THUNDER BAY, ON and
TORONTO, Dec. 15, 2020 /CNW/ - PREMIER GOLD MINES
LIMITED ("Premier") (TSX: PG) (OTCPK: PIRGF) and CENTERRA
GOLD INC. ("Centerra") (TSX: CG) are pleased to
announce that an affiliate of the Orion Mine Finance Group
("Orion"), has entered into an agreement (the "Purchase Agreement")
with Centerra and Premier pursuant to which Orion will acquire
Centerra's 50% interest in the Greenstone Gold Mines Partnership
("GGM") for cash consideration of US$225
million (subject to certain adjustments) plus certain
contingent payment obligations of approximately US$75 million (assuming a US$1,500 gold price), described below (the
"Transaction"). Premier currently owns the other 50% of GGM.
GGM's principal asset is the Hardrock Mine Project ("Hardrock"
or the "Project") located on the Trans-Canada Highway near
Geraldton, Ontario,
Canada and represents one of the most significant
large-scale, permitted, mine development opportunities in
North America.
Consideration under the Purchase Agreement is comprised of:
- payment on closing from Orion to Centerra in the amount of
approximately US$225 million (subject
to certain adjustments); and
- contingent payments due from Orion to Centerra, payable under
certain circumstances, as follows (the "Contingent Payments"):
-
- US$25 million in cash, payable
within 24 months following a positive mine construction decision by
GGM with respect to the Project;
- within 30 days of the Project achieving cumulative production
of 250,000 ounces of refined gold, Orion shall deliver to Centerra,
at Orion's option, either: (A) 11,111 ounces of refined gold; (B)
the cash equivalent value of 11,111 ounces of refined gold, based
on the 20-day average spot gold price ending on the date
immediately prior to the date of payment; or (C) a combination of
refined gold and a cash equivalent of the shortfall ounces of
refined gold;
- within 30 days of the Project achieving cumulative production
of 500,000 ounces of refined gold, Orion shall deliver to Centerra
at Orion's option, either: (A) 11,111 ounces of refined gold; (B)
the cash equivalent value of 11,111 ounces of refined gold, based
on the 20-day average spot gold price ending on the date
immediately prior to the date of payment; or (C) a combination of
refined gold and a cash equivalent of the shortfall ounces of
refined gold; and
- within 30 days of the Project achieving cumulative production
of 700,000 ounces of refined gold, Orion shall deliver to Centerra
at Orion's option, either: (A) 11,111 ounces of refined gold; (B)
the cash equivalent value of 11,111 ounces of refined gold, based
on the 20-day average spot gold price ending on the date
immediately prior to the date of payment; or (C) a combination of
refined gold and a cash equivalent of the shortfall ounces of
refined gold.
Under the terms of the Purchase Agreement, Premier and Centerra,
through their respective affiliates, will cause GGM to provide a
guarantee to Centerra in respect of the obligations of Orion to
make the Contingent Payments, if any, and with respect to an early
termination amount payable to Centerra upon early termination of
the Purchase Agreement in certain circumstances, all of which will
be secured by a fixed and floating charge and a continuing security
interest in the GGM property. Following the closing of the
Transaction, Orion intends to support a positive feasibility
decision for the Hardrock project based on the feasibility study
conducted in 2019.
The Transaction is subject to customary closing conditions for a
transaction of this nature including the approval of the Toronto
Stock Exchange ("TSX") in respect of Premier with respect to the
guarantee and the charge described above. It is also a condition of
closing of the Transaction that all parties to the
previously-announced Hardrock legal actions and related
counterclaims, as well as Premier and Centerra, will provide a
mutual release and consent dismissal in respect of the action and
the related counterclaims. The Transaction is expected to close in
January 2021.
"This transaction paves the way for the development of Premier's
flagship asset. We look forward to working with Orion, a
long-standing supportive partner of Premier, in advancing the
Hardrock Project on an expedited timeline," stated Ewan Downie, President and CEO of Premier. "This
new partnership will unlock the substantial value of one of
North America's most advanced,
permitted and well-located, multi-million-ounce gold
projects."
Istvan Zollei, portfolio manager at Orion, commented: "Orion
looks forward to being a partner in turning the Hardrock Project
into Ontario's next prominent
mine. After years of successful exploration and development work,
we believe the Greenstone Project has the potential to grow into a
large, long-lived gold mining operation with multiple
deposits."
Affiliates of Orion beneficially own or control approximately
13.9% of the outstanding common shares of Premier and, as such,
Orion is considered a "related party" and an "insider" of Premier
for the purposes of applicable securities laws and stock exchange
rules. The agreement of Premier under the Purchase Agreement to
cause GGM to provide the above-noted guarantee, and related charge,
to Centerra may be considered a "related party transaction" between
Premier, Orion and their respective affiliates for the purposes of
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). Premier is
relying on exemptions from the formal valuation and minority
approval requirements otherwise mandated by MI 61-101, since at the
time the "related party transaction" was agreed to, neither the
fair market value of the subject matter of, nor the fair market
value of the consideration for, the "related party transaction",
insofar as it involves interested parties, exceeds 25 per cent of
Premier's market capitalization.
CIBC Capital Markets is acting as financial advisor to Premier
with respect to the Transaction.
Premier Gold Mines Limited is a gold-producer and
respected exploration and development company with a high-quality
pipeline of precious metal projects in proven, accessible, and safe
mining jurisdictions in Canada,
the United States, and
Mexico.
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
and is one of the largest Western-based gold producers in
Central Asia. Centerra operates
three mines, the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in
British Columbia, Canada and the
Öksüt Mine in Turkey. Centerra's
shares trade on the TSX under the symbol CG. Centerra is based in
Toronto, Ontario, Canada.
This Press Release contains certain information that may
constitute "forward-looking information" under applicable Canadian
securities legislation. Forward-looking information includes, but
is not limited to, statements about the completion of the
acquisition by Orion to acquire Centerra's 50% interest in GGM,
Premier's ability to secure financing for its share of costs
relating to Hardrock, strategic plans, including future operations,
future work programs, capital expenditures, discovery and
production of minerals, price of gold and currency exchange rates,
mineral resource and mineral reserve estimates and corporate and
technical objectives. Forward-looking information is necessarily
based upon a number of assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward-looking information, including the risks inherent to the
mining industry, adverse economic and market developments, the
risks identified in Premier's annual information form under the
heading "Risk Factors" and the risks identified in Centerra's 2020
annual information form under the heading "Risk Factors". There can
be no assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information. All
forward-looking information contained in this press release is
given as of the date hereof and is based upon the opinions and
estimates of management and information available to management as
at the date hereof. Each of Premier and Centerra disclaim any
intention or obligation to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as required by law.
SOURCE Premier Gold Mines Limited