DRYDEN - Dryden-area mine developer NexGold (formerly Treasury Metals) has agreed to merge with Signal Gold, a Nova Scotia mine builder.
The two companies inked a definitive arrangement agreement on Oct. 9 to combine their holdings into what’s being promoted as the creation of a significant Canadian gold player with six million ounces of gold in the ground in northwestern Ontario and Nova Scotia.
A joint news release from the two companies said they bring to the table two advanced stage and buildable Canadian projects with potential to generate more than 200,000 ounces of gold a year. Environmental assessment approvals are in place for each company’s main gold projects.
Transactionally, NexGold will acquire all the issued and outstanding common shares of Signal in exchange for common shares of NexGold. Upon completion of the deal at the end of this year. NexGold and Signal shareholders will own approximately 71 per cent and 29 per cent of NexGold, respectively.
Tied to the deal, the companies said a concurrent private placement financing of up to $11.5 million is being planned with NexGold board and management subscribing for up to $1 million in financing. The release said mining financier Frank Giustra, a major NexGold shareholder will be participating in a meaningful way.
The directors of both companies have approved the merger. Signal shareholders will have their say at a special meeting sometime in December, when the deal is expected to close.
In the course of rebranding from Treasury Metals to NexGold earlier this year, the company said that an aggressive mergers and acquisitions path was on the agenda as a means to gain greater market exposure. That was kicked off when the company acquired the Niblack copper-gold-zinc-silver project in southeast Alaska.
NexGold’s cornerstone project is Goliath, a three-deposit, district-sized gold play, 20 kilometres east of Dryden, with both open pit and underground mining scenarios proposed.
Signal brings to the table its Goldboro Gold Project in Nova Scotia, a proposed open-pit mine with an estimated 11-year mine life and annual gold production pegged at 100,000 ounces a year.
Both projects are in the the advanced stage of permitting, which is expected to be done in 2025. Goliath has federal environmental assessment approval. Goldboro has provincial environmental assessment approval.
The way the new board and management team shakes out is that Jim Gowans will chair the board which will consist of six board members from NexGold and two nominated by Signal.
The combined company will be headed by Signal CEO Kevin Bullock as the new president-CEO, Jeremy Wyeth as chief operating officer, and Orin Baranowsky as chief financial officer.
Wyeth, who joined Treasury as president and CEO of Treasury Metals in December 2020, will be named chief operating officer of this combined company. Wyeth was an executive at De Beers and was involved in the development of the Victor Diamond Mine in the James Bay region.
The arrangement has been approved by the board of directors at both companies. Signal shareholders can cast their vote at an upcoming meeting scheduled for sometime in December.
“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,” said NexGold president Morgan Lekstrom in a statement. “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.
“Not only do we have a path to construction on both projects when project financing is obtained,” added Lekstrom, “but both historic gold districts have demonstrated tremendous expandability and upside potential that could contribute to larger, longer-life projects.”
Signal CEO Kevin Bullock said the merger offers an exciting opportunity to create a leading Canadian gold development company at a time when gold prices are on the rise.
“The combined company will be led by an experienced and skilled leadership team and will benefit from a strong balance sheet. I am excited to work towards unlocking significant value for the shareholders of NexGold after the completion of this transformative business combination.”
