VANCOUVER, Dec. 4, 2018 /PRNewswire/ - Taseko Mines Limited
(TSX: TKO; NYSE American: TGB) ("Taseko" or the "Company") is
pleased to announce it has entered into an agreement whereby Taseko
will acquire all of the outstanding common shares of Yellowhead
Mining Inc. (TSX: YMI – "Yellowhead") that it does not
already own for $15.1 million,
payable in Taseko common shares.
Russell Hallbauer, President and
CEO of Taseko commented, "Our management and technical teams are
pleased with this transaction and both Taseko and Yellowhead
shareholders should be as well. Yellowhead's project now has a
path forward and with over $60
million having been spent on a Feasibility Study and
Environment Plan to-date, we are excited to continue advancing the
project towards production. The project is at a stage where we can
advance technical work and reinitiate permitting activities using
internal resources, without significant cash expenditures. There is
potential for this project to be shovel ready soon after our
Florence Copper project begins
commercial production."
"The Yellowhead 2014 Feasibility Study(1) proposed a
70,000 tonne per day concentrator with total pre-production capital
costs of roughly C$1 billion and an
average operating cost of US$1.46 per
pound of copper. Using US$3.00 per
pound copper, a foreign exchange rate of C$/US$ 0.80, and an 8% discount rate results in a
pre-tax net present value of C$1.1
billion." Mr. Hallbauer continued.
"Based on the current Feasibility Study(1), copper
production will average approximately 170 million pounds for the
first three years after start up, plus significant gold and silver
by-products. The metallurgical work performed to-date has
confirmed that the overall soft ore of the deposit will result in
power usage in the lower quartile of similar sized mines. Combined
with an extremely low strip ratio of 0.76:1 and short waste hauls,
the mine will benefit from low C1 costs, especially in the first
three years with production costs under US$1.20 per pound of copper,(1)" added
Mr. Hallbauer
Mr. Hallbauer continued, "Our technical team has been assessing
engineering alternatives over the past few years and believe there
are many improvements which can be made to enhance the project's
economics. We have identified a number of optimizations which
will increase the overall average mine life head grade and reduce
costs. The Yellowhead project has an extremely large, long-life
orebody that will span numerous metal cycles and fits perfectly
with our core strengths and is also very similar to our Gibraltar
Mine. Additionally, we have already identified many synergies due
to the proximity of the project to Gibraltar. With Proven and Probable
Reserves(1) of 3.6 billion pounds of recoverable copper,
supplemented by 370,000 ounces of gold and 15.6 million ounces of
silver over its life, this project will be a world-class,
long-life, low cost mine."
Mr. Hallbauer concluded, "This transaction, at a cost of a half
a penny per pound of copper in the reserve base, supports our
long-term strategy of conservatively growing our production by way
of meaningful and manageable acquisitions. We have minimized
shareholder dilution while protecting our balance sheet. The
Yellowhead project increases our near-term pipeline of 100% owned
global reserves to nine billion pounds of contained copper, and the
project can be advanced without significant capital expenditures
for the next few years. When Yellowhead is in production, and
combined with our producing Gibraltar Mine and near-term production
from Florence Copper, we anticipate
that our annual copper production would exceed 320 million pounds
per year, making Taseko one of the largest copper producers in
North America."
Summary of the Transaction
Under the terms of the transaction between Taseko and Yellowhead
(the "Arrangement"), each Yellowhead shareholder other than Taseko
will receive 1.1484 Taseko common shares for each Yellowhead common
share held, representing consideration of $1.00 per share based on Taseko's 5-day volume
weighted average price ("VWAP") for the period ending December 3, 2018. Taseko's acquisition cost,
after taking into account the existing 21% ownership, is
$15.1 million in Taseko common shares
and will be settled through the issuance of 17.3 million Taseko
common shares.
The transaction is structured as a plan of arrangement (the
"Arrangement") pursuant to the Business Corporations Act
(British Columbia) and will
require the approval of the Supreme Court of British Columbia and the approval of: (i) at
least two-thirds of the votes cast by Yellowhead shareholders; and
(ii) a majority of the votes cast by Yellowhead shareholders
excluding Taseko, at a special meeting of Yellowhead shareholders
which is expected to be held in January
2019.
In connection with the Arrangement, Matco Investments Ltd., the
holder of approximately 45.5% of the outstanding Yellowhead common
shares, has entered into a hard lock up agreement with Taseko, and
a director who holds approximately 7.2% of the outstanding
Yellowhead common shares has entered into a customary support
agreement (collectively, the "Locked-Up Shareholders") pursuant to
which they have agreed to vote their Yellowhead shares,
representing in the aggregate 52.7% of the issued and outstanding
Yellowhead shares, in favour of the Arrangement. Together with
Taseko, the Locked-Up Shareholders hold 73.7% of the issued and
outstanding Yellowhead common shares.
The Board of Directors of Yellowhead (the "Board"), having
received a unanimous recommendation from a special committee of the
Board consisting entirely of independent directors (the "Special
Committee") has unanimously approved the Arrangement and recommends
that Yellowhead shareholders vote in favour of the Arrangement. The
Special Committee, in conducting its review of the Arrangement, has
engaged Evans & Evans, Inc. ("Evans & Evans") as its
financial advisor. Evans & Evans has provided the Special
Committee and Board with a fairness opinion, stating that in its
opinion, based upon and subject to the assumptions, limitations,
and qualifications set forth therein, the consideration to be
received by Yellowhead shareholders (other than Taseko) under the
Arrangement is fair, from a financial point of view, to the
Yellowhead shareholders (other than Taseko).
In addition to the aforementioned approvals, completion of the
Arrangement is subject to other customary conditions, including the
approval of the TSX Venture Exchange (for Yellowhead), and the
issuance of the Taseko shares is subject to the approval of the TSX
and the NYSE American. The Arrangement is expected to close in the
first quarter of 2019.
The Arrangement Agreement provides for customary
non-solicitation covenants on the part of Yellowhead and a right in
favour of Taseko to match any unsolicited superior proposal. In the
event that the Arrangement is not completed in certain
circumstances, Yellowhead has agreed to pay Taseko a termination
fee of $1.0 million.
The Arrangement Agreement will be filed under Taseko's profile
on SEDAR (www.sedar.com).
The content of this release was reviewed and approved by
Scott Jones, P.Eng., Vice President,
Engineering, and a Qualified Person under National Instrument
43-101.
(1)
|
The Technical Report
& Feasibility Study dated July 31, 2014 is available under
Yellowhead's profile on SEDAR (www.sedar.com).
|
Russell Hallbauer
President and CEO
No regulatory authority has approved or
disapproved of the information contained in this news release.
CAUTION REGARDING FORWARD-LOOKING
INFORMATION
This document contains "forward-looking statements" within the
meaning of applicable Canadian securities legislation and the
United States Private Securities Litigation Reform Act of 1995
(collectively, "forward looking statements") that were based on
Taseko's expectations, estimates and projections as of the dates as
of which those statements were made. Any statements that express,
or involve discussions as to, expectations, believes, plans,
objectives, assumptions or future events or performance that are
not historical facts, are forward-looking statements.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "outlook",
"anticipate", "project", "target", "believe", "estimate", "expect",
"intend", "should" and similar expressions.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause the Company's
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking statements. These included but are not limited
to:
- uncertainties and costs related to the Company's exploration
and development activities, such as those associated with
continuity of mineralization or determining whether mineral
resources or reserves exist on a property;
- uncertainties related to the accuracy of our estimates of
mineral reserves, mineral resources, production rates and timing of
production, future production and future cash and total costs of
production and milling;
- uncertainties related to feasibility studies that provide
estimates of expected or anticipated costs, expenditures and
economic returns from a mining project;
- uncertainties related to the ability to obtain necessary title,
licenses and permits for development projects and project delays
due to third party opposition;
- our ability to comply with the extensive governmental
regulation to which our business is subject;
- uncertainties related to unexpected judicial or regulatory
proceedings;
- changes in, and the effects of, the laws, regulations and
government policies affecting our exploration and development
activities and mining operations, particularly laws, regulations
and policies;
- changes in general economic conditions, the financial markets
and in the demand and market price for copper, gold and other
minerals and commodities, such as diesel fuel, steel, concrete,
electricity and other forms of energy, mining equipment, and
fluctuations in exchange rates, particularly with respect to the
value of the U.S. dollar and Canadian dollar, and the continued
availability of capital and financing;
- the effects of forward selling instruments to protect against
fluctuations in copper prices and exchange rate movements and the
risks of counterparty defaults, and mark to market risk;
- the risk of inadequate insurance or inability to obtain
insurance to cover mining risks;
- the risk of loss of key employees; the risk of changes in
accounting policies and methods we use to report our financial
condition, including uncertainties associated with critical
accounting assumptions and estimates;
- environmental issues and liabilities associated with mining
including processing and stock piling ore;
- labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we
operate mines, or environmental hazards, industrial accidents,
equipment failure or other events or occurrences, including third
party interference that interrupt the production of minerals in our
mines
- .;
- the availability of, and uncertainties relating to the
development of, infrastructure necessary for the development of our
projects;
- our reliance upon key personnel;
- uncertainties relating to increased competition and conditions
in the mining capital markets; and
- uncertainties relating to the receipt of necessary court and
shareholder approvals for the Arrangement.
For further information on Taseko, investors should review the
Company's annual Form 40-F filing with the United States Securities
and Exchange Commission www.sec.gov and home jurisdiction filings
that are available at www.sedar.com, including the "Risk Factors"
included in our Annual Information Form.
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SOURCE Taseko Mines Limited