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MELBOURNE and TORONTO, July 30,
2015 /CNW/ - OceanaGold Corporation (TSX/ASX/NZX:
OGC) ("OceanaGold") and Romarco Minerals Inc. (TSX:
R) ("Romarco") are pleased to announce that the
companies have entered into a definitive agreement (the
"Agreement") pursuant to which OceanaGold has agreed to acquire all
of the issued and outstanding common shares of Romarco in an
all-share transaction to be completed by way of a statutory Plan of
Arrangement (the "Arrangement") under the Business Corporations Act
(British Columbia). Romarco's
principal asset is the Haile Gold Mine located in South Carolina, United States, which is a high-grade open pit
project that is currently in construction and represents one of the
premier gold development assets globally.
The combination of OceanaGold and Romarco is expected to create
the lowest cost gold producer in the market; propelled by a long
reserve life, a portfolio of high quality assets that generate
significant free cash flow and a solid pipeline of organic growth
opportunities.
Under the terms of the Agreement, Romarco shareholders will
receive 0.241 (the "Exchange Ratio") of an OceanaGold common
share (an "OceanaGold Share") for each Romarco common share
(a "Romarco Share"), representing the equivalent of C$0.68 per Romarco
Share and a premium of 72.7% based on the July 29, 2015 closing prices of OceanaGold and
Romarco on the TSX and 71.8% based on the 30-day volume-weighted
average price ("VWAP") of the OceanaGold Shares and the Romarco
Shares on the Toronto Stock Exchange as of July 29, 2015. The Exchange Ratio implies a total
equity value of approximately C$856
million on a fully-diluted in the money basis. In addition,
each option to purchase a Romarco
Share will be exchanged for a replacement option to purchase
OceanaGold shares adjusted based upon the Exchange Ratio.
Upon completion of the Arrangement, existing OceanaGold and
Romarco shareholders will own approximately 51% and 49% of the
combined company, respectively.
Highlights of the Combined Company
- Sector leading low cost gold producer – Estimated to
produce approximately 540,000 ounces of gold annually by 2017 at an
All-In Sustaining Cost ("AISC") of less than US$600/oz.
- Diversified production – Combined entity to operate from
four operating platforms in three countries with approximately 75%
of gold production expected to come from New Zealand and the
United States in 2017.
- Financial flexibility – Combined entity will have
greater financial flexibility through the combined cash position,
OceanaGold's strong free cash flow generation from its existing
operations and access to low-cost credit facilities. As a result,
the cost of capital for the Haile development is expected to be
meaningfully reduced, while maintaining a leverage profile that
allows OceanaGold to continue to invest in organic growth
opportunities and generate returns to shareholders.
- Technical & operational synergies – Combines
OceanaGold's more than 25 years of successful development and
operating experience in New
Zealand and most recently in the
Philippines where the OceanaGold team self-executed the
construction and commissioning the Didipio gold-copper mine with
Romarco's operating team who have successfully advanced, permitted
and initiated the construction start-up of the Haile Gold
Mine.
Benefits to OceanaGold Shareholders
- Haile represents a high quality development asset and is one of
the best gold development assets currently owned by a junior
- Low cost production - Haile's year 1 (2017) estimated AISC of
US$414/oz
- Positive geographic diversification, as the United States represents a top-tier mining
jurisdiction
- Enhanced growth profile as the combined company is estimated to
produce approximately 540,000 gold ounces in 2017
- Meaningfully accretive on a net asset value basis to OceanaGold
shareholders
Benefits to Romarco Shareholders
- Immediate premium to Romarco shareholders of 72.7% based on the
closing price of OceanaGold and Romarco on July 29, 2015 and 71.8% based on the 30-day
volume-weighted average closing prices
- Exposure to OceanaGold's asset portfolio of operating mines
diversifies Romarco's single-asset and development-stage risks
- Enhanced financial position with cash flow from OceanaGold's
producing mines and access to low cost credit facilities
- Construction of Haile will benefit from the combined OceanaGold
and Romarco mine development and operating expertise
Mick Wilkes, Managing Director
& CEO of OceanaGold, stated: "We are very pleased to bring this
transaction forward to the benefit of both sets of our valued
shareholders. OceanaGold has remained disciplined in its growth
initiatives while building and preserving a robust balance sheet
and positioning the company for the value-creating opportunities
that complement our existing portfolio of high-quality assets." He
added, "We believe the addition of the low-cost, long-life Haile
Gold Mine provides such an opportunity while underpinning an
industry leading business. The combination of the sector low cost
profile with significant free cash flow generation, diversified
production and a pipeline of organic growth opportunities forms the
lowest cost gold producer globally."
"We are aligned with Romarco in our philosophy towards social
responsibility and therefore, see this important attribute as
another good fit for our company," Mr. Wilkes added.
Diane Garrett, President &
CEO of Romarco stated: "This transaction with OceanaGold represents
a logical business combination that will create a premier
intermediate gold producer with a diversified asset base that
includes four low-cost operating platforms, a significant organic
growth profile, all of which is underpinned by a solid balance
sheet and led by a combined experienced and proven operating team.
We are confident that our shareholders will benefit from the
value-creating opportunities that will be realized through an
expanded and diversified asset base and enhanced cash flow
generating capabilities. Importantly, we believe OceanaGold has the
same philosophy to social responsibility as our own."
Transaction Summary
The implementation of the Arrangement will be subject to the
approval of at least 66 ⅔% of the votes cast by holders of Romarco
Shares at a special meeting of Romarco shareholders expected to
take place near the end of September or early October, 2015. The
issuance of shares by OceanaGold under the Arrangement is also
subject to the approval of a majority of the votes cast by the
holders of OceanaGold Shares at a special meeting of OceanaGold
shareholders, which is also expected to take place at the same
time. In addition to the shareholder approvals, the Arrangement is
also subject to the receipt of certain regulatory, court and stock
exchange approvals and other closing conditions customary in
transactions of this nature.
The Agreement has been unanimously approved by the boards of
directors of each of Romarco and OceanaGold. The financial advisor
to OceanaGold, National Bank Financial Inc., has provided a
fairness opinion to the board of directors of OceanaGold which
concludes that, subject to the assumptions, limitations and
qualifications set out in such fairness opinion, the Exchange Ratio
provided for in the Agreement is fair, from a financial point of
view to OceanaGold. RBC Capital Markets has provided a fairness
opinion to the special committee of independent directors of
Romarco (the "Special Committee") and to the board of
directors of Romarco that, subject to the assumptions, limitations
and qualifications set out in such fairness opinion, the
consideration under the Arrangement is fair, from a financial point
of view, to the Romarco shareholders.
The directors and executive officers of each of OceanaGold and
Romarco have entered into customary voting support agreements in
favour of the transaction.
The Agreement includes a non-solicitation covenant of Romarco
and gives Romarco the right to accept a superior proposal in
certain circumstances and terminate the agreement. OceanaGold has a
five business day right to match any superior proposal. The
Agreement also provides for the payment by Romarco of a
C$34 million termination fee if the
Arrangement is terminated in certain circumstances. The termination
fee is payable by OceanaGold in certain circumstances.
Upon completion of the Arrangement, Romarco is entitled to
appoint one member to the board of directors of OceanaGold.
Diane Garrett, current President and
CEO of Romarco is also expected to continue to play an important
role going forward with local and regional government and
stakeholder relations in the United
States. In addition, OceanaGold anticipates retaining all of
the local management team and employees at the Haile Gold Mine.
Further information regarding the Arrangement will be contained
in a joint information circular that OceanaGold and Romarco will
prepare, file and mail in due course to their respective
shareholders in connection with the special meetings of each of the
OceanaGold and Romarco shareholders to be held to consider the
Arrangement. All shareholders are urged to read the joint
information circular once available as it will contain additional
important information concerning the Arrangement. The Agreement
will be filed on the SEDAR profiles of OceanaGold and Romarco on
the SEDAR website at www.sedar.com.
Advisors and Counsel
National Bank Financial Inc. is acting as the exclusive
financial advisor to OceanaGold. Stikeman Elliott LLP is acting as
legal counsel to OceanaGold. RBC Capital Markets is acting as
financial advisor to Romarco. Blake, Cassels & Graydon LLP is
acting as legal counsel to Romarco, Bennett Jones LLP is acting as
legal counsel to the Romarco Special Committee and Paul, Weiss,
Rifkind, Wharton & Garrison LLP is acting as U.S. counsel to
Romarco.
Conference Call and Webcast Information
OceanaGold will host a conference call on Thursday July 30, 2015 at 8:30am (Toronto,
Canada time) / Thursday July
30, at 10:30pm (Melbourne, Australia time) for members of the
investment community to discuss the business transaction.
A copy of the transaction investor presentation will be made
available on the OceanaGold website prior to the conference
call.
Webcast Participants
To register, please copy and
paste the link below into your browser:
http://event.on24.com/r.htm?e=1019738&s=1&k=258DFA596AAB8E46660A0CF02562DFDD
Teleconference Participants (required for those who wish to
ask questions)
Local (toll free) dial in numbers are:
Australia: 1 800 076 068
New Zealand: 0 800 453 421
Canada & North America: 1 888 390 0605
All other countries (toll): + 1 416 764 8609
Playback of Webcast
If you are unable to attend the
call, a recording will be available for viewing on OceanaGold's
website from 12:30pm on Thursday July 30 2015 (Toronto, Canada time) / 2:30am on Friday 31 July
2015 (Melbourne, Australian
time).
About OceanaGold
OceanaGold Corporation is a significant multinational gold
producer with mines located on the South Island of New Zealand and in the Philippines. OceanaGold's assets encompass
New Zealand's largest gold mining
operation at the Macraes Goldfield in Otago which is made up of the
Frasers and Coronation open pits and the Frasers underground mine.
On the west coast of the South Island, OceanaGold operates the
Reefton Open Pit mine. At the end of April
2015, OceanaGold announced the acquisition of the high
quality Waihi Gold Mine located on the North Island of New Zealand where the transaction is expected
to close in the third quarter of 2015. In the Philippines, OceanaGold owns and operates
its flagship operation, the Didipio Gold-Copper Mine located on the
island of Luzon. OceanaGold has a pipeline of organic growth and
exploration opportunities in the Australasia and Americas
regions.
OceanaGold has operated sustainably over the past 25 years with
a proven track record for environmental management and community
and social engagement. OceanaGold has a strong social license to
operate and works collaboratively with its valued stakeholders to
identify and invest in social programs that are designed to build
capacity and not dependency.
In 2015, OceanaGold expects to produce 295,000 to 335,000 ounces
of gold from the combined New
Zealand (excluding Waihi) and Didipio operations and 21,000
to 23,000 tonnes of copper from the Didipio operation.
OceanaGold is listed on the Toronto, Australian and New Zealand stock exchanges under the symbol
OGC.
About Romarco
Romarco Minerals Inc. is a gold development company focused on
production primarily in the US. The Company has completed a
positive Feasibility Study, received all major permits, secured
financing and has commenced construction of its flagship project,
the Haile Gold Mine in South Carolina. The Company's current
construction schedule contemplates first production during the
fourth quarter of 2016.
Romarco is listed on the Toronto stock exchange under the symbol R.
Cautionary Statement for Public Release
Certain information contained in this public release may be
deemed "forward-looking" within the meaning of applicable
securities laws. Forward-looking statements and information relate
to future events and future performance and reflect OceanaGold's
and Romarco's expectations regarding the generation of free cash
flow, execution of business strategy, future development and
construction, future growth, future production, estimated costs,
results of operations, business prospects and opportunities of
OceanaGold and Romarco. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or
"does not anticipate", "plans", "estimates" or "intends", or
stating that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved) are not
statements of historical fact and may be forward-looking
statements.
Specific forward-looking statements in this public release
include 2017 production estimates of gold of 540,000 ounces, a 2017
AISC of under US $600/oz of gold, the
completion of construction of the Haile Gold Mine, the completion
of the Arrangement, the estimated compound growth rate at the Haile
Gold Mine of 20% per year, and the estimated combined market
capitalization of OceanaGold and Romarco.
Forward-looking statements are subject to a variety of risks and
uncertainties which could cause actual events or results to differ
materially from those expressed in the forward-looking statements
and information. They include, among others, the accuracy of
mineral reserve and resource estimates and related assumptions,
inherent operating risks, the failure to obtain shareholder,
regulatory or court approvals in connection with the Arrangement,
adverse changes in the construction timetable or progress at the
Haile Gold Mine, and those risk factors identified in OceanaGold's
and Romarco's most recent Annual Information Form prepared and
filed with securities regulators which is available on SEDAR at
www.sedar.com under the each OceanaGold's name.
There are no assurances OceanaGold and Romarco can fulfil
forward-looking statements and information. Such forward-looking
statements and information are only predictions based on current
information available to the respective management teams as of the
date that such predictions are made; actual events or results may
differ materially as a result of risks facing OceanaGold and
Romarco, some of which are beyond OceanaGold's or Romarco's
control. Although the OceanaGold and Romarco believe that any
forward-looking statements and information contained in this press
release are based on reasonable assumptions, readers cannot be
assured that actual outcomes or results will be consistent with
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements and information. OceanaGold
and Romarco expressly disclaim any intention or obligation to
update or revise any forward-looking statements and information,
whether as a result of new information, events or otherwise, except
as required by applicable securities laws. The information
contained in this release is not investment or financial product
advice.
SOURCE OceanaGold Corporation