Combined, the Goliath and Goldboro projects cover a property package of more than 600 km2, with an established gold resource of 4.7 million ounces in the measured and indicated category and 1.3 million ounces in the inferred category.
NexGold president Morgan Lekstrom said the deal “will be a transformative transaction” that combines two near-term buildable projects in Canada
The Goliath project consists of an open-pit and underground gold mine, along with associated milling infrastructure including a tailings storage facility, located 20 km east of Dryden, Ontario. The gold complex has a pre-feasibility study that outlined a 9-year mine life producing on average 109,000 ounces a year. Its after-tax net present value is estimated at C$625 million (discounted at 5%), with a 41.1% internal rate of return.
The Goldboro project is a proposed open pit mine that has an approximate 11-year life with projected annual production of 100,000 ounces, according to a feasibility study. The project has an after-tax NPV (at 5% discount) of C$328 million and an IRR of 25.5%, for a payback period of 2.9 years.
NexGold president Morgan Lekstrom said the deal “will be a transformative transaction” that combines two near-term buildable projects in Canada on a potential path to a production profile of over 200,000 ounces per year.
“This reflects the execution of NexGold’s strategy of targeting high-value gold projects with potential production of over 100,000 ounces and a capital expenditure of under $400 million,” Lekstrom said in a press release Thursday.
Kevin Bullock, CEO of Signal, added that “the transaction brings together two cornerstone Canadian gold projects and presents an exciting opportunity to create a leading gold development company in Canada during a time of increasing gold prices.”
Bullock will assume the role of CEO of the combined company, building on his previous experience leading Volta Resources, which was sold to B2Gold in 2013.
For the merger, NexGold will issue 0.1244 of a common stock to acquire each of Signal’s shares. Upon completion, existing NexGold and Signal shareholders will own approximately 71% and 29% of the combined company, respectively.
To complete the transaction, NexGold and Signal have each arranged for financings totalling C$5 million and C$6.5 million respectively. It is anticipated that both NexGold’s management team and investor Frank Giustra, a significant shareholder, will participate in its financing.
Shares of Signal Gold rose 5.9% to C$0.09 following the merger announcement, giving the company a market capitalization of C$21.7 million. NexGold traded flat at C$0.75 with a market capitalization of C$57.4 million.
