Premier Gold has made a US$205 million offer to buy out Centerra Gold, its joint venture partner in developing a mine in northwestern Ontario, near Geraldton.
In a March 30 news release, the Thunder Bay-headquartered miner indicates there’s another company waiting in the wings to acquire Centerra’s 50 per cent interest in Greenstone Gold Mines (GGM).
GGM is a partnership company set up specifically to put the Hardrock gold project into production.
Premier said this proposed company has the financial wherewithal to acquire Centerra’s ownership stake and advance Hardrock through the construction phase.
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The proposed open-pit mine is located on Highway 11, immediately south of the town of Geraldton. It’s on the site of a past-producing underground gold operation.
The offer to Centerra consists of US$175 million cash and all of Centerra's obligations under the partnership agreement, including a remaining earn-in obligation of US$30 Million.
Premier is making the offer to avoid litigation with Centerra.
The two companies clashed over whether the Hardrock Project had reached the “feasibility study” stage.
Premier made its claims based on a 2016 study which estimated a 14-year mine life. After more than 15 year of exploration and technical studies, the latest resource count shows 7.1 million ounces of gold, both measured and indicated, with 3.0 million ounces in the inferred category.
“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 per cent 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,” said Premier president-CEO Ewan Downie in a statement.
“The value of the offer is in excess of Premier’s market capitalization, especially when you consider the Company’s considerable cash position”.
Premier declares that Hardrock is “shovel ready” with both federal and provincial environmental assessment approvals, an updated mine closure plan filed, and inked relationship agreements with nearby First Nation communities.
Premier Gold Mines is gold producer and exploration outfit with operations and properties in northwestern Ontario, Nevada and Mexico.
