliminate the holding company discount for this structure and to effectively privatize the Company (thereby reducing costs) it is proposed that each of the minority’s common shares be exchanged under a CBCA Plan of Arrangement for 1.05 subordinate voting common shares of PCC and $0.01 of cash. The exchanging shareholders will thereby receive, as an economic matter, an incremental 0.7% interest in the assets and liabilities of the Company they already own, plus a 36.7% interest in the non-Company assets of PCC.

Eligible (i.e., taxable) minority shareholders may provide an s. 85 election form to PCC within 120 days of the Arrangement in order to secure rollover treatment. The exchange is taxable for U.S. purposes.

See full summary under Mergers & Acquisitions - Mergers (mostly Plans of Arrangement) - Privatizations.

Overview

Under an Ontario Plan of Arrangement, AuRico will acquire all the shares of Alamos ("Alamos Shares") in consideration for AuRico common shares ("AuRico Shares") and nominal cash (so that a s. 85 election is required for rollover treatment), and then amalgamate with Alamos. Former AuRico and Alamos Shareholders are anticipated to own 50.1% and 49.9% of Amalco, respectively. 95.1% of the shares of a newly-incorporated subsidiary, namely, AuRico Metals, holding the Kemess East development project, cash and royalty interests, will be spun-off to all the Amalco shareholders under a s. 86 reorg involving an exchange of Amalco common shares for Amalco Class A shares (with identical substantive attributes) and common shares of AuRico Metals ("AuRico Metals Shares"). The AuRico Metals distribution will be treated as a dividend for Code purposes based on current or accumulated E&P of Amalco; and the merger is intended by the parties to qualify as a Code s. 368(a) reorg. An acquisition of control of AuRico (which likely has significant Canadian resource pools) by Alamos under ITA s. 256(7)(c) will be avoided by having the AuRico Metals spin-off occur after the merger. There also is a preliminary transaction in which Alamos subscribes for 9.9% of the shares of AuRico.

AuRico

An Ontario corporation listed on the TSX and NYSE which has gold mines and projects in North America, and focuses on the Young Davidson Mine in northern Ontario, and the El Chanate Mine in Sonora State, Mexico. AuRico's project pipeline also includes the advanced-stage Kemess Project in northern B.C. Shareholders' equity at December 31, 2014 was US$2.0B after deduction of a deficit of U$285M, and its market cap is US$867M.

Alamos

A B.C. corporation listed on the TSX and NYSE. Its primary asset is the Mulatos Mine and concessions in the state of Sonora, Mexico. In addition, in 2010 Alamos acquired the development-stage Aği Daği Project and Kirazlı Project in the Biga district of northwestern Turkey.

AuRico Metals

. Was incorporated under the laws of the Province of Ontario for the sole purpose of participating in the Arrangement. It has applied for a TSX listing. Its carve out (i.e., pro forma) financial statements show owners' equity of US$125M as at December 31, 2014. The market cap of AuRico is US$867M, i.e., a significant discount to book. The "AuRico Metals Properties" (described below) currently are held by AuRico.

AuRico Metals Properties. Include: the Kemess Project; cash equal to $20 million less the Earn-In Committed Amount (see below); and royalties on the Young Davidson mine (i.e., a 1.5% NSR) and Australian properties.

Amalco Earn-In Interest

AuRico Metals will grant to Amalco a right to earn up to a 30% participating interest in the Kemess East Project by spending C$20 million on the Kemess East Project by December 31, 2016, of which C$9.5 million, subject to upward adjustment, is a committed amount (the "Earn-In Committed Amount"). The Earn-In Committed Amount is payable to AuRico Metals on the Effective Date of the Arrangement. AuRico Metals shall spend the Earn-In Committed Amount, on AuRico's behalf, at the Kemess East Project on exploration. Upon Amalco receiving the 30% interest, it and AuRico Metals shall enter into a joint venture agreement to form a special-purpose entity to hold the project.

Preliminary transactions. D

irectors and officers of AuRico and Alamos, representing approximately 3.1% and 4.5% of the outstanding AuRico Shares and Alamos Shares on a fully diluted basis, respectively, each entered into support agreements. Pursuant to the Arrangement Agreement, Alamos subscribed for approximately 27.9 million AuRico Shares on a private placement basis for total gross proceeds to AuRico of approximately $83.3 million. Alamos will be continued to Ontario.

Plan of Arrangement

1. Alamos shall subscribe for a number of AuRico Shares to be agreed by AuRico and Alamos.
2. AuRico shall transfer the AuRico Metals Property to AuRico Metals, AuRico Metals shall assume liabilities and the Earn-In Covenants shall become effective. [No mention of share consideration or of when the AuRico Metals Shares are issued.]
3. Each Alamos or AuRico Share held by a dissenting shareholder shall be deemed to have been transferred Alamos or AuRico , as the case may be, in consideration for a debt claim against that corporation.
4. Each Alamos Share shall be transferred to AuRico in exchange for (i) the issuance to the holder of 1.9818 of an AuRico Share (subject to adjustment) and (ii) $0.0001. The aggregate stated capital of such AuRico Share shall be equal to the fair market value of such Alamos Shares minus the cash consideration.
5. Each Alamos Option outstanding immediately prior to the Effective Time shall be exchanged for an option granted by AuRico to acquire AuRico Shares.
6. Alamos SARs shall be exchanged for a replacement award by AuRico.
7. Alamos shall make a non-interest bearing loan payable on demand to AuRico.
8. The aggregate stated capital of the Alamos Shares shall be reduced to C$1.00.
9. AuRico and Alamos shall be amalgamated under the OBCA to continue as Alamos Gold Inc. ("Amalco"), with the common shares of AuRico and Alamos in each other being cancelled. The aggregate stated capital of the Amalco common shares (carrying one vote per share) shall be equal to the aggregate stated capital of the AuRico Shares and the Alamos Shares immediately prior to the amalgamation, less the amount of any stated capital attributable to the AuRico Shares or the Alamos Shares that are cancelled on the amalgamation.
10. The articles of Amalco shall be amended to add "Class A Common Shares" (with the same substantive attributes as the Amalco common shares).
11. Each issued and outstanding Amalco Share shall be exchanged with Amalco for 0.5046 of a Class A Share and a pro rata portion of 95.1% of the outstanding AuRico Metals Shares.

Canadian tax consequences

Continuance. The Alamos continuance will not result in a disposition of Alamos Shares.

Exchange of

Alamos Shares for AuRico Shares and nominal cash This exchange will occur on a taxable basis unless a s. 85 election is made by an "Eligible Holder," being (i) a taxable resident, (ii) a non-resident whose Alamos Shares are "taxable Canadian property" and who is not Treaty-exempt, or (iii) a partnership any member of which is described in (i) or (ii) and is not Treaty-exempt. Tax election information must be provided to the AuRico representative by the 60th day following the Effective Date of the Arrangement.

Amalgamation

Shareholder rollover.

S. 86 reorg

Management of AuRico advised counsel that it expects the paid-up capital in respect of the Amalco common shares immediately prior to the distribution of the AuRico Metals Shares pursuant to the Arrangement to be substantially in excess of the aggregate fair market value of the AuRico Metals Shares so distributed, so that no deemed dividend is anticipated. Resident Shareholder will realize a capital gain only to the extent that the fair market value of the AuRico Metals Shares received exceeds the adjusted cost base of such Shareholder's Amalco common shares.

U.S. tax consequences

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

Exchange

The exchange of Alamos Shares for AuRico Shares followed by the amalgamation of Alamos into Amalco and the conversion of Amalco Shares into Class A Shares pursuant to the Arrangement is intended to qualify as a tax-deferred reorganization under Code s. 368(a) (a "Reorganization"); the amalgamation of AuRico into Amalco and the conversion of Amalco Shares into Class A Shares pursuant to the Arrangement is also intended to qualify as a Reorganization. Because Alamos Shareholders will be receiving cash of $0.0001 per Alamos Share in addition to AuRico Shares, any gain realized by such holder must be recognized to the extent of such cash received.

PFIC exception

However, in the case of an Alamos Shareholder who owned Alamos Shares during any year (i.e., prior to 2006) in which Alamos was a passive foreign investment company, the foregoing tax consequences do not apply. AuRico, Alamos and Amalco (but not AuRico Metals) are not expected to be PFICs for the current year. No disclosure of the PFIC status of AuRico for prior years.

Distribution of

AuRico Metals. The receipt of AuRico Metals Shares pursuant to the Arrangement will be treated as a distribution by Amalco in an amount equal to the fair market value of the AuRico Metals Shares. The distribution will be treated as a dividend to the extent such distribution is made out of current or accumulated earnings and profits of Amalco. As for the excess, it will be treated as a non-taxable return of capital to the extent of the U.S. Holder's adjusted basis in the Amalco Shares on which the distribution is made and as a capital gain to the extent it exceeds that basis.

Overview

Under an Alberta Plan of Arrangement there will be an exchange of all the Rio Alto common shares (other than of dissenters) for Tahoe common shares (together with nominal cash so as to require a joint s. 85(1) election to achieve Canadian rollover treatment), with Tahoe then dropping its Rio Alto shares into a wholly-owned subsidiary ("Subco") and causing their amalgamation in a conventional amalgamation. The share exchange, drop-down and amalgamation are intended to qualify as a Code s. 368(a) reorganization – so that tax deferral (except re the nominal cash) generally will be available for U.S. shareholders who acquired their Rio Alto shares after May 2011, as Rio Alto is believed not to have been a PFIC since then. As the U.S. does not have a Treaty with Peru, U.S. shareholders (unlike Canadian-resident shareholders) will not be exempt from Peruvian tax under the Peruvian equivalent of the taxable Canadian property/FIRPTA rules, and typically will not be entitled to a U.S. foreign tax credit as any gain on their Rio Alto shares would be treated as U.S.-source income.

Rio Alto

An Alberta company listed on the TSX, NYSE, Frankfurt and Lima ("BVL") exchanges with 334M common shares outstanding, of which 2.96% are held by directors and officers and 17.74% by Van Eck Associates accounts. Pervuvian subsidiaries hold a gold oxide mine and a gold-silver project. Rio Alto acquired Shahuindo Gold Limited, formerly Sulliden Gold Corporation ("SGC") on August 5, 2014.

Tahoe

A TSX- and NYSE-listed Canadian-resident corporation that is headquartered in Reno, Nevada and which indirectly produces silver in Guatemala. 39% of its common shares are owned by Goldcorp. Post-merger it will have a market cap of over $3.2B. It will seek a BVL listing. Six of the existing Tahoe members and three Rio Alto nominees will be on its board.

Subco

1860927 Alberta Ltd., a wholly-owned sub of Tahoe.

Plan of Arrangement

The first steps in the Plan of Arrangement will be the cancellation of the Rio Alto rights plan and the transfer of each Rio Alto common share held by a dissenting shareholder to Tahoe, with Tahoe required to pay the fair value therefor. Thereafter:

1. Each outstanding Rio Alto common share will be transferred to Tahoe in exchange for 0.227 of a Tahoe common share and Cdn.$0.001 in cash; and Rio Alto Options (including SGC replacement options) will be exchanged for Tahoe options – provided that in the event that the in-the-money value of such Tahoe options exceeds that of the Rio Alto options, the number of Tahoe common shares which may be acquired on exercise will be reduced.
2. Each Rio Alto common share will be transferred by Tahoe to Subco in consideration for one Subco common share having a stated capital equal to the paid-up capital of the transferred shares (and with the stated capital of the transferred shares then being reduced to $1.00, and Rio Alto filing an election with the CRA to cease to be a public corporation).
3. Rio Alto and Subco will merge to form Amalco (with the same effect as if they had amalgamated under the OBCA except that Subco will survive and Rio Alto will cease to exist), and with the Rio Alto common shares thereby being cancelled and Tahoe receiving one Amalco common share on the amalgamation in exchange for each Subco common share.

Canadian tax consequences

Share exchange. In the absence of an s. 85 election, the exchange of Rio Alto common shares for Tahoe common shares will occur on a non-rollover basis. The deadline for providing an s. 85(1) election form to Tahoe by "Eligible Shareholders" (generally non-exempt residents or partnerships with such a member, and non-residents whose shares are taxable Canadian property) is 60 days after the Effective Date of the Plan of Arrangement. Capital gains/loss treatment will apply to dissenters except re interest.

Non-residents

Standard (non-informative) taxable Canadian property disclosure for non-residents.

U.S. tax consequences

Structuring of merger. The exchange of Rio Alto common shares for Tahoe common shares and cash, the contribution of the Rio Alto shares to Subco and the amalgamation should be treated as a single integrated transaction so that, provided the substantially-all test is satisfied, it should qualify as a reorganization under Code s. 368(a). The substantially-all test, which includes reference to any cash or other assets directly or indirectly transferred by Rio Alto to any Rio Alto shareholder and which for IRS ruling purposes, requires that at least 70% of the gross assets and 90% of the net assets of Rio Alto immediately before the acquisition are acquired by Tahoe, is believed by Tahoe and Rio Alto to be satisfied. The arrangement should qualify as a tax-deferred reorganization under Code s. 368(a) – so that if the PFIC rules do not apply, a U.S. holder should not recognize gain (except based on the amount of nominal cash received).

PFIC rules

Rio Alto believes that it was a PFIC for its tax years ended prior to June 1, 2011, but not thereafter, and Tahoe believes that it is not a PFIC for its current taxable year. On this basis and under proposed retroactive Regulations, a Rio Alto shareholder who has not made a timely and valid QEF election or mark-to-market election with respect to its Rio Alto common shares and who owned Rio Alto shares while it was a PFIC will be required to recognize gain (but not loss) as a result of the Arrangement, regardless of whether it qualifies as a reorganization, based on the fair market of the Tahoe shares (and nominal cash) received, with such gain being subject to tax and interest charges under the PFIC excess distribution regime. However, in the absence of the proposed Regulation becoming final, it is unclear whether the IRS would treat the transaction as being taxable under this or another basis. There can be no assurance that Rio Alto will provide U.S. Holders with the required information (i.e., PFIC annual information statements) in order for QEF elections to be available.

FTC re Peruvian tax

As the U.S. and Peru have not entered into a Treaty, gain recognized by a U.S. Holder on the transfer of Rio Alto Shares pursuant to the Arrangement will be characterized as U.S. source income for purposes of the foreign tax credit rules under the Code. Accordingly, a U.S. Holder generally would not be able to claim a credit for any Peruvian tax paid or withheld with respect to the Arrangement unless, depending on the circumstances, such U.S. Holder has excess foreign tax credit limitation due to other foreign source income that is subject to a low or zero rate of foreign tax.

Peruvian gains tax

Gain under domestic law. Under Peruvian domestic law, the transfer of Rio Alto shares under the Arrangement will qualify as an "indirect transfer" of the shares of a Peruvian company as the fair market value of the shares of the Peruvian subsidiaries represent 50% or more of the fair market value of the Rio Alto Shares, and at least 10% of the Rio Alto Shares will be transferred. However, "in the case of those Rio Alto Shareholders which held Rio Alto Shares on February 15, 2011, they will have the right to "step-up" the cost basis of said shares considering their quotation value at the relevant Stock Exchange on that date."

Canadian Treaty exemption

Under Canada-Peru Tax Convention, Rio Alto Shareholders who are resident or deemed resident in Canada for the purpose of that Treaty will be exempt from Peruvian tax on any gain arising from the exchange.

Tax to U.S. residents

However, Peru does not have a Treaty with the U.S. Non-Treaty "Rio Alto Shareholders will be required to pay a 30% income tax on the capital gain unless the shares of Rio Alto are recorded on the Securities Market Public Registry (Registro Publico del Mercado de Valores) of the Peruvian Superintendence of the Securities Market and the transaction is perfected through the BVL, in which case the rate of tax will be reduced to 5%."

Overview

After rolling its exploration assets (the "New Probe Assets") into a new Ontario subsidiary (New Probe), so that it will still retain the Borden gold project, Probe will distribute its common shares of New Probe to its shareholders as a paid-up capital distribution. Also occurring under an Ontario Plan of Arrangement will be an exchange of all the Probe common shares (other than of dissenters) for Goldcorp common shares (together with nominal cash so as to require a joint s. 85(1) election to achieve Canadian rollover treatment), with Goldcorp then dropping its Probe shares into a wholly-owned subsidiary ("Subco") and causing their amalgamation (with Subco as the survivor.) The former Probe shareholders will now hold 1.6% of the Goldcorp shares (as well as 100% of New Probe). The share exchange and amalgamation is intended to qualify as a forward triangular merger - although Probe is believed to be and have been a PFIC and Goldcorp is believed not to be a PFIC, so that Code rollover treatment generally would not be available as per a proposed retroactive Regulation.

Probe

A TSXV-listed Ontario company with 91M common shares outstanding (representing a market cap of $475M) and with a focus on its Borden gold project near Chapleau, Ontario. Palmer, the CEO, holds 1.3M common shares (a 1.5% interest) and 1.7M options, and somewhat similarly for Peterson, another director. Goldcorp held a 19.8% interest (through common shares and warrants) on 9 February 2015.

Goldcorp

A TSX- and NYSE-listed Canadian-resident corporation and senior gold producer.

New Probe

A wholly-owned CBCA subsidiary of Probe which will apply for a TSXV listing.

Subco

2426854 Ontario Inc., a wholly-owned sub of Goldcorp.

Plan of Arrangement

The first step in the Plan of Arrangement will be the transfer of each Probe common share held by a dissenting shareholder to Goldcorp, with Goldcorp required to pay the fair value therefor. This and the following steps will be deemed to occur at one-minute intervals:

1. Probe will transfer the New Probe Assets and the related liabilities to New Probe in consideration for 100 New Probe common shares, with an ITA s. 85(1) election filed.
2. Goldcorp will lend $15M to Probe by way of non-interest bearing demand note.
3. Probe will subscribe for New Probe common shares for $15M. The New Probe common shares will be subdivided so as to equal 1/3 of the number of outstanding Probe common shares. Each option under the Probe stock option plan will be exchanged for a Probe replacement option and a New Probe option (with the intention that ITA s. 7(1.4) apply.)
4. The New Probe common shares "will be distributed by Probe to the … Probe Shareholders on a return of share capital pursuant to a reorganization of Probe's business and a distribution of proceeds from a disposition of Probe's property outside the ordinary course of Probe's business."
5. Each outstanding Probe common share (if not held by Goldcorp or an affiliate thereof) will be transferred to Goldcorp in exchange for 0.175 of a Goldcorp common share and Cdn.$0.001 in cash; and Probe replacement Options will be exchanged for Goldcorp options (with the intention that ITA s. 7(1.4) apply.)
6. Each Probe common share will be transferred by Goldcorp to Subco in consideration for one Subco common share having a stated capital equal to the paid-up capital of the transferred shares (and with the stated capital of the transferred shares then being reduced to $1.00, and Probe filing an election with the CRA to cease to be a public corporation).
7. Probe and Subco will merge to form Amalco (with the same effect as if they had amalgamated under the OBCA except that Subco will survive and Probe will cease to exist), and with the Probe common shares thereby being cancelled and Goldcorp receiving one Amalco common share on the amalgamation in exchange for each Subco common share.

Canadian tax consequences

New Probe distribution. The fair market value of the New Probe common shares distributed up to the paid-up capital of the Probe common shares should be treated as a return of paid-up capital. Probe expects that such fair market value will not exceed the paid-up capital of the Probe common shares. There are qualified investment and taxable Canadian property risks if the New Probe shares may not be listed on a timely basis.

Share exchange

In the absence of an s. 85 election, the exchange of Probe common shares for Goldcorp common shares will occur on a non-rollover basis. The deadline for providing an s. 85(1) election form to Goldcorp by "Eligible Shareholders" (generally non-exempt residents or partnerships with such a member) is 90 days after the Effective Date of the Plan of Arrangement. Capital gains/loss treatment will apply to dissenters except re interest.

Non-residents

Standard (non-informative) taxable Canadian property disclosure for non-residents.

U.S. tax consequences

Structuring of merger. Probe and Goldcorp intend that the exchange of Probe common shares for Goldcorp common shares and cash will qualify as a reorganization under Code s. 368(a)(2)(D), so that subject to the PFIC rules a U.S. Holder will generally not recognize gain upon receipt of Goldcorp common shares pursuant to the Arrangement (except based on the amount of nominal cash received).

PFIC rules. Probe believes that it is and has been a PFIC, and Goldcorp believes that it is not a PFIC for its current taxable year. On this basis and under proposed retroactive Regulations, a Probe shareholder who has not made a timely and valid QEF election or mark-to-market election with respect to its Probe common shares will be required to recognize gain (but not loss) as a result of the Arrangement, regardless of whether it qualifies as a reorganization, based on the fair market of the Goldcorp shares (and nominal cash) received, with such gain being subject to tax and interest charges under the PFIC excess distribution regime. There can be no assurance that Probe will provide U.S. Holders with the required information (i.e., PFIC annual information statements) in order for QEF elections to be available, and "U.S. Holders should assume that a QEF election will not be available."

New Probe

distribution. Probe intends that the receipt of New Probe common shares pursuant to the Arrangement by a U.S. Holder will be considered to be a taxable distribution in an amount equal to the fair market value of such shares. However, it is possible that the receipt of such shares would be treated instead as additional consideration for the Probe common shares, in which case the receipt of the New Probe common shares would be taxable in a similar manner to the cash consideration. New Probe is likely to be treated as a PFIC for its current taxable year.

Overview

Each Cayden (common) share will be transferred to Agnico under a B.C. Plan of Arrangement for 0.09 of an Agnico Eagle common share and cash of $0.01 (so that no rollover treatment obtains unless a s. 85 election is filed). The Agnico Eagle shares to be issued would represent 2.2% of its outstanding common shares on a fully diluted basis. No subsequent amalgamation of Cayden is specified, and no Code s. 368(a) reorg treatment is anticipated.

Cayden

A BCBCA company which is listed on the TS-XV and trades on the OTCQX, and whose principal mineral exploration assets are held in a Mexican subsidiary.

Agnico Eagle

An international gold mining OBCA corporation listed on the TSX and NYSE, and headquartered in Toronto.

Plan of Arrangement

1. Cayden options and warrants will be deemed to be exercised.
2. Each Cayden common share (not held by Agnico Eagle or a dissenting shareholder) will be transferred to Agnico Eagle for 0.09 of a Agnico Eagle common share (subject to rounding) and cash of $0.01.
3. Each Cayden common share of a dissenter will be transferred to Agnico Eagle with the right to receive the fair value therefor.

Canadian tax consequences

Exchange of Cayden shares. Eligible Shareholders (non-exempt Canadian residents, and partnerships of such persons) who provide a s. 85 election form to Agnico Eagle within 45 days of the Arrangement effective date will have those election forms completed and returned by Agnico Eagle. Those who do not make and timely-file a valid election will be considered to have disposed of their shares on a non-rollover basis.

Non-residents

Standard taxable Canadian property disclosure.

U.S. tax consequences

The exchange will occur on a taxable basis. Cayden believes that it currently is a PFIC. No PFIC determination has been made re its non-U.S. subsidiaries.

Overview

Brigus will be spinning-off a newly-established exploration CBCA subsidiary (Fortune) (per the s. 86 rules) under a CBCA Plans of Arrangement, with each Brigus share then being transferred to Primero for 0.175 of a Primero common share and cash of $0.000001 (so that no rollover treatment obtains unless a s. 85 election is filed). Brigus then will be amalgamated with a newly-incorporated CBCA subsidiary of Primero (Primero NewCo) with nominal assets. Code s. 368(a) reorg treatment is anticipated.

Brigus

A CBCA company which is listed on the TSX and NYSE MKT whose principal asset is an Ontario gold mine.

Primero

A B.C. company which is listed on the TSX and NYSE. Its head office is in Toronto and it has Mexican precious metal mines.

Post-merger picture

Fortune is expected to be listed on the TSXV, with Brigus holding 9.9% of its shares. Brigus shareholders will hold approximately 27% of the Primero common shares and an amalgamated Brigus will be a wholly-owned subsidiary of Primero.

Brigus Pre-Spinout Reorganization

1. Brigus will transfer various Canadian exploration properties and shares of non-resident subsidiaries to Fortune in consideration for the issuance of common shares.
2. The Brigus shareholders will approve a stated capital reduction to $217 million to take effect immediately prior to the Arrangement, subject to the Board determining not to proceed.

Plan of Arrangement

1. The Brigus Rights Plan will be terminated.
2. The Brigus DSUs will vest and the DSUs will be satisfied through Brigus issuing common shares.
3. Each Brigus common share of a dissenter will be transferred to Primero in exchange for a debt claim against Primero.
4. Primero will lend $10M to Brigus by way of non-interest-bearing promissory note.
5. Brigus will use such loan proceeds to subscribe for additional Fortune common shares.
6. Each of the other Brigus common shares will be exchanged for one Brigus Class A share and 1/10 of an Fortune common share, with the stated capital of the Brigus Class A shares being equal to the paid-up capital of the exchanged Brigus common shares minus the fair market value of the Fortune common shares. As a result, the Brigus shareholders will hold all the Fortune shares other than 9.9% of the shares which are retained by Brigus.
7. Each Brigus common share will be transferred to Primero for "an indivisible combination" of 0.175 of a Primero common share and cash of $0.000001 (with the total cash entitlement of each shareholder rounded up to the nearest nickel).
8. Each employee stock option to acquire an Brigus common share will be exchanged for an option to acquire 0.175 new Primero common shares, with the old exercise price divided by 0.175.
9. Primero NewCo and Brigus will amalgamate under s. 192 of the CBCA to form Amalco (named "Brigus Gold Corp"), with the Class A shares (of Brigus) continuing as common shares of Amalco and the common shares of Amalco (its only class of shares) being equal to the paid-up capital of all the shares of Brigus before the amalgamation.

U.S. securities laws

The Brigus Class A, Primero and Fortune shares will be issued in reliance on the s. 3(a)(10) exemption. Shares issuable on the exercise of Brigus warrants and options in the U,S. or by or on behalf of a U.S. person after the Effective Date may not be issued in reliance on the s. 3(a)(10) exemption.

Canadian tax consequences

S. 86 reorg. Description of s. 86 rules. No deemed dividend is anticipated.

Exchange of Brigus Class A shares

Eligible Shareholders (non-exempt Canadian residents, and partnerships of such persons) who use Primero's web-based system to complete a s. 85 election and who provide the election to Primero within 90 days of the Arrangement effective date will have those election forms completed and returned by Primero. Those who do not make and timely-file a valid election will be considered to have disposed of their shares on a non-rollover basis.

Qualified investments

If the Fortune shares are not listed before the due date for Fortune's first income tax return, they will not be qualified investments.

Non-residents

Standard taxable Canadian property disclosure.

U.S. tax consequences (from Summary)

[S. 368(a) reorg.]

[I]t is anticipated that the Arrangement will be treated as a partially tax-deferred reorganization under Section 368(a) of the Code. As a result, U.S. Holders…should recognize gain, but not loss, as a result of the Arrangement. The gain, if any, recognized will equal the lesser of (a) the fair market value, at the time of the Arrangement, of the Fortune Shares and cash received pursuant to the Arrangement and (b) the amount of gain realized in the Arrangement. The amount of gain that is realized by a U.S. Holder in the Arrangement will equal the excess, if any, of (i) the sum of the cash plus the fair market value, at the time of the Arrangement, of the Primero Shares and Fortune Shares received pursuant to the Arrangement over (ii) such U.S. Holder's adjusted tax basis in the Brigus Shares surrendered in the Arrangement.

[PFIC rules.]

Based on its current and projected income, assets and business, it is expected that Fortune will be classified for U.S. federal income tax purposes as a PFIC for the current taxable year and in future taxable years. As a consequence, the complex U.S. federal income tax rules relating to PFICs would apply to U.S. Holders of Fortune Shares, potentially resulting in gains realized on the disposition of such shares being treated as ordinary income rather than as capital gains, and the application of interest charges to those gains as well as to certain distributions.

Overview

Alpha and Fission (both TSXV-listed, and ABCA and CBCA corporations, respectively) will be transferring various (mostly uranium) exploration assets to Alpha Spinco and Fission Spinco and spinning-them off (per the s. 86 rules) under ABCA and CBCA Plans of Arrangement (the Alpha Arrangement and Fission Arrangement), with each Alpha share then being transferred to Fission under the Alpha Arrangement for 5.725 Fission common shares and nominal cash (so that no rollover treatment obtains unless a s. 85 election is filed).

Post-merger picture

The Spincos are expected to be listed on the TSXV. Alpha shareholders will hold approximately 50.7% of the new Fission common shares (or 49.3% after giving effect to the private placement referred to in 10 below). The merger will consolidate ownership of the Patterson Lake South uranium property in Saskatchewan, a core asset for both companies.

Alpha Pre-Spinout Reorganization

1. Alpha will transfer various Canadian exploration properties to Alpha Spinco in consideration for the issuance of common shares; and Alpha Spinco will assume liabilities in respect of the transferred properties in consideration for a cash payment from Alpha with Alpha also subscribing $3M for Alpha Spinco common shares.

Alpha Arrangement

1. Each Alpha common share of a dissenter will be transferred to Fission.
2. Each of the other Alpha common shares will be exchanged for one Alpha Class A share and ½ of an Alpha Spinco common share, with the stated capital of the Alpha Class A shares being equal to the paid-up capital of the exchanged Alpha common shares minus the fair market value of the Alpha Spinco common shares.
3. Each Alpha common share will be transferred to Fission for 5.725 "new" Fission common shares (see 3 of section below) and cash of $0.0001
4. Each employee stock option to acquire an Alpha common share will be exchanged for an option to acquire 5.725 new Fission common shares, with the exercise price reduced by the fair market value of ½ an Alpha Spinco common share; and similarly re Alpha warrants.

Fission Arrangement

1. Fission will transfer various exploration properties in Alberta, Saskatchewan and Peru to Fission Spinco on essentially the same terms as 1 above.
2. Each Fission common share of a dissenter will be transferred to Fission.
3. Each of the other Fission common shares will be redesignated as Fission Class A shares (essentially the same as before but with two votes per share) and each such Fission Class A share will be exchanged for one new Fission common shares and one Fission Spinco common share, with the stated capital of the new Fission common shares being equal to the paid-up capital of the exchanged Fission Class A shares minus the fair market value of the Alpha Spinco common shares.
4. Each employee stock option to acquire a Fission common share will be exchanged for an option to a new Fission common shares, with the exercise price reduced by the fair market value of a Fission common share.

Flow-through offering

1. Subscription proceeds from an offering of flow-through new Fission common shares will be released from escrow immediately following the closing of the two Arrangements.

Canadian tax consequences

Alpha s. 86 reorg. Description of s. 86 rules. The determination as to whether a deemed dividend will arise, which depends on the fair market value of the Alpha Spinco common shares cannot currently be made. Alpha will subsequently advise on its website.

Fission s. 86 reorg

Similar to Alpha Circular disclosure.

Exchange of Alpha Class A shares

Eligible Shareholders (non-exempt Canadian residents, non-residents whose Alpha Class A shares are taxable Canadian property and who are not treaty-exempt and partnerships with such members) who use Fission's web-based system to complete a s. 85 election and who provide the election to Fission within 90 days of the Arrangement effective date will have those election forms completed and returned by Fission. Those who do not make and timely-file a valid election will be considered to have disposed of their shares on a non-rollover basis.

Qualified investments

If the Alpha or Fission Spinco shares are not listed before the due date for the Spinco's first income tax return, they will not be qualified investments.

Non-residents

Standard taxable Canadian property disclosure.

U.S. tax consequences

Alpha Arrangement. It is not intended to be a tax-free transaction.

Fission reorg

The exchange of Fission shares for new Fission shares and Fission Spinco shares is not expected to qualify as a nonrecognition transaction. Accordingly, subject to the PFIC rules, a U.S. holder will be required to include in income as a distribution the fair market value of the of the Fission Spinco common shares received.

PFIC rules

Fission, its non-U.S. subsidiaries and Fission Spinco may be classified as PFICs for their current and future taxable years.

Overview

All the shares of Orko, which is a B.C. company listed on the TSX-V and holding a Mexican subsidiary, are to be acquired under a B.C. plan of arrangement by First Majestic, which is a B.C. company listed on the TSX and NYSE, in consideration for First Majestic shares (with a value representing a 72% premium) and nominal cash. Orko then is being merged under the plan of arrangement with a wholly-owned B.C. subsidiary of First Majestic ("Subco").

U.S. Securities law

Each of First Majestic and Orko is a foreign private issuer. Reliance will be placed on the s. 3(a)(10) exemption.

Break fee

$11.5M (expense reimbursement fee of $1.5M).

Plan of Arrangement

Under the Plan of Arrangement:

• The Orko shareholder rights plan will be cancelled

• all outstanding options to acquire Orko shares will be cancelled

• Orko shares of dissenters will be transferred to First Majestic for their fair value

• each outstanding Orko share will be transferred to First Majestic for an "indivisible mixture" of 0.1202 of a First Majestic share and $0.0001 in cash

• each Orko share will be transferred to Subco in consideration for one Subco share and, at the same time, the stated capital of the Orko shares will be reduced in aggregate to $1.00

• Orko and Subco then "shall merge to form one corporate entity ("Amalco") with the same legal effect as if they had amalgamated under Section 269 of the Business Corporations Act, except that the legal existence of Orko shall not cease and Orko shall survive the merger as Amalco…[and] the separate legal existence of Subco shall cease…and Orko and Subco shall continue as one company…."

These transactions would result in the number of issued and outstanding First Majestic shares increasing from 116.8M by up to 17.1M.

Canadian tax consequences

In the absence of an s. 85 election, the exchange will occur on a non-rollover basis. The deadline for providing an s. 85(1) election form to First Majestic is 90 days after the Effective Date of the plan of arrangement. Capital gains/loss treatment will apply to dissenters except re interest. Standard (non-informative) taxable Canadian property disclosure for non-residents.

U.S. tax consequences

Structuring of merger. The "Arrangement has been structured to qualify as a tax-deferred reorganization under the Code" (p.50). The U.S. tax "summary assumes that the Arrangement Transactions will be treated for U.S. federal income tax purposes as if Subco and Orko merged with Orko surviving the merger and Subco ceasing to exist as a separate legal entity" (p.60).

S. 368(a) reorg

The arrangement should qualify as a tax-deferred reorganization under Code s. 368(a) – so that if the PFIC rules do not apply, a U.S. holder should not recognize gain.

PFIC rules

Orko believes that it and its subsidiaries have been and are PFICs, and First Majestic believes that it is not currently a PFIC and will not be one for any subsequent year. On this basis, a shareholder who has not made a timely QEF election will be required to recognize gain (but not loss) as a result of the arrangement, regardless of whether it qualifies as a reorganization based on the fair market of the First Majestic shares (and nominal cash) received, with such gain being subject to tax and interest charges under the PFIC excess distribution regime. However, a U.S. Holder who has made a mark-to-market election may benefit from the treatment of the arrangement as a reorganization. A U.S. Holder who has made a timely QEF election also will be required to recognize gain if First Majestic was not a PFIC.

Overview

Pursuant to an Alberta Plan of Arrangement, TSX-listed Pacific Rubiales will acquire all of the outstanding common shares of C&C Energia (also TSX-listed) and holders of C&C Energia common shares will receive, in exchange for each of their common shares, 0.3528 of a common share of Pacific Rubiales, cash of $0.001 and one common share of Platino Energy. Platino Energy previously will have been incorporated and capitalized by C&C Energia to hold US$80 million in cash and (through a Barbados holding structure) exploration assets in Columbia, a branch of a Barbados IBC. C&C Energia will retain a 5% equity interest in Platino Energy. The former C&C Energia shareholders will hold approximately 7% of the Pacific Rubiales shares.

Plan of Arrangement

Under the Plan of Arrangement:

• Common shares of C&C Energia held by dissenting shareholders are surrendered to C&C Energia
• Options to acquire C&C Energia common shares which have not been exercised are cancelled, and each C&C Energia common share acquired on exercise of options on C&C Energia common shares is exchanged for 0.3528 of a common share of Pacific Rubiales and the right to receive one Platino Energy share (with delivery occurring subsequently)
• Class A shares (essentially, common shares but with a special class voting right) are added to the capital of C&C Energia, and each common share of C&C Energia is exchanged for a Class A share and a Platino Energy share, with the stated capital of the Class A shares being set at $1.00 in the aggregate
• Each Class A share (other any share already held by Pacific Rubiales) is exchanged with Pacific Rubiales for 0.3528 of a common share of Pacific Rubiales and cash of $0.001

Break fee

$15M.

Bump protection

Pursuant to a Reimbursement Agreement in which C&C Energia and Platino Energy will agree to share transaction costs on an 80/20 basis, Platino Energy (a.k.a. ExploreCo) agrees that

until the date that is two years following the Effective date, that ExploreCo shall not, and shall use commercially reasonable effort to cause any person with whom ExploreCo does not deal at arm's length, or any corporation of which ExploreCo or any person with whom ExploreCo does not deal at arm's length is a "specified shareholder" (as defined in paragraph 88(1)(c.2) of the tax Act) not to, purchase or otherwise acquire, directly or indirectly, shares in the capital of Pacific Rubiales, debt of Pacific Rubiales, or shares in the capital of or debt of Pacific Rubiales' affiliates, or any securities convertible or exchangeable into any such securities, or that derive their value, directly or indirectly, from any such securities.

Canadian tax consequences

S. 86 exchange. The fair market value of the distributed Platino Energy shares is not expected to exceed the paid-up capital of the C&C Energia common shares, so that no deemed dividend should arise on the exchange of the C&C Energia common shares for Class A shares and Platino Energy shares. S. 86 will apply to such exchange so that a holder of C&C Energia common shares will be considered to have disposed of its shares for the greater of their adjusted cost base and the fair market value of the Platino Energy shares received on the exchange. Management will issue its estimate of such fair market value.

Exchange of C&C Energia Class A shares

The exchange of C&C Energia Class A shares for Pacific Rubiales' shares and cash will not occur on a rollover basis unless a valid s. 85 election is made. Pacific Rubiales will jointly elect under s. 85(1) or (2) with eligible holders (Canadian residents, and non-residents whose shares are taxable Canadian property and not treaty-protected property) provided that it is provided with two signed and complete copies of the election form by 45 days following the effective date of the plan of arrangement.

Dissenters

Will (subject to s. 55(2)) be deemed to receive a dividend to the extent that the amount received (excluding an award of interest) exceeds the paid up capital of the C&C Energia common shares of the dissenter. C&C Energia will not designate such deemed dividend as an eligible dividend.

Qualified investments

The C&C Energia Class A shares (which will not be listed) will be qualified investments provided that the C&C Energia common shares are listed on the TSX or other designated stock exchange.

Non-residents

The exchange of C&C Energia Class A shares for Pacific Rubiales' shares and cash will not be subject to tax unless the C&C Energia Class A shares (which will not be listed on a designated stock exchange) constitute taxable Canadian property. Based on the types of property from which the Class A shares will derive their value, management does not anticipate that they will be taxable Canadian property.