TORONTO,
ONTARIO–(Marketwired – April 2, 2014) – YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY)
(“Yamana”) and Osisko Mining Corporation (TSX:OSK)(FRANKFURT:EWX)
(“Osisko”) are pleased to announce they have entered into an
agreement (“the Agreement”) pursuant to which Yamana will acquire a
50% interest in Osisko’s mining and exploration assets for C$441.5 million in
cash and 95.7 million common shares of Yamana having an aggregate value of
C$929.6 million (the “Yamana Consideration”). Upon implementation of
the Agreement, each outstanding Common share of Osisko will be exchanged for
(i) C$2.194 in cash, (ii) 0.2119 of a Yamana common share, and (iii) a new
common share of Osisko.
The value of the interest
in the Yamana share is C$2.06 (based on the closing price of the Yamana shares
on the Toronto Stock Exchange as of April 1st, 2014), and the ascribed value of
the new common share of Osisko is C$3.35, for an aggregate of cash and the
implied share value equal to C$7.60(1) for each currently outstanding Common
share of Osisko.
Under the Agreement, Yamana
will become an equal partner in all of Osisko’s mining and exploration assets.
Osisko will continue to operate the Canadian Malartic Mine and all other
projects under the guidance of a joint operating committee, and will also
maintain its head office in Montreal. Yamana and Osisko will be hosting a joint
conference call today at 10:00 a.m. ET to discuss the transaction and the new
partnership (details for the call provided below).
The Agreement will be
effected by way of a statutory plan of arrangement (the
“Arrangement”, as described below). Osisko shareholders will receive,
in exchange for their common shares a combination of cash, Yamana common
shares, and new common share of Osisko, which collectively have an aggregate
implied value of C$7.60 for each outstanding Osisko common share(1).
Under the terms of the
Arrangement, Osisko will transfer all of its rights, titles and interests in
its mining assets, including the Canadian Malartic Mine and its advanced and
greenfield exploration properties to one or more general partnerships (the
“General Partnerships”). Yamana will then acquire a 50% interest in
the units of each of the General Partnerships in exchange for the Yamana
Consideration.
1. This assumes current
Osisko Common shares outstanding of 439.8 million plus an additional 12 million
Osisko Common shares to be issued upon the agreed conversion of the convertible
debenture. Further this assumes that all other remaining convertible securities
are not exercised but instead are exchanged pursuant to the Arrangement for
convertible securities which are exercisable into common shares in the capital
of new Osisko. The $3.348 per new Osisko share is implied from the value paid
by Yamana for their 50% interest in the Partnerships and retention of certain
balance sheet items.
The aggregate value of
C$7.60 per Common share represents a premium of approximately (i) 10% over
Osisko’s closing price as of April 1st, 2014, and (ii) 22% to the Goldcorp
offer of C$6.21 (based on the closing price of the Goldcorp common shares on
April 1st, 2014).
Osisko retains an
additional 2% royalty on all General Partnership projects other than Canadian
Malartic.
Osisko has also entered
into binding commitment agreements with CPPIB Credit Investments Inc.
(“CPPIB”), a wholly-owned subsidiary of CPP Investment Board for an
increase under its existing credit facility (the “Credit Facility”)
and with La Caisse de depot et placement du Quebec (“La Caisse”) for
the sale of a gold stream (the “Gold Stream Agreement”) on the
Canadian Malartic Mine. The Gold Stream Agreement and the increase in the
Credit Facility provide additional funding to Osisko of an aggregate of C$550
million. Together with cash consideration from Yamana, these investments
generate approximately C$1 billion in cash to be distributed to Osisko
shareholders.
The Canadian Malartic
General Partnership will enter into the Gold Stream Agreement related to 37,500
ounces of gold per annum with La Caisse in return for a deposit of C$275
million. The Gold Stream Agreement includes a repurchase and put clause and
provides La Caisse with a guaranted minimum return of 8% (in the event the put
right is exercised). The Gold Stream Agreement has a transfer price of 42% of
the spot gold price. Osisko’s CPPIB credit facility of C$150 million will be
transferred to the Canadian Malartic General Partnership and increased by C$275
million, with an interest rate of 7.625%, providing a total of C$425 million of
debt to finance the transaction.
CPPIB, a lender to and
security holder of Osisko, is supporting the transaction by making a binding
commitment to advance a C$275 million loan and to roll over its existing C$150
million loan, providing a total of C$425 million of debt to finance the
transaction.
In connection with the
transaction, La Caisse and Investissement Quebec will each exercise their right
to convert their respective C$37.5 million debentures into six million shares
of Osisko (12 million shares total) prior to the implementation of the
Agreement.
This partnership provides
Yamana with significant production growth, an improved consolidated cost
structure, enhanced generation of cash flow and an expanded future project
pipeline. It will also provide entry into one of the world’s best mining
jurisdictions without the level of risk generally associated with new
jurisdictions given that as part of the agreement, Osisko management will
continue to be the operators of the Canadian Malartic mine through a joint
operating committee.
Peter Marrone, Chairman and
Chief Executive Officer of Yamana stated: “This transaction provides an
entry into a new world-class North American jurisdiction with an immediate
increase in production and improvement to our already low-cost structure, in
addition to the significant and immediate positive impact to our current and
future cash flow generation. This remains consistent with our stated objectives
of focusing on top and bottom line growth and balancing production and costs to
preserve margin and enhance cash flow generation capacity. This approach
provides the best available opportunity for Yamana to gain access and exposure
to a high quality asset with the least risk balanced with immediate growth and
the potential for further value enhancement.
“The transaction
provides Osisko shareholders fair value for their existing shares and allows
them to retain direct exposure through new Osisko shares to the robust and
substantive value of Canadian Malartic, as well as the significant value
represented in the other exploration and development projects in the Osisko
asset portfolio and more diversified exposure through Yamana shares. Management
will remain the same with their head office in Montreal, providing further
support for Osisko to continue to be a successful and formidable player in the
Canadian and more particularly Quebec gold mining landscape.
“We believe the
combination of Osisko mine management, with their extensive experience, and our
management’s experience on large open pit operations creates an opportunity for
operational synergies and enables continued operating success at Canadian
Malartic with the potential to be further enhanced. This combined expertise
will also create value as other projects are advanced through the project
pipeline.
“This transaction is
accretive to Yamana across a range of key metrics. In particular, we are very
impressed by the proven cash flow and free cash flow generation capacity of
Canadian Malartic for both Yamana and the new Osisko. We believe this
transaction provides the best opportunity for both Yamana and Osisko
shareholders to realize significant immediate and future value
generation.”
Osisko’s Board Unanimously
Recommends the Arrangement
Osisko’s board of directors
has unanimously determined that the Arrangement is in the best interests of
Osisko and its shareholders and will recommend that Osisko shareholders vote in
favour of the Arrangement. Shareholders, including the directors and senior
officers of Osisko, holding in aggregate over 5% of the issued and outstanding
Common shares of Osisko, have entered into voting agreements with Yamana,
pursuant to which they have agreed to vote their shares in favour of the
Arrangement.
Sean Roosen, President and
Chief Executive Officer of Osisko stated: “We are extremely pleased today
to announce this partnership with Yamana Gold. Since the middle of January our
shareholders have been subjected to a low-value hostile offer. Today’s
announcement brings significantly greater value to our shareholders. It also
provides shareholders with a certainty of their ability to continue
participating in the future upside of our very strong free cash flowing
Canadian Malartic mine; the ability to continue benefitting from further
exploration and development at the mine site, with the underground potential at
Canadian Malartic and Barnat, the Amphi deposit, the Western Porphyry deposit
and the new Odyssey discovery; and the ability to continue to participate in
our very strong growth portfolio: the Upper Beaver deposit, Hammond Reef, the
Canadian Kirkland deposit, the Bidgood deposit, the Upper Canada deposit,
Pandora, and Guerrero. Our partnership with Yamana will also provide 50% of the
future funding for new exploration and development of these projects, reducing
risk for our shareholders.
“We have worked
carefully and diligently over the past two months to bring this deal to
shareholders today. Osisko will continue to follow its ideals and principles,
with our primary objective being to maximize shareholder value as we work to
grow the free cash flow from our assets and return benefits to Osisko’s owners
through the planned implementation in 2014 of a significant dividend program,
all the while striving to add value at the drill bit with new
discoveries.”
Osisko to Hold Special
Meeting of Shareholders
The Arrangement will be
carried out by way of a statutory plan of arrangement pursuant to the Canada
Business Corporations Act and must be approved by the Superior Court of Quebec
and the affirmative vote of Osisko’s shareholders and optionholders voting
together at a special meeting to be held by Osisko not later than May 20th,
2014. At the special meeting, the Arrangement will require approval of Osisko
shareholders and optionholders voting together holding at least 66 2/3% of the
common shares, voting in person or by proxy.
The Gold Stream Agreement
and the CPPIB Credit Facility are subject to a number of conditions, including
due diligence, the closing of the Arrangement and the execution of definitive
documentation.
In addition to
securityholder approval, the closing of the Arrangement is subject to a number
of conditions, including the execution of definitive documentation in respect
of the Gold Stream and the CPPIB Credit Facility and the receipt of court and
all necessary regulatory or exchange approvals. The Arrangement is not subject
to due diligence, or Yamana shareholder approval, and is supported by committed
financing.
The Arrangement is expected
to close by May 30th, 2014, following receipt of all shareholder and court,
regulatory and exchange approvals.
Pursuant to the terms of
the Arrangement, Osisko is subject to customary non-solicitation covenants. In
the event a superior proposal is made to Osisko, Yamana has a 5 business day
right to match such proposal, and under certain circumstances in the event
Osisko’s board of directors changes its recommendation or terminates the
Arrangement, Osisko has agreed to pay termination fees totaling C$70 million.
In certain other circumstances where the transaction is not completed, Osisko
has agreed to reimburse Yamana’s expenses in the amount of C$10 million for its
costs.
Yamana has engaged
Canaccord Genuity Corp. as its financial advisor and Norton Rose Fulbright Canada
LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal advisors
in connection with the Arrangement. Yamana has also engaged National Bank
Financial to provide an opinion as to the fairness of the transaction from a
financial point of view to the Yamana shareholders.
Osisko has engaged BMO
Capital Markets and Maxit Capital LP as its financial advisors and Bennett
Jones LLP and Stikeman Elliott LLP as its legal advisors in connection with the
Arrangement.
Conference Call Information
Yamana and Osisko will host
a conference call on Wednesday, April 2, 2014 at 10:00 a.m. ET, where Osisko
and Yamana senior management will discuss the partnership details.
Toll Free (North America): 1-800-355-4959
Toronto Local and
International: 416-695-6616
Webcast: http://www.yamana.com/
Conference Call REPLAY:
Toll Free (North America): 1-800-408-3053
Passcode 1835855
Toronto Local and
International: 905-694-9451
Passcode 1835855
The conference call replay
will be available from 1:00 p.m. ET on April 2, 2014 until 11:59 p.m. ET on
April 16, 2014.
For further information on
the conference call or webcast, please contact the Investor Relations
Department at [email protected]
or visit www.yamana.com.
About Yamana
Yamana is a Canadian-based
gold producer with significant gold production, gold development stage
properties, exploration properties, and land positions throughout the Americas
including Brazil, Argentina, Chile and Mexico. Yamana plans to continue to
build on this base through existing operating mine expansions, throughput
increases, development of new mines, the advancement of its exploration
properties and by targeting other gold consolidation opportunities with a
primary focus in the Americas.
About Osisko
Osisko Mining Corporation
operates the Canadian Malartic Gold Mine in Malartic, Quebec and is pursuing
exploration on a number of properties, notably in Quebec, Ontario and Mexico.
About Caisse de depot et
placement du Quebec
La Caisse de depot et
placement du Quebec is a financial institution that manages funds primarily for
public and private pension and insurance plans. As of December 31, 2013, it
held $200 billion in net assets. As one of Canada’s leading institutional fund
managers, La Caisse invests in major financial markets, private equity,
infrastructure and real estate, globally. For more information: www.lacaisse.com.
About CPPIB
Canada Pension Plan
Investment Board (“CPPIB”) is a professional investment management
organization that invests the funds not needed by the Canada Pension Plan
(“CPP”) to pay current benefits on behalf of 18 million Canadian
contributors and beneficiaries. In order to build a diversified portfolio of
CPP assets, CPPIB invests in public equities, private equities, real estate,
infrastructure and fixed income instruments. Headquartered in Toronto, with
offices in London, Hong Kong, New York and Sao Paulo, CPPIB is governed and
managed independently of the Canada Pension Plan and at arm’s length from
governments. At December 31, 2013, the CPP Fund totalled C$201.5 billion. For
more information about CPPIB, please visit www.cppib.com.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS: This news release contains “forward-looking
statements” within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and applicable Canadian securities legislation.
Except for statements of historical fact relating to the Company, information
contained herein constitutes forward-looking statements, including any
information as to the Company’s strategy, plans or future financial or
operating performance. Forward-looking statements are characterized by words
such as “plan,” “expect”, “budget”,
“target”, “project”, “intend,”
“believe”, “anticipate”, “estimate” and other
similar words, or statements that certain events or conditions “may”
or “will” occur. Forward-looking statements are based on the
opinions, assumptions and estimates of management considered reasonable at the
date the statements are made, and are inherently subject to a variety of risks
and uncertainties and other known and unknown factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. These factors include the Company’s expectations in
connection with the closing of the Arrangement and the related transactions,
the expected production and exploration, development and expansion plans at the
Company’s projects discussed herein being met, the impact of proposed
optimizations at the Company’s projects, the impact of the proposed new mining
law in Brazil and the impact of general business and economic conditions,
global liquidity and credit availability on the timing of cash flows and the
values of assets and liabilities based on projected future conditions,
fluctuating metal prices (such as gold, copper, silver and zinc), currency
exchange rates (such as the Brazilian Real, the Chilean Peso, the Argentine
Peso, and the Mexican Peso versus the United States Dollar), the impact of
inflation, possible variations in ore grade or recovery rates, changes in the
Company’s hedging program, changes in accounting policies, changes in mineral
resources and mineral reserves, risk related to non-core mine dispositions,
risks related to acquisitions, changes in project parameters as plans continue
to be refined, changes in project development, construction, production and
commissioning time frames, risk related to joint venture operations, the possibility
of project cost overruns or unanticipated costs and expenses, higher prices for
fuel, steel, power, labour and other consumables contributing to higher costs
and general risks of the mining industry, failure of plant, equipment or
processes to operate as anticipated, unexpected changes in mine life, final
pricing for concentrate sales, unanticipated results of future studies,
seasonality and unanticipated weather changes, costs and timing of the
development of new deposits, success of exploration activities, permitting time
lines, government regulation and the risk of government expropriation or
nationalization of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims, limitations on insurance
coverage and timing and possible outcome of pending litigation and labour
disputes, as well as those risk factors discussed or referred to in the
Company’s current and annual Management’s Discussion and Analysis and the
Annual Information Form filed with the securities regulatory authorities in all
provinces of Canada and available at www.sedar.com,
and the Company’s Annual Report on Form 40-F filed with the United States
Securities and Exchange Commission. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
statements. The Company undertakes no obligation to update forward-looking
statements if circumstances or management’s estimates, assumptions or opinions
should change, except as required by applicable law. The reader is cautioned
not to place undue reliance on forward-looking statements. The forward-looking
information contained herein is presented for the purpose of assisting
investors in understanding the Company’s expected financial and operational
performance and results as at and for the periods ended on the dates presented
in the Company’s plans and objectives and may not be appropriate for other
purposes.
FOR
FURTHER INFORMATION PLEASE CONTACT: Lisa Doddridge Vice President, Corporate
Communications and Investor Relations 416-815-0220 1-888-809-0925 [email protected]
Source: Yamana Gold Inc.
