JOHANNESBURG (miningweekly.com) - TMAC Resources has signed a definitive acquisition agreement with Hope Bay Mining, a subsidiary of New York-listed Newmont Mining Corporation, to acquire Newmont's Hope Bay gold mine, in Nunavut, Canada.

The closing of the transaction was subject to conditions, including the completion of a private placement of at least at least $30-million of TMAC equities and the receipt of all required regulatory and third-party approvals.

Prior to the completion of the private placement, TMAC’s ownership in Hope Bay Mining would be 20%, while Newmont would own the rest.

Following the company's initial public offering (IPO), planned for mid-2013, TMAC management's ownership in excess of 6.3% would be held in escrow until commercial production was achieved or a new significant discovery was made or the IPO capital market capitalisation was doubled.

Newmont would retain a 1% net smelter royalty on future production from Hope Bay, but would not receive any upfront cash payments and $300-million of tax attributes would be retained by TMAC for application against future mining production revenues generated from Hope Bay.

The TMAC board would have a majority of independent directors and subject to its 20% minimum ownership threshold, Newmont reserved the right to nominate two directors.

TMAC management and Newmont are subject to an 18-month lock-up following the completion of the planned IPO.

The company has initiated a targeted $50-million private placement of TMAC common shares and would meet with potential investors in the coming weeks.

Proceeds of the financing would be used to open the Hope Bay camps; build ice landing strips; fly in underground and surface drills; initiate underground and surface drill exploration programmes; as well as transport the mill and associated equipment currently located in Durban, South Africa, in Pennsylvania, US and in Lachine, Quebec to the Hope Bay site.

Funds would also be used complete a prefeasibility study to support putting the Doris gold deposit into production and for general corporate purposes.

"TMAC's management team has a proven track record of developing projects with similar characteristics, both profitably and responsibly, while maximizing value for shareholders and other stakeholders. We look forward to developing a strong, long-term partnership as a significant shareholder of TMAC," Newmont strategic development executive VP Randy Engel said.

"By applying best practices and leveraging the TMAC team's proven entrepreneurial approach to profitable, low cost, staged mine development supported by geoscience driven exploration, we believe the 80 km by 20 km Hope Bay belt has great potential to be Canada's next major gold mining camp. Our objective is to become a long-term, profitable and environmentally responsible gold producer for the benefit of all stakeholders," TMAC executive chairperson Terry MacGibbon stated.

Closing of the transaction was anticipated in the first quarter of 2013.