Barrick Mining (TSX: ABX) has officially completed the sale of their Hemlo Mine. The major Canadian gold mine was sold to a newly assembled group referred to as Carcetti Capital, whom has since renamed themselves to Hemlo Mining Corp.
The mine was sold for total consideration of $1.09 billion, which is just under the recently evaluated net present value of $1.1 billion for the mine, which is based on estimated annual production of 154,000 ounces of gold over a 14 year mine life as per a prefeasibility study commissioned in relation to the sale.
Probable reserves for the mine amount to 2.3 million ounces at 1.75 g/t gold, while measured and indicated resources total 3.6 million ounces at 1.58 g/t. Inferred resources meanwhile total 0.6 million ounces at 1.98 g/t gold.
Consideration under the transaction consisted of an $875 million payment in cash that was paid on closing along with $50 million in Hemlo Mining shares and a production and tiered gold price-linked cash payment structure for contingent consideration of up to $165 million.
The transaction on Carcetti’s side was backed by Wheaton Precious Metals and Orion Resource Partners. The company managed to raise funding via a gold stream alongside a $542 million equity raise and the issuance of $250 million in bank debt.
Wheaton specifically provided $300 million under a gold stream arrangement that will see Wheaton purchase 10.13 of the payable gold until 135,750 ounces of gold has been delivered, after which the stream steps down to 6.75% until a further 117,998 ounces are delivered. The stream then is to step down to 4.50% of gold production for the life of mine. Payment for those ounces is set at 20% of spot, with Wheaton anticipating 15,000 ounces of production to be delivered annually for the next ten years under the deal.
Orion Resource Partners meanwhile acquired $138.6 million in shares under the transaction, providing them with a 15.63% ownership interest in the new issuer.
Barrick Mining last traded at $57.56 on the TSX.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
