Monarch Gold Announces Mailing of Management Information Circular for Proposed Arrangement With Yamana Gold

Rhea-AI Summary

Monarch Gold Corporation (TSX:MQR)(OTCQX:MRQRF) has filed its management information circular for a special meeting on December 30, 2020, concerning its proposed arrangement with Yamana Gold Inc.. Under the agreement, Yamana will acquire Monarch's Wasamac and Camflo properties for about C$200 million or C$0.63 per share. Shareholders will receive $0.192 in cash, 0.0376 Yamana shares, and 0.20 shares of a new entity, SpinCo. The arrangement offers a 43% premium for Monarch shareholders. The board recommends voting in favor of the transaction.

Positive

• Proposed arrangement with Yamana Gold offers a significant premium of approximately 43% to Monarch Shareholders based on prior closing prices.
• Monarch Shareholders will retain exposure to additional mineral properties through SpinCo, alongside receiving shares in a well-established gold producer, Yamana.
• Yamana's strong balance sheet and operational capabilities are expected to provide financial stability and capital market exposure to Monarch Shareholders.

Negative

• There are inherent risks in the transaction approval process, including potential failure to secure necessary regulatory and shareholder approvals, which may delay or prevent completion.
• If the transaction fails, existing business operations could be adversely affected, impacting Monarch's future performance and financial health.

MONTREAL, QC / ACCESSWIRE / December 8, 2020 / MONARCH GOLD CORPORATION ("Monarch" or the "Corporation") (TSX:MQR)(OTCQX:MRQRF)(FRA:MR7) announced today that the Corporation has filed its management information circular and related materials for the annual and special meeting (the "Meeting") of shareholders (the "Monarch Shareholders") and optionholders of Monarch (together with the Monarch Shareholders, the "Securityholders") to be held on December 30, 2020 in connection with the proposed arrangement (the "Arrangement") with Yamana Gold Inc. ("Yamana").

The Transaction

As announced on November 2, 2020, Monarch entered into an arrangement agreement (the "Arrangement Agreement") with Yamana pursuant to which Yamana will acquire the Wasamac property and the Camflo property and mill through the acquisition of all of the outstanding shares of Monarch (other than the shares already owned by Yamana) for total consideration of approximately C$200 million or C$0.63 per Monarch share on a fully diluted basis. Under the Arrangement, Monarch will first complete a spin-out to its Shareholders through a newly-formed company, Monarch Mining Corporation ("SpinCo"), which will hold the remaining mineral properties and certain other assets and liabilities of Monarch. Pursuant to the Arrangement, Monarch Shareholders will receive, in respect of each common share of Monarch (a "Monarch Share") held:

• $0.192 in cash from Yamana;
• 0.0376 of a common share of Yamana (each whole share, a "Yamana Share"); and
• 0.20 of a common share of SpinCo (each whole share, a "SpinCo Share");

(collectively, the "Consideration").

Benefits to Monarch Shareholders of the Arrangement Agreement

• Significant Premium to Monarch Shareholders. Yamana has offered Monarch Shareholders a significant premium to the Monarch Share price. The Consideration to be received by the Monarch Shareholders, based on the closing price of the Yamana Shares on the Toronto Stock Exchange (the "TSX") on October 30, 2020 (being the last trading day prior to the announcement of the Arrangement), represents a premium of approximately 43% based on the closing price of the Monarch Shares on the TSX on October 30, 2020 and a premium of 43% to the volume weighted average price of the Monarch Shares on the TSX for the 20-day period ending on October 30, 2020.
• Continued Exposure to the Acquisition Properties. Monarch Shareholders, through their ownership of Yamana Shares, will participate in the value associated with the exploration, development and operation of the acquisition properties, supported by Yamana's technical, operational and financial capability.
• Benefits of Owning Yamana Shares. The Yamana Shares to be received by Monarch Shareholders in the Arrangement offer Monarch Shareholders an opportunity to own shares in a high-quality, low-cost gold producer, as well as exposure to Yamana's portfolio of well diversified assets in safe jurisdictions throughout the Americas.
• Continued Exposure to Other Monarch Assets. Monarch Shareholders, through their ownership of SpinCo Shares, will have continued exposure to the other Monarch assets being transferred to SpinCo.
• Access to Capital and Enhanced Capital Markets Exposure. Yamana has a strong balance sheet with sufficient cash and liquidity to advance its assets. The management team and board of directors of Yamana have high visibility in the mining industry and significant relationships with key sector investors and analysts that should help to attract strong retail and institutional support for Yamana and the Wasamac Property.

Board Recommendation

The Board of directors of Monarch unanimously (with Mr. Yohann Bouchard who, having declared his interest as an officer of Yamana, did not participate in the meetings or vote with respect to the Arrangement or the Arrangement Agreement) determined that the Arrangement is fair to the Monarch Shareholders, that the Arrangement and the entering into of the Arrangement Agreement are in the best interests of Monarch and recommends that Monarch Securityholders vote FOR the resolution approving the Arrangement.

The Meeting

The Meeting will be held on December 30, 2020 at 9:30 a.m. (Eastern time). In light of the recent coronavirus (COVID-19) pandemic and in order to address potential issues arising from the unprecedented public health impact of COVID-19, comply with applicable public health directives that may be in force at the time of the Meeting and to limit and mitigate risks to the health and safety of our communities, Monarch Securityholders, employees, directors and other stakeholders, the Meeting will be held in a virtual format, which will be conducted via live webcast online at https://web.lumiagm.com/201893367 (password: monarch2020).

Securityholder Questions and Assistance

If you have questions or need assistance in your consideration of the Arrangement, or with the completion and delivery of your proxy, please contact Monarch's shareholder communications advisor and proxy solicitation agent, Laurel Hill Advisory Group, by telephone at 1.877.452.7184 toll-free in Canada (+1.416.304.0211 for international calls) or by e-mail at assistance@laurelhill.com.

Caution Regarding Forward-Looking Statements

This press release may contain forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts included in this press release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of Monarch, may constitute forward-looking statements within the meaning of Canadian securities legislation and regulations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue", the negatives of these terms, variations of them and similar expressions. More particularly and without restriction, this press release contains forward-looking statements and information regarding: statements and implications about the anticipated benefits of the proposed transaction for Monarch, its employees, business partners, shareholders and other stakeholders, including future financial and operating results, plans, objectives, expectations and intentions of Yamana or Monarch; and the anticipated timing of the annual and special meeting of Securityholders of Monarch and of the completion of the proposed transaction.

In respect of the forward-looking statements and information concerning the anticipated benefits and timing of the completion of the proposed transaction, Monarch has provided such statements and information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and Securityholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the transaction; and other expectations and assumptions concerning the proposed transaction. The anticipated dates indicated may change for a number of reasons, including the inability to receive, in a timely manner, the necessary regulatory, court and Securityholder approvals, the necessity to extend the time limits for satisfying the other conditions to the completion of the proposed transaction or the ability of the Board of Directors to consider and approve, subject to compliance by Monarch of its obligations in this respect under the Arrangement Agreement, a superior proposal for Monarch. Although Monarch believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct, that the proposed transaction will be completed or that it will be completed on the terms and conditions contemplated in this press release. Accordingly, investors and others are cautioned that undue reliance should not be placed on any forward-looking statements.

Risks and uncertainties inherent in the nature of the proposed transaction include, without limitation, the failure of the parties to obtain the necessary Securityholder, regulatory and court approvals or to otherwise satisfy the conditions to the completion of the transaction; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; significant transaction costs or unknown liabilities; the ability of the Board of Directors to consider and approve, subject to compliance by Monarch of its obligations in this respect under the Arrangement Agreement, a superior proposal for Monarch; the failure to realize the expected benefits of the transaction; and general economic conditions. Failure to obtain the necessary Securityholder, regulatory and court approvals, or the failure of the parties to otherwise satisfy the conditions to the completion of the transaction or to complete the transaction, may result in the transaction not being completed on the proposed terms, or at all. In addition, if the transaction is not completed, and Monarch continues as an independent entity, there are risks that the announcement of the proposed transaction and the dedication of substantial resources of Monarch to the completion of the transaction could have an impact on its business and strategic relationships (including with future and prospective employees, customers, suppliers and partners), operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Furthermore, the failure of Monarch to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in it being required to pay a fee to Yamana, the result of which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations. Consequently, the reader is cautioned not to place undue reliance on the forward-looking statements and information contained in this press release.

The forward-looking statements in this document reflect the Monarch's expectations on the date hereof and are subject to change after that date. Monarch expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

No Offer or Solicitation

This announcement is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell Monarch common shares.

FOR MORE INFORMATION:

Jean-Marc Lacoste
President and Chief Executive Officer
1-888-994-4465
jm.lacoste@monarquesgold.com

Mathieu Séguin
Vice President, Corporate Development
1-888-994-4465
m.seguin@monarquesgold.com

Elisabeth Tremblay 1-888-994-4465
Senior Geologist - Communications Specialist
1-888-994-4465
e.tremblay@monarquesgold.com

www.monarquesgold.com

SOURCE: Monarch Gold Corp.

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FAQ

What is the proposed arrangement between Monarch Gold and Yamana Gold?

Monarch Gold's proposed arrangement involves Yamana acquiring Monarch's Wasamac and Camflo properties for approximately C$200 million, offering Monarch shareholders a significant premium.

When is the shareholder meeting for Monarch Gold's arrangement with Yamana?

The shareholder meeting is scheduled for December 30, 2020, at 9:30 a.m. Eastern time.

What will Monarch shareholders receive under the arrangement with Yamana Gold?

Shareholders will receive $0.192 in cash, 0.0376 shares of Yamana, and 0.20 shares of a new company, SpinCo.

What are the risks associated with Monarch Gold's proposed arrangement?

The risks include potential failure to obtain necessary regulatory and shareholder approvals, which could delay or prevent the transaction.

How much premium will Monarch shareholders receive from the arrangement?

Monarch shareholders will receive a premium of approximately 43% based on the closing price prior to the announcement of the deal.