McEwen Inc (TSX: MUX) is again looking to expand its asset base via the acquisition of a junior explorer. The company this morning announced it has entered into a definitive agreement to acquire Golden Lake Exploration (CSE: GLM).
The arrangement will see Golden Lake shareholders receive 0.003876 of a share of McEwen for each share of Golden Lake held. The transaction equates to a consideration price of $0.12 per share, representing a premium of 60% based on the 20 day volume weighted average price of the equity. Golden Lake shareholders on a post transaction basis will own 0.5% of the combined company.
The appeal here for McEwen is Golden Lake’s Jewel Ridge and Jewel Ridge West projects, which are found adjacent to McEwen’s Windfall and Lookout Mountain discoveries. Those discoveries are part of the larger Gold Bar Mine Complex within the Eureka Mining District in Nevada.
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Drill intercepts at Jewel Ridge are said to include 2.20 g/t gold over 28.96 metres and 2.37 g/t gold over 67.57 metres among other results, with that mineralization found to the north of the Windfall deposit, where recent drilling tested 5.55 g/t gold over 44.2 metres. Acquisition of these additional claims are said to assist in making Gold Bar a long life operation with further exploration.
The transaction remains subject to shareholder and customary regulatory approvals, with a break fee of $250,000 currently in place. The transaction is expected to close after a shareholder meeting in March.
McEwen Mining last traded at $39.47 on the TSX.
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