Auryn to Acquire Eastmain Resources and Spin Out Peruvian Assets Combination to Create Fury Gold, a Leading Canadian Gold Developer
Auryn to Acquire Eastmain Resources and Spin Out Peruvian
Assets
Combination to Create Fury Gold, a Leading Canadian Gold Developer
VANCOUVER & TORONTO, CANADA / July 29, 2020 / Auryn Resources Inc.
(TSX:AUG)(NYSE American:AUG) ("Auryn") and Eastmain Resources Inc. (TSX: ER)
("Eastmain") are pleased to announce that they have entered into a definitive agreement (the
"Agreement") pursuant to which Auryn will acquire all of the issued and outstanding shares of
Eastmain, immediately following a spin out of Auryn's Peruvian projects to Auryn shareholders
and completion of a concurrent financing (collectively, the "Transaction"). The Transaction will
create Fury Gold Mines Limited ("Fury Gold") and two independent spin-out entities
("SpinCos") which will hold Auryn's Peruvian projects.
Concurrent with the spin-out of the Peruvian projects, Fury Gold will consolidate its shares by
approximately 10:7 such that approximately 110 million Fury Gold shares will be outstanding
after the Eastmain acquisition (pre-financing), of which 69% will be owned by current Auryn
shareholders and 31% will be owned by current Eastmain shareholders. Fury Gold is expected to
remain listed on the TSX and NYSE American exchanges, and will be led by new President &
CEO, Mike Timmins, whose bio follows below.
Eastmain shareholders as of the closing date of the Transaction will be entitled to receive
approximately 0.117 of a Fury Gold share (approximately 0.165 of an Auryn share pre-
consolidation) for each Eastmain share (the "Eastmain Exchange Ratio"). After adjustment for
the assumed value of the SpinCo shares based on an independent valuation report received by
Auryn, the C$121M offer represents approximately C$0.42 per Eastmain share, representing a
premium of 137% to the closing market price of the Eastmain shares on July 29, 2020, and a
premium of 123% based on the 20 day volume weighted average price of the Eastmain shares.
Transaction Highlights
• Auryn to spin out Peruvian assets into two new SpinCo companies - "SpinCo Sombrero"
consisting of the Sombrero project and "SpinCo Curibaya" consisting of the Curibaya and
Huilacollo projects described below. Auryn engaged Evans and Evans Inc. to provide a
comprehensive valuation report on the value of the two SpinCos. The midpoint of Evans
& Evans, Inc.'s value range for the SpinCos is US$45.5M.
• Auryn shareholders to receive approximately 0.7 shares of Fury Gold together with one
share in each SpinCo for each Auryn share held as of the closing date of the Transaction.
• Auryn to combine its Canadian assets and operations (Committee Bay in Nunavut and
Homestake Ridge in British Columbia) with Eastmain's assets (Eau Claire and Eleonore
South Joint Venture in Quebec) to create a Canadian developer platform with an
aggressive growth strategy.
• Mike Timmins, former Agnico Eagle VP of Corporate Development, to lead Fury Gold
as President, CEO and Director.
• Concurrent private placement of Fury Gold subscription receipts, raising a minimum of
$15 million (the "Financing").
• Fury Gold to commence a 50,000-meter drill program at Eau Claire shortly after closing
of the Transaction.
• Fury Gold will provide updated exploration plans for Homestake Ridge and Committee
Bay after closing of the Transaction.
Further Particulars of Transaction
Fury Gold will have approximately 110 million shares issued and outstanding (pre-financing) of
which 69% will be owned by former Auryn shareholders and 31% will be owned by former
Eastmain shareholders. Fury Gold will also have approximately 9 million options and warrants
outstanding on completion of the Transaction. Any options or warrants exercised prior to the
closing of the Transaction will not alter the 69%/31% ownership of Fury Gold.
The spin out of Auryn's Peruvian assets will result in two independent companies, one holding
the Sombrero property, and the second holding the Curibaya and Huilacollo properties, with
approximately C$7.5 million in combined cash to fund their future operations. Auryn
shareholders will receive, for each Auryn share held as of the closing date of the Transaction, a
full share in each of these two companies, which will be reporting issuers in Canada. Stock
exchange listings will not be immediately sought for either SpinCo.
Holders of Eastmain options will receive appropriately adjusted replacement options of Fury
Gold and Eastmain's outstanding warrants will be adjusted so that on exercise, holders will
receive shares of Fury Gold adjusted to reflect the Eastmain Exchange Ratio. Holders of options
and warrants of Auryn will receive appropriately adjusted replacement options and warrants of
New Auryn, which will be exercisable into shares of Fury Gold and the two SpinCos as if
exercised prior to completion of the Transaction.
STRONG BENEFITS TO SHAREHOLDERS
Benefits to Shareholders of Both Companies
• The combination of Eastmain's portfolio with Auryn's Canadian projects into one
Canadian-focused gold exploration and development company;
• An experienced leadership team with exploration and development pedigrees and a track
record of creating shareholder value;
• A strong technical team, led by SVP of Exploration, Michael Henrichsen, P. Geo, with
access to a team of experts responsible for discovering and developing millions of ounces
of gold globally; and
• A well-funded company with ample resources for acceleration of step-out exploration,
drilling and development.
Benefits to Auryn Shareholders
• Adds a cornerstone development project in Eau Claire, an advanced staged high-grade
gold project in close proximity to Newmont's Eleonore gold mine;
• Separation of Auryn's opportunities by commodity and country, allowing for Canadian
and Peruvian projects to be valued separately; and
• 100% participation in the Peruvian projects through the SpinCos, each of which will hold
sufficient cash for exploration and the obtaining of permits.
Benefits to Eastmain Shareholders
• Immediate premium and strong re-rating potential;
• Eliminates single asset risk and enhances growth optionality; and
• Participation in the substantial upside of Committee Bay and Homestake Ridge.
A Message from Ivan Bebek, Executive Chairman & Director of Auryn:
"Auryn has spent a considerable amount of time and money developing a tier-one exploration
portfolio. The splitting of Auryn should unlock considerable value for Auryn shareholders, and
importantly, results in three, commodity-specific exploration companies well-positioned for
major discoveries as we head into the bull market.
"Fury Gold will combine the high-grade gold projects; Committee Bay in Nunavut, Homestake
Ridge in B.C and Eau Claire in Quebec, to offer investors a robust Canadian, gold-focused
exploration and development company. We are very excited to welcome Mike Timmins as CEO
of this new endeavour and believe that his impressive pedigree combined with our world-class
technical team will successfully execute on our goal of creating significant shareholder value
through discovery and development in all three jurisdictions.
"Sombrero and Curibaya are premier exploration targets in Peru and we are in the final phases of
permitting for inaugural drill programs. We plan to significantly enhance the value of these
entities over the coming months, prior to their relisting, through achieving drill permits,
completing additional community agreements to provide access to more areas, identifying
additional high priority targets and further value-added acquisitions."
A Message from Laurie Curtis, Chairman of Eastmain:
"The Board of Eastmain strongly endorses the Transaction, as we believe it is in the best interests
of all our shareholders and stakeholders. Fury Gold will have the capability and access to capital
to develop and finance Eau Claire. We want to commend our interim President and CEO Blair
Schultz for his efforts in delivering this strong partner and to thank our entire team for their
efforts moving this Transaction to a positive conclusion. The time is right and Fury Gold opens
up a new horizon for all of our stakeholders."
Fury Gold
Fury Gold will hold three core Canadian gold projects: Eau Claire in Quebec, Committee Bay in
Nunavut and Homestake Ridge in British Columbia. Secondary assets will include Gibson
MacQuoid in Nunavut and 36.7% of the Eleonore South Joint Venture in Quebec.
Eau Claire (Quebec):
• ~113,000 hectares in Central James Bay
• PEA completed in 2018
• Resource (as of February 4, 2018):
o Measured & Indicated: 853,000 ounces of 6.18 g/t Au
o Inferred: 500,000 ounces of 6.53 g/t Au
Committee Bay (Nunavut):
• ~300 km greenstone belt
• Resource (as of May 31, 2017):
o Indicated: 524,000 ounces of 7.85 g/t Au
o Inferred: 720,000 ounces of 7.64 g/t Au
Homestake Ridge (British Columbia):
• ~7,500 hectares in the Golden Triangle
• Amended PEA dated June 24, 2020
• Resource (as of May 29, 2020):
o Indicated: 165,000 ounces of 7.02 g/t Au
o Inferred: 816,000 ounces of 4.58 g/t Au
A Message from Mike Timmins, President & CEO of Fury:
"I am excited by this new opportunity presented by Fury Gold. The Transaction reflects Auryn's
long-term strategy of acquiring promising, early-stage gold projects and leveraging a broad range
of technical skill sets to add value through focused exploration and development. I look forward
to leading a team of experienced and talented professionals that are capable of taking big steps to
drive growth."
Proposed Board of Directors of Fury Gold
The proposed board will consist of current Auryn directors, Ivan Bebek, Jeffrey Mason and
Steve Cook, current Eastmain directors, Michael Hoffman and Blair Schultz, with the addition of
Mike Timmins as CEO and director.
Ivan Bebek, Chair:
Mr. Bebek has over 20 years of experience in mineral project acquisition, financing and exit
strategies. Mr. Bebek was formerly the President, CEO and co-founder of Cayden Resources,
which was sold to Agnico Eagle Mines for $205 million in November 2014, and a co-founder of
Keegan Resources (now Galliano Gold). Mr. Bebek is a cofounder, Co-Chairman and Director of
Torq Resources (formerly, Stratton Resources).
Mike Timmins, President, Chief Executive Officer, Director:
Mr. Timmins brings over 20 years of experience as a mining executive from his work with a
number of companies, including Agnico Eagle Mines and Placer Dome. Mr. Timmins was Vice
President of Corporate Development at Agnico, where he played a key role in the development
of the Kittila mine in northern Finland and in the acquisition of Osisko Mining for C$3.9 billion.
He has degrees from Queen's University (EMBA), the University of British Columbia (M. Sc.
Metallurgy) and Bishop's University (B.Sc.). Mr. Timmins also serves as a Director and Audit
Committee member for Excellon Resources.
Blair Schultz, Director:
Mr. Schultz, a director of Eastmain since April 2016, brings over 20 years of experience in
financial, operational and capital markets. He spent 14 years at K2 and Associates Investment
Management Inc. before taken on several board and executive roles at mining companies, most
notably the resurrection of Klondex Mining. More recently he organized the spinout 1911 Gold
Corp from Klondex and RTO'd Arizona Metals into a CPC shell. He is currently on the Board of
Directors for 1911 Gold Corp and Solstice Gold Corp. Mr. Schultz holds an Honours Bachelor of
Mathematics degree from the University of Waterloo with a Business Administration option
from Wilfred Laurier University.
Jeffrey Mason, Director:
Mr. Mason is a CPA and holds an ICD.D. He has extensive experience in the exploration,
development, construction and operation of precious and base metals projects in the Americas,
Asia and Africa, including 15 years as a Principal, Board Director and Chief Financial Officer
for the Hunter Dickinson group of companies. He began his career with Deloitte LLP as a CPA,
followed by six years at Barrick Gold Corporation. Overall, Mr. Mason has served as Chief
Financial Officer, Chief Financial Officer, Corporate Secretary and Board Director for over 20
public companies listed on the TSX, TSXV, NYSE American and NASDAQ. Most recently, he
was the Chair of the board and interim CEO of Great Panther Mining. Mr. Mason currently
serves as an Independent Director of Torq Resources.
Steve Cook, Director:
Mr. Cook is a practicing tax partner at the law firm of Thorsteinssons LLP in Vancouver. He
received his B. Comm. and LL.B. degrees from the University of British Columbia and was
called to the British Columbia Bar in 1982. Mr. Cook is a specialist in corporate and
international tax planning, offshore structures, representation and civil and criminal tax litigation.
He has served on the board of Brett Resources, prior to it being acquired by Osisko Mining, and
Cayden Resources, prior to it being acquired by Agnico Eagle Mines. Mr. Cook currently serves
as a Director of Torq Resources and Lasalle Exploration.
Michael Hoffman, Director:
Mr. Hoffman, a director of Eastmain since March 2016, is an experienced mining executive with
over 30 years of practice including engineering, mine operations, corporate development,
projects and construction. Mr. Hoffman also has direct northern Canadian mining experience
including operations and projects. He currently serves as a director of Velocity Minerals and
1911 Gold. Mr. Hoffman is a Mining Engineering graduate from Queen's University and is a
Professional Engineer in the province of Ontario. He is also a member of the Institute of
Corporate Directors.
Proposed Advisory Board
Shawn Wallace:
Mr. Wallace has been involved in all aspects of the mining industry, from mineral exploration
and project management, to financing, mergers & acquisitions and corporate development. Over
the past 30 years, Mr. Wallace has been instrumental in building numerous high-quality mineral
exploration, development and production companies, including co-founding Cayden Resources,
which was acquired by Agnico Eagle Mines for $205 million. Mr. Wallace is also a co-founder
and Director of Asanko Gold (now Galliano Gold) and a co-founder, Co-Chairman and Director
of Torq Resources.
Laurie Curtis:
Mr. Curtis is a professional geologist who has spent over 50 years exploring and developing
mining assets, especially in the Americas. He founded Intrepid Minerals, which transitioned
through merger and acquisition to Intrepid Mines, which became a gold producer and developer.
He has been actively involved as Director on the boards of several junior developers with
producing mines, including Wheaton River Minerals, High River Gold Mines, Breakwater
Resources and Buryatzoloto. Later in his career, Laurie shifted to the financial sector as a Mining
Research Analyst for Clarus Securities then subsequently as Vice President, Senior analyst for
Dundee Capital Markets. He joined Eastmain as a Director and Chairman in September 2015 and
currently also serves as a Director of Excellon Resources. Laurie graduated with a BSc (Hons)
from the Australian National University, a PhD at University of Toronto, and is Registered
Professional Geoscientist in Ontario.
Peruvian Spin-Out Projects
Auryn will spin out its Peruvian projects to Auryn shareholder via two recently formed British
Columbia companies. Auryn shareholders, as of the effective date of the Transaction, will
receive one full share of each of the SpinCos for each Auryn share. The SpinCos will be
reporting issuers in Canada and will rely on an exemption from registration the United States
under section 12g3-2(b) of the 1934 Exchange Act for Canadian reporting issuers who make
their Canadian filings available in the US. The SpinCos are likely to seek stock exchange listings
once they achieve certain milestones including:
Sombrero
• Obtaining drill permits, currently in progress;
• Completing additional surface exploration and drill targeting on numerous targets that are
in the process of being identified; and
• Securing additional community agreements.
Curibaya
• Completing drill targeting, currently underway;
• Obtaining drill permits, process initiated and underway; and
• Acquiring additional high-quality assets for its exploration portfolio.
Sombrero SpinCo:
The North Sombrero and South Sombrero properties comprise over 130,000 hectares to be
owned or optioned by this SpinCo. The copper-gold concessions are located 340 kilometers SE
of Lima in southern Peru and are hosted in the Andahuaylas-Yauri belt. This belt is interpreted to
be the north-western extension of the Eocene-Oligocene aged copper-gold porphyry and skarn
belt that hosts the Las Bambas, Haquira, Los Chancas, Cotambambas, Constancia, Antapaccay
and Tintaya deposits. The project is characterized by multiple mineralized intrusive centers with
significant copper and gold values from surface samples. The principal targets at Sombrero are
copper-gold skarn, porphyry systems and precious metal epithermal deposits.
Curibaya SpinCo - Curibaya and Huilacollo:
The Curibaya Spinco will have 100% ownership of the Curibaya project which consists of
approximately 11,000 hectares. The Curibaya project is located 48 km north-northeast of the
provincial capital, Tacna, and is accessible by road in two and a half hours. It covers the regional
Incapuquio fault zone and subsidiary structures, which are interpreted as one of the fundamental
controls for both epithermal and porphyry styles of mineralization within the region. Initial
surface sampling programs at Curibaya have returned numerous high-grade samples of silver,
gold and copper over a four-kilometer by four-kilometer alteration system.
The Huilacollo epithermal property is comprised of approximately 3,300 hectares of intense
hydrothermal alteration that is consistent with epithermal Au/Ag mineralization over a four-
kilometer by six-kilometer area. It is located 52 km from Tacna and is accessible by road with
nearby high-voltage power lines and water. Contiguous to the Huilacollo property are the Tacora
and Andamarca properties, which Auryn acquired in August 2017. Auryn's technical team
believes the epithermal system on the Tacora licenses is the continuation of the same oxide gold
epithermal system observed on the Huilacollo licenses. The Andamarca license provides Auryn
with a strategic land position that is considered important from an infrastructure standpoint if
future mining were to occur.
Other Transaction Information
The Transaction will be legally implemented by way of two statutory plans of arrangement
(collectively, the "Arrangements"), one involving Auryn under the Business Corporations Act
(British Columbia) and one by Eastmain under the Business Corporations Act (Ontario). Full
details of the Transaction and each of the Arrangements will be included in the two information
circulars that are expected to be filed with the applicable securities regulatory authorities and
mailed to Auryn and Eastmain securityholders in connection with their respective meetings. It is
anticipated that a special meeting of the securityholders of Eastmain and an annual and special
meeting of the securityholders of Auryn will be held in September 2020. Eastmain and Auryn
securityholders are urged to read the respective information circulars once they are available, as
they will contain additional important information about the Transaction including details about
the tax treatment of the SpinCo portion of the Transaction for Canadian and US Auryn
Shareholders. The Transaction is expected to be completed later in the year.
The Transaction is subject to a number of customary closing conditions, including the approval
by a special majority of securityholders of both companies and the completion of the Financing,
as well as approval of the Arrangements under British Columbia and Ontario law and approval
of the TSX and NYSE American. The terms of the Financing, including pricing, will be settled
in the context of the market after this announcement and the securities issued upon conversion of
the subscription receipts issued under the Financing will not be subject to hold periods in Canada
as a consequence of being issued in connection with the Arrangements. The securities issued in
the Financing will be offered and sold pursuant to prospectus and registration exemptions and
will only be offered where, and to whom, permitted by applicable law. A subsequent news
release will provide the details of the Financing when they are determined.
Pursuant to the Agreement, each company is subject to customary non-solicitation covenants. In
the event a superior proposal is made to a company, the other has the right to match such
proposal. Under certain circumstances where the transaction is not completed because of a third-
party superior proposal received by Eastmain or Auryn, the party accepting a superior proposal
has agreed to pay a termination fee of 3.75% based on the defined value of the superior proposal.
None of the securities to be issued pursuant to the Arrangements including the Financing have
been or will be registered under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), or any state securities laws, and any securities issued in the Arrangement are
anticipated to be issued in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions
under state securities laws. This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities.
Board of Directors' Recommendations
Each of the Boards of Directors of Auryn and Eastmain, following consultation with their
financial and legal advisors and the recommendation of the respective special committees (each,
a "Special Committee") formed to consider the Transaction, have unanimously approved the