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China’s Shandong Gold to buy TMAC, securing Hope Bay future

TMAC Resources CEO Jason Neal

TMAC Resources CEO Jason Neal

8th May 2020

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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China’s Shandong Gold Mining (SD Gold) has agreed to buy Canada’s TMAC Resources, securing continued investment in the remote Hope Bay mine, in Nunavut.

SD Gold will acquire all the outstanding shares of TMAC at C$1.75 a share in cash, which the Canadian company said on Friday was a 52% premium to its 20-day volume-weighted average share price.

The total equity value of the transaction is $149-million.

“SD Gold, as one of the world’s largest gold producers, has the financial strength, technical capability and long-term vision to maximise the value of the Hope Bay camp,” said TMAC CEO Jason Neal in a statement.

TMAC in January initiated a strategic review and said, at the time, that it hoped to advance a transaction in the early part of the year to allow for planning and procurement for the 2020 sealift, which the company might not be able to otherwise make itself.

Separately to the acquisition announcement on Friday, TMAC also announced an equity investment by SD Gold to support the cost of the company’s sealift this year. Shandong has agreed to purchase 12-million shares of the company at C$1.75 a share for an investment of $15-million in a nonbrokered private placement.

Hope Bay is a high-grade gold camp, but requires substantial investment to optimise production, extend mine life and maximise the value of the camp, SD Gold chairperson Yumin Chen said.

The mine produced 138 510 oz last year.

Resource Capital Funds, Newmont and directors and officers of TMAC collectively holding about 58.6% of the current outstanding TMAC common shares have entered into voting support agreements to support the transaction.

TMAC’s share price rose 1.19% to $C1.70 a share on the TSX on Friday morning.

Edited by Creamer Media Reporter

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