Thompson Creek Metals will be acquired for $1.1 billion by Centerra Gold

July 7, 2016

Centerra Gold will acquire Thompson Creek Metals for about $1.1 billion in cash and stock.

The Toronto-based Centerra will assume nearly $900 million in debt that Thompson Creek accumulated while building its Mount Milligan copper and gold mine in central British Columbia. Thompson Creek also has molybdenum mines in British Columbia and Idaho.

In addition to the debt built through the construction of the Mount Milligan mine, Thompson Creek has been hurt by sagging gold, copper and molybdenum prices. Its share price has dropped about 95 percent over the last five years, Bloomberg reported.

Centerra is offering a premium of 32 percent on Thompson Creek's share closing price as of July 4. As part of the deal, Centerra will redeem Thompson Creek notes for $889 million.

It said it has a deal with Denver-based Royal Gold Inc. (NYSE: RGLD) to restructure a “streaming” deal for future metals production with Thompson Creek.

“To broaden interest and maximize value, we demonstrated some flexibility in amending our gold stream to generate interest from gold companies,” Royal Gold CEO Tony Jensen said.

The merger -- known as a “plan of arrangement” under Canadian law -- is still subject to approval by Thompson Creek's shareholders and is expected to close this fall. It will leave Centerra investors owning about 92 percent of the combined company.

Thompson Creek has reported adjusted net losses each quarter since late 2014. It posted a first-quarter 2016 adjusted net loss of $19.3 million, or 9 cents a share, versus a loss of $14.2 million, or 7 cents a share, in the same quarter a year earlier.

In January it was delisted by the New York Stock Exchange for not meeting its minimum share price requirement.

“Following a formal strategic review process and the evaluation of numerous strategic alternatives to address Thompson Creek’s upcoming debt maturities, I am pleased to announce the business combination of Thompson Creek with Centerra," said Jacques Perron, president and CEO of Thompson Creek, in a statement.

"We believe the combination with Centerra represents a unique opportunity for our shareholders to gain exposure to additional high-quality assets with a strong development pipeline," Perron said. "While we believe this transaction delivers our shareholders an attractive premium today, it also delivers our shareholders with significant value generation opportunities going forward.”

Reuters reported that Centerra, whose operations are focused in the central Asian nation of Kyrgyzstan, wants to "reduce its exposure" to the region amid disputes with its leaders.

"Half of the value of all our assets will now be domiciled in Canada. I really think we have absolutely transformed the company in a very favorable way," Centerra CEO Scott Perry told the news service.



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