HighGold Mining To Be Acquired For $0.55/Share By Contango ORE
Treasury Metals’ deal to acquire Blackwolf isn’t the only consolidation happening within the gold sector today. Contango ORE (NYSE: CTGO) this morning indicated it will be acquiring HighGold Mining (TSXV: HIGH) in an all-share transaction that will see the consolidation of gold mining assets in Alaska.
The transaction, which will see HighGold shareholders receive 0.019 shares of Contango for each share held, is claimed to establish a “leading Alaskan gold company with a low-risk and properly sequenced portfolio.” The consideration, once exchange rates are factored in, amounts to total consideration of $0.55 per share for HighGold shareholders, a premium of 59% based on 20 day volume-weighted average prices for the two issuers.
The benefit for shareholders of HighGold is that they get an equity stake in a near term producer, with Contango expected to see the first gold pour at its Manh Choh project in the second half of this year under a joint venture with Kinross Gold (TSX: K). That project is expected to result in 67,500 gold equivalent ounces per year for Contango over a 4.5 year mine life.
One key aspect of that project, is that ore is directly shipped to the Fort Knox mill operated by Kinross, a model which may be suitable for HighGold’s Johnson Tract Project. The near term cash flow from Manh Choh is also expected to be used to advance the Johnson Tract project in a meaningful way.
“With the cash flow expected in the second half of 2024 from our high grade Manh Choh operation achieving commercial production, we will be able to continue to create value for the Johnson Tract Project and advance this high-quality project through to production. When combined with our Manh Choh and Lucky Shot projects, the Johnson Tract Project represents another asset that meets our criteria to be a run-of-mine, direct shipping ore operation. Contango will now develop a growth plan to advance these three assets to a production decision and target producing well in excess of 150,000 ounces of gold per year,” commented Rick Van Nieuwenhuyse, CEO of Contango.
The Johnson Tract project, found in southern coastal Alaska, is a high grade gold project, with a current resource of 1.05 million ounces of gold in the indicated category at 9.4 g/t gold equivalent, and a further 0.11 million ounces in the inferred category at 4.8 g/t gold equivalent. The transaction is priced at what amounts to US$30 per ounce of gold equivalent.
The transaction is subject to shareholder approval and other customary regulatory approvals. A $2.0 million termination fee is in play, with the transaction currently slated to close in July 2024.
HighGold Mining last traded at $0.315 on the TSX Venture.
Information for this story was found via Sedar and the companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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