New York Stock Exchange (NYSE)-listed gold producer Contango ORE has expanded its footprint with the acquisition of HighGold Mining and Avidian Gold Alaska.
Contango sealed a definitive agreement to acquire all issued and outstanding shares of HighGold Mining.
This acquisition will be executed through a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
The exchange ratio, based on volume-weighted average prices (VWAPs), implies a total HighGold equity value of around $37m (C$27.08m).
Under the agreement, each HighGold share will be exchanged for 0.019 shares of Contango common stock.
This exchange ratio implies a total consideration of C$0.55 per HighGold share, marking a 59% premium based on the 20-day VWAP of both companies.
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Post-transaction, Contango shareholders will own around 85% of the combined entity, while HighGold shareholders will hold the remaining 15%.
The transaction is expected to create a leading Alaskan gold company with a strong portfolio and significant growth potential.
It will also allow Contango to leverage its expertise and resources to accelerate the development of the Johnson Tract Project, a high-grade polymetallic deposit with promising production potential.
The shareholders of HighGold will benefit from a substantial premium and continued exposure to exploration upside with reduced risk.
HighGold’s directors and officers have agreed to support the transaction, which is also subject to regulatory approvals and customary closing conditions.
The deal is anticipated to be highly accretive to Contango, with HighGold’s ounces being acquired at an attractive cost, and could lead to a potential re-rating as Contango’s Manh Choh project reaches commercial production.
Additionally, Contango agreed to acquire Avidian Gold’s Alaskan subsidiary, Avidian Gold Alaska, for a total consideration of up to $3.4m, payable in a combination of cash and Contango shares.
Avidian Gold Alaska owns and controls the Golden Zone and Amanita NE gold properties, and has an option to buy 100% of the Amanita gold property.
The transaction will leave Avidian debt free upon completion, pending shareholder approval.
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