China-based Shandong Gold Mining (SD Gold) has agreed to acquire Canadian mining company TMAC Resources for about $149m in an all-cash deal.

TMAC Resources is the 100% owner of the producing Hope Bay Property, a gold mining district in Nunavut, Canada. The property poured its first gold in early 2017.

The Canadian company’s acquisition will be executed by the Chinese miner’s fully-owned, overseas subsidiary Shandong Gold Mining (HongKong).  The Chinese firm is offering CAD1.75 ($1.26) per share to acquire 100% of the Canadian gold company.

The transaction is being backed by Resource Capital Funds (RCF), Newmont, and TMAC Resources’ directors and officers, who collectively hold nearly 58.6% of the current outstanding common shares of the Canadian mining firm.

TMAC Resources president and CEO Jason Neal said: “The Transaction is the culmination of the strategic review process we announced earlier this year. Over the past several months, SD GOLD has completed a significant due diligence review of TMAC, including a site visit to Hope Bay earlier this year.

“SD GOLD, as one of the world’s largest gold producers, has the financial strength, technical capability and long-term vision to maximize the value of the Hope Bay camp.”

Doris is the first mine at Hope Bay to be put into production. The ore drawn from the mine is processed at the Doris Plant, which originally had 1,000 tonnes per day in nameplate capacity that has been doubled midway through 2018.

TMAC Resources believes that there is potential to grow its established deposits significantly at depth, and then further grow resources by prioritised exploration of the more than 90 other identified regional targets.

TMAC Resources set to produce gold from the Madrid and Boston mines in the Hope Bay Property

The Canadian mining company has secured permits to produce gold from both the Madrid and Boston mines in the 1,101km2 spanning Hope Bay Property.

Following the acquisition, SD GOLD is expected to wrap up the feasibility study pertaining to the expansion of Hope Bay mining and processing, following on the prefeasibility study, which was completed recently by TMAC Resources.

The Chinese gold producer is expected to be in a position to execute and fund the significant capital expenditure needed for the expansion project.

Shandong Gold Group chairman Yumin Chen said: “Hope Bay is a highly prospective high-grade gold camp which requires substantial investment to optimize production and extend mine life and maximize the value of the camp to the benefit of all stakeholders.

“We look forward to completion of the Transaction and the opportunity to invest in the project for years to come as the generational potential of the camp is unlocked.”

Closing of the transaction will be subject to shareholders’ approval, regulatory approvals, and meeting of other customary conditions.