The aggregate purchase price totaled approximately US$83 million, including a US$55 million payment to Newmont and US$28 million to replace the reclamation bond. Klondex has also issued 5 million common share purchase warrants to Newmont with a 15-year term, subject to acceleration in certain circumstances, and an exercise price of C$2.15.
Paul Huet, Klondex President and CEO, stated "Completing this transformational and highly synergistic acquisition is very exciting for us. The addition of the operating Midas mine and mill complex to our portfolio creates an enhanced platform for future growth in one of the world’s most prolific and mining-friendly jurisdictions. We believe that Fire Creek is a tremendous high-grade gold asset with substantial upside potential on its own and, through this acquisition, we have cemented a long-term milling solution, minimizing the risks associated with toll milling, and ultimately enhancing the potential for increased cash flows from our operations. We are extremely pleased to have worked with Newmont to complete the acquisition of Midas, a mine that I, along with several others on the Klondex leadership team operated, and look forward to a continued relationship."
Klondex Chairman, Blair Schultz, added "On behalf of the board, I would like to recognize the hard work and dedication from our entire team in closing the Midas mine and mill acquisition within a short time frame. The acquisition transforms Klondex from an explorer, only a year ago, to a producer with fully-integrated operations in 2014, forever changing the face of our company and positioning us well for future success."
The Acquisition was financed through the net proceeds of the following (collectively, the "Acquisition Financings"):
GOLD FINANCING PACKAGE: a gold financing package from subsidiaries of Franco-Nevada Corporation ("Franco-Nevada") in the amount of US$35 million, consisting of a gold purchase arrangement (the "Gold Purchase") for 38,250 ounces of gold to be delivered by December 31, 2018, and a 2.5% NSR royalty on the Fire Creek and Midas properties commencing 2019, after the scheduled gold deliveries are completed. Under the terms of the Gold Purchase, gold deliveries will be made at the end of each month with the first delivery due on June 30, 2014. Gold deliveries will cease when the delivery of 38,250 ounces is completed on December 31, 2018.
In connection with the Acquisition Financings, Klondex repaid in full from existing working capital the C$7 million principal amount of senior unsecured notes issued in January 2013 and otherwise due in January 2015.
