G Mining Ventures (TSX: GMIN) is taking a run at establishing an intermediate gold producer in the Americas, announcing this morning that it has entered into a definitive agreement to acquire Reunion Gold Corp (TSXV: RGD).
The transaction is centered on the acquisition of the Oko West Project in Guyana, the flagship asset of Reunion. G Mining intends to push the project, which it describes as having “excellent potential to become a top tier deposit,” quickly through the necessary technical studies to get to a construction decision.
An updated resource estimate released in February suggests the project contains 2.5 million indicated ounces of gold, along with 1.8 million inferred ounces, across both open pit and underground resources.
Oko West is intended to become the major focus of G Mining in terms of project development, while their own flagship asset, the Tocantinzinho project in Brazil, is on schedule to begin commercial production in the second half of this year. That project currently contains proven and probable reserves of 2.0 million ounces of gold. Tocantinzinho is expected to produce 175,000 gold ounces per annum at an all in sustaining cost of just $681 an ounce.
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The definitive agreement between G Mining and Reunion outlines that shareholders of both companies will receive shares in a newly formed company, with Reunion Gold shareholders to effectively receive 0.285 shares for each share of Reunion Gold held. The figure works out to roughly $0.65 per common share, valuing the company at $875 million, with Reunion Gold shareholders to hold 43% of the resulting company.
As part of the transaction, Reunion shareholders will also receive shares in a new gold explorer, called SpinCo, that will hold all other assets of Reunion. The new entity is to be funded with $15 million by G mining as part of the transaction, with Reunion shareholders to own 80.1% of the entity.
Concurrent with the transaction, La Mancha Investments, a major shareholder of G Mining, will invest US$25 million under a financing, while Franco-Nevada will subscribe for US$25 million of common shares as well. La Mancha has also indicated it will purchase up to US$10 million in shares on the open market, and may subscribe to an additional US$10 million in shares under the financing.
On a post-transaction basis, La Mancha is expected to hold an 18.7% interest in the company, while Franco-Nevada will hold 7.2%.
As part of the transaction, Reunion will be able to nominate two members to the board of directors.
The transaction remains subject to shareholder approval for both parties, as well as regulatory approvals. There is also a $31.2 million termination fee in play.
The proposed transaction is currently slated to close in Q3 2024.
Reunion Gold last traded at $0.50 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
