Premier Gold Mines (TSX: PG) made an offer to Centerra Gold (TSX: CG) to acquire the remaining 50% interest in the Greenstone Gold Mines Partnership for a total consideration of $205 million.
The offer consists of a $175-million cash payment and the assumption of all Centerra’s obligations under the partnership agreement, including the remaining earn-in obligation of approximately $30 million.
It is estimated that the open-pit gold mine could provide nearly 1,000 jobs during construction and pre-production, and 450 workers would be employed full-time during Hardrock’s 15-year mine life span
In a press release, Premier said the acquiring party will be another company that is an assignee of its rights under the offer letter. The proposed assignee has the financial capacity to both acquire Centerra’s 50% interest and advance the Hardrock mine project through construction. It also intends to work with Premier to assist in securing the financial resources required for Premier to fund its 50% share of related mine construction costs.
Hardrock is the Greenstone Gold Mines Partnership’s principal asset and it is located on the Trans-Canada Highway near Geraldton, Ontario.
According to the miners involved in the transaction, Hardrock is one of the most significant large-scale, near permitted, mine development projects in North America.
“This offer should be viewed favourably by Centerra as we believe that it represents a substantial premium to the median of current analyst consensus valuations attributed to Centerra’s 50% interest in GGM, full recovery of their total investment in GGM to date, and aligns with Centerra’s stated focus of maximizing the value of its existing operating assets over new-build opportunities,” Ewan Downie, Premier’s president and CEO, said in the media brief. “The value of the offer is in excess of Premier’s market capitalization, especially when you consider the company’s considerable cash position.”
Hardrock has been a contentious project for both Premier and Centerra, with the latter filing a lawsuit over a project update made in December by Greenstone Gold Mines which Centerra argues should not be considered a “Feasibility Study,” and Premier filing a counterclaim in response.