AngloGold Ashanti acquires Corvus

AngloGold Ashanti Limited (“AngloGold Ashanti”) and Corvus Gold Inc. (“Corvus”) have entered into a definitive arrangement agreement pursuant to which AngloGold Ashanti has agreed to acquire the remaining 80.5% of common shares of Corvus not already owned by AngloGold Ashanti (the “Transaction”) at a price of C$4.10 per common share (the “Offer Price”) in cash. 

The total Transaction cost to AngloGold Ashanti is estimated to be approximately US$370 million.

The Transaction implies a total equity value for all Corvus common shares and outstanding options to acquire common shares of approximately C$570 million (approximately US$450 million). 

The Offer Price represents a premium of approximately 26% to the closing price of Corvus common shares on the Toronto Stock Exchange (“TSX”) on 12 July 2021, the day prior to the announcement that AngloGold Ashanti submitted a non-binding proposal to Corvus, and a premium of approximately 59% to the closing price of Corvus common shares on the TSX on 5 May 2021, the day prior to the announcement of the loan agreement and exclusivity.

Transaction Highlights

The combination of Corvus and AngloGold Ashanti’s Nevada assets further consolidates one of the largest new gold districts in Nevada (the Beatty District) and provides the opportunity for AngloGold Ashanti to establish, in the medium and longer term, a meaningful, low-cost production base in a premier mining jurisdiction.

Consolidation of the Beatty District has the potential for significant synergies due to economies of scale and integrated infrastructure, including processing facilities at an attractive capital intensity.

The combined Beatty District asset base allows for streamlined engagement with federal, state and local stakeholders to advance and achieve shared sustainability goals and other district benefits, such as opportunities to design projects incorporating renewable energy, as well as develop conservation and other local projects in conjunction with the Beatty community.  

Alberto Calderon, AngloGold Ashanti’s Chief Executive Officer and Executive Director, said: “We are pleased to reach an agreement with Corvus that we believe is value-enhancing for all stakeholders. This transaction delivers a compelling, district-wide consolidation in Nevada, which allows for the Beatty District to become a potential Tier 1 asset for AngloGold Ashanti. The inclusion of these assets in our portfolio will enable AngloGold Ashanti to have first production in North America in the next three to four years, further improving the overall geographic balance of our portfolio. Placing these assets under single ownership will allow for significantly reduced capital intensity to develop the district with a phased and modular approach, providing for a meaningful, low-cost production base in the medium and longer term.”

Jeffrey Pontius, Corvus’ President and Chief Executive Officer, said: “The proposed all-cash offer provides a compelling opportunity for Corvus shareholders to realise significant value and eliminates exposure to future capital requirements to fund construction of Corvus’ projects. AngloGold Ashanti has been a supportive shareholder of Corvus since its inception and has supported us in our capital raising needs along the way. AngloGold Ashanti’s long history of successful and responsible exploration, discovery, mine building and operating expertise will be a significant benefit to the region and all of its stakeholders.”

AngloGold Ashanti has a long track record of developing and operating gold assets in the United States, including the Jerritt Canyon Gold mine in Nevada and the Cripple Creek & Victor mine in Colorado. AngloGold Ashanti has a North American regional office in Denver, Colorado, from where it manages its U.S. business interests as well as its global generative exploration portfolio, including its exploration portfolio in the United States. 

AngloGold Ashanti holds several exploration assets (Silicon, Merlin, Transvaal and Rhyolite) in the Beatty District where it has been conducting exploration activities for four years and has drilled 70,688 meters during that period. Current exploration results indicate the potential for significant oxide ore bodies at Silicon and Merlin, as well as additional sulphide potential at Silicon at depth. AngloGold Ashanti anticipates it will publish a Mineral Resource at Silicon for the year ending 31 December 2021. Exploration work is ongoing to delineate the ore bodies at both Silicon and Merlin in greater detail.

AngloGold Ashanti’s conceptual development plan for the district envisions North Bullfrog being developed first, with production in the next three to four years, followed by Silicon, Merlin (including Lynnda Strip) and Mother Lode. Targets will be considered with strict reference to AngloGold Ashanti’s capital allocation framework. Further details on AngloGold Ashanti’s integrated development plan for the Beatty District will be communicated during 2022.

Benefits to Corvus Shareholders

• All-cash consideration of C$4.10 per share represents a premium of approximately 26% to the closing price of Corvus common shares on the TSX on 12 July 2021, the day prior to the announcement that AngloGold Ashanti submitted a non-binding proposal to Corvus, and a premium of approximately 59% to the closing price of Corvus common shares on the TSX on 5 May 2021, the day prior to the announcement of the loan agreement and exclusivity;

• Strong shareholder support with voting support agreements from Sprott Funds Trust and the management and directors of Corvus, for the common shares and options held by such parties which collectively represent approximately 34.7% of Corvus’ issued and outstanding common shares (on a fully diluted basis and excluding shares held by AngloGold Ashanti);

• All-cash offer that is not subject to any financing conditions; and

• The Transaction provides certainty of value, removing future dilution, commodity, development, and execution risk. 

Benefits to AngloGold Ashanti Shareholders

• Further consolidates the Beatty District, one of the largest new gold districts discovered in Nevada and a premier mining jurisdiction globally;

• Establishes a relatively low-cost and low-risk production base from North Bullfrog in the near-term that will then enhance the development of AngloGold Ashanti and Corvus’ assets to build a meaningful production base from the broader Beatty District in the medium and longer term. North Bullfrog is a well-advanced project with a Feasibility Study and permitting targeted for completion in 2023 and first gold production potentially in the next three to four years; the mine will provide an initial production area that will support the development and funding of the other Beatty District projects;

• The combination of the Corvus deposits (North Bullfrog, Lynnda Strip, and Mother Lode) with those of AngloGold Ashanti (Silicon, Merlin, Transvaal and Rhyolite) provides the opportunity to integrate infrastructure and processing facilities, that includes utilising a shared heap leach facility for the Silicon, Merlin (including Lynnda Strip) and oxide portion of Mother Lode deposits, staged capital development with a reduced initial capital outlay, and increased scale to create synergies and realise the maximum potential from these assets. Additionally, the combination of the sulphide potential of AngloGold Ashanti’s Silicon and Corvus’ Mother Lode deposits presents an opportunity to unlock future value via the synergies of a combined operation;

• The addition of the Corvus deposits immediately increases AngloGold Ashanti’s Mineral Resources. Study work will be initiated at North Bullfrog with the expectation to add it to AngloGold Ashanti’s Reserves by the end of 2022. Upon closing of the Transaction AngloGold Ashanti will integrate the acquired Mineral Resources based on its own technical parameters established for the Beatty District;

• The increased landholding across the Beatty District provides opportunities for further exploration and upside potential; and

• Consolidation of the Beatty District will have several sustainability benefits, including the opportunity to optimise surface infrastructure requirements thus minimising the overall operational and environmental footprint, in addition to other benefits through enhanced community and stakeholder engagement.

Transaction Summary and Details

The Transaction will be implemented by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). The Transaction will be subject to the approval of: (a) 66 2/3% of the votes cast by (i) the holders of Corvus’ common shares (“Shareholders”), including votes attached to common shares held by AngloGold Ashanti, present in person or represented by proxy at the special    meeting relating to the Transaction (the “Special Meeting”); and (ii) the Shareholders and the holders of options, voting together as a single class, present in person or represented by proxy at the Special Meeting; and (b) a simple majority of the votes cast by the Shareholders present in person or represented by proxy at the Special Meeting, excluding votes attached to common shares held by AngloGold Ashanti and any other person as required to be excluded under section 8.1(2) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). In addition to securityholder approval, the Transaction is subject to the receipt of court approval and other customary closing conditions for transactions of this nature. The definitive arrangement agreement includes customary deal-protection provisions. Corvus has agreed not to solicit or initiate any discussion regarding any other business combination, subject to customary “fiduciary out” rights. Corvus has also granted AngloGold Ashanti a right to match any superior proposal and will pay a termination fee of C$19 million to AngloGold Ashanti under certain circumstances, including if the definitive arrangement agreement is terminated in connection with Corvus pursuing a superior proposal.

Sprott Funds Trust, along with the directors and officers of Corvus, holding common shares and options reflecting in aggregate, approximately 34.7% of Corvus’ issued and outstanding common shares (on a fully diluted basis and excluding shares held by AngloGold Ashanti), have entered into voting support agreements with AngloGold Ashanti, pursuant to which they have agreed, among other things, to vote their Corvus securities in favour of the Transaction. Together with the shares already owned or held by AngloGold Ashanti, this represents approximately 46.3% of Corvus’ issued and outstanding shares (on a fully diluted basis).

Full details of the Transaction and the definitive arrangement agreement will be included in the proxy statement / information circular, which will be mailed to Corvus shareholders and made available on SEDAR and EDGAR under the issuer profile of Corvus.

The Transaction is expected to close in Q1 2022. The Transaction will be funded from AngloGold Ashanti Holdings plc’s current cash balance. No shareholder vote will be required by AngloGold Ashanti shareholders. 

Advisers and Counsel

AngloGold Ashanti has engaged RBC Capital Markets as its financial adviser, Stikeman Elliott LLP as its Canadian legal counsel, and Cravath, Swaine & Moore LLP and Hogan Lovells US LLP as its U.S. legal counsel in connection with the Transaction.  Corvus has engaged BMO Capital Markets as its financial adviser, and Cassels Brock & Blackwell LLP and Dorsey & Whitney LLP as its legal counsel in connection with the Transaction. The Corvus Special Committee has engaged Blakes, Cassels & Graydon LLP as its legal counsel, and Fort Capital Partners (“Fort Capital”) to provide an independent fairness opinion and independent formal valuation. 

Board of Directors’ and Special Committee Recommendations

A special committee comprised entirely of independent directors of Corvus (the “Special Committee”) was constituted to consider the Transaction. The Special Committee, on behalf of the Corvus Board of Directors (the “Corvus Board”), obtained an independent formal valuation (the “Valuation”) from Fort Capital in accordance with MI 61-101. The Corvus Special Committee received the Valuation from Fort Capital, which concluded that, subject to the scope of review, assumptions, limitations and qualifications set forth therein, as of 12 September 2021, the consideration to be paid under the Transaction is within the range of fair market value as determined by Fort Capital. In addition, Fort Capital has provided a fairness opinion to the Special Committee (the “Fort Capital Fairness Opinion”), stating that in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be paid under the Transaction is fair, from a financial point of view, to Corvus shareholders (other than AngloGold Ashanti and its affiliates).  BMO Capital Markets has provided an opinion to the Corvus Board, based upon and subject to various assumptions, limitations and qualifications, as to the fairness, from a financial point of view, as of the date of such opinion, to holders of Corvus common shares (other than AngloGold Ashanti and its affiliates) of the consideration to be paid under the Transaction. 

The Special Committee unanimously recommended the Transaction to the Corvus Board, and the Corvus Board unanimously approved the Transaction and recommends that Corvus shareholders and optionholders vote in favour of the Transaction.

About AngloGold

Ashanti AngloGold Ashanti, with its head office in South Africa, is an independent, global gold mining company with a diverse, high-quality portfolio of operations, projects and exploration activities across nine countries on four continents.

About Corvus

Corvus is a North American gold exploration and development company, focused on its near-term gold-silver mining projects at North Bullfrog, Lynnda Strip and Mother Lode in the Beatty District of Nevada. Corvus is committed to building shareholder value through new discoveries and the expansion of its projects to deliver value to its shareholders.  

Source: classfmonline.com

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