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PREMIER GOLD MINES LIMITED (TSX:PG) ("Premier", "the Company") is pleased to announce that it has completed its acquisition of Yamana Gold Inc.'s ("Yamana") 100% interest in the Mercedes Mine Property (the "Acquisition"), located some 60 kilometres southeast of Magdalena de Kino, in the Sonora State, Mexico.
Pursuant to a share purchase agreement dated July 28, 2016, Premier has acquired all of the shares of Yamana's indirect wholly-owned Mexican subsidiaries, which own a 100% interest in the Mercedes Mine, for total consideration consisting of:
a) US$122.5 million in cash (the
"Cash Purchase Price");
b) 6.0 million common shares to
Yamana in the capital of
Premier (each a "Common
Share"); and
c) 3.0 million warrants to
Yamana (each a "Yamana
Warrant") to acquire up to
3.0 million Common Shares.
Each Yamana Warrant entitles
Yamana to purchase one
Common Share upon the
exercise thereof at the
price of C$4.75 per Common
Share until 5:00 p.m.
(Toronto time) on September
30, 2018.
In connection with the Acquisition, Premier granted Yamana a 1.0% net smelter return royalty on production from the current land package relating to the Mercedes Mine on the earlier of: (a) the date on which 450,000 ounces of gold equivalent has been produced by the Mercedes Mine following September 30, 2016; and (b) September 30, 2022. Yamana was also granted a 2.0% net smelter return royalty on the La Silla property in Sinaloa, Mexico and the La Espera property in Sonora, Mexico.
The Cash Purchase Price was provided pursuant to a financing package (the "Financing") from Orion Mine Finance ("Orion"). The Financing is comprised of the following:
a) Senior Secured Gold Prepay
Credit Facility of US$ 42.2
million pursuant to which
Premier will deliver to Orion
2,450 troy ounces of gold per
quarter for a period of 15
consecutive quarters
commencing December 31, 2016
in repayment of principal,
plus cash interest payments at
an interest rate of 6.5%.
Subject to certain exceptions,
Premier has the option to
satisfy four interest payments
in Common Shares issued at the
then 10 day volume weighted
average closing price;
b) Senior Secured Silver Stream of
US$11.5 million pursuant to
which Premier will deliver to
Orion 50% of the silver
production from the Mercedes
Mine for the first year
following closing, 60% for the
subsequent year, and 70%
thereafter until the delivery
of 1.25 million ounces of
silver, after which the
delivery will be reduced to
25% of the silver production
until the delivery of 2.0
million ounces, and reduced
further to 12.5% thereafter.
Orion will pay an ongoing cash
purchase price equal to 20% of
the prevailing silver price;
c) An increase of US$15 million in
Premier's existing unsecured
credit facility with Orion to
US$45 million. The interest
rate associated with this
facility remains unaltered at
6.0%;
d) A subscription of 10,958,333
Common Shares by Orion for
gross proceeds of US$35
million;
e) 1,000,000 warrants (each an
"Orion Warrant") to acquire up
to 1,000,000 Common Shares.
Each Orion Warrant entitles
Orion to purchase one Common
Share upon the exercise
thereof at the price of $5.46
per Common Share until June
30, 2018; and
f) An amendment to Premier's
existing offtake obligations
with Orion to sell up to an
additional 20,000 ounces of
gold annually relating
exclusively to production from
the Mercedes Mine, subject to
an annual aggregate maximum of
35,000 ounces of gold from all
of Premier's producing
projects.
The Common Shares and warrants issued pursuant to the Acquisition and the Financing are subject to a four-month plus one day hold period pursuant to applicable Canadian securities laws.
Stephen McGibbon, P. Geo., is the Qualified Person for the information contained in this press release and is a Qualified Person within the meaning of National Instrument 43-101.
Premier Gold Mines Limited is a respected production, exploration and development company with a high-quality pipeline of gold projects focused in proven, safe and accessible mining jurisdictions in Canada, the United States and Mexico. Anticipated gold production in excess of 100,000 ounces during the final quarter of 2016 will come from its interest in the South Arturo Mine in Nevada and the recently acquired Mercedes Mine in Mexico.
Forward Looking Information
This Press Release contains certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about future gold production, including anticipated production in excess of 100,000 ounces during the final quarter of 2016 from the South Arturo Mine in Nevada and the Mercedes Mine in Mexico, future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates, timing of geological reports 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 the 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". 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 press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Premier 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
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/October2016/03/c5869.html
SOURCE: Premier Gold Mines Limited
Ewan Downie, President & CEO, Phone: 807-346-1390, Fax: 807-346-0100, e-mail:
Info@premiergoldmines.com, Web Site: www.premiergoldmines.com
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