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Nevada-Based Precious Metals Miner Announces Merger Proposal
Research Report

Source:

George Topping, an analyst with iA Securities, discussed the business combination arrangement on the table between the two mining companies.

Rye Patch's Florida Canyon Mine

George Topping, an iA Securities analyst, reported in a March 19 research note that Rye Patch Gold Corp. (RPM:TSX.V; RPMGD:OTCQX) announced that Alio Gold would acquire all of its outstanding shares. "While the offer for Rye Patch's recently commissioned mine in Nevada [with a 200 thousand ounce (200 Koz) per year plant] is highly undervalued, Alio brings a lot to the table in terms of cash, technical ability and risk reduction," he concluded, referencing Rye Patch's Florida Canyon mine.

The analyst described Alio as a junior producer with three mines in Mexico, one in production, another in development and a third in exploration. The company produced 83.5 Koz in 2017 and guided for 90100 Koz in 2018. Major shareholders of Alio include Goldcorp and the Lundin Group.

The "upside for Rye Patch," Topping explained, would come from Alio's $51.6 million ($51.6M) cash reserve, its cash flow-generating assets and its team's expertise, all of which would further mitigate risk during the continuing Florida Canyon mine ramp-up.

Via the proposed merger, Rye Patch shareholders would receive 0.48 of a common share of Alio in the place of one Rye Patch share. This represents a 35% premium over the 20-day volume weighted average price and is equal to about $1.57 per share, or $128M undiluted. "With 47% ownership of Alio going forward, Rye Patch shareholders will still enjoy the growth in production and gold prices but at a much reduced technical, managerial and financial risk," Topping noted. The Rye Patch-Alio deal is expected to close on May 25, 2018.

However, Topping indicated "many Rye Patch shareholders were disenchanted" with the proposed transaction and several bigger ones, along with members of management, have already chosen to tender their shares. Further, a competing bid is unlikely, he added, largely because "the $15.3M warrants with an exercise price of $1.65 are a deterrent to a materially higher offer."

IA Securities revised its rating on Rye Patch to Tender from Buy and reduced its price target to CA$1.60 per share from CA$3.25 per share. Rye Patch is currently trading at around CA$1.26/share.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Rye Patch Gold Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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Disclosures from iA Securities, Rye Patch Gold Corp., Research Update, Mar. 19, 2018

Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.

Analyst's Certification: Each iA Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst's personal views about the issuer and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analyst Trading: iA Securities permits analysts to own and trade in the securities and or the derivatives of the issuer under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of coverage for a period of 30 days prior to the issuance of the report and 5 days after the dissemination of the report to our clients. For a change in recommendation, no trading is allowed for a period of 24 hours after the dissemination of such information to our clients. A transaction against an analyst's recommendation can only be executed for a reason unrelated to the outlook of the stock for the issuer and with the prior approval of the Director of Research and the Chief Compliance Officer.

Within the last 12 months, iA Securities has received compensation for investment banking services or has provided investment banking services with respect to the securities of the issuer.

In the past 12 months, iA Securities has managed or co-managed a public offering of securities for the issuer.

The analyst has visited the issuer's operations. No payment or reimbursement was received from the issuer for the associated travel costs.

In the past 12 months, neither iA Securities, its officers or directors, nor any analyst involved in the preparation of this report have provided services to the issuer for remuneration other than normal course investment advisory or trade execution services.

Disclosures from iA Securities, AtlasGas Ltd., Research Update, July 9, 2018

Conflicts of Interest: The research analyst and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of iA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, iA Securities may provide financial advisory services for the issuers mentioned in this report. iA Securities may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.

Analyst's Certification: Each iA Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst's personal views about the issuer and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analyst Trading: iA Securities permits analysts to own and trade in the securities and or the derivatives of the issuer under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of coverage for a period of 30 days prior to the issuance of the report and 5 days after the dissemination of the report to our clients. For a change in recommendation, no trading is allowed for a period of 24 hours after the dissemination of such information to our clients. A transaction against an analyst's recommendation can only be executed for a reason unrelated to the outlook of the stock for the issuer and with the prior approval of the Director of Research and the Chief Compliance Officer.

The Industrial Alliance Securities Inc. research analyst(s), who cover the issuer discussed, members of the research analyst's household, research associate(s) or other individual(s) involved directly or indirectly in producing this report: a. have a long position in its common equity securites.

The analyst has visited the issuer's operations. No payment or reimbursement was received from the issuer for the associated travel costs.

In the past 12 months, neither iA Securities, its officers or directors, nor any analyst involved in the preparation of this report have provided services to the issuer for remuneration other than normal course investment advisory or trade execution services.




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