All figures are in Canadian dollars unless otherwise
stated.
TORONTO, Feb. 5, 2015 /CNW/ - Centerra Gold Inc.
("Centerra") (TSX: CG) and Premier Gold Mines Limited ("Premier")
(TSX: PG) are pleased to announce that they have signed a
definitive agreement to form a 50/50 partnership for the joint
ownership and development of Premier's Trans-Canada Property
including the Hardrock Gold Project located in the
Geraldton-Beardmore Greenstone Belt in Ontario.
Commenting on the partnership, Mr. Ian
Atkinson, President and Chief Executive Officer of Centerra
stated: "We are very excited to have this opportunity to work with
Premier on the Trans-Canada Property. Forming this
partnership gives Centerra's shareholders exposure to a significant
gold resource and an advanced stage development project in
Ontario, Canada. The
property has a large land package with exceptional exploration
potential. As we have stated in the past it has been our goal
to identify and acquire an additional production platform. We
feel that the Trans-Canada Property, including the flagship
Hardrock Gold Project, complements our growth pipeline which
includes the Gatsuurt Project, in Mongolia and the Öksüt Project in Turkey."
"This partnership is an important step in realizing Premier's
objective to become a prominent North American-focused gold
producer," stated Ewan Downie,
President and Chief Executive Officer of Premier Gold. "With
this partnership comes a more clear and certain path toward
realizing the potential that the Trans-Canada Property represents
to Premier shareholders and neighboring communities. We share
in Centerra's excitement and look forward to introducing them to
nearby communities and local partners in the very near future."
The Trans-Canada Property
The Trans-Canada Property
comprises a group of mineral claims situated within the
Geraldton-Beardmore Greenstone Belt which extends for 110
kilometres between Lake Nipigon and the community of Long Lac in
northern Ontario, Canada, located
approximately 250 kilometres northeast of Thunder Bay.
Together, the claim blocks cover an area of approximately 33,000
hectares consisting of unpatented mineral claims, mining leases and
mining patent claims.
Located along the Trans-Canada Highway, the flagship Hardrock
Project is found on one of the larger claim blocks and is central
to a historic gold camp that produced approximately 3 million
ounces of gold between 1936 and 1970. It benefits from
excellent existing infrastructure with the town of Geraldton located only two kilometres to the
north. The Hardrock Project is an advanced-stage project
currently undergoing feasibility study. A Preliminary
Economic Assessment (PEA) was completed and the results published
by Premier on January 28, 2014.
Subsequently on July 8, 2014, an
updated mineral resource on the Hardrock Project was published by
Premier with an estimated 4.87 million total contained ounces of
gold within an Indicated Resource (89.04 million tonnes (Mt) at
1.70 grams per tonne gold (g/t Au)) and 2.74 million ounces of gold
in an Inferred Resource (23.15 Mt at 3.69 g/t Au). See the
Technical Report and Mineral Resource Estimate Update for the
Hardrock Deposit issued by Premier on August
22, 2014 and an effective date of July 4, 2014.
Along with the Hardrock Project, the Trans-Canada Property
encompasses the mineral resources of the Brookbank, Kailey and Key
Lake gold deposits. In its December
19, 2012 news release, Premier reported an open-pit
Indicated Mineral Resource at Brookbank that is estimated to
contain 171,000 ounces of gold (2.64 Mt at 2.02 g/t Au) together
with an underground Indicated Mineral Resource estimated to have
429,000 ounces of gold (1.85 Mt at 7.21 g/t Au). The
estimated Inferred Mineral Resource for the Brookbank deposit
contains another 66,000 ounces of gold (0.57 Mt at 3.53 g/t
Au). A PEA was completed by Premier for the Brookbank
deposit, evaluating the project on a standalone basis and as one
providing supplementary ore feed to the Hardrock Project (published
on January 28, 2014). Together
with the Hardrock deposit, these deposits attest to the mineral
potential of the Trans-Canada Property.
In addition, several gold prospects and other high-potential
exploration targets are recognized on the extensive land holdings
of the partnership, including on the Viper claim block which is
situated about 25 kilometres east of the Hardrock deposit.
The gold deposits of the Geraldton-Beardmore Belt belong to the
mesothermal, greenstone-hosted class of gold deposits which is also
represented by the world-class ore systems found at Red Lake and Timmins, Ontario and in the Kalgoorlie
district of Western Australia.
The Implementation and Partnership Agreement
Centerra
and Premier have agreed to form a partnership to develop the
Trans-Canada Property. Centerra will contribute up to
C$300 million in cash to the
partnership in accordance with the terms described below, while
Premier will contribute all property, assets and rights it holds in
respect of the Trans-Canada Property.
Key terms of the agreements and the development strategy for
Hardrock include:
- On closing, Premier, through a wholly-owned subsidiary, will
contribute all property, assets and rights it holds in respect of
the Trans-Canada Property to the partnership in consideration for
its 50% interest in the partnership and Centerra will make an
initial cash contribution to the partnership in the amount of
C$85 million for its 50% limited
partner interest which amount will be distributed to Premier on the
closing date.
- Centerra has agreed to make capital contributions to the
partnership in the aggregate amount of C$185
million (the "Centerra Development Commitment") half of
which is on behalf of Premier. A portion of these funds will
initially be used to complete a comprehensive technical and
economic feasibility study including an updated mineral resource
calculation for the Hardrock Project at the Trans-Canada Property.
Subject to the satisfaction of certain feasibility and project
advancement criteria the remainder of the funds will be used
towards the construction and development of the Hardrock
Project.
- Premier will not be required to make any contributions to the
partnership until Centerra has provided the full amount of the
Centerra Development Commitment following which cash calls will be
satisfied by each of Centerra and Premier on a 50/50 basis pursuant
to approved annual programs and budgets. The partnership agreement
contains customary dilution mechanisms for failures to meet cash
calls and certain other events.
- Centerra has agreed to make an additional contingent capital
contribution to the partnership not to exceed C$30 million based on the results of the updated
mineral resource calculation in respect of the Trans-Canada
Property which amount, if any, will be distributed to Premier.
- The partnership will be managed by a corporation (the "Managing
Partner"), owned 50/50 by Centerra and Premier. Initially the board
of directors of the Managing Partner will consist of four directors
with two nominees from Centerra and two nominees from Premier. The
board of directors of the Managing Partner will be responsible for,
among other things, approving the partnership's annual programs and
budgets.
The transaction is expected to close on or about March 6, 2015, subject to the receipt of
applicable regulatory approvals and the satisfaction of customary
conditions precedent. The Implementation Agreement and the
form of limited partnership agreement will be filed on
SEDAR.com.
About Centerra
Centerra is a leading North
American-based gold producer operating, developing, exploring and
acquiring gold properties in Asia
and other markets worldwide. Centerra is the largest
Western-based gold producer in Central
Asia. Centerra's shares trade on the Toronto Stock Exchange
(TSX) under the symbol CG. The Company is headquartered in
Toronto, Ontario, Canada.
About Premier
Premier is one of North America's leading exploration companies
with a high quality pipeline of projects focused in proven, safe
and accessible mining jurisdictions in Canada and the
United States that includes world class gold mining
districts such as Red Lake and
Geraldton in Ontario and the Battle Mountain-Eureka Trend
in Nevada.
Advisors
Cormark Securities Inc. is acting as
financial advisor to Centerra and has provided a fairness opinion
to the board of directors of Centerra that the transaction is fair
from a financial point of view to Centerra. Stikeman Elliott LLP is
acting as legal advisor to Centerra. CIBC World Markets Inc.
is acting as financial advisor to Premier and Maxit Capital LP has
provided a fairness opinion to the board of directors of Premier
that the transaction is fair from a financial point of view to
Premier. Bennett Jones LLP is acting as legal advisor to
Premier.
Resource classifications referred to herein are in accordance
with standards defined by the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM), 2010 Definition Standards for
Mineral Resources and Mineral Reserves. Stephen McGibbon, P.Geo., Executive
Vice-President, Corporate and Project Development of Premier, is
the Qualified Person responsible for the technical information
contained in this news release and is a Qualified Person within the
meaning of National Instrument 43-101.
Cautionary Note Regarding Forward-Looking
Information
This news release contains certain information
that may constitute "forward-looking information" under applicable
Canadian securities legislation, including statements which are not
historical facts. Forward-looking information includes, but is not
limited to, statements about strategic plans, future operations,
future work programs, capital expenditures and contributions to the
partnership, discovery and production of minerals, price of gold
and currency exchange rates, timing of geological reports and
feasibility studies, mineral resource estimates and corporate and
technical objectives. Forward-looking information is necessarily
based upon a number of assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward-looking information, including risks inherent to the mining
industry, adverse economic and market developments and the risks
identified in Premier's annual information form under the heading
"Risk Factors", the risks identified in Centerra's annual
information form under the heading "Risks that can affect our
business" and other risks identified in each of Premier's and
Centerra's other filings with the Canadian securities regulators.
There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
readers should not place undue reliance on forward-looking
information. All forward-looking information contained in this news
release is given as of the date hereof and each of Premier and
Centerra disclaims any intention or obligation to update or revise
any forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
law.
SOURCE Premier Gold Mines Limited