Centerra Gold To Acquire Thompson Creek Metals In US$1.1 Bln Deal

(RTTNews) - Centerra Gold Inc (CG.TO) said that it agreed to acquire all of the issued and outstanding common shares of Thompson Creek Metals Company Inc. (TCM.TO). Total transaction value, including the assumption of capital lease obligations, is equal to US$1.1 billion.

In connection with the closing of the Arrangement, Centerra will redeem all of Thompson Creek's secured and unsecuredv notes at their call price plus accrued and unpaid interest, in accordance with the their terms.

Under the terms of the Arrangement Agreement, all of the Thompson Creek issued and outstanding common shares will be exchanged on the basis of 0.0988 of a Centerra common share for each Thompson Creek common share.

Upon completion of the Arrangement, existing Centerra and Thompson Creek shareholders are expected to own approximately 92% and 8%, respectively, of the pro forma company.

The Exchange Ratio implies consideration of C$0.79 per Thompson Creek common share, based on the closing price of Centerra common shares on the Toronto Stock Exchange on July 4, 2016, representing a 32% premium to the closing price of Thompson Creek common shares on the TSX on July 4, 2016.

The proposed redemption of Thompson Creek's 9.75% secured notes due in 2017, the 7.375% unsecured notes due in 2018, and the 12.5% unsecured notes due in 2019 is expected to be financed with a combination of a new US$325 million senior secured revolver and term loan facility provided by Scotiabank, a C$170 million bought deal subscription receipt offering which has been announced today by way of a separate press release and cash on hand at Centerra and Thompson Creek. It is anticipated that the Thompson Creek shareholder meeting and closing of the proposed transactions will take place in the fall of 2016.

Separately, Royal Gold signed a commitment letter and binding term sheet with Centerra Gold Inc. related to the Company's streaming interest at the Mount Milligan mine that is owned by Thompson Creek Metals Company Inc. Centerra entered into a definitive arrangement agreement to acquire Thompson Creek and pay its outstanding bonds.

Under the terms of the commitment letter, Royal Gold's 52.25% gold streaming interest at Mount Milligan will be amended, conditional and effective on closing of Centerra's acquisition of Thompson Creek, to a 35% gold stream and 18.75% copper stream. Royal Gold will continue to pay $435 per ounce of gold delivered and will pay 15% of the spot price per metric tonne of copper delivered.

Royal Gold estimates this amendment to be value neutral on a discounted cash flow basis, and expects about two-thirds of its future net revenue from Mount Milligan will be gold related and one-third copper related over the next ten years. After transition to the amended stream, Royal Gold expects that approximately 85% of its total net revenue will come from precious metals and 15% from base metals.

Royal Gold's security position related to Mount Milligan will remain unchanged with respect to gold and will be amended to include copper.