THUNDER BAY, ON, Oct. 3, 2016 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX:PG) ("Premier", "the Company") is pleased to
announce that it has completed its acquisition of Yamana Gold
Inc.'s ("Yamana") 100% interest in the Mercedes Mine
Property (the "Acquisition"), located some 60 kilometres
southeast of Magdalena de Kino, in
the Sonora State, Mexico.
Pursuant to a share purchase agreement dated July 28, 2016, Premier has acquired all of the
shares of Yamana's indirect wholly-owned Mexican subsidiaries,
which own a 100% interest in the Mercedes Mine, for total
consideration consisting of:
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a)
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US$122.5 million in
cash (the "Cash Purchase Price");
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b)
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6.0 million common
shares to Yamana in the capital of Premier (each a "Common
Share"); and
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c)
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3.0 million warrants
to Yamana (each a "Yamana Warrant") to acquire up to 3.0
million Common Shares. Each Yamana Warrant entitles Yamana to
purchase one Common Share upon the exercise thereof at the price of
C$4.75 per Common Share until 5:00 p.m. (Toronto time) on September
30, 2018.
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In connection with the Acquisition, Premier granted Yamana a
1.0% net smelter return royalty on production from the current land
package relating to the Mercedes Mine on the earlier of: (a) the
date on which 450,000 ounces of gold equivalent has been produced
by the Mercedes Mine following September 30,
2016; and (b) September 30,
2022. Yamana was also granted a 2.0% net smelter return
royalty on the La Silla property
in Sinaloa, Mexico and the La
Espera property in Sonora,
Mexico.
The Cash Purchase Price was provided pursuant to a financing
package (the "Financing") from Orion Mine Finance
("Orion"). The Financing is comprised of the following:
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a)
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Senior Secured Gold
Prepay Credit Facility of US$ 42.2 million pursuant to which
Premier will deliver to Orion 2,450 troy ounces of gold per quarter
for a period of 15 consecutive quarters commencing December 31,
2016 in repayment of principal, plus cash interest payments at an
interest rate of 6.5%. Subject to certain exceptions, Premier has
the option to satisfy four interest payments in Common Shares
issued at the then 10 day volume weighted average closing
price;
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b)
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Senior Secured Silver
Stream of US$11.5 million pursuant to which Premier will deliver to
Orion 50% of the silver production from the Mercedes Mine for the
first year following closing, 60% for the subsequent year, and 70%
thereafter until the delivery of 1.25 million ounces of silver,
after which the delivery will be reduced to 25% of the silver
production until the delivery of 2.0 million ounces, and reduced
further to 12.5% thereafter. Orion will pay an ongoing cash
purchase price equal to 20% of the prevailing silver
price;
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c)
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An increase of US$15
million in Premier's existing unsecured credit facility with Orion
to US$45 million. The interest rate associated with this facility
remains unaltered at 6.0%;
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d)
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A subscription of
10,958,333 Common Shares by Orion for gross proceeds of US$35
million;
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e)
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1,000,000 warrants
(each an "Orion Warrant") to acquire up to 1,000,000 Common
Shares. Each Orion Warrant entitles Orion to purchase one Common
Share upon the exercise thereof at the price of $5.46 per Common
Share until June 30, 2018; and
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f)
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An amendment to
Premier's existing offtake obligations with Orion to sell up to an
additional 20,000 ounces of gold annually relating exclusively to
production from the Mercedes Mine, subject to an annual aggregate
maximum of 35,000 ounces of gold from all of Premier's producing
projects.
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The Common Shares and warrants issued pursuant to the
Acquisition and the Financing are subject to a four-month plus one
day hold period pursuant to applicable Canadian securities
laws.
Stephen McGibbon, P. Geo., is the
Qualified Person for the information contained in this press
release and is a Qualified Person within the meaning of National
Instrument 43-101.
Premier Gold Mines Limited is a respected production,
exploration and development company with a high-quality pipeline of
gold projects focused in proven, safe and accessible mining
jurisdictions in Canada,
the United States and
Mexico. Anticipated gold production in excess of 100,000
ounces during the final quarter of 2016 will come from its interest
in the South Arturo Mine in Nevada
and the recently acquired Mercedes Mine in Mexico.
Forward Looking Information
This Press Release contains certain information that may
constitute "forward-looking information" under applicable Canadian
securities legislation. Forward-looking information includes, but
is not limited to, statements about future gold production,
including anticipated production in excess of 100,000 ounces during
the final quarter of 2016 from the South Arturo Mine in
Nevada and the Mercedes Mine in
Mexico, future operations, future
work programs, capital expenditures, discovery and production of
minerals, price of gold and currency exchange rates, timing of
geological reports and corporate and technical objectives.
Forward-looking information is necessarily based upon a number of
assumptions that, while considered reasonable, are subject to known
and unknown risks, uncertainties, and other factors which may cause
the actual results and future events to differ materially from
those expressed or implied by such forward-looking information,
including the risks inherent to the mining industry, adverse
economic and market developments and the risks identified in
Premier's annual information form under the heading "Risk Factors".
There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
readers should not place undue reliance on forward-looking
information. All forward-looking information contained in this
press release is given as of the date hereof and is based upon the
opinions and estimates of management and information available to
management as at the date hereof. Premier disclaims any intention
or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise,
except as required by law.
SOURCE Premier Gold Mines Limited