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Monarch Gold Acquisition Shareholder Information

Important tax information for Monarch Gold Corporation Canadian Shareholders

On January 21, 2021, the shares of Monarch Gold Corporation (“Monarch”) were exchanged for C$0.192 in cash, 0.0376 shares of Yamana Gold Inc. (“Yamana”) and 0.2 shares of Corporation Minière Monarch/Monarch Mining Corporation (“Spinco”) pursuant to the Plan of Arrangement.  This exchange results in a disposition of Monarch shares held by each shareholder for Canadian tax purposes.  Accordingly, a Monarch shareholder may realize a gain (or loss) and be subject to tax. 

Based on the initial trading price of the SpinCo Shares, Monarch is taking the filing position that the fair market value of the Spinco Shares at the time of the share exchange and distribution by Monarch was C$0.65.  However, such valuation is not binding on the Canada Revenue Agency or any holder of Monarch Shares who received Spinco Shares pursuant to the exchange. Each investor should make their own determination of fair market value in order to determine their cost of the SpinCo Shares.  Monarch also confirms that the tax paid-up capital per Monarch share at the time of the exchange was in excess of C$0.65.

It is possible for a Monarch shareholder subject to Canadian income tax to defer some or all of the gain and tax resulting from the disposition by making joint tax election(s) with Yamana under section 85 of the Income Tax Act (Canada) and any applicable similar provincial legislation. Such tax election(s) must be then filled with the Canada Revenue Agency and any applicable provincial taxation authorities in the prescribed form and within the prescribed time. The joint tax election(s) are optional. A Monarch shareholder that is subject to Canadian income tax that does not make the joint tax election(s) with Yamana will not obtain a tax-deferred rollover on any gain realized on the disposition of their Monarch shares and may be subject to Canadian income tax.

The following Monarch shareholders should NOT file a tax election:
Monarch shareholders that are non-residents of Canada that are not required to file a tax return. Uncertain taxpayers should contact their accountants or tax representatives.

Monarch shareholders that held all of their Monarch shares in an RRSP, RRIF, RRP, TFSA,    or other Canadian tax-exempt plan.

Monarch shareholders that realizes a loss on the disposition of their Monarch shares.

Any Monarch shareholder subject to Canadian income tax that would like to make a tax election must provide their name, mailing address and telephone number via voicemail on the Monarch technical assistance hotline at 1-855-527-1047 or via email at ca_yamanagold@pwc.com  Yamana’s representatives will contact all Monarch shareholders with instructions on how to make the tax election. 

It is anticipated a special purpose website will be established to facilitate the tax election process. Once this website is established, shareholders that have contacted Yamana’s representatives via voicemail or email will be notified and directed to the website. Monarch shareholders that have responded to the letter of transmittal requesting a tax information package will also be notified. 
The foregoing is subject to the more detailed information set out in the November 30, 2020 Management Information Circular of Monarch and the discussion under the heading Certain Canadian Federal Income Tax Considerations, a copy of which can be found on www.sedar.com under Monarch’s profile.

Important Tax Information for Monarch Gold Corporation US Shareholders (PDF)

Monarch Warrant Indenture dated September 17, 2020

Post Acquisition of Monarch Gold by Yamana Gold

The previously announced plan of arrangement under the Canada Business Corporations Act (the “Arrangement”) involving Monarch Gold Corporation (“Monarch”) and Yamana Gold Inc. (“Yamana”) took effect at 12:01 a.m. on January 21, 2021 (the “Effective Time”). Pursuant to the Arrangement, among other things, (i) Monarch transferred certain of its assets and liabilities to a newly incorporated company, Monarch Mining Corporation (“New Monarch”); and, immediately thereafter (ii) Yamana acquired all of the issued and outstanding common shares of Monarch (the “Monarch Shares”) in exchange for 0.0376 of a common share of Yamana (each whole share, a “Yamana Share”), $0.192 in cash from Yamana (the “Cash Consideration”) and 0.20 of a common share of New Monarch (each whole share, a “New Monarch Share”) for each Monarch Share so exchanged.

In connection with the Arrangement, the Monarch warrants (the “Monarch Warrants”) issued pursuant to the warrant indenture dated September 17, 2020 have been adjusted in accordance with their terms as reflected in the amended and restated warrant indenture dated January 21, 2021 (the “Warrant Indenture”) among Monarch, Yamana, New Monarch and Computershare Trust Company of Canada (the “Warrant Agent”).

In accordance with the terms of the Warrant Indenture, as of the Effective Time, instead of receiving one Monarch Share upon the exercise of each Monarch Warrant, holders of Monarch Warrants are now entitled to receive the following upon the exercise of each Monarch Warrant: (i) 0.0376 of a Yamana Share; and (ii) 0.20 of a New Monarch Share, after accounting for a setoff of the Cash Consideration against the portion of the exercise price payable to Yamana.

The adjusted exercise price for each Monarch Warrant is $0.408 (the “Aggregate Exercise Price”), subject to adjustment in accordance with the terms of the Warrant Indenture. The Aggregate Exercise Price will be allocated between Yamana and New Monarch as follows: (i) $0.311 (the “Yamana Exercise Price”) payable to Yamana for each Monarch Warrant exercised and (ii) $0.097 (the “New Monarch Exercise Price”) payable to New Monarch for each Monarch Warrant exercised.

To exercise Monarch Warrants a holder must provide the following to the Warrant Agent:

  1. a validly completed and executed Exercise Form for the number of Monarch Warrants being exercised in the form attached as Schedule “B” to the Warrant Indenture, a copy of which is available under Monarch’s SEDAR profile at www.sedar.com and attached;
  2. payment by certified cheque, bank draft or money order payable to or to the order of Yamana for the aggregate Yamana Exercise Price for the number of Monarch Warrants being exercised; and
  3. payment by certified cheque, bank draft or money order payable to or to the order of New Monarch for the aggregate New Monarch Exercise Price for the number of Monarch Warrants being exercised.

No fractional Yamana Shares or New Monarch Shares will be issuable on the exercise of Monarch Warrants. If upon exercise of a Monarch Warrant a holder is entitled to a fraction of a Yamana Share or New Monarch Share, as applicable, the number of such Yamana Shares and LEGAL*52174881.1 - 2 - New Monarch Shares, as applicable, will, without additional compensation, be rounded down to the nearest whole number of Yamana Shares and New Monarch Shares, respectively.

Warrant Agent Contact Information:

Computershare Trust Company of Canada, at 1-800-564-6253 or via email at corporateactions@computershare.com.

Exercise Form (PDF)


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Yamana discloses certain non-GAAP measures including Cash costs per ounce of gold, Cash costs per ounce of silver, Co-product cash costs per ounce of gold, Co-product cash costs per ounce of silver, Co-product cash costs per pound of copper, All-in sustaining costs per ounce of gold, All-in sustaining costs per ounce of silver, All-in sustaining co-product costs per ounce of gold, and All-in sustaining co-product costs per ounce of silver to supplement its Consolidated Financial Statements, which are presented in accordance with IFRS. The term IFRS and generally accepted accounting principles (“GAAP”) are used interchangeably. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

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