According to the terms of the definitive agreement, Calibre Mining will issue 0.6164 of a common share for each Marathon Gold share acquired
Marathon Gold to be acquired by Calibre Mining in $250m deal. (Credit: Matthias Wewering from Pixabay)
Canada-based mid-tier gold producer Calibre Mining has agreed to acquire Valentine gold project owner Marathon Gold in an all-stock deal that values the latter at C$345m ($250m).
According to the terms of the definitive agreement, Calibre Mining will issue 0.6164 of a common share for each Marathon Gold share acquired.
The consideration represents an implied value of C$0.84 ($0.61) per share for Marathon Gold. The company is based in Canada and is also listed on the Toronto Stock Exchange (TSX) like Calibre Mining.
Through the merger with Marathon Gold, Calibre Mining aims to develop an Americas-focused, high-margin, high-growth, mid-tier gold producer with an estimated average annual gold production of nearly 500koz per year.
Calibre Mining president and CEO Darren Hall said: “Calibre has delivered on its commitment to create significant value for its shareholders through a disciplined approach to operations and exploration.
“This Transaction builds on that commitment, adding a high-quality gold asset in the final stages of construction with strong exploration upside in one of the top mining jurisdictions in the world.”
The enlarged company is estimated to have a combined cash balance of $148m and significant free cash flow generated from Calibre Mining’s existing mines.
It is projected to support the easier completion of the Valentine project located in the central region of Newfoundland and Labrador during the final 50% of construction.
In line with the proposed combination, Calibre Mining will buy a non-brokered private placement basis 66.6 million common shares of Marathon Gold at C$0.6 ($0.43) per share for gross proceeds of C$40m ($28.95m).
This represents an equity interest of 14.2% in Marathon Gold on an issued and outstanding basis. The private placement is not subject to the completion of the transaction.
Marathon Gold president and CEO Matt Manson said: “Through this Transaction, Valentine will be fully funded to production without additional debt, royalties, or shareholder equity.
“The combined company will have three high quality, cash flowing gold assets, a strong balance sheet, and leadership with proven credentials in value creation. The Transaction offers the ability to fully realise the potential of Valentine without the limitations of the single asset project developer.”
Subject to shareholder, regulatory, court and TSX approvals and other customary conditions, the deal is anticipated to be completed next year.
Trinity Advisors and TD Securities are serving as financial advisors to Calibre Mining while Cassels Brock & Blackwell is the Canadian legal advisor to the company.
Maxit Capital is acting as financial advisor to Marathon Gold. Mason Law and Norton Rose Fulbright Canada are Canadian legal advisors to the gold production company.