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Monarch Gold announces agreement with Yamana Gold

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Global Mining Review,

Monarch Gold Corp. has announced that it has entered into a definitive agreement with Yamana Gold Inc., pursuant to which Yamana will acquire the Wasamac property and the Camflo property and mill through the acquisition of all of the outstanding shares of Monarch (not already owned by Yamana) for total consideration of approximately CAN$200 million or C$0.63 per Monarch share on a fully diluted basis, under a plan of arrangement.

The total consideration to be paid by Yamana to the shareholders of Monarch (Monarch shareholders) is approximately CAN$60.8 million in cash and CAN$91.2 million in Yamana shares. Under the plan of arrangement, Monarch will first complete a spin-out to its shareholders, through a newly-formed company (SpinCo) that will hold its other mineral properties and certain other assets and liabilities of Monarch, by issuing as consideration common shares of SpinCo (the SpinCo shares) having an implied value of approximately CAN$47.5 million (the spin-out).

The transaction represents a 43% premium to the closing price of Monarch shares on the Toronto Stock Exchange (TSX) on 30 October 2020 and a premium of 43% to the volume weighted average price of the Monarch shares on the TSX for the 20-day period ending on 30 October 2020.

Transaction terms

Upon implementation of the plan of arrangement, the following assets and liabilities will be transferred by Monarch to SpinCo in consideration for the issuance of the SpinCo Shares to Monarch Shareholders:

  • The Beaufor mine, the McKenzie Break property, the Croinor Gold property, the Swanson property and the Beacon Gold mill and property (the SpinCo properties).
  • CAN$14 million cash.
  • All assets and liabilities related to the SpinCo Properties.

Following the Spin-Out, each outstanding common share of Monarch will be exchanged for:

  • CAN$0.192 in cash from Yamana.
  • 0.0376 of a Yamana share (a value of CAN$0.288 based on the volume weighted average price of the Yamana shares on the TSX for the 20 trading days ending on 30 October 2020).
  • 0.20 of a SpinCo share (with each full share having a value of CAN$0.75 per share).

Following the completion of the transaction, Monarch Shareholders will own approximately 1.3% of Yamana and 100% of SpinCo, and Yamana will own 100% of Monarch.

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