MEXICO – Premier Gold Mines of Thunder Bay, ON, has signed a definitive share purchase agreement with Yamana Gold of Toronto to acquire Yamana’s Mercedes gold-silver mine in Sonora state.
Premier has agreed to pay US$140 million in cash and shares for all of the shares of Yamana’s subsidiary that indirectly owns all interest in the Mercedes mine. Premier is offering US$122.5 in cash, 6.0 million common shares, and 3.0 million warrants to Yamana. Each warrant will entitle Yamana to purchase one common share at a price of C$4.75 within 24 months of the original deal closing. In addition, Premier will grant Yamana a 1.0% net smelter return.
The Mercedes gold-silver mine has been in production since 2011 and is currently mining three underground gold-silver deposits. From 2012 to 2015, the mine produced an average of 109,000 oz of gold annually. The mine has reserves of 333,000 oz gold in ore grading 4.33 g/t Au and 3.75 million oz of silver in ore grading 48.8 g/t Ag. The measured and indicated resource is 4.96 million tonnes grading 3.36 g/t Au and 32.6 g/t Ag. The inferred resource is 2.16 million tonnes at 3.45 g/t Au and 36.5 g/t Ag.
To pay for the acquisition, Premier has made arrangements with Orion Mine Finance. The US$122.5 million in cash will comes from a senior secured gold prepay facility of US$42.2 million in return for 2,450 oz of gold per quarter of a period of 15 consecutive quarters. A silver stream worth US$11.5 million, an increase in Premier’s existing unsecured credit facility with Orion to US$45 million, 1.0 million share purchase warrants, an equity component of US$35 million, and an offtake obligation of 15,000 oz of gold annually complete the arrangements.
Please see www.PremierGoldMines.com for details of the arrangement.