Tag Archives: M&A

NEWS: First Majestic Announces Friendly Acquisition Of Silvercrest Mines‏

Jul 27, 2015

First Majestic Silver Corp. (“First Majestic”) and SilverCrest Mines Inc. (“SilverCrest”) are pleased to announce that the companies have entered into a definitive agreement (the “Arrangement Agreement”) pursuant to which First Majestic has agreed to acquire all of the issued and outstanding common shares of SilverCrest for consideration of 0.2769 of a common share of First Majestic (the “Exchange Ratio”) plus C$0.0001 in cash per SilverCrest common share. The offer implies a value of C$1.30 per SilverCrest share based on the closing price of First Majestic’s common shares on the Toronto Stock Exchange (“TSX”) on July 24, 2015. The offer represents a premium of approximately 37% to SilverCrest’s 30-day volume-weighted average price (“VWAP”) on the TSX for the period ending July 24, 2015 and a 35% premium to SilverCrest’s previous closing price. The transaction will be implemented by way of a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia). In addition, shareholders of SilverCrest will receive shares in a newly formed company (“New SilverCrest”) which will hold certain exploration assets currently held by SilverCrest and First Majestic.

BENEFITS TO FIRST MAJESTIC SHAREHOLDERS

  • Enhances First Majestic’s leading position in Mexico, one of the world’s most prolific silver and gold regions
  • Accretive to First Majestic’s net asset value per share, reserves and total resources per share and production per share
  • SilverCrest’s Santa Elena Mine will be First Majestic’s sixth producing silver mine adding further growth potential to First Majestic’s portfolio of Mexican projects
  • Strengthens First Majestic’s balance sheet by adding approximately C$30 million in cash and further enhances the working capital position
  • Provides operational and production synergies with the potential for additional cost cutting
  • Further diversifies production and cash flow across a robust portfolio of producing mines

BENEFITS TO SILVERCREST SHAREHOLDERS

  • Provides SilverCrest shareholders with a highly attractive premium to current market price
  • Opportunity to participate in a leading silver producer through an all-share transaction
  • Gain access to First Majestic’s operational and underground mining expertise
  • Diversifies SilverCrest’s single asset risk profile and provides exposure to First Majestic’s broad portfolio of Mexican assets
  • Increased leverage to silver with First Majestic’s primarily silver resource base
  • Enhances capital markets presence with a pro forma market capitalization in excess of C$700 million based on current share prices including increased analyst coverage, trading liquidity and a broader institutional investor base
  • Provides SilverCrest shareholders with ownership in New SilverCrest, a well-capitalized exploration company created to leverage SilverCrest management’s exploration expertise

Keith Neumeyer, President & CEO of First Majestic, stated: “We believe this transaction provides an excellent opportunity for the shareholders of both First Majestic and SilverCrest. Shareholders stand to gain significant upside in the combined company with production of well over 20 million silver equivalent ounces per year while maintaining one of the lowest production costs and highest purity to silver in the industry.”

J. Scott Drever, CEO of SilverCrest, stated: “We believe the inclusion of SilverCrest’s Santa Elena mine into First Majestic’s portfolio of operating mines provides the combined company greater flexibility in the current difficult metals market and creates a strong platform from which First Majestic can continue its corporate growth to the benefit of both sets of shareholders. SilverCrest shareholders will benefit from First Majestic’s liquidity in the market place, the diversity provided by six mines and Management’s long history of successful operations in Mexico. First Majestic shareholders will benefit from SilverCrest’s strong balance sheet, free cash flow and low cost silver production. ”

TRANSACTION SUMMARY

Under the terms of the Arrangement Agreement, on closing, each SilverCrest shareholder will receive 0.2769 common shares of First Majestic plus C$0.0001 in cash for each SilverCrest common share held. Pursuant to the transaction, First Majestic will issue approximately 32.8 million common shares (assuming no exercise of existing SilverCrest options), valuing SilverCrest’s equity at approximately C$154 million, based on current closing prices. Following the completion of the transaction, the current shareholders of SilverCrest will hold approximately 21% of the issued and outstanding shares of First Majestic. The transaction will be carried out by way of a court-approved plan of arrangement and will require the approval of at least 66 2/3% of the votes cast by the shareholders of SilverCrest, and approval by the “majority of the minority”, being a majority of the votes cast by SilverCrest shareholders other than J. Scott Drever, N. Eric Fier and Barney Magnusson, whose votes will not be included in determining minority approval pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. The transaction will also require the approval of a simple majority of the shareholders of First Majestic in accordance with the rules of the TSX and the NYSE. The special meetings of shareholders of SilverCrest and First Majestic are expected to take place in late September 2015.

The Arrangement will also provide for the issuance by First Majestic of an aggregate of approximately 2.9 million replacement stock options (the “Replacement Options”) (assuming no exercise of existing SilverCrest options) to SilverCrest option holders who do not exercise such options prior to the effective time of the Arrangement, at exercise prices adjusted by the Exchange Ratio. All other terms and conditions of the Replacement Options will be the same as the SilverCrest option for which they were exchanged, except that the terms and conditions of the First Majestic stock option plan relating to accelerated expiry of First Majestic options on account of early termination after ceasing to hold office or ceasing to be an employee or consultant will not apply to the Replacement Options.

In connection with the Arrangement, each SilverCrest shareholder will also receive 0.1667 common shares of New SilverCrest for each SilverCrest common share held. As part of the Arrangement, SilverCrest will transfer the Las Chispas, Cruz de Mayo, Angel de Plata, Huasabas and Estacion Llano exploration properties located in northern Mexico, as well as C$5.25 million in cash and certain other assets currently owned by SilverCrest to New SilverCrest. First Majestic will also transfer its Guadalupe exploration property located in Durango, Mexico to New SilverCrest, and First Majestic will own approximately 9.9% of the shares of New SilverCrest following completion of the transaction. SilverCrest’s La Joya project will be retained by First Majestic following closing of the transaction, however First Majestic does not have any immediate plans to advance the La Joya project. N. Eric Fier, SilverCrest’s Chief Operating Officer, will be the CEO and President of New SilverCrest along with other members of SilverCrest’s current board and management team. New SilverCrest intends to make application to list its shares on the TSX Venture Exchange.

In addition to shareholder, court and creditor approvals, the transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.

The Arrangement Agreement includes customary provisions, including non-solicitation of alternative transactions, right to match superior proposals and fiduciary-out provisions. In addition, SilverCrest has agreed to pay a termination fee to First Majestic of C$8 million upon the occurrence of certain events.  First Majestic and SilverCrest have each agreed to pay a C$1 million expense reimbursement fee to the other party upon termination of the Arrangement Agreement due to the occurrence of certain other events.

The Board of Directors of SilverCrest has unanimously approved the transaction and will provide a written recommendation that SilverCrest shareholders vote in favour of the transaction which will be included in the Information Circular to be mailed to shareholders in connection with the Arrangement. Each of the directors and senior officers of SilverCrest, who hold in the aggregate approximately 3.9% of the issued and outstanding SilverCrest shares (assuming no exercise of existing SilverCrest stock options) have entered into a voting agreement with First Majestic and have agreed to vote in favour of the transaction at the special meeting of SilverCrest shareholders to be held to consider the Arrangement.

Full details of the Arrangement will be included in a joint Management Information Circular to be filed with the regulatory authorities and mailed to SilverCrest and First Majestic shareholders in accordance with applicable securities laws. SilverCrest and First Majestic expect to mail the joint Management Information Circular in early September 2015.

ADVISORS AND COUNSEL

Cormark Securities Inc. (“Cormark”) acted as exclusive financial advisor and McCullough O’Connor Irwin LLP acted as legal counsel to First Majestic. Cormark has provided an opinion to the First Majestic Board of Directors that, based upon and subject to the assumptions, limitations and qualifications in the opinion, the consideration being offered by First Majestic to SilverCrest pursuant to the transaction is fair, from a financial point of view, to First Majestic.

National Bank Financial Inc. (“National Bank”) acted as exclusive financial advisor and Koffman Kalef LLP acted as legal advisor to SilverCrest. National Bank has provided an opinion to the Board of Directors of SilverCrest that, based upon and subject to the assumptions, limitations, and qualifications in the opinions, the consideration to be received is fair, from a financial point of view, to the shareholders of SilverCrest.

CONFERENCE CALL

First Majestic and SilverCrest will host a joint conference call and webcast on July 27, 2015 at 2:00 pm Eastern time / 11:00 am Pacific time for members of the investment community to discuss the proposed transaction. The call‐in details are as follows:

Toll Free Canada & USA: 1-800-319-4610 FREE
Outside of Canada & USA: 1-604-638-5340
Toll Free Germany: 0800 180 1954
Toll Free UK: 0808 101 2791

 

Click on WEBCAST on the First Majestic homepage as a simultaneous audio webcast of the conference call at www.firstmajestic.com.

The Conference call will be recorded and you can listen to an archive of the conference by calling:

Toll Free Canada & USA: 1-800-319-64131-800-319-6413 FREE
Outside of Canada & USA: 1-604-638-90101-604-638-9010
Pin Code: 3928

An archived webcast of the conference call will also be available at www.firstmajestic.com.

ABOUT FIRST MAJESTIC

First Majestic is a mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets and the pursuit through acquisition of additional mineral assets which contribute to the Company achieving its corporate growth objectives.

For further information, contact info@firstmajestic.com, visit our website at www.firstmajestic.com or contact Todd Anthony, Investor Relations at 1.866.529.2807 FREE.

ABOUT SILVERCREST

SilverCrest is a Canadian precious metals producer headquartered in Vancouver, BC. SilverCrest’s flagship property is the 100%‐owned Santa Elena Mine, located in the State of Sonora, Mexico. The operation comprises a high‐grade, epithermal silver and gold deposit, along with a 3,000 tpd conventional milling facility. Santa Elena is projected to produce in a range of 4.7 to 5.1 million silver equivalent ounces in 2015.

For further information, contact SilverCrest at 1.866.691.1730 FREE or via our website online at www.silvercrestmines.com.

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John Rubino: Who’s Next? China Finally Starts Snapping Up Gold Miners

By John Rubino, Jun 3, 2015

One (perhaps the only) bright spot in the past few year’s gold market has been Chinese and Indian demand for the metal. Here’s a chart, courtesy of Ed Steer’s Gold & Silver Daily, showing that the two countries have imported a cumulative 15,000 tonnes since 2008, which is not far from the total production of the world’s gold mines in that period.

China India gold demand 2015

But physical bullion is only part of the story, and may not be the biggest one going forward. Speculation has been circulating for years that China’s miners, flush with cash from selling their low-cost output to the government, would soon start buying up the world’s in-ground gold reserves. Here’s a representative opinion from 2010:

China buying Gold Mines Instead of Gold Bullion

A top industry official from the China Gold Association told The China daily back in February that the Chinese purchase of IMF bullion would cause market speculation and volatility. Instead, China is continuing to buy gold not directly from the market but through acquiring gold mines…abroad!Dennis Gartman reported in March: “Perhaps we are to begin owning gold mines rather than gold futures of gold ETFs. We have avoided owning mines for years, preferring the “purer” play of owning gold rather than the mines, for we fear being exposed to poor mine management, or accidents in a mine that might do damage to the equity while gold itself moves higher. But if the Chinese authorities want to own mines, perhaps we have to consider doing so also…”

Why shouldn’t this make sense? After all, where do investors want to put their money? Banks are unsafe. Stocks are unsafe and speculative. With Real Estate at least you have a tangible asset and it will hold some value despite market busts. And buying Gold Bullion, especially buying in large quantities, can cause the prices to fluctuate significantly.

The best bet? Gold Mines! Maybe even patented gold mines where the investors own both the title to the land AND the Gold in the ground. Get ready to see a huge surge in gold mine buyers, especially from China!

That was obviously a little optimistic, since mining shares have plunged in the ensuing five years. But price action notwithstanding, the speculation didn’t let up. From 2013:

5 reasons China is coming to buy your gold mine

Chinese producers are aggressively looking at picking up gold companies and mines elsewhere as domestic demand reaches record highs.Takeovers and asset purchases by Hong Kong and mainland miners increased to a record $2.2 billion in 2013 according to data compiled by Bloomberg.

Chinese companies like Zijin Mining Group and Zhaojin Mining Industry Co are in a good position to to take a bite out of struggling North American and European-based producers because:

• Chinese gold demand is soaring and at 1,000 tonnes will overtake Indian purchases this year, but domestic deposits are less than 5% of the global total.

• Targets are cheap – the S&P/TSX Global Gold Index of the globe’s 49 biggest gold companies are down 31% this year alone.

• Domestic Chinese producers enjoy some of the lowest cash costs – Zhaojin manages $549/oz, compared with a global average of $831/oz

• Chinese and Hong Kong companies have access to cheap capital – Zijin got $4.9 billion in soft loans from a state bank for M&A

• The majors are actively looking to sell as debt levels increase and high-cost mines are mothballed – Barrick could dump as many as 12 of its mines.

Possible targets include:
• Australia’s Mali-focused Papillion Resources ($390 million)
• Toronto-based Iamgold ($2.5 billion)
• Amara Mining active in West Africa ($48 million)
• Perseus Mining ($325 million) with producing mines in Ghana and Cote d’Ivoire

While these companies are looking to get rid of a number of mines:
• Barrick Gold
• Newmont Mining Corp
• Gold Fields
• Alacer Gold Corp

Again, too early. Mining stocks are down by about half since that article was published.

But now, finally, the China-buying-all-the-gold-mines scenario has begun to solidify. From last week:

Barrick Gold Sells 50% Stake In Big PNG Gold Mine To The Chinese

In what it describes as a ‘long-term strategic co-operation agreement which outlines the intent of both companies to collaborate on future projects’ Barrick (NYSE:ABX) is to sell a 50% stake in Barrick (Niugini) Limited (which owns 95% of the Porgera gold mine in Papua New Guinea) to China’s Zijin Mining (OTCPK:ZIJMY) for $298 million in cash. Barrick (Niugini) Mining is wholly-owned by its parent company.Porgera, in production terms, is one of the world’s larger gold mines. Barrick’s share of gold production in 2014 was 493,000 ounces at all-in sustaining costs of $996 per ounce. Barrick’s share of proven and probable mineral reserves as at December 31, 2014, was 3 million ounces of gold.

From the Zijin standpoint this will all be a part of the overall Chinese move to secure supplies of strategic metals from around the world to meet its future needs. And China considers gold as very much a strategic metal on the economic front, particularly as it tries to increase its global trading influence over the next few years – which seems to be a key aim of the nation’s government. A $298 million outlay for a share in annual production amounting to 250-275,000 ounces of gold in a single year strikes one as a pretty good deal for the Chinese – and Porgera has an expected mine life of at least another five or six years, and this may well prove to be a conservative estimate.

Despite the “win-win” rhetoric, it’s clear that at this point in the gold price cycle the power is with the deep-pocketed Chinese while the many, many miners who brought expensive mines on-line just in time for financing to dry up are there for the taking. So — just based on current market conditions and leaving aside long term strategic considerations — it’s reasonable to expect plenty of similar deals in the next few years, and that the end result will be Chinese control of reserves that dwarf the bullion now sitting in its bank vaults.

Whether this is a buy signal for the gold mining sector remains to be seen. A falling gold price would, without doubt, more than offset the occasional merger. But in a world of stable to slightly higher gold prices, the presence of big Chinese buyers would make the dominant question “who will they buy next?” and that’s great news for the takeover candidates.

This article is written by John Rubino of Dollarcollapse.com and with his kind permission, Gecko Research has been privileged to publish his work on our website. To find out more about Dollarcollapse.com, please visit:

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Gold Canyon: In scarcity – Large gold projects in Canada up for grabs

Gecko Research, May 15, 2015

M&A is hot and quality projects are scarce. If you are looking for a large gold project in Canada, not already in the hands of a major, your choices are very limited.


M&A activity stronger than ever
In the past we have written a fair bit on mergers and acquisitions in the mining space. Good companies are being acquired, as their share prices have fallen along with the prices of the bad ones in the last few years. It has become very difficult for these small companies to raise funds.

There is an ongoing quest for gold juniors in safe jurisdictions and we are seeing new acquisitions on a weekly basis. We have seen majors being very active in the past year (AEM/YRI bought Osisko, Goldcorp bought Probe Mines) with Agnico Eagle being perhaps the most active major out there. Agnico has also made strategic investments in juniors through private placements which has also been the strategy for our old top pick OceanaGold as they just took a 15% stake in Gold Standard this week.

Lately we have also seen juniors consolidating their assets, making the combination a stronger vehicle going forward, sort of a 1 + 1 = 3 if you will. NovaCopper merging with Sunward Resources is a great example how one company with a management and a project secures its financing by way of merger (NCQ bought SWD at >100% premium).

Our interest is to take positions in companies that are deeply undervalued and have attractive assets and undervaluation enables an acquirer a possibility to offer a premium. For example, Coastal Gold (COD) was trading at $0.015 about a month back. An announcement of a friendly acquisition by Sulliden Mining (SMC) resulted in a bidding war. It is now being acquired by First Mining (FF) for equivalent of $0.06. About 200% on what was invested a month back will been made, tripling your money. Of course, we did not see the acquisition of COD coming.

It’s obvious, isn’t it?
So, let’s have a quick look at why we think Gold Canyon is an obvious take-over target. All these are large, rare projects, and hence attractive to major and mid-sized mining companies. Their share prices, market capitalizations, and global gold resources are in parenthesis:

  • Gold Canyon ($0.25; $40 million; 5.1 million oz)
  • Pretium Resources ($7.40; $1,065 million; 7.5 million oz)
  • Detour Gold ($13.66; $2,335 million; 15 million oz)
  • Rubicon Minerals ($1.32; $520 million; 3.3 million oz)
  • Romarco Minerals ($0.45; $559 million; 4.8 million oz)

Now, the above are not really comparable numbers. In the first two companies capital has not yet been invested. The latter three are either fully financed for production, close to production or have recently started production. Moreover, grade and economics of these projects are different. Some of them even have liabilities on their balance sheets.

What we want to emphasise from our numbers is how difficult it will be for a major mining company (which are mostly struggling financially) to offer much of a premium to, say, Detour or Pretium, given their very high valuation. As a result, we just don’t see the kind of money made in the acquisition of COD by FF to be made in the latter three companies.

Gold Canyon has all the ingredients to attract
For the reasons described above, we have focused on Gold Canyon as they are holding a very large and attractive project, but is available to be picked up at a small fraction of valuation of other companies. That is why they offer a possibility of a high upside. Moreover, given that they are not yet in production, it is easier for an acquiring company to put them in hibernation, if gold price does not recover. You cannot do this easily with a project on which capital has been invested.

The junior sector is so risky that we either want to make a home-run (invest for a big upside) or go home (just stay in cash). We have in the past repeatedly mentioned that Gold Canyon’s Springpole project is one of the rare, large gold projects in Canada. Add to that it also has good economics even in today’s gold price environment which is very unusual. We also know that the rumor mill among institutional investors in Toronto is hot about what might be next for Gold Canyon. It has been brought to our attention that some funds have acquired meaningful positions.

The rumors surrounding GCU is all good for us, but it’s not the only reason for our investment. Gold Canyon is holding a large land package which is virtually very much unexplored (see earlier articles, links below) and the current 43-101 resource is based on a very small part of the overall project. With more than 5 Moz in resources, the potential huge upside is what attracts us the most and we feel this also protects our downside.

What the Springpole project need is for someone to take this project forward. Current management has done a tremendous job up until now and created a lot of value in the company. All that value in our view is not reflected in today’s share price, which is the reason why we haven’t sold a single share.

The point we are making is that the M&A activity is at full speed and we expect this to continue throughout 2015. Deals almost always include a junior company on one side and interestingly enough, both juniors and majors are on the hunt for new acquisitions on the other side as seen in the examples above.

Although there are several very low-grade projects available in Canada, many of them are not really economical projects and will never become mines. That is why Gold Canyon’s high grade open pit Springpole project stands out from the rest and should be on everybody’s radar (including companies looking at acquisitions).
Previous articles on Gold Canyon:
* Gold Canyon – What We Are Looking For As Investors
(http://blog.geckoresearch.com/content/8569, Apr 22, 2015)
* Why Gold Canyon is a keeper and should be held on to
(http://blog.geckoresearch.com/content/8510, Apr 18, 2015)
* Gold Canyon – Just How Cheap Is It?
(http://blog.geckoresearch.com/content/8364, Apr 7, 2015)
* Gold Canyon is Heating up – Institutional Buying is Evident
(
http://blog.geckoresearch.com/content/7964, March 6, 2015)
* Ripe for a Take-over – Gold Canyon Resources
(
http://blog.geckoresearch.com/content/7814, February 26, 2015)

Team Gecko Research
www.geckoresearch.com

 

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Mega Precious to be Acquired by Yamana Gold

Apr 24, 2015

Mega Precious Metals Inc. (TSX VENTURE:MGP) (“Mega” or the “Company”) is pleased to announce that it has entered into a definitive agreement (the “Agreement”) with Yamana Gold Inc. (TSX:YRI)(NYSE:AUY) (“Yamana”), whereby Yamana will acquire all of the outstanding shares of Mega under a plan of arrangement for consideration of 0.02092 of a Yamana share and cash of C$0.001 per Mega share, equivalent to C$0.10 per Mega share, based on the closing price of Yamana shares on the TSX on April 23, 2015. The total consideration to Mega shareholders is approximately C$17.5 million, based on the Company’s issued current and outstanding shares. Yamana has also agreed to purchase the outstanding convertible debentures held by Pacific Road Capital Resources Funds.

Mega’s board of directors has unanimously approved the transaction and recommends that Mega shareholders vote in favour of the arrangement. All of the directors and officers of Mega, as well as certain shareholders who collectively own approximately 22% of Mega’s issued and outstanding shares, have entered into support agreements with Yamana pursuant to which they have agreed, among other things, to support the transaction and vote their Mega shares in favour of the arrangement. Paradigm Capital Inc. has provided an opinion to Mega’s board that the consideration is fair, from a financial point of view, to Mega shareholders.

Benefits to Mega Shareholders:

  • Based on April 23, 2015 closing prices, the Yamana shares offered for each Mega share represents consideration of C$0.10 per share, representing a premium that Mega management and directors believe is fair to its shareholders in the context of the current market environment;
  • Yamana is a high-quality, low-cost gold producer with a diversified, long-life production base, and its shares represent good value and offer significant upside potential;
  • Mega shareholders will be provided material increase in share trading liquidity, and participation in immediate gold production through Yamana shares; and
  • Yamana has the resources and technical expertise to advance Monument Bay along with its many Regional Exploration targets and the Company’s other projects with a view that they may become valued additions to its Canadian portfolio.

The acquisition represents a material progression in the advancement of Monument Bay from a grass roots exploration project when Mega began to explore the project in early 2011. Mega’s Chairman, Mario Stifano summarizes the board’s view as follows, “We are very proud of the work that the entire Mega team has done on Monument Bay over the past 4 years. The Monument Bay Project has grown into what we consider to be one of the best development assets in the industry and we are proud to be part of this story. Our team has assembled a 338km2 camp-sized land position, advanced the project to its current multi-million ounce resource, formulated a regional geological and targeting model, including the realization of a potential tungsten by-product and importantly, we have developed a positive and respectful relationship with the Red Sucker Lake First Nation. The acquisition by Yamana allows the work done on Monument Bay to continue unabated to the benefit of all stakeholders.”

Glen Kuntz, Mega’s CEO is keen for Yamana to continue the work on the project, stating, “My experience in dealing with Yamana’s management and technical team is that they are world-class and committed to growing the Monument Bay Project along with the rest of their portfolio in Canada. This acquisition not only validates the project and its value, but also the opportunity to our shareholders to participate in the future success with one of the industry’s most respected gold producers. The work Mega’s team has done on Monument Bay has been remarkable, we have not only grown the initial small underground resource into a multi-million ounce resource, but also discovered multiple new deposits and structures. We believe this transaction is an excellent outcome for Mega shareholders as it provides a significant premium recognizing the value embedded in our projects. We look forward to joining their team and continuing the work we have successfully started.”

“The acquisition of Mega Precious Metals advances Yamana’s strategy to expand our presence in Canada, which we established last year with the joint acquisition of Canadian Malartic and a portfolio of exploration properties in Quebec and Ontario”, said William Wulftange, Senior Vice President, Exploration for Yamana Gold. Yamana’s exploration program has contributed to unlocking value within our portfolio through consistently finding high quality ounces at our properties and we are looking forward to applying our experience and expertise at Monument Bay. The significant existing mineral resource base at Mega’s Monument Bay and North Madsen Projects in particular provide an opportunity for further exploration to meaningfully increase the potential of these assets. “With the addition of Monument Bay in particular, we look forward to continuing the positive relations that have been established with the First Nations population and other stakeholders in the region, including the Government of Manitoba.”

Transaction Details:

Full details of the transaction will be set out in Mega’s information circular that it will prepare in respect of the meeting of shareholders to approve the transaction. Mega intends to mail the information circular in mid-to-late May 2015. The transaction is expected to close in late June of 2015, subject to the satisfaction of certain conditions, including court and shareholder approval, and Yamana’s satisfactory completion of its title, environmental, tax and litigation due diligence on or prior to May 15, 2015.

Pursuant to the arrangement, Mega is subject to customary non-solicitation covenants. In the event a superior proposal is made to Mega, Yamana has a 5 business-day right to match such a proposal. Under certain circumstances where the transaction is not completed, Mega has agreed to pay a termination fee of C$700,000 to Yamana. Yamana has agreed to a C$500,000 placement in Mega if the transaction is terminated in certain circumstances. The transaction is subject to approval by Mega shareholders, court approval and other customary conditions. Mega has engaged Paradigm Capital Inc. as its financial advisor and Bennett Jones LLP as its legal advisor in connection with the transaction. Copies of the transaction agreement, support agreements, management information circular and certain related documents will be filed with securities regulators and will be available on SEDAR at www.sedar.com.

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