Fuerte Metals (TSXV: FMT) announced a major transaction this morning, with the company set to acquire Newmont’s (TSX: NGT) Coffee Gold project in the Yukon.
The transaction will see the gold explorer acquire the project for total consideration of up to US$150 million. Consideration upon closing is to consist of US$10 million in cash and US$40 million in equity, while a 3.0% net smelter return royalty has been attached to the project, which Fuerte can repurchase for up to US$100 million.
Equity consideration is expected to amount to 34 million shares being issued to Newmont, which will result in the gold major becoming a 27% owner of Fuerte. Shares to be issued include 22.7 million common shares and 10.8 million preferred shares of Fuerte.
The Coffee project is said to be one of the largest and highest-grade heap leach projects in the world. The project boasts a 3.0 million gold ounce measured and indicated resource at 1.15 g/t gold, which is based on over $300 million in exploration spend and 617,000 metres of drilling.
A preliminary economic assessment is expected to be delivered in H1 2026, while a feasibility study meanwhile is slated to be released in the second half of next year. The project is said to be amenable to conventional open-pit, heap leach mining and processing to produce gold dore bars.
In terms of permitting, the project received a positive Yukon Environmental and Socio-Economic Assessment Act in 2022, while a collaboration agreement was signed with one local First Nation group in 2018, while an impact and benefits agreement was signed with a second First Nation in 2021 that includes life of mine activities.
“The acquisition of Coffee is highly transformational for Fuerte. The project is on a clear path to complete permitting and has strong financial and technical partners who have the vision to advance the project to production and build the next great Canadian gold producer,” commented Tim Warman, CEO of Fuerte.
As part of the transaction, Fuerte is set to raise $50 million at a price of $1.65 per subscription receipt, with each receipt to contain one common share and one warrant of Fuerte. Each warrant contains an exercise price of $2.50 per share and an expiry of five years.
Closing of the transaction is currently scheduled for October 19.
Fuerte Metals last traded at $1.95 on the TSX Venture.
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