Teck Resources Limited and SilverBirch Energy Corporation have entered into an agreement for Teck to acquire SilverBirch by way of a plan of arrangement under the Canada Business Corporations Act.

Under the arrangement, SilverBirch shareholders will receive CAD $8.50 in cash and one share of a new company, SilverWillow Energy Corporation, per SilverBirch common share. SilverWillow will hold substantially all of the assets of SilverBirch other than SilverBirch's 50% interest in the Frontier and Equinox oil sands project. In connection with the arrangement, Teck will contribute to SilverWillow CAD $25 million in working capital and its 50% interest in several oil sands leases that are currently jointly owned with SilverBirch. As a result, SilverWillow is expected to begin operations with approximately CAD $25 million in net working capital.

The cash portion of the consideration to SilverBirch shareholders represents a premium of approximately 31% to the 20 day volume weighted average price of SilverBirch common shares on the TSX Venture Exchange. In addition, SilverBirch shareholders will retain their exposure to SilverBirch's in situ assets through their retained interest in SilverWillow.

'For a net cash outlay of $435 million, this transaction strengthens the Frontier project,' said Don Lindsay, Teck President and Chief Executive Officer. 'The Frontier ownership structure is simplified, our exposure to oil sands leases not amenable to mining is reduced, and Teck now has the opportunity to explore new potential partnerships and other alternatives to move Frontier towards development.'

Howard Lutley, President and Chief Executive Officer of SilverBirch commented, 'We believe this transaction provides excellent value to the SilverBirch shareholders and that this is the appropriate time for us to exit the Frontier project. SilverWillow will be able to focus its attention on the very promising, existing 100% owned, Audet in situ oil sands prospect while gaining 100% control over the Birch Mountains leases and other lands that have significant oil sands exploration potential'.

Teck and SilverBirch have entered into an agreement providing for, among other things, a non-solicitation covenant on the part of SilverBirch, subject to customary 'fiduciary out' provisions that entitle SilverBirch to consider and accept a superior proposal, a right in favor of Teck to match any superior proposal and the payment to Teck of a termination payment of $20 million in certain circumstances. Holders of 39% of outstanding SilverBirch shares have agreed to vote in favor of the transaction. In addition, Teck owns approximately 9.4% of the outstanding SilverBirch shares.

The board of directors of SilverBirch has unanimously approved the transaction, after consultation with its financial and legal advisors, and has determined unanimously that the transaction is fair to SilverBirch's shareholders and is in the best interests of SilverBirch and SilverBirch's shareholders. The SilverBirch board unanimously recommends that SilverBirch shareholders vote in favor of the arrangement. SilverBirch's Financial Advisors, RBC Dominion Securities and TD Securities Inc., have each provided an opinion that the consideration offered in the transaction is fair, from a financial point of view, to SilverBirch shareholders, other than Teck. Blake Cassels & Graydon LLP and Torys LLP are acting as legal counsel to SilverBirch. Stikeman Elliott LLP is acting as legal counsel to Teck.

Completion of the transaction is subject to receipt of the necessary regulatory approvals and approval by SilverBirch shareholders, as well as other customary conditions. Full details of the transaction will be included in an information circular to be mailed to SilverBirch shareholders in accordance with applicable securities laws. The transaction is expected to close on or before April 16, 2012.

Tags: Teck Resources Limited