Advancing a Major New Gold Discovery in Canada’s High-Grade Gold Capital
Gold Mining's 2021 Cinderella Story
On November 30th Great Bear Resources, President and CEO, Chris Taylor presented to a large audience that was in attendance for the Mining the Northwest Virtual Expo. Chris wowed a crowd with his presentation on the Dixie Project. The Dixie Project which consists of 9,140 hectares of contiguous claims that extend over 22 kilometres. The Dixie Project is accessible year-round by highway and is proximal to major infrastructure provided by the town of Red Lake, located approximately 25 kilometres to the northwest. Chris spoke on Advancing a Major New Gold Discovery in Canada’s High-Grade Gold Capital.
In speaking to the audience Chris mentioned the challenges of getting this project to the level it is at today. It was determination and drive with a great team and awesome partnership with it's first nations partners that helped us a lot along the way.
Just eight days after the Great Bear presentation on December 8, 2021 Great Bear Resources Ltd. announced that it has entered into a binding agreement with Kinross Gold Corporation under which Kinross had agreed to acquire all of the outstanding common shares of Great Bear.
Under the terms of the Transaction, Great Bear shareholders will receive upfront consideration of approximately C$1.8 billion, representing C$29.00 per Great Bear common share on a fully diluted basis. Great Bear shareholders will be able to elect to receive the upfront consideration as either (i) C$29.00 in cash or (ii) 3.8564 Kinross shares per Great Bear share, both subject to proration. The upfront consideration will be subject to maximum aggregate cash consideration of approximately C$1.4 billion (representing 75% of the upfront consideration) or maximum aggregate shares issuable of 95.8 million¹ (representing 40% of the upfront consideration), depending on the election of Great Bear shareholders. Great Bear shareholders who do not elect cash or Kinross shares will be deemed to have elected to receive cash, subject to pro-ration. The Transaction Price represents a premium of 31% and 40% to the closing price and the volume weighted average price (“VWAP”), respectively, of Great Bear’s shares on the TSX-V for the 20 day period ending December 7, 2021.
Great Bear shareholders will also receive contingent consideration in the form of contingent value rights (“CVRs”) providing for further potential consideration equal to 0.1330 of a Kinross share per Great Bear common share which represents approximately C$58.2 million in aggregate consideration, or C$1.00 per Great Bear common share, on a partially diluted² basis (based upon the closing price of a Kinross share on the TSX as at December 7, 2021). The contingent consideration will be payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that at least 8.5 million gold ounces of measured and indicated mineral resources have been disclosed.
On closing, the Transaction is expected to result in Great Bear shareholders owning approximately 7% of Kinross, on a fully diluted basis, assuming full take-up of the share consideration. Upon satisfaction of the payment conditions under the terms of the CVRs, Great Bear shareholders would own approximately 8% of Kinross, on a fully diluted basis (based upon the number of Kinross shares outstanding following completion of the Transaction).
Chris Taylor, President and CEO of Great Bear said: “The acquisition of Great Bear by Kinross is an outstanding opportunity for our shareholders, partners at Wabauskang and Lac Seul First Nations, and the local communities of Northern Ontario.
“The Transaction delivers a compelling premium for Great Bear’s shareholders, reflecting the top tier nature of the Dixie project, while offering beneficial exposure as Kinross shareholders to a high-quality operating portfolio and growing production base. Kinross’ Canadian identity and headquarters in Ontario will facilitate close ties between the Company and the Dixie project’s local communities, which will help to maximize benefits to the area, including employment and training.
“As a senior gold producer, Kinross has the financial strength, technical expertise, and commitment to the highest ESG practices to advance the Dixie project at the pace and scale that this industry-leading discovery deserves. Dixie will remain a centrepiece project that will receive significant development and exploration focus, which will continue to unlock and maximize the project’s value, while mitigating our shareholders’ exposure to the risks of a single-asset developer.”
J. Paul Rollinson, President and CEO of Kinross Gold said: “The Dixie project represents an exciting opportunity to develop a potentially top tier deposit into a large, long-life mine complex. In addition to the prospect of developing a quality, high-grade open pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation.
“Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders. Our extensive due diligence reinforced the scarcity of an asset of this quality and value. The Dixie project has multiple high-potential mineralized zones which remain open along strike and at depth, and we are confident that the asset has strong untapped upside with numerous avenues for growth.
“We are pleased to achieve our goal of adding a high-quality asset in our home jurisdiction that further bolsters our global portfolio and can potentially provide long-term tax benefits. The Dixie project is ideally located in the renowned Red Lake mining district in Northern Ontario near established infrastructure and in a province with a low-carbon energy grid. We look forward to building strong relationships with the Wabauskang and Lac Seul First Nations and will work with them to ensure that the project delivers sustainable benefits to their communities and respects their way of life.”
¹ Aggregate maximum total share consideration includes 15.0 million Kinross Options that will be exchanged for 3.9 million Great Bear Options
² Inclusive of 0.3 million Great Bear Restricted Stock Units and Deferred Share Units
Details of the Transaction
The Transaction, which is not subject to a financing condition, will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of: (i) 66 2/3% of the votes cast by the holders of Great Bear’s common shares; (ii) 66 2/3% of the votes cast by holders of Great Bear common shares, restricted share units, deferred share units and options, voting together as a single class, and; (iii) “minority approval” in accordance with Multilateral Instrument 61-101, at a special meeting of Great Bear security holders to be held to consider the Transaction (the “Special Meeting”). In addition to approval by Great Bear security holders, the Transaction is also subject to the receipt of court approval, regulatory approvals including competition clearances in Canada, and other customary closing conditions for transactions of this nature. The Transaction is expected to be completed in the first quarter of 2022.
The Arrangement Agreement provides for customary deal-protection provisions, including a non-solicitation covenant on the part of Great Bear and a right for Kinross to match any Superior Proposal (as defined in the Arrangement Agreement). The Arrangement Agreement includes a termination fee of C$85 million, payable by Great Bear, under certain circumstances (including if the Arrangement Agreement is terminated in connection with Great Bear pursuing a Superior Proposal). The directors and senior officers of Great Bear, in addition to certain securityholders, owning in aggregate approximately 20.04% of Great Bear’s voting securities have entered into voting support agreements pursuant to which they have agreed to vote all the securities they own or control in favour of the Transaction.
Great Bear Board of Directors and Special Committee Recommendations
A special committee comprised entirely of independent directors of Great Bear (the “Special Committee”) unanimously recommended the Transaction to the board of directors of Great Bear (the “Great Bear Board”). The Great Bear Board has evaluated the Arrangement Agreement with the Company’s management and legal and financial advisors and, following the receipt and review of a unanimous recommendation from the Special Committee, the Great Bear Board has unanimously approved the Arrangement and determined that the Arrangement is in the best interest of the Company, and the Great Bear Board has resolved to recommend that the Company’s shareholders vote in favour of the Transaction, all subject to the terms and conditions contained in the Arrangement Agreement.
GenCap Mining Advisory Ltd. and CIBC World Markets Inc. have provided opinions to the Great Bear Board and BMO Capital Markets has provided an opinion to the Special Committee and Board, stating that, as of the date of such opinions and based upon and subject to various assumptions, limitations and qualifications therein, the consideration to be received by the Great Bear shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to such holders.
Further details regarding the terms of the Transaction are set out in the Arrangement Agreement, which will be publicly filed by Great Bear under its profile at www.sedar.com. Additional information regarding the terms of the Arrangement Agreement, the background to the Transaction, the rationale for the recommendations made by the Special Committee and the Great Bear Board and how Great Bear shareholders can participate in and vote at the Special Meeting to be held to consider the Transaction will be provided in the management information circular for the Special Meeting which will be mailed to shareholders and also filed at www.sedar.com. Shareholders are urged to read these and other relevant materials when they become available.
Advisors and Counsel
CIBC World Markets Inc. and GenCap Mining Advisory Ltd. are acting as co-advisors to Great Bear, and Blake, Cassels & Graydon LLP is acting as Great Bear’s legal counsel. BMO Capital Markets is acting as financial advisor to the Special Committee. Cormark Securities Inc. provided capital markets advice to Great Bear.
To view Chris Taylor and Great Bear Resources presentation please follow the You Tube link below.
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