The transaction forms a district scale, multi-million-ounce gold development project that is poised for production in the mining-friendly province.
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Canada’s Treasury Metals will issue First Mining 130 million shares upon closing, making the Vancouver-based miner Treasury’s largest shareholder. First Mining plans to distribute up to 70 million Treasury shares along with 35 million warrants exercisable at C$0.35 to its shareholders within 12 months of the deal’s closing, according to a statement Wednesday.
Treasury’s shares closed at C$0.34 on Wednesday, making the deal worth just over C$61 million in total including milestone payments.
Goldlund houses 809,200 ounces of indicated gold and 876,954 ounces in the inferred category, while Goliath has a nearly 1.2 million-ounce resource. Combined, the two projects will represent one of the largest undeveloped gold assets in Canada with a consolidated resource base of 2 million ounces of measured and indicated gold along with an additional 1.1 million in the inferred category.
In a statement, Dan Wilton, CEO of First Mining, said the company was “very excited” to be part of the regional consolidation in Ontario.
"Combining our Goldlund asset with Goliath creates an attractive opportunity to immediately establish shareholder value through the potential synergies that these two assets share, given their regional proximity. Importantly, our shareholders will retain significant exposure to the future upside of the combined projects through not only a large equity stake in Treasury Metals, but also through warrants, a royalty, and milestone payments that are aligned with the advancement of Goldlund."
Under the term sheet, First Mining will retain a 1.5% net smelter return royalty covering the Goldlund claims, which Treasury retains a buy-back right of 0.5% for C$5 million. Treasury will also give First Mining milestone payments totaling $5 million upon certain advancements at Goldlund, including the receipt of a mining license and after 300,000 tonnes of ore is extracted from the mine.
Multimillion-ounce gold district
"I am pleased to be delivering value for our shareholders through the regional consolidation of this multi-million-ounce gold district in Ontario," said Keith Neumeyer, chairman of First Mining.
"This transaction delivers on the promise we made to our shareholders when we established First Mining in 2015 to return value to our shareholders and create new district-scale opportunities. We believe that the pro forma company is well positioned to benefit from the current rising gold market given the district-scale potential of these two projects and the robust co-development opportunities.”
Neumeyer called the deal a “value-enhancing transaction” that will see First Mining retain a 19.9% ownership of Treasury along with input into the governance of the project through board and technical committee representation.
The agreement also frees up First Mining to focus on its flagship Springpole gold asset, a 41,943-hectare project near the prolific Red Lake, Ontario district.
The deal is expected to close in August upon shareholder and regulatory approval.
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