NexGold Mining and Signal Gold have announced a definitive agreement to merge, aiming to establish one of Canada’s most advanced near-term gold developers.
The combined entity will boast 4.7 million gold ounces (oz) of measured and indicated resources, with ambitions to achieve more than 200,000oz of annual production.
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In terms of the merger’s structure, NexGold will issue 0.1244 of a common stock for each Signal share. Post-merger, NexGold and Signal shareholders will own approximately 71% and 29% of the new entity, respectively.
To finance the transaction, NexGold and Signal have arranged for C$5m ($3.63m) and C$6.5m in funding, respectively.
The transaction is set to combine two near-term development projects, the Goliath Gold Complex Project in Northern Ontario and the Goldboro Gold Project in Nova Scotia, enhancing the companies’ portfolios and mitigating single-asset risks.
Both projects currently have environmental approvals, and the companies expect to complete their respective permits by 2025.
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By GlobalDataThe merger will consolidate more than 600km² of property, including 4.7 million ounces (moz) of measured and indicated gold resources and 1.3moz in the inferred category.
The Goliath project, which includes an open-pit and underground gold mine, is projected to produce an average of 109,000oz of gold annually over a nine-year mine life.
The project’s after-tax net present value (NPV) is estimated at C$625m with a 41.1% internal rate of return (IRR).
On the other hand, Signal’s Goldboro project is expected to produce approximately 100,000oz of gold per year over an 11-year mine life.
The project’s feasibility study indicates an after-tax NPV of C$328m and an IRR of 25.5%, with a payback period of 2.9 years.
NexGold president Morgan Lekstrom said: “This will be a transformative transaction that combines two near-term buildable projects in Canada on a potential path to a production profile of over 200,000oz per year.
“This reflects the execution of NexGold’s strategy of targeting high-value gold projects with potential production of over 100,000oz and a capital expenditure of under $400m.
“With the transaction, we have significantly de-risked the combined company as it will no longer be a single asset company but rather a company with a pipeline of low-cost, low risk, high return mine development and expansion projects in Canada.”
