Canadian mining company Calibre Mining has agreed to acquire Marathon Gold in a transaction valued at C$345m ($250m).
The deal will create an Americas-focused, mid-tier gold-producing company with an average annual production of 500 kilo-ounces (koz) of gold during 2025-2026.
The merged entity will have a combined cash balance of $148m, along with significant free cash flow being generated from Calibre’s existing mines.
As per the deal, shareholders of Marathon will receive 0.6164 Calibre shares for each of Marathon’s shares.
Each Marathon share has been valued at C$0.84, which brings the total transaction value to C$345m.
The deal represents a premium of 32% based on spot and 61% based on Calibre’s and Marathon’s 20-day volume weight average price (VWAP) as of 10 November 2023.
In the merged company, Calibre’s shareholders will own a 66% interest and the remaining 34% stake will be held by Marathon’s shareholders.
Calibre has also agreed to purchase 66.6 million Marathon shares, each priced at C$0.60, totalling C$40m pursuant to the concurrent private placement. This will represent a 14.2% stake in the company.
Through the transaction, Marathon can advance immediately from the position of a developer to a mid-tier gold producer.
For Calibre, the deal includes the Valentine gold project, a near-term producing asset in Canada that is expected to begin production in the first quarter of 2025.
The project is anticipated to produce around 195koz of gold every year during the first 12 years of production. Combined with its own gold production, it would total to around 500koz.
Calibre chairman Blayne Johnson said: “The combination with Marathon perfectly aligns with Calibre's commitment to building a diversified mid-tier gold producer, focused on quality assets with strong re-rate potential for all shareholders.
“This transformative merger creates a projected 500,000oz gold producer and offers our shareholders diversification and exposure to high-quality, long-life production in a tier-one jurisdiction.
“I have no doubt that the union of Marathon's experienced team and well-advanced Valentine project based in Canada, with Calibre's production assets, robust treasury, free cash flow, flawless track record in execution and high impact exploration opportunities will unlock significant value for the shareholders of both companies.”
