Premier Gold Mines Ltd. has made an offer to acquire the remaining 50% interest in the Greenstone Gold Mines Partnership (GGM) to Centerra Gold Inc. Total consideration of the offer is approximately US$205 million.
GGM’s principal asset is the Hardrock Mine Project located on the Trans-Canada Highway near Geraldton, Ontario, Canada. Hardrock is one of the most significant large-scale, near permitted, mine development projects in North America.
The offer is comprised of a cash payment in the amount of US$175 million, and in addition the assumption of all Centerra’s obligations under the partnership agreement, including the remaining earn-in obligation of approximately US$30 million.
Premier submitted the offer in cooperation and with the support of an assignee that has completed its technical due diligence in relation to the 2019 mineral resource estimate and recent economic update for Hardrock. The updated mineral resource estimate and economic study was prepared by G-Mining Services, the independent QP for Hardrock, on behalf of GGM. All work completed by G-Mining to prepare the updated estimate and economic study was in accordance with GGM budgets, approved by both partners and funded entirely by Centerra, the company said.
The proposed assignee has the financial capacity to both acquire Centerra’s 50% interest and advance Hardrock through construction. The assignee also intends to work with Premier to assist in securing the financial resources required for Premier to fund its 50% share of related mine construction costs, the company said.
“This offer should be viewed favorably by Centerra as we believe that it represents a substantial premium to the median of current analyst consensus valuations attributed to Centerra’s 50% interest in GGM, full recovery of their total investment in GGM to date, and aligns with Centerra’s stated focus of maximizing the value of its existing operating assets over new build opportunities,” President and CEO of Premier Ewan Downie said. “The value of the offer is in excess of Premier’s market capitalization, especially when you consider the company’s considerable cash position.”
Hardrock is the product of more than 12 years of exploration, development and engineering work that resulted in the delivery of an initial Feasibility Study late in 2016. During that same time, GGM obtained both federal and provincial environmental assessment approval, filed an updated closure plan and signed long-term relationship agreements with all locally impacted First Nation communities.