OceanaGold Corp and Romarco Minerals have entered into a definitive agreement pursuant to which OceanaGold has agreed to acquire all of the issued and outstanding common shares of Romarco in an all-share transaction to be completed by way of a statutory Plan of Arrangement under the Business Corporations Act (British Columbia). Romarco’s principal asset is the Haile gold mine located in South Carolina, USA, which is a high-grade open pit project that is currently in construction and represents one of the premier gold development assets globally.

The companies say the combination of OceanaGold and Romarco “is expected to create the lowest cost gold producer in the market; propelled by a long reserve life, a portfolio of high quality assets that generate significant free cash flow and a solid pipeline of organic growth opportunities.” Highlights of the combined company:

• Sector leading low cost gold producer – Estimated to produce approximately 540,000 oz of gold annually by 2017 at an All-In Sustaining Cost (AISC) of less than $600/oz
• Diversified production – Combined entity to operate from four operating platforms in three countries with approximately 75% of gold production expected to come from New Zealand and the USA in 2017
• Financial flexibility – Combined entity will have greater financial flexibility through the combined cash position, OceanaGold’s strong free cash flow generation from its existing operations and access to low-cost credit facilities. As a result, the cost of capital for the Haile development is expected to be meaningfully reduced, while maintaining a leverage profile that allows OceanaGold to continue to invest in organic growth opportunities and generate returns to shareholders
• Technical and operational synergies – Combines OceanaGold’s more than 25 years of successful development and operating experience in New Zealand and most recently in the Philippines where the OceanaGold team self-executed the construction and commissioning the Didipio gold-copper mine with Romarco’s operating team who have successfully advanced, permitted and initiated the construction start-up of the Haile mine.

OceanaGold goes on to comment that “Haile represents a high quality development asset and is one of the best gold development assets currently owned by a junior.” It should have a low cost production – Haile’s year 1 (2017) estimated AISC is $414/oz.

Mick Wilkes, Managing Director & CEO of OceanaGold, stated: “We are very pleased to bring this transaction forward to the benefit of both sets of our valued shareholders. OceanaGold has remained disciplined in its growth initiatives while building and preserving a robust balance sheet and positioning the company for the value-creating opportunities that complement our existing portfolio of high-quality assets. We believe the addition of the low-cost, long-life Haile gold mine provides such an opportunity while underpinning an industry leading business. The combination of the sector low cost profile with significant free cash flow generation, diversified production and a pipeline of organic growth opportunities forms the lowest cost gold producer globally.

“We are aligned with Romarco in our philosophy towards social responsibility and therefore, see this important attribute as another good fit for our company,” Wilkes added.

Diane Garrett, President & CEO of Romarco stated: “This transaction with OceanaGold represents a logical business combination that will create a premier intermediate gold producer with a diversified asset base that includes four low-cost operating platforms, a significant organic growth profile, all of which is underpinned by a solid balance sheet and led by a combined experienced and proven operating team. We are confident that our shareholders will benefit from the value-creating opportunities that will be realised through an expanded and diversified asset base and enhanced cash flow generating capabilities. Importantly, we believe OceanaGold has the same philosophy to social responsibility as our own.”