RGDFF - G Mining Ventures and Reunion Gold Announce Combination to Set the Stage for a Leading Intermediate Gold Producer in the Americas | Benzinga
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 to US$10 million of GMIN shares in the open market
BROSSARD and LONGUEUIL, Quebec, April 22, 2024 (GLOBE NEWSWIRE) -- G Mining Ventures Corp. ("GMIN") (TSX:GMIN) (OTCQX:GMINF) and Reunion Gold Corporation ("RGD") (TSXV:RGD) (OTCQX:RGDFF) are pleased to announce they have entered into a definitive agreement (the "Agreement") to combine the two companies, setting the stage for the creation of a leading intermediate gold producer (the "Transaction").
Through the Transaction, GMIN will acquire RGD's flagship Oko West Project located in Guyana, within the Guiana Shield region, one of the most attractive mining jurisdictions in South America. Oko West has emerged as a globally significant gold discovery over the last few years, with excellent potential to become a top tier deposit that could support a large, long-life mine complex to accelerate GMIN's vision of building a leading intermediate gold producer. The GMIN team, including through the Gignac Family-owned G Mining Services ("GMS"), has an impressive track-record of executing world-class projects in the Guiana Shield region to generate industry leading returns for its stakeholders.
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 Tocantinzinho Gold Project ("Tocantinzinho" or "TZ"), which is trending on schedule and on budget for commercial production in the second half of 2024. The Transaction sets the stage for the creation of an Americas focused leading intermediate gold producer.
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 ("SpinCo") that will hold all of RGD's assets other than Oko West. GMIN has agreed to fund SpinCo with $15 million.
RGD shareholders will receive estimated consideration of $0.65 per RGD common share, an estimated Transaction equity value of $875 million, based on the closing price of GMIN common shares on the Toronto Stock Exchange ("TSX") on April 19, 2024, excluding the value of the SpinCo consideration. This represents a premium of 29% based on GMIN's and RGD's closing price and 10-day VWAP on the TSX and TSX Venture Exchange ("TSXV") as at April 19, 2024, respectively, without accounting for value of SpinCo.
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 US$50 million equity financing, and the combined company and RGD shareholders will own 19.9% and 80.1%, respectively, of the outstanding common shares of SpinCo.
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.
- 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 led Cambior Inc. to build its first South American operation in Guyana 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.
- 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.
- 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 to US$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.
- 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.
- 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.
Louis-Pierre Gignac, CEO, President and Director of GMIN, stated: "Oko West has all the key attributes GMIN is looking for in its next leg of growth. We are well-positioned to accelerate value creation at Oko West leveraging our unique expertise in building and operating mines on schedule and on budget in the Guiana Shield, deep knowledge of and network in the region, and over US$480M anticipated near-term free cash flow from Tocantinzinhoi. The acquisition of Oko West is the second step towards our vision of becoming a leading intermediate gold producer, building on the team's success at Tocantinzinho. We look forward to continuing to advance our "Buy. Build. Operate." strategy to create and unlock further value for GMIN shareholders."
Rick Howes, CEO, President and Director of RGD, stated: "We are very pleased to announce this Transaction today, which we believe is a testament to the outstanding work our team has done rapidly discovering and advancing Oko West over the last few years. We believe that this Transaction not only delivers our shareholders an attractive upfront premium, but also the ability to participate with significant ongoing ownership in the combined company, having the opportunity to participate in an expected future re-rating as Oko West is advanced towards production. The Transaction significantly de-risks the advancement of Oko West given the financial strength, free cash flow, and development capabilities that GMIN brings to the table. Importantly, we believe this is a great outcome for the country of Guyana, with Oko West being taken forward by a company that will be a great steward of the asset for the benefit of the country and its communities."
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 of SpinCo.
- 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 ...