TORONTO, Nov. 7, 2017 /CNW/ - Centerra Gold Inc.
("Centerra" or the "Company") (TSX:CG) and AuRico Metals Inc.
("AuRico Metals") (TSX:AMI) are pleased to announce that they have
entered into a definitive arrangement agreement (the "Arrangement
Agreement") whereby Centerra will acquire all of the issued and
outstanding common shares of AuRico Metals (the "Arrangement") for
C$1.80 in cash consideration per
share (the "Purchase Price"), representing an aggregate transaction
value of C$310 million.
The Purchase Price represents a 38% premium to the closing price
of AuRico Metals' common shares on the Toronto Stock Exchange
("TSX") on November 6, 2017 and a
premium of 37% to the 20-day volume weighted average price ("VWAP")
as of such date.
AuRico Metals is developing the Kemess property in British Columbia, Canada; a low-cost
brownfield development asset that is host to the feasibility-stage
Kemess Underground ("KUG") and preliminary economic assessment
level Kemess East ("KE") projects. AuRico Metals also owns a
high-quality, free-cash flow generating royalty portfolio which
includes a 1.5% net smelter return ("NSR") royalty on the
Young-Davidson gold mine in Ontario and a 2.0% NSR royalty on the
Fosterville mine in Australia. Together with Centerra's low-cost,
long-lived Kumtor Mine in the Kyrgyz
Republic and the Mount Milligan Mine in British Columbia, Canada, Centerra is expected
to be firmly established as a low-cost gold producer with a
geographically diversified footprint and peer-leading development
pipeline. Post-transaction, Centerra is expected to sustain and
grow its production base with its strong balance sheet and
liquidity profile, sector leading operating margins, and low
capital requirements.
Highlights of the Transaction:
- Enhances Centerra's high-quality asset base in a world-class
jurisdiction: The Kemess property adds a future cornerstone
asset that will further bolster Centerra's strong development
pipeline including the fully-financed Öksüt Project in Turkey, the Greenstone Gold Property in
Ontario, Canada, and the Gatsuurt
Project in Mongolia. Kemess will
also complement existing Centerra operations at the Mount Milligan
Mine in British Columbia and has
the potential to unlock operating and tax synergies with its
existing assets in British
Columbia.
- De-risked brownfield project: Over C$1 billion of surface infrastructure already in
place, environmental approvals and an Impact Benefits Agreement
with First Nations in hand, and permitting well advanced.
- Numerous mine life upside opportunities at Kemess: The
integration of KUG and KE has the potential to unlock a number
synergies and optimization opportunities.
- Attractive acquisition return profile: Expected to be
accretive to Centerra shareholders, on a per share basis, to net
asset value, reserves and resources.
- Optionality retained in royalty portfolio: Acquisition
of a high quality, free-cash flow generating royalty portfolio
provides immediate incremental cash flow and long-term upside from
strong underlying assets.
- Maintains strong balance sheet: Centerra currently holds
in excess of US$350 million in cash
to fund the acquisition and has secured a new US$125 million acquisition facility. Centerra
plans to maintain its strong cash balance which positions the
Company with the financial strength and flexibility to fund
operating and capital expenditures required to build out its
pipeline of development projects. Centerra plans to restructure its
current debt facilities in connection with the closing of the
Arrangement.
Stephen A. Lang, Chairman and
Director of Centerra, said, "With the acquisition of the AuRico
Metals assets, Centerra expands its existing development pipeline
to include another low-cost de-risked brownfield development asset,
the Kemess property, located in Canada—one of the lowest risk
mining jurisdictions in the world. As well, the Company adds a
high-quality, free-cash flow generating royalty portfolio. In the
future, as the Company delivers on building out this development
pipeline its production base will be sustained and continue to grow
with sector-leading operating margins positioning the Company to
generate robust free cash flows for many years to come."
Chris Richter, President and CEO
of AuRico Metals, stated, "Since AuRico Metals' inception in the
middle of 2015, our key objective has been to surface what we saw
as significant value in the Kemess Project. I am delighted to now
see this value being recognized, with our shareholders receiving a
strong cash offer from Centerra at a very attractive premium of 38%
to the current spot price, and representing a return of over three
times their initial investment in a period of less than two and a
half years. I am proud of the success the AuRico Metals team has
had in advancing Kemess while growing the value of our portfolio of
high quality royalties. I also believe that Centerra is ideally
positioned to realize the full potential of Kemess as a long life,
significant gold and copper producer."
Benefits to Centerra
- Acquiring a de-risked, brownfield development asset located in
Canada that is complementary to
Centerra's Mount Milligan operation and has the potential to
generate meaningful synergies;
- Adds a strong polymetallic project in a tier-one jurisdiction
that yields high-margin gold and copper production at a time when
copper markets are expected to improve significantly;
- Significant mine life improvement potential through the
potential KUG and KE integration, resource to reserve conversion,
and exploration potential;
- Expected to improve Centerra's operating cost profile and
generate meaningful life-of-mine free cash flows; and
- High-quality, cash flow generating royalty portfolio.
Benefits to AuRico Metals
- Immediate and significant premium of approximately 38% based on
the prior day closing price, and 37% based on the 20-day VWAP;
- All cash offer, not subject to financing condition;
- Strong deal certainty with support agreements from Directors
and senior officers of AuRico Metals as well as Alamos Gold Inc.;
and
- Secures future funding for Kemess to realize its future
potential.
Transaction Summary and Timing
The proposed business combination will be effected by way of a
plan of arrangement completed under the Business Corporations Act
(Ontario). The Arrangement will
require approval by 66 2/3 percent of the votes cast at a special
meeting of AuRico Metals shareholders. In addition to shareholder
and court approvals, the Arrangement is subject to applicable
regulatory approvals and the satisfaction of certain other closing
conditions customary in a transaction of this nature. Directors and
senior officers of AuRico Metals, in addition to Alamos Gold Inc.,
collectively representing approximately 11.4 percent of the
outstanding AuRico Metals common shares, have entered into support
agreements pursuant to which they have agreed to vote in favour of
the proposed transaction.
The Arrangement Agreement includes customary provisions
including non-solicitation provisions, including a C$12 million termination fee payable to Centerra
under certain customary circumstances.
Full details of the Arrangement will be included in the meeting
materials which are expected to be mailed to AuRico shareholders
in connection with the AuRico shareholder meeting that
will take place in December 2017 with
closing of the Arrangement expected in January 2018.
Transaction Financing
The proposed acquisition is expected to be financed through a
combination of a new US$125 million
acquisition facility and cash on hand at Centerra.
Board of Directors' Recommendations
The Arrangement Agreement has been approved by the Board of
Directors of each of Centerra and AuRico Metals. The AuRico Metals
Board of Directors recommends that AuRico Metals shareholders vote
in favor of the Arrangement. Macquarie Capital Markets Canada Ltd.
has provided an opinion to the Board of Directors of AuRico Metals,
stating that in its opinion, and based upon and subject to the
assumptions, limitations, and qualifications set forth therein, the
Purchase Price pursuant to the Arrangement is fair, from a
financial point of view, to the AuRico Metals shareholders.
Scotia Capital Inc. has provided an opinion to the Centerra
Board of Directors, stating that in its opinion, and based upon and
subject to the assumptions, limitations, and qualifications set
forth therein, the Purchase Price pursuant to the Arrangement is
fair, from a financial point of view, to Centerra.
Scott Perry, CEO and Director of
Centerra, also holds a Director position on the Board of Directors
of AuRico Metals and has therefore recused himself from the
transaction from both a Centerra and AuRico Metals perspective. In
connection with the Arrangement, Scott
Perry has resigned from the Board of Directors of AuRico
Metals contemporaneously with the execution of the Arrangement
Agreement.
Advisors and Counsel
Scotia Capital Inc. acted as financial advisor to Centerra and
Stikeman Elliott LLP acted as Centerra's legal advisors. Scotia
Capital Inc. has provided a fairness opinion to the Centerra Board
of Directors.
Macquarie Capital Markets Canada Ltd. acted as financial advisor
to AuRico Metals and Fasken Martineau DuMoulin LLP acted as AuRico
Metals' legal advisor. Macquarie Capital Markets Canada Ltd. has
provided a fairness opinion to the AuRico Metals Board of
Directors.
Conference Call
Centerra Gold and AuRico Metals will host a joint conference
call on Tuesday, November 7, 2017 at
8:00 AM Eastern Time for members of
the investment community to discuss the transaction. The call-in
details are as follows:
- North American participants should dial the toll-free number:
(800) 404-5245
- International participants may access the call at: +1 (416)
981-9070
- The call will also be webcast live by NASDAQ and can be
accessed at: https://edge.media-server.com/m6/p/o3q7qtwg
- A copy of the investor presentation is also available on the
Centerra Gold and AuRico Metals websites at www.centerragold.com
and www.auricometals.ca, respectively.
An audio recording of the call will be available shortly after
the call and will be available until midnight Eastern Time on Friday, December 8, 2017. The recording can be
accessed by calling (416) 626-4100 or (800) 558-5253 and using the
passcode 21862384.
About Centerra Gold
Centerra Gold Inc. is a Canadian-based gold mining company
focused on operating, developing, exploring and acquiring gold
properties in North America,
Asia and other markets worldwide.
Centerra operates two flagship assets, the Kumtor Mine in the
Kyrgyz Republic and the Mount
Milligan Mine in British Columbia,
Canada and is the largest Western-based gold producer in
Central Asia. Centerra's shares
trade on the TSX under the symbol CG. The Company is based in
Toronto, Ontario, Canada.
Additional information on Centerra is available on the Company's
website at www.centerragold.com and at SEDAR at www.sedar.com.
About AuRico Metals
AuRico Metals is a mining development and royalty company with a
100% interest in the Kemess property in British Columbia, Canada. The Kemess property
hosts the feasibility-stage Kemess Underground Gold-Copper Project,
the Kemess East Project, and the infrastructure pertaining to the
past producing Kemess South mine. AuRico's royalty portfolio
includes a 1.5% NSR royalty on the Young-Davidson Gold Mine and a
2.0% NSR royalty on the Fosterville Mine, as well as a portfolio of
additional producing and pre-production royalty assets located in
North America and Australia.
More information is available at www.auricometals.ca and at
www.sedar.com.
Cautionary Statement on Forward-Looking Information
This News Release contains "forward-looking statements". All
statements other than statements of historical fact included in
this release, are forward-looking statements that involve various
risks and uncertainties and are based on forecasts of future
operational or financial results, estimates of amounts not yet
determinable and assumptions of management. Any statements that
express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words
or phrases such as "expects" or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results
"may", "could", "would", "might", "have potential" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements
are subject to a variety of risks and uncertainties that could
cause actual events or results to differ from those reflected in
the forward-looking statements. There can be no assurance that
forward-looking statements will prove to be accurate and actual
results and future events could differ materially from those
anticipated in such statements. In particular, forward-looking
information included in this document includes, but is not limited
to: (i) assumptions and expectations with regard to the Arrangement
and its completion and the anticipated benefits and advantages of
the Arrangement; and (ii) the future prospects, including
exploration potential, resulting from the Arrangement and the
ability to unlock value. Other factors include, ongoing permitting
requirements and the ability to work with local populations, the
actual results of current exploration activities, conclusions of
economic evaluations and changes in project parameters as plans
continue to be refined as well as future prices of gold, and those
factors discussed in the section titled "Risk Factors" in
Centerra's Annual Information Form and AuRico Metals' and other
disclosures of "Risk Factors" by Centerra and AuRico Metals,
available on SEDAR. Although Centerra and AuRico Metals have
attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Centerra
assumes no obligation to update or revise forward looking
information to reflect changes in assumptions, changes in
circumstances or any other events affecting such forward-looking
information, except as required by applicable law.
SOURCE AuRico Metals
