Shandong Gold Mining Co. (Shandong Gold), one of China’s biggest gold producers and a state-owned entity, announced on Friday, May 8, 2020, that it had entered into an agreement to acquire Toronto-listed TMAC Resources (TMAC) for around C$230 million ($164.89 million).
Under the deal, Shandong Gold would pay roughly $149 million in cash to acquire all of TMAC’s shares at a price of C$1.75 per share, TMAC said in a separate statement, and would also make a purchase of another 12 million shares at the same price in a private placement for around $15 million.
Shandong Gold’s Acquiring TMAC
The recent deal marked the latest acquisition of a Canadian resources company by a Chinese gold firm after Shandong Gold’s rival, Zijin Mining (Zijin) was reported to have completed its purchase of Continental Gold for C$1.3 billion in March.
As Refinitiv Eikon data showed, “The deal offer price represents a premium of 52% to TMAC’s 20-day volume-weighted average price as of May 6. TMAC’s share price is down by more than 50% year-to-date, giving it a market capitalization of C$191.35 million.” A statement released by TMAC said that the key shareholders in TMAC, Resource Capital Funds and gold miner Newmont Corp. (Newmont), which together hold a combined 58.6% in the company, “have entered into voting support agreements to support the transaction.”
TMAC president and CEO, Jason Neal said in the statement, “The transaction is the culmination of the strategic review process we announced earlier this year,” adding that Shandong Gold “has the financial strength, technical capability, and long-term vision to maximize the value of the Hope Bay camp.”
The Hope Bay Gold Project in Canada
According to TMAC’s website, the company operates the Hope Bay gold project in Canada’s far-north territory of Nunavut, which started commercial production in 2017, had proven the probable reserve of mineral totaling around 3.54 million ounces of gold at the end of 2019.
Chen Yuming, chairman of Shandong Gold Group that owned the Chinese mining company, said in the statement, “Hope Bay is a highly prospective high-grade gold camp which requires substantial investment to optimize production and extend mine life and maximize the value of the camp to the benefit of all stakeholders.” It was also reported that Shandong Gold, based in eastern China’s Shandong province, produced 40.12 tonnes, or 1.29 million ounces of mined gold in 2019.
However, TMAC asserted that to close the deal transaction, the company needs the approval of at least two-thirds of votes cast at a special meeting of its shareholders which is likely to be held next month. It also added that regulatory approvals would also be needed in Canada and China to finalize the deal.
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