Fresnillo (OTCPK:FNLP.F) M&A Announcement Transcript

Summary of Fresnillo's Acquisition of Prove Gold Inc. Company and Industry - Company: Fresnillo - Acquisition Target: Prove Gold Inc. - Industry: Mining, specifically gold mining Core Points and Arguments 1. Acquisition Details: Fresnillo will acquire all outstanding shares of Prove Gold in an all-cash deal valued at C$780 million (approximately $560 million), with each Prove shareholder receiving C$3.65 per share, representing a 24% premium on the 30-day VWAP to Prove's closing price [2][4][3] 2. Strategic Importance: This acquisition marks Fresnillo's first major entry outside Mexico, specifically into Canada, which is recognized for its mining excellence. The acquisition is seen as a strategic move to enhance Fresnillo's growth strategy [2][3][6] 3. Resource Base: Prove Gold has a resource base of 10 million ounces, including 8 million ounces at its flagship Novador Gold Project, located near Val-d'Or, Quebec, a region known for its rich gold mining history [3][4] 4. Exploration Potential: The acquisition includes a large unexplored land package of approximately 1,800 square kilometers in Val-d'Or, providing significant exploration opportunities for Fresnillo [4][6] 5. Transaction Support: The deal has unanimous support from Prove's board of directors and key shareholders, including Eldorado, which owns approximately 12% of Prove's shares [4][5] 6. Timeline: The transaction is expected to close in Q1 2026, with shareholder voting anticipated in January 2026 [6][5] Additional Important Content 1. Commitment to Mexico: Despite the acquisition, Fresnillo emphasizes that Mexico remains its home base, and the company is committed to its existing operations and projects in Mexico [7][6] 2. Future Growth Projects: Fresnillo plans to continue developing its growth projects in Mexico, including Oresivo, Rodeo, and others, while also exploring opportunities in Canada [10][11] 3. Financial Health: Fresnillo reported a cash balance of approximately $1.8 billion at the end of June, with expectations to maintain a robust cash position even after the acquisition payment [15][19] 4. Dividend Policy: The acquisition is not expected to impact Fresnillo's dividend policy, which aims to balance growth and returns to shareholders [19][20] 5. International Diversification: The acquisition may signal a broader strategy for Fresnillo to diversify internationally, with ongoing evaluations of opportunities in other jurisdictions [21][22]