G Mining Ventures and Reunion Gold Announce Combination to Set the Stage for a Leading Intermediate Gold Producer in the Americas
TSX: GMIN
OTCQX: GMINF
All amounts are in CAD unless stated otherwise
- Sets the stage for the creation of a leading intermediate gold producer with the addition of Oko West, one of the most significant gold discoveries in the Guiana Shield, to GMIN's portfolio
- Led by GMIN's best-in class management team, ideally positioned to unlock the value of
Oko West - The GMIN team and GMS have an impressive track-record of executing world-class projects in the Guiana Shield region to generate industry leading returns for its stakeholders
- De-risked growth profile to accelerate development of Oko West through anticipated TZ cash flow
- Compelling re-rate potential from multiple near-term catalysts and enhanced capital markets profile
- Continued support from La Mancha and Franco-Nevada via concurrent
US$50 million equity financing, in addition to La Mancha's intention to purchase up toUS$10 million of GMIN shares in the open market
Through the Transaction, GMIN will acquire RGD's flagship
GMIN plans to move Oko West quickly through technical studies to a construction decision, leveraging the considerable amount of exploration, development, and permitting work that has already been completed by RGD, supported by the expected free cash flow from the
Under the terms of the Agreement, GMIN and RGD shareholders will receive common shares of a newly formed company (the "New GMIN") equivalent to RGD shareholders being issued 0.285 GMIN common shares for each RGD common share. In addition, RGD shareholders will receive common shares in a newly created gold explorer ("
RGD shareholders will receive estimated consideration of
Upon completion of the Transaction, existing GMIN and RGD shareholders will own approximately 57% and 43% of the combined company on a fully-diluted in-the-money basis prior to the concurrent
Transaction Highlights
-
Sets the stage for the creation of an
Americas focused leading intermediate gold producer- Oko West is one of the most significant gold discoveries in the Guiana Shield and has potential to support a large, long-life mine complex.
- Tocantinzinho is 87% complete, and trending on schedule and on budget for commercial production in H2-24 and is engineered to produce ~200,000 gold ounces per year for the first five years at an attractive lowest quartile AISC.
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Best in-class management team ideally positioned to unlock value of Oko West through in-house execution
- The GMIN team, including through the Gignac Family-owned GMS, has an impressive track-record of executing world-class projects in the Guiana Shield region, on or ahead of schedule and on or below budget, to generate industry leading returns for its stakeholders.
- The principals of GMS have been continuously involved in the region since
Louis Gignac ledCambior Inc. to build its first South American operation inGuyana in the early 1990s. - The most recent significant gold mine constructed in the Guiana Shield region, the Merian gold mine operated by Newmont Corporation, was built by GMS, coming in ahead of schedule and under budget, operating at higher than feasibility study capacity.
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De-risked growth profile to accelerate development of Oko West through anticipated cash flow and funding
- Strong balance sheet and anticipated strong cash flow generation from TZ, starting during a period of record high commodity prices, will fund development of Oko West to minimize additional equity dilution for shareholders going forward.
- Strong balance sheet and anticipated strong cash flow generation from TZ, starting during a period of record high commodity prices, will fund development of Oko West to minimize additional equity dilution for shareholders going forward.
-
Supportive shareholder base with shared vision for growth and value creation
- La Mancha Investments S.à r.l. ("La Mancha") will exercise its existing anti-dilution right in connection with the Transaction and will subscribe for
US$25 million , which may be increased toUS$35 million at La Mancha's sole discretion, of common shares of GMIN. - La Mancha also intends to purchase up to an additional
US$10 million of GMIN shares in the open market. - Franco-Nevada Corporation ("Franco-Nevada") has agreed to subscribe for
US$25 million of common shares of GMIN on the same terms as La Mancha.
- La Mancha Investments S.à r.l. ("La Mancha") will exercise its existing anti-dilution right in connection with the Transaction and will subscribe for
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Compelling re-rate potential driven by multiple near-term catalysts and enhanced capital markets profile
- GMIN plans to move quickly through technical studies to a construction decision, leveraging the considerable amount of exploration, development, and permitting work that has already been completed by RGD, and the unique capabilities of the GMIN and GMS teams.
- GMIN has the opportunity to earn a premium valuation based on outstanding project execution at TZ and going forward at Oko West.
- Combined entity with strong growth profile is expected to have greater scale, investor following, trading liquidity, and opportunity for index inclusion.
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Creates a strong
Americas focused platform positioned for further growth- Ideally positioned to spearhead further regional consolidation leveraging strong regional platform.
- Continues GMIN's strategy of building an
Americas focused intermediate gold producer through its Buy, Build, Operate Strategy.
Benefits to GMIN Shareholders
- Oko West has emerged as a top tier deposit that could support a large, long-life mine complex, sequenced to benefit from TZ's robust free cash flow.
- Strengthens portfolio and positions GMIN to execute on its strategy of building the next intermediate gold producer leading to further re-rate potential and index inclusion.
- Management ideally positioned to unlock value of Oko West, leveraging systems, equipment, expertise and team from TZ to accelerate development timeline.
- Provides asset diversification and improves GMIN's long-term production and cash flow profile.
- Provides an expanded platform for continued growth in the
Americas with participation in a SpinCo focused on exploration in the Guiana Shield.
Benefits to RGD Shareholders
- Significant upfront premium of 29% based on GMIN's and RGD's closing price and 10-day VWAP on the TSX and TSXV as at
April 19, 2024 , respectively, without accounting for value ofSpinCo . - 43% ownership in an emerging intermediate gold producer, with a strong track-record of value creation and share price outperformance.
- Significant continued exposure to Oko West's future operational profile and exploration upside, coupled with lower execution and funding risk.
- Strong balance sheet and anticipated strong cash flow generation from TZ, starting during a period of record high commodity prices, will fund development of Oko West with minimal additional equity dilution going forward.
- Participate in the substantial exploration upside at TZ from the 996km2 land package.
- Continued exposure to RGD management's substantial exploration knowledge, expertise and local connections, providing the opportunity to uncover additional new discoveries through
SpinCo which will have$15 million in funding.
La Mancha will exercise its existing anti-dilution right in connection with the Transaction and as such has entered into a subscription agreement (the "Subscription Agreement") with GMIN pursuant to which La Mancha will subscribe for
La Mancha also intends to purchase up to an additional
Following completion of the Transaction, it is expected that La Mancha's shareholding will decrease from approximately 25% in GMIN to approximately 18.7% in New GMIN (calculated on a basic shares outstanding basis).
The closing of the Subscription is expected to occur immediately prior to the closing of the Transaction and is subject to TSX approval and certain other conditions being met, including confirmation that GMIN and RGD are ready to proceed with the closing of the Transaction. The price per GMIN common share under the Subscription is expected to be
The existing investor rights agreement between GMIN and La Mancha will be terminated upon closing of the Transaction and replaced by a new investor rights agreement to be entered into between New GMIN and La Mancha on substantially the same terms. Under the new investor rights agreement, La Mancha will continue to be entitled to nominate two directors to New GMIN's Board of Directors, as long as it holds a minimum of 15% of New GMIN's outstanding common shares, and maintain customary anti-dilution, registration, and information rights with respect to New GMIN.
The Subscription is considered to be a "related party transaction" for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). GMIN is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 with respect to the Subscription, in reliance on sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the Subscription is not more than the 25% of GMIN's market capitalization.
Franco-Nevada will subscribe for
The closing of the Franco-Nevada Subscription is expected to occur immediately prior to the closing of the Transaction, and is subject to TSX approval and certain other conditions being met, including confirmation that GMIN and RGD are ready to proceed with the closing of the Transaction. The price per GMIN common share under the Franco-Nevada Subscription will be the same as under the La Mancha subscription.
Transaction Summary
The Transaction will be completed pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act. To effect the Transaction, New GMIN will acquire all of the issued and outstanding shares of GMIN and RGD. New GMIN, to be renamed
The number of common shares issued by New GMIN to GMIN and RGD shareholders will be equivalent to the combined company undergoing a 4-to-1 share consolidation upon closing of the Transaction (0.25 New GMIN common shares will be issued for each GMIN common share and 0.07125 New GMIN common shares will be issued for each RGD common share (the "Exchange Ratio")).
RGD will be entitled to nominate two members to the board of directors of New GMIN, in addition to the appointment of the common director,
The Transaction will be subject to approval of at least 662/3% of the votes cast by GMIN shareholders, as well as, to the extent required under applicable law, the approval of a simple majority of disinterested shareholders, voting at a special meeting of GMIN shareholders, and at least 662/3% of the votes cast by RGD shareholders, 662/3% of the votes cast by RGD shareholders and optionholders, voting together as a single class, as well as, to the extent required under applicable law, the approval of a simple majority of disinterested shareholders, voting at a special meeting of RGD securityholders. The Transaction is expected to be completed in Q3 2024, subject to the receipt of required securityholder, court and TSX approvals and other closing conditions customary in transactions of this nature.
The Agreement includes reciprocal deal protections and a reciprocal
Voting Support Agreements
Directors and members of senior management of RGD, and La Mancha, as well as two subsidiaries of, and a trust controlled by, Dundee Corporation, who in the aggregate own approximately 29% of RGD's common shares outstanding, have entered into voting support agreements pursuant to which they have agreed to vote their shares in favor of the Transaction, subject to the terms thereof.
Additionally, directors and members of senior management of GMIN, as well as GMIN's three largest shareholders, La Mancha, Eldorado Gold Corporation, and Franco-Nevada, who in aggregate own approximately 60% of GMIN's common shares outstanding, have entered into voting support agreements pursuant to which they have agreed to vote their shares in favor of the Transaction.
Boards of Directors' Recommendations
The Agreement has been unanimously approved by the disinterested Directors of the Boards of GMIN and RGD following the unanimous recommendations of each of the Special Committees of independent directors of GMIN and RGD (each, a "Special Committee"). The disinterested Directors of the Boards of GMIN and RGD each unanimously recommend that their respective shareholders vote in favour of the Transaction.
This press release is not intended as, and does not constitute a solicitation of proxies or votes in connection with the requisite RGD securityholder and GMIN shareholder approval of the transaction. Further information will be included in information circulars that RGD and GMIN will each prepare, file and mail in due course to their respective securityholders in connection with their respective securityholder meetings to approve the transaction.
Advisors and Counsel
Conference Call and Webcast
GMIN and RGD will host a joint conference call and webcast on
- Local and international: 1-800-836-8184
-
Toronto : 1-289-819-1350
A live webcast of the conference call will be available at https://app.webinar.net/qGlg7yL1brD
A replay of this conference call will be available until
- Local and international: 1-888-660-6345
-
Toronto : 1-289-819-1450 - Replay passcode: 25491#
About
About
RGD continues to explore several additional priority targets at Oko West that lie outside of the area of the MRE, as well as leverage its considerable experience in the Guiana Shield to acquire and explore additional new projects in the region.
Additional Information
For further information on GMIN, please visit the website at www.gminingventures.com.
Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained in this press release constitute "forward-looking information" and "forward-looking statements" within the meaning of certain securities laws and are based on expectations and projections as of the date of this press release.
Forward-looking information and forward-looking statements may relate to
-
the creation of a "leading" intermediate gold producer in the
Americas , with a strong balance sheet to develop Oko West; - the benefits of the contemplated transaction for GMIN and RGD shareholders;
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the H2-2024 commencement of commercial production for the Tocantinzinho ("TZ") Project, to be completed on schedule, within budget and in line with the
February 2022 Feasibility Study, as well as its cost and production profiles; - the La Mancha and Franco-Nevada equity investments in connection with the contemplated transaction, their respective terms and the timeline to closing thereof;
- the eventual board composition and size for New GMINt;
-
the contemplated transaction creating a strong
Americas -focused platform for future growth; - the availability of funding to bring Oko West to production, notably with TZ free cash flow and with minimal equity dilution for New GMIN's shareholders;
- the contemplated transaction's terms (notably the creation and funding of SpinCo and the concurrent top up investment from La Mancha and Franco-Nevada) and its timeline to closing;
- the compelling re-rate potential from multiple near-term catalysts and enhanced capital markets profile;
-
SpinCo's business focus and its outlook; and -
more generally the quotes from the respective CEOs of GMIN and RGD, as well as that of La Mancha's Managing Partner, and from the CIO of La Mancha as well as the sections entitled "About
G Mining Ventures Corp. ". and "AboutReunion Gold Corporation ".
Forward-looking statements are based on expectations, estimates and projections as of the time of this press release. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by GMIN and/or RGD as of the time of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates and assumptions may prove to be incorrect. Such
assumptions include, without limitation, those relating to the price of gold and currency exchange rates and those underlying the items listed on the above sections entitled "About
Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, actual results to differ materially from those expressed or implied in any forward-looking statements. There can be no assurance that, notably but without limitation, that:
- GMIN will eventually bring TZ into commercial production and its cash flow will fund the accelerated development of Oko West (minimizing potential equity dilution for New GMIN shareholders);
- New GMIN would move quickly to a construction decision and would eventually bring Oko West into commercial production;
-
New GMIN will become an
Americas -focused "leading" intermediate gold producer; - the required shareholders', regulatory and court approvals for the contemplated transaction will be obtained in a timely manner, or at all;
- the impressive track-record of the GMIN and GMS teams for executing world-class projects and its past successes in the Guiana Shield (notably, the Merian gold mine) would be replicated at Oko West and would accelerate value creation thereat and generate industry leading returns for New GMIN stakeholders;
- Oko West will become a top tier deposit that could support a large, long-life mine complex;
- the contemplated transaction will be completed as per the terms outlined in the section entitled "Transaction Highlights";
-
the business conditions in
Brazil andGuyana will remain favorable and the gold price will remain high; and - the New GMIN shareholder base will continue to be supportive;
as future events could differ materially from what is currently anticipated by GMIN and/or RGD management.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future. Readers are cautioned not to place undue reliance on these forward-looking statements as a number of important risk factors and future events could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements. All of the forward-looking statements made in this press release are qualified by these cautionary statements and those made in GMIN's and RGD's other filings with the securities regulators of
La Mancha – Required Early Warning Disclosure
As of the date hereof, La Mancha owns or has control and direction over 111,879,265 common shares of GMIN, representing approximately 25% of the issued and outstanding common shares of GMIN. La Mancha will acquire
The Subscription is being undertaken for investment purposes and La Mancha may, from time to time, acquire additional securities of GMIN or, following closing of the Transaction, New GMIN or dispose of all or a portion of the common shares of GMIN or, following closing of the Transaction, New GMIN previously acquired or held, in open market or private transactions.
An early warning report containing additional information with respect to the foregoing matters will be filed under GMIN's SEDAR+ profile at www.sedarplus.ca and may also be obtained by contacting:
GMIN's head office is located at 5025 Lapinière Blvd., 10th Floor, Suite 1050,
La Mancha's head office is located at 31-33 Avenue Pasteur, L-2311, Luxembourg, Grand Duchy of Luxembourg.
Franco-Nevada – Required Early Warning Disclosure
As of the date hereof, Franco-Nevada owns or has control and direction over 44,687,500 common shares of GMIN, representing approximately 9.9% of the issued and outstanding common shares of GMIN and 11,500,000 Warrants of GMIN. Franco-Nevada will acquire
The Franco-Nevada Subscription is being undertaken for investment purposes and Franco-Nevada may, from time to time, acquire additional securities of GMIN or, following closing of the Transaction, New GMIN or dispose of all or a portion of securities of GMIN or, following closing of the Transaction, New GMIN previously acquired or held, in open market or private transactions.
An early warning report containing additional information with respect to the foregoing matters will be filed under GMIN's SEDAR+ profile at www.sedarplus.ca and may also be obtained by contacting:
GMIN's head office is located at 5025 Lapinière Blvd., 10th Floor, Suite 1050,
Franco-Nevada's head office is located at
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i Total after-tax free cash flow for years 1-4 per Feasibility Study dated |
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