Canadian Gold Explorer Receives CA$1.8B Buyout Offer From Senior Gold Producer
Shares of Great Bear Resources Ltd. traded 24% higher after the company reported it entered into a definitive agreement to be acquired by Kinross Gold for CA$1.8 billion. Existing Great Bear shareholders will be given the option of receiving CA$29.00 per share in cash, shares in Kinross or a pro-rata combination of both, plus a contingent value right.
Vancouver, B.C.-based explorer Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX), which is focused primarily on gold exploration at its wholly owned flagship Dixie property near Red Lake, Ont., yesterday announced that “it has entered into a binding agreement with Kinross Gold Corp. (K:TSX; KGC:NYSE) under which Kinross has agreed to acquire all of the outstanding common shares of Great Bear.”
The company advised that under the terms of the agreement, current Great Bear stockholders will in aggregate receive upfront consideration totaling approximately CA$1.8 billion. The firm stated that on a fully diluted basis this equates to CA$29.00 per share.
The report indicated that existing Great Bear shareholders will have the option to receive the full amount of CA$29.00 per share in cash or 3.8564 Kinross Gold shares for each Great Bear common share owned, or a combination thereof. Great Bear mentioned that the transaction agreement stipulates that the total aggregate upfront cash consideration will not exceed 75% of the upfront consideration, or CA$1.4 billion.
The firm explained that the CA$29.00 per share purchase price is 31% above the prior day’s closing share price on December 7, 2021 and is 40% above the 20-day volume weighted average price (VWAP) on the TSX Venture Exchange.
In addition, for each common share owned, “Great Bear shareholders will also receive contingent consideration in the form of contingent value rights (CVRs) providing for further potential consideration equal to 0.1330 of a Kinross share.” It is estimated this will add another CA$58.2 million in aggregate consideration, or about CA$1.00 per Great Bear common share on a partially diluted basis. Great Bear advised that payment of the addition contingent consideration is predicated upon Kinross Gold making a public announcement verifying that the Dixie project resource has been verified as having a Measured & Indicated resource of 8.5 Moz Au or higher.
Great Bear Resources’ President and CEO Chris Taylor commented, “The acquisition of Great Bear by Kinross is an outstanding opportunity for our shareholders, partners at Wabauskang and Lac Seul First Nations, and the local communities of Northern Ontario.”
CEO Taylor continued, “The Transaction delivers a compelling premium for Great Bear’s shareholders, reflecting the top tier nature of the Dixie project, while offering beneficial exposure as Kinross shareholders to a high-quality operating portfolio and growing production base…Kinross has the financial strength, technical expertise, and commitment to the highest ESG practices to advance the Dixie project at the pace and scale that this industry-leading discovery deserves.”
Kinross Gold Corp’s President and CEO J. Paul Rollinson stated, “The Dixie project represents an exciting opportunity to develop a potentially top tier deposit into a large, long-life mine complex. In addition to the prospect of developing a quality, high-grade open pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation.”
“Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders…The Dixie project has multiple high-potential mineralized zones which remain open along strike and at depth, and we are confident that the asset has strong untapped upside with numerous avenues for growth,” Rollinson added.
For the transaction to be complete, approval by 66 2/3% of the votes cast by the Great Bear shareholders is required. After that, the transaction will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The company must also properly account for minority shareholder approval as regulations require. Great Bear’s Board of Directors has already reviewed and unanimously approved the arrangement and determined that the transaction is favorable to, and in the best interest of the company and its investors. The company reported that it expects the transaction to close in Q1/22, subject to ordinary closing conditions and various regulatory approvals.
Great Bear Resources is a gold exploration company headquartered in Vancouver, B.C. The company is focused primarily on advancing its wholly owned “flagship” Dixie project near Red Lake, Ont. The firm has conducted a significant amount of exploration drilling at the property in order to define and expand the resource at this high-grade disseminated gold discovery which was made in 2019. The company’s efforts are proceeding with infill drilling and in continues to evaluate new regional targets at the property.
Kinross is a senior gold mining company headquartered in Toronto. The firm owns interests in mines and projects in the U.S, Brazil, Canada, Chile, Ghana, Mauritania and Russia. The firm is a major gold developer producing around 2.1 Moz Au eq annually and has a market cap of about $7.5 billion (CA$9.34 billion). The company shares trade under the ticker symbols “K” and “KGC” on the Toronto and New York Stock Exchanges, respectively.
Great Bear Resources Ltd. started off the day with a market cap of around $1.05 billion (CA$1.33 billion) with approximately 57.84 million shares outstanding. GTBAF OTC shares opened 23% higher today at $22.289 (+$4.2292, +23.42%) over yesterday’s $18.0598 closing price and reached a new 52-week high price this morning of $22.5432. The stock has traded today between $22.2356 and $22.5432 per share and is currently trading at $22.3938 (+$4.3640, +24.20%).
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