Steppe Gold (TSX: STGO) is set to become a leading producer of gold in Mongolia, announcing the morning that it it has entered into a share exchange agreement to acquire Boroo Gold LLC.
Boroo Gold is currently a leading producer in the country, with the mine estimated to produce 60,000 ounces of gold per year for the next three years. The operation posted revenue of US$132 million in 2023, mining 67,315 ounce of gold at an all in sustaining cost of $847 per ounce.
The transaction will see Steppe Gold increase its annual production to 90,000 ounces per year on a combined basis, which is to rise to 150,000 ounces in 2026. The company, prior to the transaction, was producing approximately 30,000 ounces of gold a year.
Under the terms of the transaction, Steppe Gold is to issue 138.15 million shares to acquire Boroo, resulting in Boroo Singapore holding a 55.9% stake in the issuer on a post-transaction basis. The figure, based on the most recent closing price of Steppe, values Boroo at approximately $95.3 million, as compared to Steppe’s current market capitalization of $73.51 million.
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Boroo Singapore will also obtain the right to elect two directors as part of the transaction.
A special meeting to approve the transaction is slated to be held in June 2024. The transaction remains subject to customary regulatory and closing conditions.
Separately, the company is expected to add cash on its balance sheet from the sale of the Tres Cruces Project, which is found in Peru. Boroo Singapore is to acquire the asset for C$12 million in cash, with consideration payable over 18 months in four separate installments.
Steppe Gold last traded at $0.69 on the TSX.
Information for this briefing was found via Reuters and the sources 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.
