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.
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.
The 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.”
