After U.S. markets closed for trading yesterday, Vancouver-based
intermediate gold producer Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced that "it entered into a binding agreement with Newcrest Mining Ltd. (NCM:ASX; NCM:TSX; NCM:PNGX) under which Newcrest has agreed to acquire all of the outstanding shares of Pretium that it does not already own."
Under the terms of the agreement, "Pretium shareholders will have the option to elect to receive CA$18.50 per Pretium share in cash or 0.8084 Newcrest shares per Pretium share." Pretium shareholders who do not make an election to receive 100% in cash or Newcrest shares as offered will receive a 50-50 default consideration which will include CA$9.25 in cash per Pretium share held and 0.4042 Newcrest shares per Pretium share.
The report indicated that "the consideration of CA$18.50 is based on the Canadian dollar equivalent of the 5-day volume weighted average price (VWAP) of Newcrest Mining's "NCM" shares on the Australian Securities Exchange (ASX) ending on November 8, 2021."
"With this acquisition, Brucejack will join Newcrest's portfolio of tier one assets"
- Jacques Perron, CEO
The company advised that the CA$18.50 per share offering price represents a premium of 23% over the CA$15.10 closing price of Pretium's shares on Monday, November 8, 2001. The referenced shares trade under the symbol "PVG" on the Toronto Stock Exchange. The firm noted that bid price is also 29% higher than the share's 20-day VWAP.
Pretium Resources stated that the value of the transaction value is approximately CA$3.5 billion on a fully diluted basis. The report indicated that Newcrest Mining presently owns about 4.8% of Pretium's outstanding shares and if the deal goes through, Pretium stockholders would own around 8% of Newcrest Mining post acquisition.
Pretium Resources' President and CEO Jacques Perron commented, "The acquisition of Pretium by Newcrest is an outstanding opportunity for the Company and its shareholders, employees, First Nations partners and the local communities in northwest British Columbia…The Transaction delivers an immediate and compelling premium for Pretium shareholders that reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, while also offering an opportunity to benefit from potential upside as Newcrest shareholders."
CEO Perron continued, "With this acquisition, Brucejack will join Newcrest's portfolio of tier one assets, mitigating the inherent risks associated with ownership of a single-asset mining company. Moreover, Newcrest has the financial means and the intention of maximizing the long-term potential of the Brucejack Mine and the district scale opportunities in the surrounding Brucejack property."
The company stated that the transaction is expected to be completed in Q1/22, subject to a court-approved plan of arrangement under British Columbia's Business Corporations Act and approval by 66 2/3% of the firm's existing shareholders. In addition, the transaction remains subject to customary closing conditions and various regulatory approvals.
The purchase agreement does not allow Pretium Resources to "shop" the offer. However, if an unsolicited offer is received from another party; Newcrest retains the rights to match any superior proposal the company may receive.
The agreement also includes a termination fee of CA$125 million, payable by Pretium under certain circumstances, such as if Pretium were to receive and elect to purse a more favorable offer.
The firm stated that its Board of Directors established a special committee comprised entirely of its independent directors to evaluate the merits of the transaction. The company advised that this "Special Committee" unanimously recommended to the Board that that the transaction should proceed. The Board met with its management and legal teams who all agreed that going forward with the transaction is in the best interest of the company, and thus Pretium's Board recommends that the company stockholders vote in favor of the agreement.
Pretium Resources advised that due to the announcement today regarding the purchase of the company by Newcrest Mining Ltd., it has chosen to cancel its Q3/21 investor conference call that had been scheduled for November 12, 2021. The firm noted that it intends to post its third quarter disclosures as scheduled on November 11, 2021.
Pretium Resources is an intermediate gold producer based in Vancouver, B.C., Canada that is conducting operations at its 100% owned high-grade gold underground Brucejack Mine located in northwestern British Columbia.
Newcrest Mining is based in Melbourne, Australia, and operate mines in Australia, Canada, and Papua New Guinea. The company is the largest gold producer listed on the Australian Securities Exchange and is one of the world's largest gold mining companies.
Pretium Resources began the day with a market cap of around US$2.3 billion with approximately 187.9 million shares outstanding and a short interest of about 3.9%. PVG shares opened more than 16% higher today at $14.19 (+$2.04, +16.79%) over yesterday's $12.15 closing price and reached a new 52-week high price this morning of $14.36. The stock has traded today between $14.065 and $14.36 per share and is currently trading at $14.26 (+$2.11 +17.37%).
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