Orla Mining, a Canada-based mineral exploration company, has signed a definitive arrangement agreement to acquire all issued and outstanding common shares of Contact Gold.

The acquisition, valued at around $8.1m (C$10.93m), is set to enhance Orla's footprint in Nevada's prolific Carlin trend.

The consideration marks a 77% premium based on the two companies’ 20-day volume weighted average price on 23 February 2024. 

Contact Gold's primary asset is the 100%-owned Pony Creek property, a 4,500ha exploration area located adjacent to Orla's South Railroad property in the Carlin trend in Nevada.

The acquisition also includes the Green Springs property, an early-stage exploration project at the southern end of the Cortez trend, where Centerra Gold has the right to earn 70% through a $10m exploration programme.

Both the Pony Creek and Green Springs land packages offer significant exploration potential as they have been historically underfunded and underexplored.

As per the agreed terms, Contact shareholders will receive 0.0063 of an Orla common share for each share held, equating to a total consideration of $0.03 per Contact share.

Upon deal completion, Contact shareholders will own around 0.7% of the issued and outstanding Orla shares.

The deal is significant for Orla as it consolidates landholdings adjacent to its core growth project, South Railroad, which holds 1.6 million ounces (moz) of mineral reserves at 0.77 grams per tonne (g/t) gold (Au), 1.8moz of measured and indicated mineral resources at 0.74g/t Au and 719,000oz of inferred mineral resources at 1.00g/t Au.

Pony Creek's resources have the potential to add oxide, transition and sulphide to the resources at South Railroad.

The addition of Pony Creek complements Orla's control of the southern part of the Railroad Mining District, representing a natural and seamless expansion of the South Railroad property.

Pony Creek shares similar geology, structural setting and mineralisation style as South Railroad, providing drill-ready targets, including extensions of known deposits and new targets.

With this deal, shareholders of Contact Gold will gain exposure to Orla's portfolio of high-quality, low-cost operations and development projects, as well as access to Orla's technical, project development and operating capabilities, in addition to financial resources.

Orla president and CEO Jason Simpson said: “This transaction strengthens our land position in Nevada along the Carlin trend. Contact’s Pony Creek property is a valuable complement to our South Railroad Project, one [of] our key growth opportunities.

“We look forward to making the necessary investments to unlock the combined potential of this now larger, contiguous and highly prospective land package.”

Meanwhile, in December last year, the Government of Panama dismissed Orla’s requests for three mining concessions, which include the Cerro Quema project.