i-80 Gold Corp. revealed that it has entered into definitive agreements to create a comprehensive Nevada mining complex through an asset exchange agreement to acquire certain processing infrastructure, including an autoclave, and the Lone Tree and Buffalo Mountain gold deposits from Nevada Gold Mines LLC (NGM).
The Nevada-focused mining company said the deal will work through an asset exchange in consideration for the company's 40% ownership in the South Arturo Property which will consolidate 100% ownership of South Arturo to NGM, providing NGM with flexibility to pursue potential operational synergies with NGM's other Nevada properties.
It will also involve assignment of i-80's option to acquire the adjacent Rodeo Creek exploration property; contingent consideration of up to $50 million based on production from the Lone Tree property; and arrangement of substitute bonding (and release of NGM bonds) in respect to the Lone Tree and Buffalo Mountain reclamation obligations at closing.
Separately, i-80 Gold has also struck a definitive membership interest purchase agreement to acquire the Ruby Hill Mine, which includes multiple deposits that collectively have the potential to represent one of Nevada's largest gold, silver, and base metal endowments, from affiliates of Waterton Global Resource Management.
In addition, i-80 is pursuing financing arrangements that complement the firm’s strong cash position of $70.1 million as at June 30, 2021. Concurrent with the closing of the asset exchange, NGM will subscribe for new i-80 treasury common shares representing up to a 9.9% interest in i-80 through a private placement for proceeds not to exceed $50 million.
The company has also struck a non-binding term sheet with Orion Mine Finance for up to $140 million of acquisition and development financing, with an additional $100 million potentially available through an accordion feature, at the election of i-80.
“These two transactions are designed to position i-80 Gold as a prominent, stand alone, gold producer in the state of Nevada,” said the company. Closing of each of the transactions with NGM, Waterton, Orion and the private placement are subject to the satisfaction of several conditions, including regulatory approvals and, in the case of Orion, completion of due diligence and the negotiation and execution of mutually satisfactory definitive documentation.
"These transformational acquisitions result in a significant increase in the company's mineral resource base, and position i-80 to become one of the largest gold producers in the state of Nevada with the capacity to process refractory and oxide mineralization," i-80 Gold CEO Ewan Downie said in a statement.
"Importantly, i-80 gains a strategic advantage becoming one of only three companies in Nevada with infrastructure to process refractory mineral resources once the Lone Tree facility has been retrofitted to suit the company's deposits. We believe that this will allow i-80 to overcome a crucial barrier to entry that most of our peers face,” he added.
Downie noted that in the interim, Nevada Gold Mines has agreed to provide processing capacity for i-80 mineral resources from the McCoy Cove, Granite Creek and Ruby Hill mines at its autoclave facilities until the earlier of three years from closing of the asset exchange and the date the Lone Tree facility becomes operational.
“It will also provide i-80 with processing capacity for ore produced from the McCoy Cove mine at its roaster facilities for 10 years, in each case, subject to extension by mutual agreement, allowing i-80 to commence development of its assets on an expedited basis," Downie added.
i-80 highlighted key features of the transactions as follows:
- i-80 increases overall inferred gold mineral resource more than three and a half times, and more than doubles overall gold measured, plus indicated mineral resources;
- Ruby Hill deposits host more than 100 million ounces of indicated silver mineral resources and more than 70 million ounces of inferred silver mineral resources;
- Secures for i-80, the ability to process all types of gold bearing mineralization at the centrally located Lone Tree processing facility situated on Interstate 80 once the necessary refurbishment of the facility is completed. The Lone Tree facility includes an autoclave, carbon–in-leach (CIL) mill, Floatation Plant, and heap leach facility;
- i-80 will produce gold from the Ruby Hill open pit and residual leaching at Lone Tree;
- At the closing of the asset exchange, NGM will reimburse i-80 an amount of approximately $7.3 million for certain expenditures previously advanced in relation to the South Arturo Property.
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