Perseus Mining Limited (ASX:PRU ) (TSX:PRU) is pleased to announce that it has entered into a definitive agreement with Orca Gold Inc. (TSXV: ORG) to acquire all of the outstanding common shares of Orca not already owned by Perseus. The acquisition will be by way of a statutory plan of arrangement under the Canada Business Corporations Act.

HIGHLIGHTS

• Perseus currently owns 15% of the Orca Shares and the holders of the other outstanding Orca Shares have been offered 0.56 Perseus shares for every Orca Share held.
• Based on Perseus’s last closing price¹, Perseus’s offer implies consideration of approximately C$0.896 per Orca Share representing a premium of 62.9% to the last closing price of Orca Shares.
• Total consideration to be paid by Perseus for 100% of Orca is C$215 million. This includes C$17 million in cash previously paid to acquire its initial 15% equity interest and C$198 million in Perseus shares² to acquire the outstanding 85% equity interest.
• Orca shareholders² to own approximately 9.1% of the enlarged issued share capital of Perseus post the Orca Acquisition.
• Orca’s Board of Directors unanimously recommends that the Orca shareholders vote in favour of the Orca Acquisition.
• Orca’s directors and officers and certain shareholders of Orca owning in aggregate approximately 37% of Orca’s voting securities have entered into voting support agreements and have agreed to vote all the securities they own or control in favour of the Orca Acquisition.
• For Perseus’s shareholders, the Orca Acquisition is expected to be net asset value per share accretive and results in ownership of a robust, fully licenced development project located in a supportive mining jurisdiction that is capable of being developed into a large-scale, long-life gold mining operation.

Perseus’s Managing Director and CEO Jeff Quartermaine said:

“The potential acquisition of Orca represents a very exciting growth opportunity for Perseus that aligns with our strategy of upgrading the size, quality and geographic distribution of our asset portfolio.

We have the financial capacity, technical expertise, and in-country relationships, in combination with Orca’s existing management team, to bring Orca’s Block 14 Project into production and in the process, create material benefits for all stakeholders including the government and citizens of Sudan.

When the transaction is completed, Perseus will have three operating mines currently producing gold at a rate of approximately 500,000 ounces per year and a high-quality development project that if brought on stream, as intended, should ensure that Perseus can maintain or exceed its targeted production level well into the next decade.

With the objective of operating four mines, Perseus will be well advanced towards fulfilling its aim of becoming a highly profitable, well managed, pan-African gold company that consistently creates benefits for all stakeholders.”

TRANSACTION OVERVIEW

Perseus has entered into a definitive agreement with Orca under which Perseus will acquire all of the issued and outstanding common shares of Orca not already owned by Perseus by way of a statutory plan of arrangement under the Canada Business Corporations Act. Perseus currently owns 39,092,233 Orca Shares representing approximately 15% of the outstanding Orca Shares.

Pursuant to the terms of the Arrangement Agreement, all of the issued and outstanding Orca Shares that Perseus does not already own will be acquired by Perseus in exchange for Perseus common shares (the “Perseus Shares”) on the basis of 0.56 of a Perseus Share for every 1 Orca Share. Based on the Canadian dollar equivalent of the closing price of Perseus Shares on the Australian Stock Exchange (ASX)³, this implies consideration of approximately C$0.896 per Orca Share for an implied total equity value of approximately C$233 million⁴. The implied consideration represents a premium of 62.9% to the closing Orca Share price of C$0.55 on February 25, 2022. If consummated, the Orca Acquisition would result in Orca shareholders⁴ owning approximately 9.1% of the pro-forma Perseus Shares then outstanding.

TRANSACTION RATIONALE

The Orca Acquisition will deliver material benefits to both Perseus and Orca shareholders. For Perseus shareholders, the Orca Acquisition delivers the following:

• Aligns with Perseus’s strategy of upgrading the size, quality and geographic distribution of its African focussed gold asset portfolio;
• Maintains Perseus’s strong balance sheet while also limiting dilution with Orca shareholders⁴ owning approximately 9.1% of the pro-forma Perseus common shares outstanding;
• Expected to be net asset value per share accretive;
• Orca’s 70% interest in the Block 14 Project provides Perseus with a large and scalable development gold project that is fully licenced, at an advanced stage of readiness for development and has further exploration and resource growth potential;
• Perseus has the financial capacity, technical expertise and in-country relationships to advance the Block 14 Project and is well-supported by local shareholders who collectively own 30% of the Block 14 Project;
• Perseus also gains an indirect interest in the very large, undeveloped Koné Gold Project located in northern Cote d’Ivoire approximately 150 kilometres due south of Perseus’s Sissingué Gold Mine, through Orca’s 31.4% interest in TSXV listed Montage Gold Corp (“Montage”); and
• Shareholders of both Perseus and Orca will benefit from the strength of the combined entity through a share-based transaction.

For Orca shareholders, the Orca Acquisition delivers several benefits including:

• Implied consideration of approximately C$0.896 per Orca Share⁵ representing a 62.9% premium to the last closing price of Orca Shares;
• Orca shareholders will gain continued exposure to Perseus’s diversified portfolio of producing mines and development assets as well as the value created through the potential development of the Block 14 Project; and
• Perseus has the financial capacity to unlock the value of the Block 14 Project.

OVERVIEW OF ORCA

Orca is a TSXV listed gold developer focused on the acquisition, exploration and development of mineral properties in Africa. Orca’s main asset is a 70% interest in the Block 14 Project that is located in northern Sudan near the border with Egypt. Please refer to Orca’s website at www.orcagold.com or under Orca’s profile on SEDAR at www.sedar.com for information in relation to the Mineral Resource and Reserve estimates prepared by Orca for the Block 14 Project. Orca also announced completion of a feasibility study in accordance with National Instrument 43-101 (“NI 43-101”) on the Block 14 Project on September 14, 2020.

The Block 14 Project is a large and scalable resource with a Mineral Resource Estimate⁶ consisting of an Indicated resource of 79.9Mt grading 1.3g/t Au for 3.3Moz Au and an Inferred Resource of 18.5Mt grading 1.2g/t Au for 0.7Moz Au. The Block 14 Project has a Probable Mineral Reserve Estimate⁶ of 79.9Mt grading 1.1g/t Au for 2.9Moz Au.

Orca also owns a 31.4% interest in TSXV listed Montage which announced completion of a feasibility study at its cornerstone Koné Gold Project, located in Côte d’Ivoire, on February 14, 2022 in accordance with NI 43-101. Please refer to Montage’s website for information relating to the Mineral Resource estimates completed by Montage on the Koné Gold Project.

This press release and all technical information regarding Orca’s NI 43-101 have been reviewed and approved by Paul Thompson and Gary Brabham, each a Qualified Person for the purposes of NI 43-101.

DETAILS OF THE ORCA ACQUISITION AND TIMING

The Orca Acquisition, which is not subject to a financing condition, will be implemented by way of a court-approved plan of arrangement under the Canada Business Corporations Act and will require the approval of: (i) 66 2/3% of the votes cast by the holders of Orca Shares; (ii) 66 2/3% of the votes cast by holders of Orca Shares, restricted share units, deferred share units and options, voting together as a single class, and; (iii) approval of a simple majority of the votes cast by holders of Orca Shares, excluding votes from certain shareholders, including Perseus, in accordance with Multilateral Instrument 61-101, at a special meeting of Orca security holders to be held to consider the Orca Acquisition (the “Special Meeting”).

In addition to approval by Orca security holders, the Orca Acquisition is also subject to the receipt of court approval, regulatory approvals and other customary closing conditions for transactions of this nature. Orca intends to call a meeting of securityholders to be held in May 2022 to seek approval for the Arrangement with the closing of the Orca Acquisition expected to occur in early June 2022. Approval of the Orca Acquisition by shareholders of Perseus is not required⁷.

The Arrangement Agreement provides for customary deal-protection provisions, including a non-solicitation covenant on the part of Orca and a right for Perseus to match any Superior Proposal (as defined in the Arrangement Agreement). The Arrangement Agreement includes a termination fee of C$7.5 million, payable by Orca to Perseus, under certain circumstances (including if the Arrangement Agreement is terminated in connection with Orca pursuing a Superior Proposal).

The directors and senior officers of Orca, in addition to certain securityholders of Orca, owning in aggregate of 37% of Orca’s voting securities have entered into voting support agreements pursuant to which they have agreed to vote all the securities they own or control in favour of the Orca Acquisition.

BOARD APPROVAL AND RECOMMENDATION

A special committee of independent directors of Orca has unanimously recommended the Orca Acquisition to the board of directors of Orca. The Orca Board has evaluated the Arrangement Agreement with Orca’s management and legal and financial advisors and, following the receipt and review of the recommendation from the Special Committee, the Orca Board has unanimously approved the Arrangement and determined that the Arrangement is in the best interest of Orca. The Orca Board has resolved to recommend that Orca’s shareholders vote in favour of the Arrangement, all subject to the terms and conditions contained in the Arrangement Agreement.

BMO Capital Markets has provided an opinion to the Orca Special Committee, stating that, as of the date of such opinion and based upon and subject to various assumptions, limitations and qualifications therein, the consideration to be received by the Orca security holders (other than Perseus and its affiliates) pursuant to the Arrangement Agreement is fair, from a financial point of view to such holders.

The Arrangement Agreement has also been unanimously approved by the board of directors of Perseus.

ADDITIONAL INFORMATION

Further details regarding the terms of the Orca Acquisition are set out in the Arrangement Agreement, which will be publicly filed by Orca on Orca’s website at www.orcagold.com and filed under Orca’s profile at SEDAR at www.sedar.com. Additional information regarding the terms of the Arrangement will be provided in the management proxy circular for the Special Meeting which will be mailed to Orca securityholders and also available on Orca’s website at www.orcagold.com and filed under Orca’s profile on SEDAR at www.sedar.com. Orca shareholders are urged to read these and other relevant materials when they become available.

Perseus currently has ownership of and control over 39,092,233 Orca Shares, representing approximately 15% of the issued and outstanding Orca Shares on a non-diluted basis. Perseus has also advanced a loan to Orca in the amount of US$5 million maturing June 30, 2022 and bearing interest at 7.5% per annum. If the Arrangement is not consummated for any reason, Perseus intends to continue to review Orca’s business affairs, capital needs and general industry and economic conditions and may, from time to time, depending on market or other conditions, increase or decrease its ownership, control or direction over the shares or other securities of Orca, through market transactions, private agreements, public offerings or otherwise, or approve a corporate transaction with regard to Orca. A copy of Perseus’s related early warning report will be filed with the applicable securities commissions and will be made available on SEDAR at www.sedar.com. Orca’s head office is at 2000 – 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8, Canada.

ADVISERS AND COUNSEL

Perseus is being advised by Sternship Advisers as financial adviser and by Fasken Martineau LLP as Canadian legal counsel and Corrs Westgarth Chambers as Australian legal counsel.

BMO Capital Markets is acting as financial adviser to Orca and Blake, Cassels & Graydon LLP is acting as Orca’s legal counsel.