THE BOURSE WHISPERER: Gryphon Minerals (ASX: GRY) has entered into a Scheme Implementation Agreement (SIA) with Teranga Gold Corporation (TSX:TGZ) (ASX:TGZ), under which Teranga is set to acquire all of the ordinary shares of Gryphon.
Under the terms of the SIA, each Gryphon share will be exchanged for 0.169 common shares of Teranga or 0.169 Teranga shares in the form of ASX-listed CHESS Depositary Interests (CDIs).
Based on the closing price of Teranga CDIs on Australian Securities Exchange on 17 June 2016, the transaction values each Gryphon share at 20.6 cents.
Teranga is the owner/operator of the Sabodala gold mine, the only gold mine and mill in Senegal, West Africa.
Sabodala has been in operation since 2009.
As at 31 December 2015 Teranga’s total proven and probable open pit reserves were 2.6 million ounces of gold, including measured and indicated open pit resources of 4.4 million ounces of gold and inferred open pit mineral resources of 0.94 million ounces of gold.
The Sabodala gold mine has a 13.5 year mine life based on current production and proven and probable reserves.
“We are very pleased to be joining forces with Teranga Gold Corporation as we look to create a pre-eminent West African mid-tier gold producer,” Gryphon Minerals managing director Steve Parsons said in the company’s announcement to the Australian Securities Exchange.
“This transaction gives an immediate uplift for Gryphon shareholders and provides significant exposure to Teranga’s Sabodala gold mine in Senegal.
“The combined company can leverage off its strong balance sheet and mining cash flows to help bring the 3.6 million ounce Banfora gold project into development and production in the near term.
“The combination of the companies provides a great opportunity to leverage off the skill sets of both groups with Teranga’s mining and development team and Gryphon’s expertise and social licence to operate in Burkina Faso as well as its excellent track record on exploration and discovery.”
For its part in the deal, Teranga said it considers the acquisition of Gryphon to be an ideal opportunity to add a second high-quality gold asset to the company’s asset base allowing it to create a geographically diversified company with an enhanced gold production profile as it moves forwards to reach its vision of becoming a mid-tier West African gold producer.
“Banfora provides excellent optionality with attractive economics over a variety of development scenarios along a highly prospective land package which we intend to purposefully explore,” Teranga Gold Corporation president and chief executive officer Richard Young said.
“Banfora’s similar mining characteristics to Sabodala allow us to leverage our experienced mine construction and operating teams with Gryphon’s mine development and exploration teams to successfully develop and operate the new mine.
“Adding Banfora to our low-cost Sabodala operation should position Teranga to produce around 300,000 ounces per year with all-in sustaining cash costs below industry average.”