Orion to Acquire Centerra Gold’s 50% Interest in Greenstone Gold Mines Partnership for $225 Million

A blockbuster deal has emerged in Northwestern Ontario. PREMIER GOLD MINES LIMITED and CENTERRA GOLD INC. have announced that an affiliate of the Orion Mine Finance Group, has entered into an agreement with Centerra and Premier where Orion will acquire Centerra's 50% interest in the Greenstone Gold Mines Partnership for cash consideration of US$225 million plus certain contingent payment obligations of approximately US$75 million. Premier currently owns the other 50% of GGM.

GGM’s principal asset is the Hardrock Mine Project located on the Trans-Canada Highway near Geraldton, Ontario, Canada and represents one of the most significant large-scale, permitted, mine development opportunities in North America.

Consideration under the Purchase Agreement is comprised of:

• payment on closing from Orion to Centerra in the amount of approximately US$225 million (subject to certain adjustments); and
• contingent payments due from Orion to Centerra, payable under certain circumstances, as follows (the "Contingent Payments"):

(i)  US$25 million in cash, payable within 24 months following a positive mine construction decision by GGM with respect to the Project;

(ii)  within 30 days of the Project achieving cumulative production of 250,000 ounces of refined gold, Orion shall deliver to Centerra, at Orion's option, either: (A) 11,111 ounces of refined gold; (B) the cash equivalent value of 11,111 ounces of refined gold, based on the 20-day average spot gold price ending on the date immediately prior to the date of payment; or (C) a combination of refined gold and a cash equivalent of the shortfall ounces of refined gold;

(iii)  within 30 days of the Project achieving cumulative production of 500,000 ounces of refined gold, Orion shall deliver to Centerra at Orion's option, either: (A) 11,111 ounces of refined gold; (B) the cash equivalent value of 11,111 ounces of refined gold, based on the 20-day average spot gold price ending on the date immediately prior to the date of payment; or (C) a combination of refined gold and a cash equivalent of the shortfall ounces of refined gold; and

(iv)  within 30 days of the Project achieving cumulative production of 700,000 ounces of refined gold, Orion shall deliver to Centerra at Orion's option, either: (A) 11,111 ounces of refined gold; (B) the cash equivalent value of 11,111 ounces of refined gold, based on the 20-day average spot gold price ending on the date immediately prior to the date of payment; or (C) a combination of refined gold and a cash equivalent of the shortfall ounces of refined gold.

Under the terms of the Purchase Agreement, Premier and Centerra, through their respective affiliates, will cause GGM to provide a guarantee to Centerra in respect of the obligations of Orion to make the Contingent Payments, if any, and with respect to an early termination amount payable to Centerra upon early termination of the Purchase Agreement in certain circumstances, all of which will be secured by a fixed and floating charge and a continuing security interest in the GGM property. Following the closing of the Transaction, Orion intends to support a positive feasibility decision for the Hardrock project based on the feasibility study conducted in 2019.

“This transaction paves the way for the development of Premier’s flagship asset. We look forward to working with Orion, a long-standing supportive partner of Premier, in advancing the Hardrock Project on an expedited timeline”, stated Ewan Downie, President and CEO of Premier. “This new partnership will unlock the substantial value of one of North America’s most advanced, permitted and well-located, multi-million-ounce gold projects.”  

Istvan Zollei, portfolio manager at Orion, commented: “Orion looks forward to being a partner in turning the Hardrock Project into Ontario’s next prominent mine. After years of successful exploration and development work, we believe the Greenstone Project has the potential to grow into a large, long-lived gold mining operation with multiple deposits.”

Affiliates of Orion beneficially own or control approximately 13.9% of the outstanding common shares of Premier and, as such, Orion is considered a “related party” and an “insider” of Premier for the purposes of applicable securities laws and stock exchange rules. The agreement of Premier under the Purchase Agreement to cause GGM to provide the above-noted guarantee, and related charge, to Centerra may be considered a “related party transaction” between Premier, Orion and their respective affiliates for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Premier is relying on exemptions from the formal valuation and minority approval requirements otherwise mandated by MI 61-101, since at the time the “related party transaction” was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the “related party transaction”, insofar as it involves interested parties, exceeds 25 per cent of Premier’s market capitalization.

 

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