8 May 2020
TMAC Resources Inc. is pleased to announce that it has entered into a definitive agreement with Shandong Gold Mining Co. Ltd., through its wholly-owned, overseas subsidiary Shandong Gold Mining (HongKong) Co., Limited, pursuant to which SD GOLD has agreed to acquire all of the outstanding shares of TMAC at a price of C$1.75 per share in cash.
The total equity value pursuant to the Transaction is approximately US$149 million on a fully diluted basis. The Offer Price represents a premium of 52% to TMAC’s 20-day volume-weighted average price as at May 6, 2020.
Resource Capital Funds, Newmont Corporation (“Newmont”)and directors and officers of TMAC collectively holding approximately 58.6% of the current outstanding TMAC common shares have entered into voting support agreements to support the Transaction.
Jason Neal, President and Chief Executive Officer of TMAC, stated, “The Transaction is the culmination of the strategic review process we announced earlier this year. Over the past several months, SD GOLD has completed a significant due diligence review of TMAC, including a site visit to Hope Bay earlier this year. SD GOLD, as one of the world’s largest gold producers, has the financial strength, technical capability and long-term vision to maximize the value of the Hope Bay camp.”
Yumin Chen, Chairman of Shandong Gold Group Co., Ltd., the controlling shareholder of SD GOLD, stated, “Hope Bay is a highly prospective high-grade gold camp which requires substantial investment to optimize production and extend mine life and maximize the value of the camp to the benefit of all stakeholders. We look forward to completion of the Transaction and the opportunity to invest in the project for years to come as the generational potential of the camp is unlocked. We have been impressed by TMAC’s strong relationships with its local stakeholders and responsible management of environmental and safety aspects of mining, and intend on demonstrating the same commitment as the owner and future developer of Hope Bay’s assets. We look forward to working closely with all stakeholders and local communities in Nunavut to deliver a world-class operation that will benefit the regional economy for generations to come.”
Stanley Anablak, President of the Kitikmeot Inuit Association (“KIA”), stated, “KIA supports the Hope Bay Project and all of the benefits it has brought and will bring to Kitikmeot Inuit and subject to KIA conducting its own due diligence would be supportive of a sale of TMAC to SD GOLD if KIA determines the proposed sale satisfies KIA’s mandate. KIA’s mandate is to manage Inuit Owned Lands and resources to protect and promote the social, cultural, political, environmental, and economic well-being of Kitikmeot Inuit.”
Transaction Summary
The Transaction will be completed pursuant to a Plan of Arrangement under the Business Corporations Act (Ontario). The Transaction will be subject to the approval of at least 66-?% of the votes cast by shareholders at a special meeting of TMAC shareholders expected to be held in June 2020. In addition to shareholder and court approvals, the Transaction is also subject to the receipt of applicable regulatory approvals including, but not limited to, TSX approval, approval under the Investment Canada Act (Canada), the Competition Act (Canada) and approval by relevant authorities in China, as well as the satisfaction of certain other closing conditions customary in transactions of this nature.
The Arrangement Agreement includes, among other things, a non-solicitation covenant on the part of TMAC (subject to fiduciary out provisions) and a right for SD GOLD to match any competing offer that constitutes a superior proposal. Under certain circumstances, SD GOLD and TMAC would each be entitled to a termination fee equal to US$12.5 million.