Key Acquisition Terms:
• Initial cash payment of $140 million at closing of the acquisition;
• Issuance to New Gold of Artemis common shares equal to the lesser of the number of consideration shares having an aggregate deemed price of $20 million and 9.9% of the issued and outstanding Artemis common shares;
• A second cash payment of $70 million, less approximately $20 million (being the aggregate issuance price of the consideration shares) 12 months after closing;
• An 8% stream at 35% of US$ spot gold price reducing to 4% after 279,908 ounces delivered;
• The initial payment is backstopped by Artemis major shareholder Ryan Beedie;
An equity financing is planned to finance some or all of the initial payment over the next several weeks, with Board and Management who currently hold approximately 45% of the shares of Artemis, planning to commit to approximately half of that equity financing (up to a maximum of $70 million), subject to shareholder approval.
The Blackwater Project is a world class asset with Federal and Provincial EA approvals in place, allowing for the possibility of near-term construction. There are Measured and Indicated Mineral Resource of 9.5 million ounces of gold.
Robust economics are based on the 2014 Feasibility Study. Artemis believes that today’s long-term consensus pricing and current spot prices will contribute to driving economic potential.
Artemis will be targeting improved economics and financeability against the 2014 Feasibility Study based on Artemis due diligence including the following:
• Reducing initial capital expenditures by staging the mine throughput ramp-up while remaining committed to the full-scale project;
• Targeting lower initial start-up capital expenditure with 1-2 subsequent expansion stages to the 20 mtpa Feasibility Study case, estimated to be funded from future operating cashflows;
• The Artemis MIK (Multiple Indicator Kriging) approach to resource modelling may further optimize tonnes and grades within the pit;
The 2014 Feasibility Study resource modelling identifies a large higher-grade zone of mineralization near-surface within the southern half of the pit design which will be the focus of further mine planning analysis by Artemis.
The application of a grade control drilling approach and modeling methodology may optimize mine scheduling, grade cut-off strategies, and better define ore and waste boundaries within the pit.
While Artemis considers the 2014 Feasibility Study to be current, it plans to prepare an updated Pre-Feasibility Study based on our revised approach to developing the project over the next three months and will file the technical report within 180 days of this announcement of mineral resources and mineral reserves.
Artemis respects the rights and interests of Indigenous groups who may be impacted by the project and intends to fully honour New Gold’s existing agreements, including the Participation Agreement with the Lhoosk’uz Dené Nation and the Ulkatcho First Nation.
New Gold has engaged extensively with other Indigenous groups who may be impacted by the project, including Nadleh Whut’en First Nation, Saik’uz First Nation, Stellat’en First Nation and Nazko First Nation, and Artemis is committed to continuing that engagement. Establishing a working relationship built on trust, respect and integrity with these Indigenous groups will be a priority of the company.
Steven Dean, Chairman and CEO of Artemis noted: “The proposed acquisition of Blackwater is the first meaningful step in our strategy to develop a first tier gold deposit in one of the world’s premier low risk mining jurisdictions. As with our team’s previous success in developing the Moose River Consolidated Mine in Nova Scotia for Atlantic Gold, our focus will be the methodical de-risking of the project development to enhance NPV, optimize IRR and minimise equity dilution to shareholders.
“Furthermore, the additional attribute of having an environmental assessment approval in hand significantly curtails the timeline to construction and ultimate production. This value cannot be underestimated in today’s world. We look forward to completing the Acquisition in due course, working with the various key stakeholders to continue to advance Blackwater through the development stage and into operation.”
Selected 2014 Feasibility Study Parameters and Outputs
• Life-of-Mine gold and silver production of 7 million ounces and 30 million ounces, respectively
• First nine years – average annual gold production of 485,000 ounces at total cash costs of US $555 per ounce and all-in sustaining costs of US $685 per ounce**
• Conventional truck and shovel open pit mine with 60,000 tonne per day whole ore leach processing plant at full capacity
• 17-year mine life with direct processing for first 14 years and processing of stockpile thereafter
• Life-of-Mine operational strip ratio of 1.88 to 1.00
• Base case economics in 2014 Feasibility Study – at US $1,300/oz gold, US $22/oz silver and a 0.95 US$/C$ foreign exchange rate.
• Blackwater had a pre-tax 5% NPV of $1,044 million, an IRR of 11.3% and a payback period of 6.2 years
The Blackwater Project is located approximately 160 km southwest of Prince George and 446 km northeast of Vancouver. The Project is accessible by major highway and access road.
The Project received a federal Decision Statement and a provincial Environmental Assessment Certificate in June 2019, which are major milestones in respect of de-risking the project to ultimate permitting and construction.
Additional permits and authorizations are required from both the provincial and federal governments prior to the mine proceeding to the construction and operation phase, including provincial permits under the Mines Act and the Environmental Management Act for discharge, and federal authorizations under the Fisheries Act and Explosives Act.
At closing, Artemis will enter into a gold stream agreement with New Gold whereby New Gold will purchase 8.0% of the refined gold produced from the Blackwater Project. Once 279,908 ounces of refined gold have been delivered to New Gold, the gold stream will reduce to 4.0%.
New Gold will make payments for the gold purchased equal to 35% of the US dollar gold price quoted by the London Bullion Market Association two days prior to delivery.
In the coming months, Artemis will be focused on the following activities:
• Completion of the financing;
• Completion of all other conditions required to achieve the closing of the acquisition;
• Engagement and transition initiatives with respect to further permitting requirements;
• Establishing relationships and continuing engagement and negotiations with Indigenous groups who may be affected by the project.
Proven and Probable Mineral Reserves stand at 344.4 tonnes grading 0.74 g/t gold and 5.5 g/t silver, for 8.17 million oz gold and 60.8 million oz silver. Total Measured and Indicated Resource are 396,903,000 tonnes grading 074 g/t gold and 5.5 g/t silver, for 9.50 million oz gold and 12.60 million oz silver. Inferred Resources are 17,600,000 tonnes grading 0.66 g/t gold and 4.0 g/t silver, for 0.38 million oz gold and 2.26 million oz silver.
On June 9, Artemis Gold shares gained $0.53, or 29.3%, to close at $2.34 on a volume of 735,200 shares traded.