TORONTO, ONTARIO--(Marketwired - June 19, 2016) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION
IN THE UNITED STATES OR TO A U.S. PERSON
(All amounts are in U.S. dollars unless otherwise stated)
Teranga Gold Corporation ("Teranga" or the "Company") (TSX:TGZ)(ASX:TGZ) is pleased to announce that it has entered into a Scheme Implementation Agreement (the "Implementation Agreement") pursuant to which Teranga will acquire Gryphon Minerals Limited ("Gryphon") (ASX:GRY).
The acquisition (the "Acquisition") will be effected by way of a scheme of arrangement under the Australian Corporations Act 2001 (the "Arrangement") pursuant to which Teranga will acquire the entire issued share capital of Gryphon. Under the Arrangement, each share of Gryphon (a "Gryphon Share") will be exchanged for 0.169 (the "Exchange Ratio") of: (i) a CHESS Depositary Interest of Teranga (a "Teranga CDI"), which trades on the Australian Securities Exchange (the "ASX") or, if elected, (ii) a common share of Teranga (a "Teranga Share"), which trades on the Toronto Stock Exchange (the "TSX"). The total consideration offered for all of the outstanding shares of Gryphon is valued at approximately $63 million, based on the closing price of a Teranga Share on the TSX on June 17, 2016. In conjunction with the Acquisition, Teranga is also pleased to announce that Tablo Corporation, its largest shareholder with an approximate 13% ownership (calculated on a non-dilutive basis), intends to exercise its anti-dilution right that will result in an equity placement in Teranga of approximately $9 million, based on the current trading price of a Teranga Share.
Gryphon's key asset is the 90%-owned Banfora gold project ("Banfora"), a fully permitted, high grade, open pit gold project located in Burkina Faso, West Africa, a mining-friendly jurisdiction. Banfora currently has a measured and indicated gold mineral resource of 2.98 million ounces (67.1Mt at 1.39g/t) and an inferred gold mineral resource of 0.66 million ounces (15.9Mt at 1.30g/t) (0.5 g/t lower cut off)(a).
In January 2013 Gryphon announced a proven and probable reserve of 1.05 million ounces (16.7 Mt at 1.95g/t) contained within four open pit deposits as part of a Bankable Feasibility Study on a 2Mtpa CIL operation. The reserve estimate is inclusive of the January 2013 resource of 39.7 Mt @ 2.1 g/t (0.9 g/t lower cut off)(b). There is potential to add reserves at depth and along strike in each of these deposits, and through a number of exploration targets located on Gryphon's highly prospective land package, each of which is within trucking distance of the proposed mill.
Highlights of the Acquisition
- Advances Teranga toward becoming a multi-jurisdiction, mid-tier gold producer
- Increases Teranga's proven and probable reserve base by 35% to 3.7 million ounces
- Potential to grow annual gold production by 50% to 275,000 to 325,000 ounces1 by mid-2019, while all-in sustaining cash costs are estimated to remain low in the $900 per ounce range
- Accretive on a per share basis to Teranga's net asset value per share and reserves and resources
- On a pro forma basis Teranga shareholders will own 85% and Gryphon shareholders will own 15% of the combined entity
- Provides valuation upside as Teranga accelerates exploration of the Banfora mining area, Golden Hill and Gourma exploration properties in Burkina Faso
- Inclusive of Gryphon's cash balance and the anti-dilution offering, Teranga's pro forma March 31, 2016 cash balance increases to approximately $80 million2
- Improves Teranga's trading liquidity and increases its pro forma market cap to C$0.5 billion3
- The strength and complementary nature of Gryphon's assets, management team, regional operating experience, exploration expertise and social license gives Teranga a stronger platform to execute on its West African growth initiatives
||This production target is based on existing proven and probable reserves only of Teranga as disclosed in its recent NI 43-101 technical report dated March 22, 2016 and Gryphon proven and probable reserves reported in its report on its Bankable Feasibility Study dated January 2013 which were reported in compliance with the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Please refer to the Competent Persons Statements for both Teranga and Gryphon at the end of this release.
||Includes VAT and VAT certificates, $9 million relating to Tablo Corporation's anti-dilution investment (based on the current Teranga Share price), Gryphon cash balance less transaction costs.
||Based on Teranga's closing price on the TSX as of June 17, 2016.
"This is an outstanding opportunity to add another high quality gold asset to Teranga's portfolio and to create a multi-jurisdiction gold producer with diversified production and cash flows," said Richard Young, President and Chief Executive Officer of Teranga. "Out of the gate, Gryphon's Banfora project will give us an additional one million ounces in gold reserves, with considerable exploration potential to further increase the reserve base, which is expected to enhance our production, cost and cash flow profiles commencing as early as 2019."
Steve Parsons, Managing Director of Gryphon stated: "We are very pleased to be joining forces with Teranga Gold Corporation as we look to create a pre-eminent West African mid-tier gold producer. This transaction gives an immediate uplift for Gryphon shareholders and provides significant exposure to Teranga's Sabodala gold mine in Senegal. The combined company can leverage off its strong balance sheet and mining cash flows to help bring the 3.6Moz Banfora Gold Project into development and production in the near term. The combination of the companies provides a great opportunity to leverage of the skill sets of both groups with Teranga's mining and development team and Gryphon's expertise and social licence to operate in Burkina Faso as well as its excellent track record on exploration and discovery."
Added Mr. Young, "While Gryphon had originally considered a traditional carbon-in-leach ("CIL") flowsheet, Banfora was redesigned into a heap leach operation in 2013/2014 to lower the project capital cost as the price of gold declined. We share Gryphon's belief that in the absence of financing constraints there is greater value today in a fully optimized CIL flowsheet, particularly when combined with an active exploration program aimed at converting high grade resources to reserves. Our solid balance sheet and strong cash flows, together with the combined Teranga/Gryphon exploration, construction and operating teams, creates a company that is well-poised to maximize value for all shareholders post transaction."
Pursuant to the Implementation Agreement, each Gryphon Share will be exchanged for 0.169 of a Teranga CDI, or if elected, a Teranga Share.
Based on the closing price of a Teranga CDI on the ASX on June 17, 2016, the transaction values each Gryphon share at A$0.206. The Teranga CDI consideration received by Gryphon shareholders represents a 45% premium over the 20-day volume-weighted average share price of Gryphon for the period ending June 17, 2016 and a premium of 53% over Gryphon's closing share price on the ASX on June 17, 2016. The number of Teranga Shares (or Teranga CDIs) to be issued under the Arrangement will be approximately 68 million.
Gryphon also has a number of performance rights that will automatically vest into Teranga Shares upon court approval of the Arrangement in accordance with the terms of the performance rights, and form part of the Arrangement. Further, the Share Appreciation Rights issued by Gryphon will be adopted by Teranga and become Share Appreciation Rights in respect of the Teranga Shares, as adjusted for the Exchange Ratio and currency.
Acquisition Structure and Other Terms
The Arrangement is conditional upon approval by 75% of the number of votes cast, and 50% of the number of Gryphon shareholders present and voting, at the meeting of Gryphon shareholders and is also subject to Australian and Burkina Faso regulatory approvals/consents, Australian Court, and third party approvals, together with certain other conditions customary for a transaction of this nature.
The Acquisition is not subject to any further due diligence or financing conditions.
A meeting of Gryphon shareholders to consider the Arrangement is expected to be held later in the year and the Arrangement is expected to be implemented shortly thereafter.
The Implementation Agreement also contains customary deal protection mechanisms, including no shop and no talk provisions, matching and notification rights in the event of a competing proposal and a mutual reimbursement fee payable by Gryphon or Teranga in specified circumstances.
A copy of the Implementation Agreement is annexed to this release and has also been filed under the Company's profile on SEDAR at www.sedar.com and on the Australian Securities Exchange at www.asx.com.au.
Gryphon Board Support
The Directors of Gryphon unanimously recommend that Gryphon shareholders vote in favour of the proposed Arrangement, in the absence of a superior proposal for Gryphon and subject to an independent expert opining that the Arrangement is in the best interests of Gryphon shareholders. On the same basis, each director of Gryphon intends to vote all Gryphon shares, which they control, at the time of the Gryphon shareholder meeting to approve the Arrangement, in favour of the Arrangement.
The indicative timetable for implementation of the Acquisition is anticipated to be as follows:
|1st Australian Court hearing to approve Scheme Booklet
||Friday, August 12, 2016
|Scheme Booklet sent to Gryphon shareholders
||Wednesday, August 24, 2016
|Gryphon Scheme meeting
||Monday, September 26, 2016
|2nd Australian Court hearing to approve Arrangement
||Monday, October 3, 2016
|Arrangement becomes effective
||Tuesday, October 4, 2016
Teranga's financial advisor is Cormark Securities Inc. and its legal advisor is Stikeman Elliott LLP and DLA Piper (Australia).
Gryphon's financial advisor is Maxit Capital; its legal advisor is King & Wood Mallesons and Blake, Cassels & Graydon LLP.
Conference Call & Webcast Details
Teranga will host a conference call and audio webcast today, Monday, June 20, 2016, at 8:30 a.m. (ET) to discuss the highlights of the Acquisition.
Those wishing to listen can access the live conference call and audio webcast as follows:
|Date & Time:
||Monday, June 20, 2016 at 8:30 a.m. ET
||Please allow 10 minutes to be connected to the conference call.
||The webcast can be accessed directly at www.gowebcasting.com/7688 and on Teranga's website at http://www.terangagold.com/.
||The conference call replay will be available for two weeks after the call by dialing 416-621-4642 or toll-free at 1-800-585-8367 and entering the conference ID 37353931
||The slide presentation will be available for download at http://www.terangagold.com/ for simultaneous viewing during the call.
Teranga Gold Competent and Qualified Persons Statement
The technical information contained in this document relating to the open pit mineral reserve estimates is based on, and fairly represents, information compiled by Mr. William Paul Chawrun, P. Eng who is a member of the Professional Engineers Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Mr. Chawrun is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. However, he is a "Qualified Person" as defined in NI 43-101. Mr. Chawrun has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Chawrun is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Mr. Chawrun has consented to the inclusion in this Report of the matters based on his compiled information in the form and context in which it appears in this Report.
The technical information contained in this document relating to Gryphon mineral resource estimates is based on, and fairly represents, information compiled by Ms. Patti Nakai-Lajoie. Ms. Nakai-Lajoie, P. Geo., is a Member of the Association of Professional Geoscientists of Ontario, which is currently included as a "Recognized Overseas Professional Organization" in a list promulgated by the ASX from time to time. Ms. Nakai-Lajoie is a full time employee of Teranga and is not "independent" within the meaning of National Instrument 43-101. Ms. Nakai-Lajoie has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms. Nakai-Lajoie is a "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. Ms. Nakai-Lajoie has consented to the inclusion in this Report of the matters based on her compiled information in the form and context in which it appears in this Report.
Teranga's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ("CIM Standards"). CIM definitions of the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", are substantially similar to the 2012 JORC Code corresponding definitions of the terms "ore reserve", "proved ore reserve", "probable ore reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource", respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the 2012 JORC Code would not be materially different if prepared in accordance with the CIM definitions applicable under NI 43-101. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.
Gryphon Minerals Competent and Qualified Persons Statement
(a) As per August 4, 2014 Gryphon Minerals press release for 2Mtpa Heap Leach Feasibility Study.
The current Banfora Gold Project resource updated with the Heap Leach feasibility study and reported at the 0.5 g/t lower cutoff was released on August 4th 2014. The Nogbele and Fourkoura Deposits, are based on information compiled by Mr Sam Brooks who is a member of the Australian Institute of Geoscientists. Mr Brooks has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Brooks is a full time employee of Gryphon Minerals and has consented to the inclusion of the matters in this document based on his information in the form and context in which it appears. This information was prepared under the JORC 2012 code of reporting. The information in this document that relates to the Mineral Resources at the Stinger and Samavogo Deposits, is based on information compiled by Mr Dmitry Pertel who is a member of the Australian Institute of Geoscientists. Mr Pertel has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Pertel is a full time employee of CSA Global Pty Ltd and has consented to the inclusion of the matters in this document based on his information in the form and context in which it appears. This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to comply with the JORC Code 2012.
(b) As per January 2013 2 Mt CIL Bankable Feasibility Study.
The information in this document that relates to the Mineral Resources forming the basis of the reserve estimate for the CIL study January 2013 is based on information compiled by Mr Dmitry Pertel who is a member of the Australian Institute of Geoscientists. Mr Pertel has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Pertel is a full time employee of CSA Global Pty Ltd and has consented to the inclusion of the matters in this document based on his information in the form and context in which it appears. This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to comply with the JORC Code 2012.
(as per January 31, 2013 Gryphon Minerals press release for 2Mtpa CIL Bankable Feasibility Study ("BFS"))
The maiden Ore Reserves for the Banfora Gold Project have been derived by Cube Consulting under the direction of Quinton de Klerk to a standard reportable in accordance with the "Australasian Code for Reporting of Exploration Results, Mineral Resources (JORC Code 2004 & NI43-101) and Ore Reserves" (JORC Code 2004) and are based on the Mineral Resource Models estimated by CSA Global in this announcement. The Ore Reserve estimate is based on the Mineral Resources classified as "Measured" and "Indicated" after consideration of all mining, metallurgical, social, environmental and financial aspects of the operation. The Proved Ore Reserve has been derived from the Measured Mineral Resource, and the Probable Ore Reserve has been derived from the Indicated Mineral Resource. The cut-off grades used in the estimation of the Banfora Ore Reserves are the non-mining, break-even gold grade taking into account mining recovery and dilution, metallurgical recovery, site operating costs, royalties and revenues. For reporting of Ore Reserves the calculated cut-off grades were rounded to the first decimal gram per tonne of gold. The cut-off grades vary depending on the material type and the pit location. The grades and metal stated in the Ore Reserves Estimate include mining recovery and dilution estimates. The Ore Reserve Estimate is reported within the open pit designs prepared as part of the BFS.
Cautionary Forward-Looking Statement
This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"), which reflects management's expectations regarding Teranga Gold Corporation's ("Teranga" or the "Company") future growth, results of operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Wherever possible, words such as "plans", "expects", "does not expect", "budget", "scheduled", "trends", "indications", "potential", "estimates", "predicts", "forecasts", "anticipate" or "does not anticipate", "believe", "intend", "ability to" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might", "will", or are "likely" to be taken, occur or be achieved, have been used to identify such forward looking information. Specific forward-looking statements in this presentation include 2019 production estimates of gold of 275,000 to 325,000 ounces, the estimated base case production profile to 2026, a future AISC of under US$900/oz of gold, the completion of construction of the Banfora project, the completion of the Arrangement and the Acquisition, and the estimated combined market capitalization of Teranga and Gryphon. Although the forward-looking information contained in this presentation reflect management's current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, Teranga cannot be certain that actual results will be consistent with such forward looking information. Such forward-looking statements are based upon assumptions, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments that management believe to be reasonable and relevant but that may prove to be incorrect. These assumptions include, among other things, the ability to obtain any requisite Senegalese governmental approvals, the accuracy of mineral reserve and mineral resource estimates, gold price, exchange rates, fuel and energy costs, future economic conditions, anticipated future estimates of free cash flow, and courses of action. Teranga cautions you not to place undue reliance upon any such forward-looking statements.
The risks and uncertainties that may affect forward-looking statements include, among others: the inherent risks involved in exploration and development of mineral properties, including government approvals and permitting, changes in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Teranga, as well as other risks and uncertainties which are more fully described in the Company's Annual Information Form dated March 30, 2016, and in other filings of Teranga with securities and regulatory authorities which are available at www.sedar.com. Teranga does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Teranga securities.
This press release is dated as of the date on the first page. All references to the Company include its subsidiaries unless the context requires otherwise.
This press release contains references to Teranga using the words "we", "us", "our" and similar words and the reader is referred to using the words "you", "your" and similar words.
About Teranga Gold
Teranga is a Canadian-based gold company listed on the Toronto Stock Exchange (TSX:TGZ) and Australian Securities Exchange (ASX:TGZ). Teranga is principally engaged in the production and sale of gold, as well as related activities such as exploration and mine development in Senegal, West Africa.
Teranga's mission is to create value for all of its stakeholders through responsible mining. Its vision is to explore, discover and develop gold mines in Senegal and greater West Africa, in accordance with the highest international standards, and to be a catalyst for sustainable economic, environmental and community development. All of its actions from exploration, through development, operations and closure will be based on the best available techniques. For more information, please refer to www.terangagold.com.