B2Gold Corp. and Sabina Gold & Silver Corp (“Sabina”) are pleased to announce that the parties have entered into a definitive agreement (the “Agreement”) pursuant to which B2Gold has agreed to acquire all of the issued and outstanding shares of Sabina (the “Transaction”).
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The Transaction will result in B2Gold acquiring Sabina’s 100% owned Back River Gold District located in Nunavut, Canada. The Back River Gold District consists of five mineral claims blocks along an 80 kilometre (“km”) belt. The most advanced project in the district, Goose, is fully permitted, construction ready, and has been de-risked with significant infrastructure currently in place. B2Gold has strong northern construction expertise and experience to deliver the fully permitted Goose project and the financial resources to develop the significant gold resource endowment at the Back River Gold District into a large, long life mining complex.
Under the terms of the Transaction, B2Gold will issue 0.3867 of a common share of B2Gold (each whole share, a “B2Gold Share”) for each Sabina common share (“Sabina Share”) held, representing consideration of C$1.87 per Sabina Share on a fully-diluted basis and a total equity value for Sabina of approximately C$1.1 billion based on the closing price of B2Gold on the Toronto Stock Exchange (“TSX”) as of February 10, 2023. The consideration implies a premium of 45% to the 20-day volume weighted average prices (“VWAP”) of each of B2Gold and Sabina on the TSX as of February 10, 2023. Furthermore, the consideration implies a premium of 45% to the closing price of Sabina on the TSX as of February 2, 2023, the date the non-binding letter of intent was signed.
The Transaction will be implemented by way of a court-approved Plan of Arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”). Upon completion of the Arrangement, existing B2Gold shareholders and former Sabina shareholders will own approximately 83% and 17%, respectively, of the outstanding B2Gold Shares.
Strategic Rationale for B2Gold
- Adds a high grade, fully permitted, construction ready gold project in Nunavut, Canada:
- A March 2021 Updated Feasibility Study on the Goose project outlined a 15-year life of mine, producing an average of 223,000 ounces of gold per year (average annual production of 287,000 ounces over first five years) from 3.6 million ounces of Mineral Reserves averaging 5.97 grams per tonne (g/t) gold.
- The Goose project has been significantly de-risked with 97% of procurement complete, pre-stripping having begun at the Echo pit, and 100% of plant site civil works completed.
- Will leverage B2Gold’s in-house construction and global logistics teams, with specific expertise in remote, cold weather environments (including winter ice road construction and operation) from constructing the Julietta and Kupol mines in Russia as part of B2Gold’s predecessor company, Bema Gold.
- Enhanced operational and geographic diversification by combining B2Gold’s stable production base with a high grade, advanced development asset in a Tier-1 mining jurisdiction:
- Scarcity of high grade, long life, construction ready gold development projects located in mining friendly jurisdictions with meaningful production scale.
- With an estimated average head grade of ~6.0 g/t gold, the Goose project ranks among the highest-grade undeveloped gold projects globally.
- B2Gold will have production and development assets spanning four continents and located in both established mining jurisdictions and high growth emerging economies, serving to mitigate collective operational and geopolitical risk.
- Significant untapped exploration potential across an 80 km belt:
- At the Goose project, all deposits (Goose, Echo, Umwelt, Llama, and Nuvuyak) are open along the eight kilometres of iron formation, providing considerable potential for mine life extension.
- At the George project (~50 km from the Goose project), over 20 km of iron formation (nearly triple the iron formation length of the Goose project) represents a highly prospective area to expand existing mineral resources.
- Over 40 targets have been identified at the George project for follow-up drilling.
- B2Gold is planning a significant exploration campaign for the district over the next few years.
- Opportunity to optimize the development of the Back River Gold District with a stronger balance sheet:
- Potential to increase production in first five years of the mine life through accelerated development of the underground mine at the Goose project.
- B2Gold to complete optimization studies on various project initiatives which could improve long-term economics by allocating more capital up-front.
- Immediately and meaningfully grows B2Gold’s attributable Mineral Reserves and Mineral Resources base:
- Attributable Proven & Probable Mineral Reserves increase by 66% to 9.0 million gold ounces.
- Attributable Measured & Indicated Mineral Resources increase by 52% to 18.5 million gold ounces.
- Attributable Inferred Mineral Resources increase by 63% to 7.4 million gold ounces.
- Leverages B2Gold’s strong financial position and robust free cash flow generation to develop the Back River Gold District, with the potential for long-term tax synergies:
- Upon completion of the Transaction, it is anticipated that B2Gold would develop the Back River Gold District without further equity dilution to B2Gold shareholders.
- Development of the district offers the potential for long-term tax benefits from B2Gold’s Canadian tax pools.
Clive Johnson, President and Chief Executive Officer of B2Gold said, “The acquisition of Sabina represents an exciting opportunity to develop the significant gold resource endowment at the Back River Gold District into a large, long life mining complex. B2Gold has strong construction expertise and experience to successfully develop the fully permitted Goose project and unlock considerable value for the shareholders of both Sabina and B2Gold. The Back River Gold District has multiple high-potential mineralized zones which remain open, and we are confident that the district has strong untapped upside with numerous avenues for resource growth.
Our extensive due diligence reinforced the scarcity of a gold district of the quality of Back River, as well as the excellent work that the Sabina team has completed to date in taking the asset from an exploration project to a near-term operating mine. We have great respect for what Sabina has achieved at Back River and look forward to working with their exceptional team moving forward.
We also look forward to building strong relationships with the Kitikmeot Inuit Association and commit to ensuring that the development of the gold district delivers sustainable benefits to the Kitikmeot communities and Nunavut, as B2Gold has done all over the world in the communities and jurisdictions in which we operate in.”
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Benefits to Sabina Shareholders
- Immediate upfront premium of 45% to the to the 20-day VWAP of each of B2Gold and Sabina on the TSX as of February 10, 2023, and a premium of 45% to the closing price of Sabina on the TSX as of February 2, 2023, the date the non-binding letter of intent was signed.
- Ownership in a major gold producer with proven northern construction and operating capabilities, significantly reduces execution risk of the Goose project compared to a junior developer.
- Ongoing exposure to future value creating milestones at the Back River Gold District, and to Fekola, a cornerstone Tier 1 asset with significant free cash flow generation.
- Provides access to a strong, debt free balance sheet and robust cash flow generation to fund and optimize the development of the Back River Gold District.
- Enhanced institutional investor following, improved trading liquidity, and participation in a peer leading dividend yield.
Bruce McLeod, President and Chief Executive Officer of Sabina said, “We are tremendously proud of the work we have done to advance the first mine on what we believe will be a multi-generational mining district at Back River. The execution of the Goose project by Sabina did not come without risk to Sabina as a single asset, junior development company with capital constraints. With a two-year construction period until first gold production, we believe that additional value can be unlocked by participating as shareholders of a major gold producer with the northern experience and financial resources to optimize the Goose project and this prolific belt. Shareholders will also benefit from exposure to B2Gold’s continued growth and healthy dividends.
We would like to thank our land-owners, the Kitikmeot Inuit Association and the constituents of the Kitikmeot Region for all their support in advancing this project. I am confident that, when completed, this agreement means an ever-brighter future for the Back River Gold District. B2Gold will bring to Nunavut a wealth of international mining experience built upon a proven track record of project success.”
The Back River Gold District is located in southwestern Nunavut, Canada, approximately 520 km northeast of Yellowknife. The district comprises mining leases and claims covering approximately 58,374 hectares. There are five mineral claim blocks on the 80 km belt. The most advanced is the Goose project. The second most advanced is the George project, situated approximately 60 km northwest from the Goose project. There are three other underexplored claim blocks named Boot, Boulder, and Del. Significant infrastructure exists at the Goose project site along with the port facility at Bathurst Inlet.
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