Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE:
CGAU) announced today that it has entered into a definitive
agreement whereby Centerra, through its subsidiary Centerra (U.S.)
Inc., will acquire 100% of Gemfield Resources LLC, owner of the
Goldfield District Project (“Goldfield”), from Waterton Nevada
Splitter, LLC (“Waterton”) for US$206.5 million (US$175 million in
cash at closing plus a US$31.5 million future milestone payment
payable in cash or Centerra shares).
Goldfield is a conventional open-pit, heap leach
project in late-stage development, located in a Tier 1 mining
jurisdiction. It contains three known deposits: Gemfield, Goldfield
Main and McMahon Ridge. The first pit for potential development is
Gemfield. Centerra believes that the project has significant upside
potential from its large, underexplored land position in an
established mining area in Nevada that has produced more than 4
million ounces of gold historicallyi.
Highlights of the
Transaction:
- Adds high-quality
development project: Goldfield is anticipated to add
meaningful future low-cost production to Centerra with a
conventional open-pit heap leach mine with expected low capital
intensity, similar to that of our operational Öksüt Mine in
Turkey.
- Improves geographic profile
and provides new platform of operation: Goldfield is
located in a Tier 1 jurisdiction and enjoys strong local support.
The acquisition increases Centerra's exposure to North America and
provides an anchor asset that can act as a foothold for further
opportunities in the United States. Centerra currently has five
active exploration joint ventures in the United States and six in
Canada.
- Short construction
period: Goldfield is substantially de-risked. The Company
plans to further refine existing technical studies undertaken to
date by Waterton, with a resource estimate expected to be released
in the first half of 2023 and an updated feasibility study
thereafter.
- Leverages existing
operational expertise: Goldfield is a conventional
open-pit, heap leach project that can leverage development and
operating expertise obtained at Centerra's Öksüt Mine which was
constructed on time and under budget.
- Underexplored property that
provides substantial upside potential: Large land position
located in a prolific mining district which has produced over 4
million gold ouncesi. Centerra has identified numerous targets for
drill-ready regional exploration, with the potential to expand
known deposits and extend mine life.
- Extensive due diligence
completed: Centerra’s review of Goldfield has been ongoing
since 2020.
Scott Perry, President and Chief Executive
Officer of Centerra, stated: “We are very excited to be adding this
high-quality development project and its substantial Tier 1
jurisdiction land package to our portfolio. Similar to our Öksüt
Mine, Goldfield will be a heap leach mine, with low initial capital
outlay and low projected production costs.
Our experienced exploration and operational
teams have intimate knowledge of an asset of this kind, and I feel
confident that they will be able to successfully develop and
execute on this project in the coming years, delivering another
source of meaningful cash flow to Centerra.
Lastly, given the current strength of our
balance sheet together with our significant projected free cash
flow in 2022, acquiring Goldfield leaves Centerra in a position of
flexibility to deliver on other shareholder friendly capital return
initiatives that will be under consideration over time.”
For more information on Goldfield, presentation
slides are available on Centerra Gold’s website:
https://www.centerragold.com/investor/events-presentations
Centerra will host a conference call today to
discuss the acquisition at 10:30 AM Eastern Time on Tuesday,
February 22, 2022.
- North American participants may
access the call toll-free at +1 877-302-3634.
- International participants may
access the call at +1 416-981-9023.
The conference call is being webcast by Notified
(formerly Intrado Digital Media) and can be accessed live at
Centerra Gold’s website at www.centerragold.com.
An audio recording of the call will be available
approximately two hours after the call via telephone until midnight
Eastern Time on March 8, 2022. The recording can be accessed by
calling + 1 416 626-4100 or +1 800-558-5253 and using the passcode
22015888. In addition, the webcast will be archived on Centerra
Gold’s website www.centerragold.com.
Transaction Terms
Consideration under the transaction is an
initial cash payment of US$175 million payable at closing and an
additional US$31.5 million deferred milestone payment, payable in
cash or Centerra shares at Centerra’s option. The milestone payment
shall become payable, among other things, upon the earlier of (i)
the date that is 18 months following closing, or (ii) Centerra
making a construction decision with respect to the project.
Advisors and Counsel
TD Securities Inc. acted as financial advisor to
Centerra, and Stikeman Elliott LLP and Snell & Wilmer LLP acted
as legal advisors to Centerra.
Caution Regarding Forward-Looking
InformationInformation contained in this document which is
not a statement of historical fact, and the documents incorporated
by reference herein, may be “forward-looking information” for the
purposes of Canadian securities laws and within the meaning of the
United States Private Securities Litigation Reform Act of 1995.
Such forward-looking information involves risks, uncertainties and
other factors that could cause actual results, performance,
prospects and opportunities to differ materially from those
expressed or implied by such forward-looking information. The words
“believe”, “expect”, “anticipate”, “contemplate”, “plan”,
“intends”, “continue”, “budget”, “estimate”, “may”, “will”,
“schedule”, “understand” and similar expressions identify
forward-looking information. These forward-looking statements
relate to, among other things: expectations in respect of the
transaction, including its completion and the anticipated benefits
and strategic rationale of the transaction; future prospects from
the transaction, including the ability to unlock value through
exploration and improved geographic profile for the Company;
expected release of a resource estimate; expected mining and
processing methods, low costs and mine life; the timing of
definition phase, engineering and construction with respect to the
Goldfield District Development Project (“Goldfield”); expected
capital costs and 2022 free cash flow and cash provided by
operating activities.
Forward-looking information is necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by Centerra, are inherently subject to significant
technical, political, business, economic and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking information. Factors and assumptions that could
cause actual results or events to differ materially from current
expectations include, among other things: completion of the
transaction in accordance with, and on the timeline contemplated
by, the terms and conditions of the relevant agreements governing
the transaction; the accuracy of management’s assessment of the
effects of the successful completion of the proposed transaction;
strategic, legal, planning, financial, operational and other risks,
including changes in project parameters as plans continue to be
refined, changes in economic conditions, variations in ore
reserves, grade or recovery rates, actual performance of plant,
equipment or processes relative to specifications and expectations,
volatility of mineral prices, ability to obtain government
approvals and permits, worsening of COVID-19 pandemic, the making
of a determination to proceed with the development of Goldfield on
terms acceptable to Centerra and the factors and assumptions
identified in Centerra’s news release dated January 18, 2022 in
relation to the Company’s 2022 guidance. For additional risk
factors, please see section titled “Risk Factors” in the Company’s
most recently filed Annual Information Form available on SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
There can be no assurances that forward-looking
information and statements will prove to be accurate as many
factors and future events, both known and unknown, could cause
actual results, performance, or achievements to vary or differ
materially from the results, performance, or achievements that are
or may be expressed or implied by such forward-looking statements
contained herein or incorporated by reference. Accordingly, all
such factors should be considered carefully when making decisions
with respect to Centerra, and prospective investors should not
place undue reliance on forward-looking information.
Forward-looking information is as of February 22, 2022. Centerra
assumes no obligation to update or revise forward-looking
information to reflect changes in assumptions, changes in
circumstances, or any other events affecting such forward-looking
information, except as required by applicable law.
About Centerra GoldCenterra
Gold Inc. is a Canadian-based gold mining company focused on
operating, developing, exploring and acquiring gold properties in
North America, Turkey, and other markets worldwide. Centerra
operates two mines: the Mount Milligan Mine in British Columbia,
Canada, and the Öksüt Mine in Turkey. While the Company still owns
the Kumtor Mine in the Kyrgyz Republic, it is currently no longer
under the Company’s control. The Company also owns the
pre-development stage Kemess Underground Project in British
Columbia, Canada and owns and operates the Molybdenum Business Unit
in the United States. Centerra's shares trade on the Toronto Stock
Exchange (“TSX”) under the symbol CG and on the New York Stock
Exchange (“NYSE”) under the symbol CGAU. The Company is based in
Toronto, Ontario, Canada.
For more information:Toby Caron
Treasurer and Director, Investor Relations (416) 204-1694
toby.caron@centerragold.com
Shae FrosstManager, Investor Relations(416)
204-2159shae.frosst@centerragold.com
Additional information on Centerra is
available on the Company’s website at
www.centerragold.com and at SEDAR
at www.sedar.com.
________________________i Ashley, R.P., 1990a,
The Goldfield gold district, Esmeralda and Nye Counties, Nevada, in
Shawe, D.R., and Ashley, R.P., eds., Epithermal Gold Deposits—Part
1: U.S. Geological Survey Bulletin 1857–H, p. H1–H7,
https://pubs.usgs.gov/bul/1857h/report.pdf
PDF
available: http://ml.globenewswire.com/Resource/Download/5ce2cc44-fcf2-44c4-b49d-26a352b0d9c7
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