Centerra Gold to acquire AuRico Metals for $310M

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By Ted Liu

Centerra Gold Inc. (TSX: CG) has entered into a definitive arrangement agreement to acquire all of the issued and outstanding common shares of AuRico Metals Inc. (TSX: AMI) for $1.80 in cash per share, representing an aggregate transaction value of $310 million.

The offering price represents a 38% premium to the closing price of AuRico Metals’ common shares on the Toronto Stock Exchange (TSX) on November 6, 2017 and a premium of 37% to the 20-day volume weighted average price (VWAP) as of such date.

The arrangement agreement has been approved by the Board of Directors of each of Centerra and AuRico Metals.

The proposed acquisition is expected to be financed through a combination of a new US $125 million acquisition facility and cash on hand at Centerra.

AuRico Metals is developing the Kemess property in British Columbia, Canada; a low-cost brownfield development asset that is host to the feasibility-stage Kemess Underground (“KUG”) and preliminary economic assessment level Kemess East (“KE”) projects. AuRico Metals also owns a high-quality, free-cash flow generating royalty portfolio which includes a 1.5% net smelter return (“NSR”) royalty on the Young-Davidson gold mine in Ontario and a 2.0% NSR royalty on the Fosterville mine in Australia. Together with Centerra’s low-cost, long-lived Kumtor Mine in the Kyrgyz Republic and the Mount Milligan Mine in British Columbia, Canada, Centerra is expected to be firmly established as a low-cost gold producer with a geographically diversified footprint and peer-leading development pipeline. Post-transaction, Centerra is expected to sustain and grow its production base with its strong balance sheet and liquidity profile, sector leading operating margins, and low capital requirements.

Scotia Capital Inc. acted as financial advisor to Centerra and Stikeman Elliott LLP acted as Centerra’s legal advisors. Scotia Capital Inc. has provided a fairness opinion to the Centerra board of directors.

Macquarie Capital Markets Canada Ltd. acted as financial advisor to AuRico Metals and Fasken Martineau DuMoulin LLP acted as AuRico Metals’ legal advisor. Macquarie Capital Markets Canada Ltd. has provided a fairness opinion to the AuRico Metals board of directors.

photo credit: AuRico Metals