Centerra Gold And Thompson Creek Reporte Business Combination

 

TORONTO, ON and DENVER, CO – Centerra Gold Inc. and Thompson Creek Metals Company Inc. reported that they have entered into a definitive arrangement agreement whereby Centerra will acquire all of the issued and outstanding common shares of Thompson Creek. In connection with the closing of the Arrangement, Centerra will redeem all of Thompson Creek's secured and unsecured notes at their call price plus accrued and unpaid interest, in accordance with their terms. Under the terms of the Arrangement Agreement, all of the Thompson Creek issued and outstanding common shares will be exchanged on the basis of 0.0988 of a Centerra common share for each Thompson Creek common share. Upon completion of the Arrangement, existing Centerra and Thompson Creek shareholders are expected to own approximately 92% and 8%, respectively, of the pro forma company.

In connection with the proposed transactions, Centerra has entered into a binding commitment letter with Royal Gold Inc. (Royal Gold) whereby, upon the closing of the Arrangement, Royal Gold’s 52.25% gold streaming interest at Mount Milligan will be amended to a 35.00% gold stream and 18.75% copper stream. The transfer payment on the gold stream will remain at US$435/oz while the new copper stream will have a transfer payment equal to 15% of the prevailing market price of copper. Based on the midpoint of Thompson Creek’s 2016 production guidance (240-270 Koz of payable gold and 55-65 MMlbs of payable copper), Mount Milligan’s revenue split to Centerra under the amended stream agreement is expected to be approximately 70% gold, and 30% copper at current spot prices of US$1,351/oz gold and US$2.21/lb copper.

Thompson Creek operates the world class Mount Milligan Mine in British Columbia, Canada, a premier low-cost asset with more than two additional decades of profitable production expected from the current reserve base. Together with Centerra’s low-cost, long-lived Kumtor Mine in the Kyrgyz Republic, the combined company is expected to be firmly established as a low-cost gold producer with a geographically diversified footprint and industry-leading margins. In addition, the combined company will possess a high quality pipeline of development opportunities and is well positioned to sustain and grow its production base. With a strong balance sheet and liquidity profile, sector leading operating margins.