Eskay Mining has signed a non-binding letter to acquire rival Canadian precious metals exploration company P2 Gold in an all-stock deal.
As per the terms, every outstanding common share in P2 Gold, on a diluted basis, will be swapped for 0.2778 of a common share in Eskay Mining’s capital.
The merger of the two TSX Venture Exchange (TSXV)-listed companies will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
Following the completion of the merger, the existing shareholders of Eskay Mining and P2 Gold will own nearly 80% and 20%, respectively, of the new combined entity.
Based in Toronto, Eskay Mining concentrates on exploring and developing precious and base metals along the Eskay rift in the Golden Triangle region in northwest British Columbia.
On the other hand, P2 Gold is engaged in advancing its Gabbs gold-copper project situated on the Walker Lane Trend in Nevada, US.
The newly formed entity through the merger is expected to benefit from increased scale and enhanced access to capital markets. It will also have a robust portfolio of exploration and development projects to advance the growth of the company.
The Eskay-Corey property located in the Golden Triangle will be the initial exploration focus of the merged company.
In line with the potential deal, Eskay Mining and P2 Gold have inked an exploration services agreement. Under this, P2 Gold will plan and undertake an exploration programme on the Eskay-Corey property for the 2024 exploration season.
P2 Gold president and CEO Joe Ovsenek said: “The Eskay-Corey Property is the most prospective ground in the Golden Triangle without a major discovery to date.
“We look forward to getting on the ground this summer and bringing our exploration and development experience in the Golden Triangle over the last 20 years to bear on Eskay-Corey. In Nevada, we plan to move forward with additional metallurgy as the first step in advancing Gabbs to production.”
Both parties will also enter into a definitive arrangement agreement outlining the final terms and conditions of the proposed merger.
Eskay Mining president and CEO Mac Balkam said: “With this transaction, Eskay has taken a significant step toward finding the next major resource in the Golden Triangle. The P2 Team, led by Joe Ovsenek, is second to none in producing results in the area.
“The addition of the Gabbs property in Nevada puts Eskay on a totally different level as resource explorer.”
Subject to customary conditions and receipt of the required court and regulatory approvals, including exchange approval, the proposed deal is anticipated to be completed in late October 2024.
