Mr. Chris Taylor reports
KINROSS TO ACQUIRE GREAT BEAR FOR C$29.00 PER SHARE, PLUS A CONTINGENT VALUE RIGHT
Great Bear Resources Ltd. has entered into a binding agreement with Kinross Gold Corp. under which Kinross has agreed to acquire all of the outstanding common shares of Great Bear.
Under the terms of the transaction, Great Bear shareholders will receive upfront consideration of approximately $1.8-billion, representing $29 per Great Bear common share on a fully diluted basis. Great Bear shareholders will be able to elect to receive the upfront consideration as either: (i) $29 in cash; or (ii) 3.8564 Kinross shares per Great Bear share, both subject to proration. The upfront consideration will be subject to maximum aggregate cash consideration of approximately $1.4-billion (representing 75 per cent of the upfront consideration) or maximum aggregate shares issuable of 95.8 million (1) (representing 40 per cent of the upfront consideration), depending on the election of Great Bear shareholders. Great Bear shareholders who do not elect cash or Kinross shares will be deemed to have elected to receive cash, subject to proration. The transaction price represents a premium of 31 per cent and 40 per cent to the closing price and the volume-weighted average price (VWAP), respectively, of Great Bear's shares on the TSX Venture Exchange for the 20-day period ended Dec. 7, 2021.
Great Bear shareholders will also receive contingent consideration in the form of contingent value rights (CVRs) providing for further potential consideration equal to 0.1330 of a Kinross share per Great Bear common share, which represents approximately $58.2-million in aggregate consideration, or $1 per Great Bear common share, on a partially diluted (2) basis (based upon the closing price of a Kinross share on the Toronto Stock Exchange as at Dec. 7, 2021). The contingent consideration will be payable in connection with Kinross's public announcement of commercial production at the Dixie project, provided that at least 8.5 million gold ounces of measured and indicated mineral resources have been disclosed.
On closing, the transaction is expected to result in Great Bear shareholders owning approximately 7 per cent of Kinross, on a fully diluted basis, assuming full take-up of the share consideration. Upon satisfaction of the payment conditions under the terms of the CVRs, Great Bear shareholders would own approximately 8 per cent of Kinross, on a fully diluted basis (based upon the number of Kinross shares outstanding following completion of the transaction).
Chris Taylor, president and chief executive officer of Great Bear, said: "The acquisition of Great Bear by Kinross is an outstanding opportunity for our shareholders, partners at Wabauskang and Lac Seul First Nations, and the local communities of Northern Ontario.
"The transaction delivers a compelling premium for Great Bear's shareholders, reflecting the top-tier nature of the Dixie project, while offering beneficial exposure as Kinross shareholders to a high-quality operating portfolio and growing production base. Kinross's Canadian identity and headquarters in Ontario will facilitate close ties between the company and the Dixie project's local communities, which will help to maximize benefits to the area, including employment and training.
"As a senior gold producer, Kinross has the financial strength, technical expertise and commitment to the highest [environmental, social and governance] practices to advance the Dixie project at the pace and scale that this industry-leading discovery deserves. Dixie will remain a centrepiece project that will receive significant development and exploration focus, which will continue to unlock and maximize the project's value, while mitigating our shareholders' exposure to the risks of a single-asset developer."
J. Paul Rollinson, president and chief executive officer of Kinross Gold,
said: "The Dixie project represents an exciting opportunity to develop a potentially top-tier deposit into a large, long-life mine complex. In addition to the prospect of developing a quality, high-grade open-pit mine, we also believe that a significant portion of the asset's value is its longer-term potential, which includes the view of a sizable underground operation.
"Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders. Our extensive due diligence reinforced the scarcity of an asset of this quality and value. The Dixie project has multiple high-potential mineralized zones, which remain open along strike and at depth, and we are confident that the asset has strong untapped upside with numerous avenues for growth.
"We are pleased to achieve our goal of adding a high-quality asset in our home jurisdiction that further bolsters our global portfolio and can potentially provide long-term tax benefits. The Dixie project is ideally located in the renowned Red Lake mining district in Northern Ontario near established infrastructure and in a province with a low-carbon energy grid. We look forward to building strong relationships with the Wabauskang and Lac Seul First Nations and will work with them to ensure that the project delivers sustainable benefits to their communities and respects their way of life."
(1) Aggregate maximum total share consideration includes 15.0 million Kinross options that will be exchanged for 3.9 million Great Bear options.
(2) Inclusive of 300,000 Great Bear restricted stock units and deferred share units.
Details of the transaction
The transaction, which is not subject to a financing condition, will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of: (i) 66-2/3rds per cent of the votes cast by the holders of Great Bear's common shares; (ii) 66-2/3rds per cent of the votes cast by holders of Great Bear common shares, restricted share units, deferred share units and options, voting together as a single class; and (iii) minority approval in accordance with Multilateral Instrument 61-101, at a special meeting of Great Bear securityholders to be held to consider the transaction. In addition to approval by Great Bear securityholders, the transaction is also subject to the receipt of court approval, regulatory approvals including competition clearances in Canada and other customary closing conditions for transactions of this nature. The transaction is expected to be completed in the first quarter of 2022.
The arrangement agreement provides for customary deal protection provisions, including a non-solicitation covenant on the part of Great Bear and a right for Kinross to match any superior proposal (as defined in the arrangement agreement). The arrangement agreement includes a termination fee of $85-million, payable by Great Bear, under certain circumstances (including if the arrangement agreement is terminated in connection with Great Bear pursuing a superior proposal). The directors and senior officers of Great Bear, in addition to certain securityholders, owning in aggregate approximately 20.04 per cent of Great Bear's voting securities, have entered into voting support agreements pursuant to which they have agreed to vote all the securities they own or control in favour of the transaction.
Great Bear board of directors and special committee recommendations
A special committee composed entirely of independent directors of Great Bear unanimously recommended the transaction to the board of directors of Great Bear. The Great Bear board has evaluated the arrangement agreement with the company's management and legal and financial advisers, and, following the receipt and review of a unanimous recommendation from the special committee, the Great Bear board has unanimously approved the arrangement and determined that the arrangement is in the best interest of the company, and the Great Bear board has resolved to recommend that the company's shareholders vote in favour of the transaction, all subject to the terms and conditions contained in the arrangement agreement.
GenCap Mining Advisory Ltd. and CIBC World Markets Inc. have provided opinions to the Great Bear board, and BMO Capital Markets has provided an opinion to the special committee and board, stating that, as of the date of such opinions and based upon and subject to various assumptions, limitations and qualifications therein, the consideration to be received by the Great Bear shareholders pursuant to the arrangement agreement is fair, from a financial point of view, to such holders.
Further details regarding the terms of the transaction are set out in the arrangement agreement, which will be publicly filed by Great Bear under its profile at SEDAR. Additional information regarding the terms of the arrangement agreement, the background to the transaction, the rationale for the recommendations made by the special committee and the Great Bear board, and how Great Bear shareholders can participate in and vote at the special meeting to be held to consider the transaction will be provided in the management information circular for the special meeting, which will be mailed to shareholders and also filed at SEDAR. Shareholders are urged to read these and other relevant materials when they become available.
Advisers and counsel
CIBC World Markets and GenCap Mining Advisory are acting as co-advisers to Great Bear, and Blake, Cassels & Graydon LLP is acting as Great Bear's legal counsel. BMO Capital Markets is acting as financial adviser to the special committee. Cormark Securities Inc. provided capital market advice to Great Bear.
Webcast and conference call
Great Bear and Kinross will host an investor conference call and webcast to discuss the transaction on Dec. 9, 2021, at 5 a.m. PST (8 a.m. EST), followed by a question-and-answer session. To access the call, please dial the following.
Canada and United States toll-free: 833-968-2237
Outside of Canada and United States: 825-312-2059
Replay (available up to 14 days after the call)
Canada and United States toll-free: 800-585-8367
Outside of Canada and United States: 416-621-4642
About Great Bear Resources Ltd.
Great Bear is a Vancouver-based gold exploration company focused on advancing its 100-per-cent-owned Dixie project in Northwestern Ontario, Canada. A significant exploration drill program is currently under way to define the mineralization within a large-scale, high-grade disseminated gold discovery made in 2019, the LP fault. Additional exploration drilling is also in progress to expand and infill nearby high-grade gold zones, as well as to test new regional targets.
Great Bear is a committed partner to all stakeholders, with a long-term vision of sustainable exploration to advance the Dixie project in a manner that demonstrates good stewardship of land, operational excellence and accountability.
About Kinross Gold Corp.
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross's focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol: K) and the New York Stock Exchange (symbol: KGC).
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