Centerra Gold Inc. [CG-TSX] and Thompson Creek Metals Company Inc. [TCM-TSX] have completed the previously announced merger whereby Centerra has acquired all of the issued and outstanding common shares of Thompson Creek.
The Thompson Creek shares were acquired in exchange for 0.0988 of a Centerra share for each Thompson Creek share. The common shares of Thompson Creek were then transferred to Centerra’s newly-formed wholly-owned subsidiary, Centerra B.C. Holdings Inc. Centerra issued a total of 22,320,127 Centerra shares to the former Thompson Creek shareholders, representing approximately 8% of Centerra’s issued and outstanding common shares.
In connection with the closing of the merger, the governing indentures for all of Thompson Creek’s outstanding secured and unsecured notes have been satisfied and discharged.
Thompson Creek operates the Mount Milligan Mine in British Columbia, Canada, a premier low-cost asset with more than two additional decades of profitable production expected from the current reserve base.
Centerra owns 100% of the Kumtor gold mine located in the Kyrgyz Republic. It is the largest gold mine operated in Central Asia by a Western-based company, having produced more than 10.4 million ounces of gold between 1997 and the end of 2015. In 2015 Kumtor’s gold production was 520,694 ounces.
Scott Perry, CEO of Centerra, said, “With the completion of the acquisition of Thompson Creek we have created a geographically diversified gold producer with a high quality producing platform and a strong growth pipeline. The transaction diversifies Centerra’s operating platform and adds low-risk production and cash flow from a very high quality, long-lived asset in Mount Milligan and creates a leading low cost mid-tier gold producer. The acquisition establishes an operating base in Canada which will complement our Canadian-based Greenstone Project and provide for further flexibility to expand into the Americas and adds to our existing high-quality growth project pipeline (Oksut in Turkey, Gatsuurt in Mongolia, and Greenstone in Canada). Combining Centerra’s robust balance sheet and the significant positive cash flow generation from our low cost Kumtor mine with the positive cash flow from Thompson Creek’s Mount Milligan mine will ensure Centerra is well positioned for the future.”
In connection with the Arrangement, Jacques Perron, President and CEO of Thompson Creek prior to the Arrangement, has joined the Board of Directors of Centerra, effective immediately.
As previously announced, Royal Gold, Inc.’s subsidiary RGLD Gold AG’s streaming interest at the Thompson Creek Mount Milligan Mine has been amended concurrently with closing of the Arrangement. Royal Gold’s 52.25% gold stream at Mount Milligan has been converted to a 35% gold stream and 18.75% copper stream. Royal Gold will continue to pay US$435 per ounce of gold delivered and will pay 15% of the spot price per metric tonne of copper delivered.
In conjunction with the amendment, Royal Gold’s first ranking security over 52.25% of gold produced from the Mount Milligan assets has been amended to provide for first ranking security over 35% of produced gold and 18.75% of produced copper. Royal Gold’s other existing security over the Mount Milligan assets remains unaffected.