Premier Gold Mines (TSX: PG; US-OTC: PIRGF) is offering to purchase the remaining 50% interest it doesn't already own in the Greenstone Gold Mines Partnership (GGM) from Centerra Gold (TSX: CG) for US$205 million.
GGM's principal asset is the Hardrock gold project (formerly known as the Trans-Canada property), in northwestern Ontario, 275 km northeast of Thunder Bay.
The acquiring party, at the option of Premier, will be another company that is an assignee of Premier's rights under the offer letter.
The offer consists of US$175 million in cash and the assumption of all Centerra's obligations under the partnership agreement, including the remaining earn-in obligation of US$30 million.
"This offer should be viewed favourably by Centerra, as we believe that it represents a substantial premium to the median of current analyst consensus valuations attributed to Centerra's 50% interest in GGM, full recovery of their total investment in GGM to date, and aligns with Centerra's stated focus of maximizing the value of its existing operating assets over new build opportunities," Ewan Downie, Premier's president and CEO, said in a news release. "The value of the offer is in excess of Premier's market capitalization, especially when you consider the company's considerable cash position."
Hardrock's resource estimate - last updated in 2019 - stands at 147.5 million measured and indicated tonnes grading 1.50 grams gold per tonne for 7.11 million contained oz. gold and 25.5 million inferred tonnes grading 3.77 grams gold per tonne for 3.1 million contained oz. gold.
The updated resource estimate followed 12,000 metres of infill core drilling and 26,000 metres of reverse circulation drilling in selected areas during two work campaigns conducted in 2018 and 2019.
Located in the Beardmore-Geraldton Greenstone belt, the mineralization at Hardrock is typical of Archean epigenetic hydrothermal gold deposits.
At press time in Toronto, Premier was trading at $1.18 per share within a 52-week trading range of 86 ? and $2.55.
The company has 237 million common shares outstanding for a $280-million market capitalization.