Centerra, Aurico Metals reveal C$310m friendly tie-up

VANCOUVER (miningweekly.com) – Canadian gold miners Centerra Gold and AuRico Metals have struck an accord to combine their businesses through a friendly C$310-million deal that will see Centerra usurp all of the outstanding equities of AuRico.

Centerra is offering C$1.80 a share, representing a 38% premium on AuRico's TSX-listed shares' closing price on Monday and a 37% premium on the 20-day volume-weighted average price.

Following the announcement, AuRico's shares jumped 37% to a new 52-week high of C$1.79 apiece, while that of Centerra fell more than 4% to C$7.72 apiece in early trading.

The deal will give Centerra control over AuRico's Kemess property, in British Columbia, which hosts the feasibility-stage Kemess Underground and preliminary economic assessment-level Kemess East projects.

AuRico Metals also owns a free-cash-flow-generating royalty portfolio that includes a 1.5% net smelter return (NSR) royalty on the Young-Davidson gold mine, in Ontario, and a 2% NSR royalty on the Fosterville mine, in Australia.

Together with Centerra's flagship low-cost, long-lived Kumtor mine, in the Kyrgyz Republic and the Mount Milligan copper/gold mine, also in British Columbia, Centerra is expected to consolidate a portfolio of low-cost gold mines, with a geographically diversified footprint and a strong development pipeline. 

These development projects comprise the fully financed Öksüt project, in Turkey, the Greenstone gold property, in Ontario, and the Gatsuurt project, in Mongolia. Kemess will also complement existing Centerra operations at Mount Milligan and has the potential to unlock operating and tax synergies with its existing assets in British Columbia, the companies advised in a joint statement.

Centerra has in recent years been diversifying its asset base away from high-risk Kyrgyzstan, on the back of a years-long dispute regarding a laundry list of issues the government was unhappy with at Kumtor. The parties had reached a settlement agreement early in September.

Centerra currently holds more than $350-million in cash to fund the acquisition and has secured a new $125-million acquisition facility.

The deal is expected to close in January 2018.