TORONTO, Nov. 1, 2021 /PRNewswire/ - Golden Star
Resources Ltd. (NYSE American: GSS) (TSX: GSC) (GSE:
GSR) ("Golden Star" or the "Company") and Chifeng Jilong Gold
Mining Co., Ltd. (SHSE: 600988) ("Chifeng") are pleased to announce
that they have entered into a definitive agreement (the
"Arrangement Agreement") pursuant to which Chifeng has agreed to
acquire all of the issued and outstanding common shares of Golden
Star ("Golden Star Shares") by way of a statutory plan of
arrangement ("Plan of Arrangement") under the Canada Business
Corporations Act (the "Transaction"). The Transaction will be
consummated through Chifeng's majority-controlled subsidiary,
Chijin International (Hong Kong)
Limited (the "Purchaser").
HIGHLIGHTS:
- Pursuant to the Transaction, holders of Golden Star Shares
("Golden Star Shareholders") will receive total consideration,
payable in cash, of US$3.91
(equivalent to approximately C$4.85)
per Golden Star Share (the
"Consideration"), which equates to approximately US$470 million on a fully-diluted, in-the-money
basis.
- The Consideration represents a 24.1% premium over the closing
price of the Golden Star Shares on the NYSE American as at
October 29, 2021, a 37.2% premium
based on the volume-weighted average price of the Golden Star
Shares on the NYSE American over the 20 trading days ending
October 29, 2021 and a 51.5% premium
based on the volume-weighted average price of the Golden Star
Shares on the NYSE American over the 60 trading days ending
October 29, 2021.
- The Board of Directors of Golden Star has unanimously approved
the Transaction and is unanimously recommending that Golden Star
Shareholders vote in favour of the Transaction.
- The Board of Directors of Golden Star has received an oral
opinion from its financial advisor, Canaccord Genuity Corp.
("Canaccord Genuity"), that, as of the date of such opinion and
subject to the assumptions, limitations and qualifications set out
in such opinion, and such other matters as Canaccord Genuity
considered relevant, the Consideration to be received pursuant to
the Transaction is fair, from a financial point of view, to the
Golden Star Shareholders.
- All directors and officers of Golden Star, as well as La Mancha
Star Investments S.a.r.l., which collectively hold approximately
33.4% of the Golden Star Shares, have entered into voting support
agreements with Chifeng pursuant to which they have agreed to,
among other things, vote in favour of the shareholder resolution
approving the Transaction.
- All directors and senior officers of Chifeng, as well as
Chifeng's former Chairman, Mr. Zhao
Meiguang, and his relatives and associates, who collectively
hold approximately 25.1% of the currently issued and outstanding
common shares and/or securities of Chifeng carrying a voting right
in the capital of Chifeng ("Chifeng Shares"), have entered into
voting support agreements with Golden Star pursuant to which they
have agreed to vote in favour of the Chifeng shareholder resolution
approving the Transaction (to the extent a Chifeng shareholder vote
is required).
- Subject to the various approvals required, the Transaction is
expected to close in January
2022.
Andrew Wray, Chief Executive
Officer of Golden Star, commented:
"This offer, and the healthy premium being paid relative to
recent trading levels, reflect the progress made in defining the
future growth profile at Wassa as well as the repositioning of
Golden Star with a streamlined corporate and financial structure.
We believe that the transaction will benefit all of our
stakeholders, with shareholders receiving an attractive premium in
return for the future growth potential, and with Wassa forming part
of Chifeng's larger portfolio of gold mines there will be a larger
capital base to help deliver that growth. Chifeng has a proven
track record as a responsible operator and is well positioned to
build on the platform and reputation we have worked hard to
establish. We look forward to working with Chifeng over the coming
weeks to close this transaction and transition to the new
team."
Lyu Xiaozhao, President of Chifeng, commented:
"We would like to thank the Board of Directors, and management
team of Golden Star for supporting Chifeng with this important
transaction. We are delighted to acquire Golden Star and its Wassa
gold mine in Ghana which hosts a
very significant gold resource endowment. Our team is very
enthusiastic about working at Wassa and we are very confident in
our ability to build on the solid foundations that Golden Star has
established. We intend to invest significant financial and human
capital into Wassa to realize the mines' full potential and in
doing so expand our operating footprint into West Africa. Chifeng has an established track
record as a safe and sustainable operator and is focused on
creating value that will provide long-term benefits to all of our
stakeholders including the people of Ghana."
Key Benefits to Golden Star Stakeholders
- Premium of 37.2% to the 20-day VWAP of the Golden Star Shares
on the NYSE American.
- All-cash offer that is not subject to a financing
condition.
- Strong deal certainty with voting support agreements entered
into by:
-
- The directors and officers of Golden Star and La Mancha Star
Investments S.a.r.l., Golden Star's largest shareholder,
representing a total of approximately 33.4% of the Golden Star
Shares; and
- The directors and senior officers of Chifeng (including for
greater certainty, the current Chairman of Chifeng) and Chifeng's
former Chairman, Mr. Zhao Meiguang,
and his relatives and associates, representing a total of
approximately 25.1% of the Chifeng Shares.
- Removes future dilution, commodity, expansion and execution
risk.
- Places Wassa into a larger platform with the financial
capability to accelerate investment in growth, to the benefit of
all of our Ghanaian stakeholders.
- Chifeng has agreed to fully respect employment agreements and
the terms and conditions of employment of all Golden Star
employees. To that effect, within six months of the closing of the
Transaction, Chifeng intends to complete a restructuring and has
committed to make all severance payments due to such employees as
part of such restructuring. Likewise, the current community
engagement and CSR programmes around Wassa will continue to be a
key focus for Chifeng.
Board of Directors' Recommendation
The Board of Directors of Golden Star has unanimously approved
the Transaction and unanimously recommends that Golden Star
Shareholders vote in favour of the Transaction at the Golden Star
shareholder meeting (as defined below). The Board of Directors of
Golden Star has received an oral fairness opinion from Canaccord
Genuity which states that, as of the date of such opinion and
subject to the assumptions, limitations and qualifications set out
in such opinion, and such other matters as Canaccord Genuity
considered relevant, the Consideration to be received pursuant to
the Transaction is fair, from a financial point of view, to the
Golden Star Shareholders.
In addition, the Board of Directors of Chifeng has unanimously
approved the Transaction and unanimously recommends that Chifeng
shareholders vote in favour of the Transaction at the interim
meeting of shareholders of Chifeng, if required (the "Chifeng
Shareholder Meeting").
Transaction Summary
The Transaction will be subject to the approval of 66⅔ per cent
of the votes cast by Golden Star Shareholders at the special
meeting of shareholders (the "Golden Star Shareholder Meeting").
The Golden Star Shareholder Meeting is expected to be held prior to
the end of the year.
The Transaction may also be subject to the approval of 66⅔ per
cent of the votes cast by shareholders of Chifeng at the Chifeng
Shareholder Meeting. The Chifeng Shareholder Meeting, if
applicable, is expected to be held prior to the end of the
year.
Further details of the Transaction and the Arrangement Agreement
will be set out in the management information circular that will be
prepared and mailed to Golden Star Shareholders in connection with
the Golden Star Shareholder Meeting. Additional information
regarding the rationale for the recommendations made by the Board
of Directors of Golden Star and how Golden Star Shareholders can
participate in and vote at the Golden Star Shareholder Meeting will
also be provided in the management information circular. Golden
Star Shareholders are urged to read the management information
circular and other relevant materials in their entirety when they
become available.
As noted above, pursuant to the Transaction, each Golden Star
Shareholder will receive the Consideration for each Golden Star Share held by such shareholder. In
addition, as part of the Transaction and as further detailed in the
Plan of Arrangement made in accordance with the Transaction, each
deferred share unit and each performance share unit of Golden Star
that is outstanding immediately prior to the effective time of the
Transaction will be acquired for cancellation in consideration for
a cash payment equal to the Consideration. Additionally, each
in-the-money common share purchase option that is outstanding
immediately prior to the effective time of the Transaction will be
acquired for cancellation in consideration for a cash payment equal
to the product obtained by multiplying (i) the amount by which the
Consideration exceeds the exercise price by (ii) the number of
Golden Star Shares underlying such in-the-money option. All amounts
are subject to applicable withholding taxes.
Golden Star and Chifeng have provided representations and
warranties customary for a transaction of this nature and Golden
Star has provided customary interim period covenants regarding the
operation of its business in the ordinary course. In addition, the
Arrangement Agreement includes customary deal protection
provisions. Golden Star has agreed not to solicit or initiate any
discussion regarding any other business combination, subject to
customary "fiduciary out" rights. Golden Star has also granted
Chifeng a right to match any superior proposal and will pay a
termination fee of US$14.1 million to
Chifeng if the Arrangement Agreement is terminated in certain
circumstances, including if Golden Star recommends or approves an
acquisition proposal or enters into an agreement with respect to a
superior proposal. Chifeng has also agreed to pay Golden Star a
reverse termination fee of US$14.1
million in certain circumstances. Golden Star and Chifeng
have also agreed to make an expense reimbursement payment of up to
US$2 million to the other party if
the Arrangement Agreement is terminated in certain other
circumstances.
In addition to the approvals by the shareholders of each of
Golden Star and Chifeng, the Transaction is subject to the receipt
of certain regulatory, court and stock exchange approvals,
including obtaining an interim and final order approving the
Transaction from the Ontario Superior Court of Justice (Commercial
List) and approval by relevant authorities in Ghana and the
People's Republic of China. The Transaction also includes
other closing conditions that are customary in a transaction of
this nature.
The Transaction is not subject to a financing condition. The
Consideration will be funded from Chifeng's current cash balance
and committed debt facilities. Chifeng and the Purchaser intend to
introduce a third party as co-buyer to consummate the Transaction
with the intention that the Purchaser acquires 62% of the Golden
Star Shares on the Effective Date and the third party co-buyer
acquires 38% of the Golden Star Shares on the effective date of the
Transaction.
Subject to the conditions precedent being met, the Transaction
is expected to close in January
2022.
In connection with and subject to closing the Transaction,
Golden Star will apply to have its shares delisted from the TSX,
the NYSE American and the GSE, and Golden Star will cease to be a
reporting issuer under Canadian, Ghanaian and U.S. securities
law.
Advisors
Golden Star has engaged Canaccord Genuity Corp. as its exclusive
financial advisor as well as Fasken Martineau DuMoulin LLP and
Davis Graham & Stubbs LLP as its
respective Canadian and United
States legal advisors. Canaccord Genuity Corp. provided a
fairness opinion to Golden Star's Board of Directors. Chifeng has
engaged Stifel Nicolaus Canada Inc. and First Asia Group
Ltd. as its financial advisors as well as Goodmans LLP as its
legal advisor.
Golden Star Profile
Golden Star is an established gold mining company that owns and
operates the Wassa underground mine in the Western Region of
Ghana, West Africa. Listed on the NYSE American, the
Toronto Stock Exchange and the Ghanaian Stock Exchange, Golden Star
is focused on delivering strong margins and free cash flow from the
Wassa mine. As the winner of the Prospectors & Developers
Association of Canada 2018
Environmental and Social Responsibility Award, Golden Star remains
committed to leaving a positive and sustainable legacy in its areas
of operation.
Chifeng Profile
Chifeng is an international gold mining company listed on the
Shanghai Stock Exchange with a market capitalization of
US$4.3 billion. It operates five
mining assets, including the world-class Sepon gold mine in
Laos. In 2018, Chifeng acquired
Sepon before undertaking significant capital expenditures to
redevelop the gold processing facility in order to double its
future gold production.
Statements Regarding Forward-Looking Information
Some statements contained in this news release are
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and "forward looking
information" within the meaning of Canadian securities laws
(collectively, "forward-looking statements"). Generally,
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved or the
negative connotation thereof. Investors are cautioned that
forward-looking statements are inherently uncertain and involve
risks, assumptions and uncertainties that could cause facts to
differ materially. Such statements are based on numerous
assumptions regarding present and future business strategies and
the environment in which Golden Star will operate in the
future.
Forward-looking statements may include but are not limited to,
statements related to the Transaction, including statements with
respect to the benefits of the Transaction to Golden Star's
shareholders; the anticipated Golden Star Shareholder Meeting date;
the timing for and receipt of all required regulatory, court, stock
exchange and shareholder approvals and approvals to complete the
Transaction; the ability of Golden Star and Chifeng to satisfy
other conditions to, and to complete the Transaction; the
anticipated timing for completion of the Transaction; the closing
of the Transaction; the intention to seek a delisting of the shares
of Golden Star from certain stock exchanges; the Company's ability
to deliver on the future growth of the Wassa Mine; Chifeng's plans
with respect to the Wassa Mine following the closing of the
Transaction; Chifeng's plans with respect to Golden Star employees
in Ghana; and expectations
regarding the impact of the Transaction on Golden Star and
Chifeng's financial and operating results, strategy and business,
and on stakeholders in general.
In respect of the forward-looking statements and information
concerning the anticipated completion of the proposed Transaction
and the anticipated timing for completion of the proposed
Transaction, Golden Star has provided them in reliance on certain
assumptions and believes that they are reasonable at this time,
including the assumptions as to the time required to prepare and
mail shareholder meeting materials, including the required
management information circular; the ability of the parties to
receive, in a timely manner, the necessary regulatory, shareholder,
court, stock exchange and relevant authority approvals; and the
ability of the parties to satisfy, in a timely manner, the other
conditions to the closing of the Transaction. These dates may
change for a number of reasons, including unforeseen delays in
preparing meeting materials, inability to secure necessary
approvals in the time assumed or the need for additional time to
satisfy the other conditions to the completion of the Transaction.
Accordingly, you should not place undue reliance on the
forward-looking statements and information contained in this news
release concerning these times.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made and
involve known and unknown risks, uncertainties and other important
factors that may cause the actual results, performance or
achievements of Golden Star to be materially different from those
expressed or implied by such forward-looking statements. Such
risks, uncertainties and factors include, without limitation: risks
associated with the Transaction and acquisitions generally; the
Arrangement Agreement may be terminated in certain circumstances;
there can be no certainty that all conditions precedent to the
Transaction will be satisfied; Golden Star will incur costs even if
the Transaction is not completed and may have to pay a termination
fee or expense reimbursement if the Arrangement Agreement is
terminated in certain circumstances; all necessary approvals may
not be obtained; and uncertainty regarding the ability of the
parties to complete and mail the management information circular to
be prepared in connection with the Golden Star Shareholder Meeting
and the ability to hold the Golden Star Shareholder Meeting within
the time frame indicated. Additional risks, uncertainties and
factors include, without limitation: gold price volatility;
discrepancies between actual and estimated production; mineral
reserves and resources and metallurgical recoveries; mining
operational and development risks; liquidity risks; suppliers
suspending or denying delivery of products or services; regulatory
restrictions (including environmental regulatory restrictions and
liability); actions by governmental authorities; the speculative
nature of gold exploration; ore type; the global economic climate;
share price volatility; foreign exchange rate fluctuations; risks
related to streaming agreements and joint venture operations; the
availability of capital on reasonable terms or at all; risks
related to international operations, including economic and
political instability in foreign jurisdictions in which Golden Star
operates; developments in Ghana
that may have an adverse impact on Golden Star and/or the
Transaction; risks related to current global financial conditions
including financial and other risks resulting from the impact of
the COVID-19 global pandemic; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in mineral reserves and mineral resources, grade or
recovery rates; mine development and operating risks; an inability
to obtain power for operations on favorable terms or at all; mining
plant or equipment breakdowns or failures; an inability to obtain
products or services for operations or mine development from
vendors and suppliers on reasonable terms, including pricing, or at
all; public health pandemics such as COVID-19, including risks
associated with reliance on suppliers, the cost, scheduling and
timing of gold shipments, uncertainties relating to its ultimate
spread, severity and duration, and related adverse effects on the
global economy and financial markets; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities; litigation risks; the
quantum and timing of receipt of the proceeds from the sale by the
Company of its interest in Bogoso-Prestea; risks related to
indebtedness and the service of such indebtedness; and general
business, economic, competitive, political, health and social
uncertainties.
Although Golden Star has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that future developments affecting the
Company will be those anticipated by management. Please refer to
the discussion of these and other factors in Management's
Discussion and Analysis of financial conditions and results of
operations for the year ended December 31,
2020 and in our annual information form for the year ended
December 31, 2020 as filed on SEDAR
at www.sedar.com. The forecasts contained in this press release
constitute management's current estimates, as of the date of this
press release, with respect to the matters covered thereby. We
expect that these estimates will change as new information is
received. While we may elect to update these estimates at any time,
we do not undertake any estimate at any particular time or in
response to any particular event, except as may be required by
applicable securities laws. Investors are cautioned that
forward-looking statements are not guarantees of future performance
and accordingly investors are cautioned not to put undue reliance
on forward-looking statements due to their inherent
uncertainty.
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SOURCE Golden Star Resources Ltd.