In the second M&A transaction announced today, McEwen Inc (formerly McEwen Mining) (TSX: MUX) is set to acquire Canadian Gold Corp (TSXV: CGC) as per a letter of intent, The proposed all-stock arrangement is focused on Canadian Gold’s wholly owned Tartan Mine, found in Manitoba.
Under the proposed transaction, McEwen is set to pay 0.0225 of a common share for each share of Canadian Gold, which translates to $0.35 per share. The figure represents a 26% premium to the 30-day volume weighted average price of Canadian Gold as of Friday’s close. Post transaction, Canadian Gold shareholders will hold 8.2% of the resulting company.
Canadian Gold’s Tartan Mine project is a high-grade, past producing mine with existing infrastructure and “high exploration potential.” The mine, found near Flin Flon, produced 47,000 ounces of gold between 1987 and 1989. The project consists of 2,670 hectares spread across 20 mineral claims, with the property boasting a 450 tonne per day processing plant, surface infrastructure, and a decline with access to the Main and South zones to a depth of 320 metres from surface.
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Current resources at the project amount to 240,000 ounces of gold in the indicated category at 6.32 g/t, and 37,000 ounces of gold in the inferred category at 4.89 g/t.
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The proposed development of the project is said to have similarities to McEwen’s Fox Complex, leveraging the company’s current knowledge base. McEwen is currently suggesting that production could resume at the mine within 24 to 36 months with their involvement in the project, while the project would benefit from McEwen’s access to funding and technical team.
“I am enthusiastic about the Tartan Mine for several reasons. First, it is a high-grade gold deposit with strong exploration potential in Canada. Second, the existing infrastructure, including the mine ramp, roads, and power, provides an opportunity to restart operations within a relatively short timeframe. Third, Manitoba stands out as one of the world’s premier mining jurisdictions, offering a skilled workforce, low-cost renewable energy, and attractive mining tax credits,” commented Rob McEwen, CEO of McEwen Inc.
The proposed transaction remains subject to a definitive agreement being met, as well as shareholder approval from Canadian Gold shareholders, and regulatory approvals. McEwen will also need to seek shareholder approval for more than 1% of the currently outstanding shares of the company to be issued to Rob McEwen in connection with the transaction, whom is a major shareholder of both entities.
McEwen Inc last traded at $15.57 on the TSX.
Information for this story was found via the sources and 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.
