Goldlund-Goliath JV with Treasury Metals June 3, 2020 – Vancouver, Canada – First Mining Gold Corp. (“First Mining” or the “Company”) (TSX: FF) (OTCQX: FFMGF) (FRANKFURT: FMG) is pleased to announce that it has entered into a definitive share purchase agreement (the “Agreement”) with Treasury Metals Inc. (“Treasury Metals” or “TML”) (TSX: TML) (OTCQX: TSRMF) (FRANKFURT: TRC) pursuant to which Treasury Metals will acquire all of the issued and outstanding shares of Tamaka Gold Corporation, a wholly-owned subsidiary of First Mining that owns the Goldlund Gold Project (“Goldlund”) (the “Transaction”). Combining Goldlund with Treasury Metals’ adjacent Goliath Gold Project (“Goliath”) creates a district-scale, multi-million ounce gold project positioned for advancement towards construction in a favourable mining jurisdiction.
“We are very excited to be part of this regional consolidation in Ontario,” stated Dan Wilton, CEO of First Mining. “Combining our Goldlund asset with Goliath creates an attractive opportunity to immediately establish shareholder value through the potential synergies that these two assets share, given their regional proximity. Importantly, our shareholders will retain significant exposure to the future upside of the combined projects through not only a large equity stake in Treasury Metals, but also through warrants, a royalty, and milestone payments that are aligned with the advancement of Goldlund.”
“I am pleased to be delivering value for our shareholders through the regional consolidation of this multi-million-ounce gold district in Ontario,” stated Keith Neumeyer, Chairman and Founder of First Mining. “This transaction delivers on the promise we made to our shareholders when we established First Mining in 2015 to return value to our shareholders and create new district-scale opportunities. We believe that the pro forma company is well positioned to benefit from the current rising gold market given the district-scale potential of these two projects and the robust co-development opportunities. Within 12 months of the closing of the Transaction we will look to return value to our shareholders through a substantial distribution of the equity consideration, allowing our shareholders to directly benefit from this value-enhancing transaction.”
Transaction Highlights
- First Mining to become the largest shareholder of a premier Canadian advanced-stage gold developer
- Goldlund has 809,200 ounces of gold in the Indicated resource category and 876,954 ounces of gold in the Inferred resource category1, and Goliath has 1,192,000 ounces of gold in the Measured & Indicated resource categories and 222,000 ounces of gold in the Inferred resource category2
- Solidifies the combined asset as one of the largest undeveloped gold assets in Canada; consolidated resource base of the projects will be 2.0 million ounces of gold in the Measured & Indicated resource categories, and 1.1 million ounces of gold in the Inferred resource category
- Shortened timeline to production given existing Federal Environmental Assessment approval to build a mine, mill and tailings facility at Goliath
- Strong resource expansion potential through exploration given the prospective land package covers a strike length of 65 km (~32,000 ha) with the possibility to host several gold deposits
- Projects located in an area of strong existing infrastructure, including power
- First Mining to distribute up to 70 million common shares of Treasury Metals (“TML Shares”) received under the Transaction, along with all 35 million common share purchase warrants to purchase TML Shares (“TML Warrants”) received, to First Mining shareholders within 12 months of closing
- First Mining shareholders retain leverage to upside potential of the combined assets through share and warrant ownership, a 1.5% net smelter returns (“NSR”) royalty, and contingent milestone payments
- First Mining to retain strong influence in governance of the combined assets through both Board and Technical Committee representation
- Streamlines First Mining’s focus on the Springpole Gold Project, its flagship asset, without further dilution from funding the advancement of Goldlund exploration
(1) Goldlund resource figures from the technical report titled "Technical Report and Resource Estimation Update, Goldlund Gold Project, Sioux Lookout, Ontario" with an effective date of March 15, 2019, which was prepared for First Mining by WSP Canada Inc. in accordance with NI 43-101, and is available under First Mining's SEDAR profile at www.sedar.com.
(2) Goliath resource figures from the technical report titled "Updated Mineral Resource Estimate for the Goliath Gold Project, Kenora Mining Division, Northwestern Ontario" with an effective date of July 1, 2019, which was prepared for Treasury Metals. by P&E Mining Consultants Inc. in accordance with NI 43-101, and which is available under Treasury Metal's SEDAR profile at www.sedar.com.
Under the terms of the Agreement, First Mining will receive total consideration comprised of (i) 130 million TML Shares; (ii) 35 million TML Warrants with an exercise price of $0.50 for a 3-year term; (iii) a 1.5% NSR royalty on Goldlund (0.5% of which can be bought back by Treasury Metals for $5 million in cash); and (iv) milestone payments totalling $5 million, payable in cash, on certain key advancements at Goldlund. Further details are set out below under “Transaction Details”.
Within 12 months of closing of the Transaction, First Mining intends to distribute up to 70 million of the TML Shares and all the TML Warrants to its shareholders (the “Distribution”), retaining 60 million TML Shares following the Distribution, leaving the Company with a significant 19.9% holding of TML. This Distribution will allow First Mining to return capital to its shareholders while remaining Treasury Metals’ largest shareholder through the Transaction.
Transaction Details
First Mining has signed a definitive share purchase agreement with TML pursuant to which TML will acquire all of the issued and outstanding shares of Tamaka Gold Corporation, a wholly-owned subsidiary of First Mining that owns Goldlund (through its own wholly-owned subsidiary, Goldlund Resources Inc.).
The key terms of the consideration to be received by First Mining under the Transaction are as follows:
Common Share Consideration
- 130,000,000 TML Shares to be issued to First Mining on closing (with such shares subject to the standard statutory four month hold period)
- First Mining intends to use commercially reasonable efforts to distribute a substantial portion of the TML Shares to First Mining’s shareholders within 12 months of closing the Transaction
- First Mining will retain no more than 19.9% of the issued and outstanding TML Shares following the Distribution to fund the continued advancement of its Springpole Gold Project
Warrant Consideration
- 35,000,000 TML Warrants to be issued to First Mining on closing. Each TML Warrant will entitle the warrant holder to purchase one TML Share at an exercise price of $0.50 for a period of three years
- First Mining intends to use commercially reasonable efforts to distribute all TML Warrants received under the Transaction to First Mining’s shareholders within 12 months of closing of the Transaction
- Treasury Metals has agreed to use commercially reasonable efforts to list the TML Warrants on the TSX and OTCQX following the Distribution
Goldlund Royalty
- First Mining will retain a 1.5% NSR royalty covering all the Goldlund claims
- Treasury Metals will retain a right to buy-back 0.5% of this royalty for $5 million at any time
Milestone Payments
- $2.5 million payable upon receipt of a mining lease to extract material from an open pit mine at Goldlund
- $2.5 million payable upon 300,000 tonnes of ore being extracted from a mine at Goldlund
Management, Board of Directors and Technical Committee
On closing, First Mining will be entitled to nominate three directors of a seven-member Board of Directors of Treasury Metals. After closing, First Mining will continue to have the right to nominate three directors to the Board until the later of (1) the next meeting of TML's shareholders at which directors are to be elected, and (2) the earlier of (i) the date of the Distribution, and (ii) the date that is 12 months from the Closing Date. If at any time after closing First Mining holds between 10% and 19.9% of the issued and outstanding TML Shares, First Mining will have the right to nominate two directors. If First Mining’s share ownership is reduced to between 5.0% and 9.9% of the issued and outstanding TML Shares, First Mining will have the right to nominate one director.
Treasury Metals will form a technical committee (the “Technical Committee”) on closing of the Transaction, with the committee overseeing project development of the consolidated assets. The Technical Committee will consist of four members, with First Mining initially entitled to appoint two members. After closing, as long as First Mining holds more than 19.9% of the issued and outstanding TML Shares, First Mining will continue to have the right to appoint two members of the Technical Committee. If at any time after closing First Mining’s ownership is reduced to between 10.0% and 19.9% of the issued and outstanding TML Shares, First Mining will have the right to nominate one member of the Technical Committee.