MegumaGold Corp (CSE:NSAU) (OTCMKTS:NSAUF) is to acquire Nova Scotia-focused Osprey Gold Development Ltd (CVE:OS) in a deal which will create a leading precious metal explorer in the Canadian province, sending shares rocketing.
The all paper business combination sees Osprey shareholders receive MegumaGold stock equal to an at an exchange ratio of one Meguma share for every two Osprey shares owned.
Osprey is focused mainly on advancing the Goldenville project, which lies in Nova Scotia’s largest historic gold district, and is also exploring four other gold projects within the Meguma Supergroup including the Caribou project.
"We believe this consolidation of assets is the logical step in building a company optimally positioned to capitalize on the upside of the developing gold camp in Nova Scotia," Theo Van der Linde, the president of MegumaGold, told investors in a statement.
"Combining Osprey’s assets of Goldenville and Caribou with MegumaGold’s developmental projects contained within its under-explored 107,000 ha land position presents a compelling opportunity for our shareholders.
"The combination of MegumaGold’s commanding land position in the Belt and Osprey’s deposits creates a combined entity that through a continued corporate and exploration activity, would represent a go-to critical mass Canadian gold and exploration opportunity in the Meguma Gold District, adjacent to Atlantic Gold’s operations which was acquired by St Barbara Ltd for $722 million cash consideration in July 2019," he added.
Nova Scotia is currently experiencing a resurgence in gold exploration, mainly due to the Atlantic Gold and its Moose River mine acquisition.
That Moose river consolidated project is currently producing gold from the Touquoy open-pit mine, which lies around 10 kilometres (km) south of Osprey’s Caribou Project and 4 km west of MegumaGold’s Touquoy West project.
MegumaGold currently holds 7,176 hectares of exploration licences, which are adjacent to Osprey’s Goldenville project.
Osprey’s Mitchell Lake Zone, which lies around 3.5 km west of the Goldenville deposit, is identified as a high priority area for additional exploration work and follow-up drilling due to the lack of historical drilling in this area that leaves large areas of untested potential.
The deal also provides shareholders with a strengthened balance sheet, exploration synergies and strengthened management and leadership team.
Earlier in March, MegumaGold told investors it was "very pleased" with the ground geophysics work at its Touquoy West property in Nova Scotia, where some of the results had indicated the presence of disseminated sulphide mineralization similar in style to the adjacent Touquoy gold mine deposit, a few kilometres to the east.
Meanwhile, on February 20, the firm said it believed there was "significant potential" for new gold discoveries at its Killag project in Nova Scotia and it had kicked off a geological study there.
Shares in Toronto raced up 80% to C$0.18 on the day.
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