SSR to buy Alacer in $1.7 billion deal as gold prices surge

May 11, 2020

SSR Mining announced that it would buy Alacer Gold in an all-stock deal valued at $1.72 billion.

Reuters reported that the deal comes as gold prices have surged 12 percent due to demand for the metal in an uncertain economy brought on by the COVID-19 pandemic.

The move also comes on the back of a record year of mergers and acquisitions in the sector, including some of the biggest deals in a decade in 2019, including deals made by Newmont Corp. and Barrick Gold Corp.

The new company, which will be headquartered in Denver, CO, will have operational mines in four countries and will be led by Alacer chief executive officer Rodney Antal.

“The combination ... vaults us into the upper echelon in the peer group in terms of free cash flow generation,” Antal said in a conference call with analysts.

Alacer has focused over the past several years on free cash flow generation, and this merger allows the miner to continue this strategy while diversifying its single operating asset exposure, Antal said.

SSR Mining has operations in Nevada, United States, Saskatchewan, Canada and Jujuy, Argentina, while Alacer is a low-cost gold producer focused on its cornerstone Çöpler Gold Mine in Turkey.

The “zero-premium” merger is expected to generate annual free cash flow of about $450 million and produce about 780,000 gold equivalent ounces over the next three years based on analysts’ estimates, according to the companies.

As part of the deal, Alacer shareholders will receive 0.3246 SSR Mining shares for each share held, implying a value of C$8.19 per Alacer share.
Shareholders of SSR Mining and Alacer will own about 57 percent and 43 percent of the new company, respectively, with the new board consisting of five directors from each of the miners’ existing boards.

The deal includes a $70 million termination fee payable under certain circumstances, the companies said.

“The zero-premium merger of SSR Miningand Alacer creates an exciting leading intermediate gold producer with exceptional financial strength, robust margins, strong cash flow generation, and long mine lives that will be run by highly experienced management with a track record of value creation,” Paul Benson, president and chief executive officer of SSR Mining said. “Consistent with our long-standing strategy of growth through a combination of organic development and M&A, the new SSR Mining will be well positioned to build on the strong foundation of both companies to continue growing and delivering value for all shareholders.”

“The combination of Alacer and SSR Mining will create a diversified portfolio of high quality, long-life mines across four mining-friendly jurisdictions,” Antal, president and chief executive officer of Alacer said. “Our focus at Alacer over the past several years has been on generating peer-leading free cash flow – this merger allows us to continue this strategy while diversifying our single operating asset exposure. In addition, the increased financial strength of the combined business will allow us to leverage the proven project execution capabilities of the combined management.”

Photo: A haul truck SSR’s Marigold Mine in Nevada.

 

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