Newcrest Mining (ASX/TSX/PNGX: NCM) and Pretivm Resources (TSX/NYSE: (PVG) announced that it has entered into a binding agreement to acquire all outstanding shares of PVG that it does not already own for a cash and stock consideration of approximately C $3.5 billion (US $2.83 billion; 17.99 billion yuan).
Under the terms of the agreement, PVG shareholders may elect to receive C $18.50 per share in cash or in exchange for 0.8084 Shares of Xinfeng Mining (based on xinfeng mining's 5-day volume weighted average price on the AsX), but cash and shares are prorated to ensure that the total cash and stock consideration each account for 50 per cent of the total transaction consideration. If PVG shareholders do not choose, they will receive C $9.25 and 0.4042 shares of Sunfeng mining per share.
The transaction price represents a premium of 23% and 29%, respectively, to the closing price and 20-day average price of PVG shares on the Toronto Stock Exchange on November 8, 2021. The total equity value is about C $3.5bn on a fully diluted basis. Xinfeng mining currently owns about 4.8% of PVG; Existing PVG shareholders will own about 8 per cent of Xinfeng Mining upon completion of the deal. The arrangement agreement contains the usual transaction protections, including an unsolicited clause on PVG's part and Sunfeng Mining's right to match any superior offer, as well as a termination fee clause of C $125 million. The deal is expected to close in the first quarter of 2022.
PVG's flagship asset is the Brucejack gold mine in northwest BC, Canada. The mine is a high grade underground mining gold mine with 4.2 million ounces (131 tons) of ore reserves and a daily processing capacity of 3,800 tons. The mine has a 13-year mine life and is expected to produce 325,000 to 365,000 ounces (10.1 to 11.4 tons) this year with a total maintenance cost of $1,060 to $1,190 per ounce.
JacquesPerron, president and CEO of Pretivm, said:
"The acquisition of PVG by New Peak Mining represents an outstanding opportunity for the company, its shareholders, employees, aboriginal partners and local communities in northwest BC. The transaction delivers an immediate and compelling premium to PVG shareholders and reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, as well as providing the opportunity to benefit from potential upside as a shareholder of new peak mining.
"With this acquisition, the Brucejack mine will become a tier 1 mine for Sunpeak Mining, mitigating the inherent risks associated with a mining company with a single asset. In addition, new peak mining has the financial means and intends to maximise the long-term potential of the Brucejack mine and the scale opportunities in the area surrounding the Brucejack mine. Xinfeng Mining and PVG share complementary corporate cultures and values that focus on safety, employee development and ESG. We are confident that our employees, aboriginal partners and community partners will succeed and thrive under new Peak Mining's world-class management."
Sandeep Biswas, Managing Director and CEO of Xinfeng Mining, said:
"We are excited to expand our presence in this highly promising region of BC. The Brucejack mine is a Tier 1 mine in a Tier 1 jurisdiction that will provide Immediate production, free cash flow and earnings diversification for New Peak Mining and will fit seamlessly into our long life, low cost portfolio. Following this transaction, Xinfeng Mining will have six tier 1 mines and an organic growth portfolio of unmatched quality. This deal will also drive significant revenue growth for us. The deal will also drive substantial growth in mineral resources, ore reserves and annual gold production.
"The combination of new peak mining and PVG will create a leading gold miner in BC's golden triangle region, operating both the Brucejack and Red Chris mines. Both companies share similar philosophies about safety, the environment, developing employees, working with local communities and investing in growth."
Xinfeng Mining reached 62.3 tons (2.13Moz) in 2020, ranking eighth in the world. Price resources production 10.8 tons (348,000 ounces), ranked 42nd; The combined output is 77.1 tons. The combination of sunpeak and price resources will take it to fifth place in the global Gold ranking after Canada's Agnico Eagle Mines and KirklandLake Gold recently announced a merger of equals that raised the ranking to third, intensifying competition among global Gold companies.
