20:20:25 EST Mon 30 Jan 2023
Enter Symbol
or Name
USA
CA



Skeena Resources Ltd (4)
Symbol SKE
Shares Issued 65,501,884
Close 2022-03-30 C$ 14.26
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Skeena to acquire Questex for $48.6-million

2022-03-30 09:07 ET - News Release

Mr. Walter Coles Jr. reports

SKEENA ANNOUNCES ACQUISITION OF QUESTEX GOLD & COPPER LTD. AND CONCURRENT SALE OF QUESTEX ASSETS TO NEWMONT CORPORATION

Skeena Resources Ltd. has signed a binding agreement with Questex Gold & Copper Ltd. whereby Skeena will acquire all of the issued and outstanding shares of Questex, pursuant to a plan of arrangement for share and cash consideration. The consideration will consist of 65 cents cash and 0.0367 of a common share in the capital of Skeena for each one Questex common share, representing total consideration of approximately $48.6-million, or approximately $1.20 per Questex share, based on Skeena's five-day volume-weighted average price ending March 29, 2022, on the Toronto Stock Exchange.

Skeena has signed a concurrent binding agreement with Newmont Corp. to vend certain Questex properties to Newmont via an asset purchase agreement on completion of the Questex transaction for approximately $27-million. The cash proceeds from the Newmont transaction are expected to be sufficient to cover the cash portion of the aggregate arrangement consideration payable by Skeena. The net arrangement consideration (after subtracting the Questex shares already owned by Skeena and Newmont) will be payable through the issuance of approximately $15-million in Skeena shares. Skeena will also assume Questex's outstanding options and warrants.

Benefits to Skeena:

  • Expansive land package in British Columbia's prolific Golden Triangle: Following the closing of the Questex transaction and the Newmont transaction, Skeena's land package will increase nearly sevenfold, and the company will (based on publicly available information) have one of the largest land positions held for mining in British Columbia's Golden Triangle, totalling 84,889 hectares.
  • Exploration synergies and potential: The proximity of Questex's KSP and Kingpin properties to Skeena's Eskay Creek and Snip projects provides opportunities for exploration synergies. The company believes that the combined portfolio offers significant exploration potential.
  • Minimal dilution to Skeena shareholders: The combination of cash and shares minimizes dilution to Skeena shareholders to less than 2 per cent, while the cash component is expected to be entirely offset by the proceeds of the Newmont transaction.

Walter Coles, president and chief executive officer of Skeena, commented: "We are excited to announce these transactions, which will add over 74,000 hectares to Skeena's landholdings and give us one of the largest land positions held for mining in the prolific Golden Triangle. The KSP and Kingpin properties are proximal to our Eskay Creek and Snip projects, and appear to have the same geological hallmarks that have hosted other large gold systems in the area. Involving Newmont on these transactions has allowed Skeena to acquire these strategically important land packages while minimizing share dilution. We are excited to explore these new mineral claims as we continue to advance Eskay Creek."

Transaction details

Questex transaction

Under the terms of the binding agreement dated March 29, 2022, between Skeena and Questex, each of Questex's issued and outstanding common shares will be exchanged for 65 cents cash and 0.0367 of a Skeena share, representing total consideration of approximately $1.20 per Questex share based on Skeena's five-day VWAP ending March 29, 2022, on the TSX.

Pursuant to the arrangement agreement, the Questex acquisition will be carried out by way of a court approved plan of arrangement and will require the approval of at least 66-2/3 per cent of the votes cast by (a) shareholders of Questex, voting as a single class and (b) shareholders, option holders and certain warrant holders of Questex, voting as a single class, in each case that are present in person or by proxy at a special meeting expected to be held in May of 2022 and, pursuant to Multilateral Instrument 61-101 -- Protection of Minority Securityholders in Special Transactions, a simple majority of the votes cast by shareholders of Questex present in person or by proxy after excluding any votes of related parties and interested parties, and other persons required to be excluded under 61-101 (including Skeena and Newmont), all at a special meeting to consider the transaction. The arrangement agreement includes customary deal-protection provisions, including non-solicitation provisions, a right to match in the event of a superior proposal and a termination fee or expense reimbursement payable under certain circumstances (and which is subject to a sharing arrangement with Newmont). Full details of the Questex acquisition will be included in the management information circular of Questex to be mailed in respect of the Questex meeting. Completion of the Questex transaction is subject to the fulfilment of each of the conditions precedent to the Newmont transaction that are capable of being fulfilled prior to the closing of the Questex transaction.

The board of directors of each of Skeena and Questex has unanimously approved the arrangement agreement. Certain significant shareholders of Questex, and the directors and senior officers of Questex, have entered into voting support agreements, pursuant to which each has agreed to vote all of their Questex securities in favour of the Questex acquisition. Collectively, the supporting shareholders own approximately 27 per cent of the outstanding common shares of Questex.

Newmont transaction

Skeena and Newmont have entered into a binding asset purchase agreement dated March 29, 2022, pursuant to which Newmont will purchase 100 per cent of Skeena's rights, titles and interests, on completion of the Questex transaction, in and to the Heart Peaks, Castle, Moat, Coyote and North ROK properties, currently owned by Questex, in exchange for cash consideration of approximately $27-million. The consideration payable to Skeena pursuant to the Newmont transaction will be set off against the arrangement consideration payable and issuable to Newmont pursuant to the Questex transaction, with the remaining amount payable by Newmont under the Newmont transaction being sufficient to cover the cash portion of the aggregate arrangement consideration payable pursuant to the Questex transaction.

Completion of the Newmont transaction is subject to completion of the Questex transaction.

Closing

Subject to Questex shareholder approval, regulatory approval (including TSX Venture Exchange and TSX) and the fulfilment of other customary closing conditions, the company expects to close the Questex transaction and Newmont transaction on or about June 2, 2022.

Advisers and counsel

Agentis Capital Mining Partners is acting as financial adviser to Skeena with regard to both the Questex and Newmont transactions. Blake, Cassels & Graydon LLP is acting as legal counsel to Skeena.

About Skeena Resources Ltd.

Skeena Resources is a Canadian mining exploration and development company focused on revitalizing the past-producing Eskay Creek gold-silver mine located in Tahltan territory in the Golden Triangle of northwest British Columbia, Canada. The company released a prefeasibility study for Eskay Creek in July, 2021, which highlights an open-pit average grade of 4.57 grams per tonne gold equivalent, an after-tax net present value at a 5-per-cent discount of $1.4-billion, 56-per-cent internal rate of return and a 1.4-year payback at $1,550 (U.S.) per ounce Au. Skeena is currently completing both infill and exploration drilling to advance Eskay Creek to a full feasibility study in 2022.

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