The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
New Oban plans to amass C$65 million in cash, 16 gold properties in Quebec, Ontario, Yukon, and support of Osisko Gold Royalties
A group of mining companies June 9 unveiled a massive consolidation of gold exploration properties spanning much of Canada, from Quebec to Yukon Territory.
The deal involves the merger of five gold exploration companies - Oban Mining Corp., Eagle Hill Exploration Corp., Temex Resources Corp., Corona Gold Corp. and Ryan Gold Corp. - backed by funding and technical support from Osisko Gold Royalties Ltd.
Ryan Gold President and CEO Mark Goodman said, "I am very pleased to bring this opportunity to our shareholders to join what I feel has the potential to be the start of an outstanding Canadian mining company."
New Oban, the emergent gold exploration and development company, will hold at least 16 Canadian projects in various stages of exploration.
"This is an exciting new chapter in Canadian mining," stated John Burzynski, Chairman of Oban. "Post-consolidation, New Oban brings together major exploration assets in Ontario and Quebec under experienced management in a well-capitalized vehicle, with over C$65M in cash and a significant global gold resource."
Creating New Oban
The creation of New Oban will involve old Oban buying out the shares of each of its fellow gold exploration companies at a price premium to what their shares are trading on the TSX Venture Exchange. Eagle Hill, Temex, Corona Gold and Ryan Gold have all entered into binding agreements in support of the merger.
Temex President and CEO Ian Campbell said, "On behalf of the board of directors and Temex management, we are delighted to offer our shareholders the once-in-a-lifetime opportunity to participate in what we envision is the birth of a new Canadian mining house led by the elite of our industry."
The other CEOs had similar messages for their shareholders.
Osisko Gold Royalties has agreed to invest up to C$20 million in Oban through a private placement of Oban shares at C11 cents per share, provided that such investment will not exceed 19.9 percent of New Oban.
In addition to getting in on the ground floor, Osisko will be the first to have an opportunity to participate in any royalties and streams created by the new and expansive gold company.
After the merger and Osisko financing, shareholders of Eagle Hill will own 24 percent, Ryan Gold 20 percent, Corona Gold 16 percent, Temex 13 percent, and Oban 11 percent of New Oban.
Osisko, which already holds a small position in Ryan Gold and Oban, is expected to own 18 percent after its investment in New Oban. Dundee Corp., which holds significant shares of companies involved in the deal, will own 15 percent of the new company.
"We are particularly excited to have Dundee Corp. and Osisko as key shareholders in the resultant company, by virtue of their respective existing holdings in four of the companies involved in the combination and Osisko's investment in this new vehicle," said Oban Chairman Burzynski.
Dundee has delivered lock-ups in connection with its holdings in Ryan Gold, Corona and Eagle Hill.
Dundee Capital Markets President and CEO Ned Goodman and Osisko Chairman and CEO Sean Roosen will share the chairmanship of the New Oban Board of Directors.
Burzynski will serve as president and CEO of New Oban. Jose Vizquerra, currently president of Oban, will be senior vice president and COO of the emergent gold company. Oban Vice President of Exploration Gernot Wober will continue his role in the merged company.
New Oban will be headquartered in Montreal with a Toronto corporate office. Exploration, engineering and administrative services will be provided by Montreal-based Osisko
Ontario, Quebec focus
Of the roughly 16 projects offered by the five merging companies, New Oban will focus primarily on four projects in eastern Ontario and western Quebec.
The most advanced of these is the Windfall Lake gold project in the Urban Barry camp of Quebec.
Brought to the table by Eagle Hill, Windfall Lake has 2.76 million metric tons of indicated resource averaging 8.42 grams per metric ton (750,000 ounces) gold; and 3.51 metric tons of inferred resources averaging 7.62 (860,000 oz.) gold.
A preliminary economic assessment published in April outlines a 1,200-metric-ton-per-day underground mine at Windfall Lake producing 106,200 ounces of gold annually for 7.8 years at an average total cash cost of US$480/oz.
"Windfall Lake is a strong asset and is ready for the next stage of investment to move it towards feasibility and development," said Eagle Hill President and CEO David Christie.
New Oban plans to get started on a feasibility study right away with the goal of beginning construction at Windfall Lake within two years.
Oban holds a large, early-stage exploration property next to the Windfall Lake project.
Whitney and Juby, two projects offered by Temex are expected to head up a second wave of development projects.
Located in the East Timmins Camp of Ontario, Whitney has 3.22 million metric tons of underground resources averaging 6.85 g/t (710,000 oz.) gold; and 1 million metric tons of inferred resources averaging 5.34 g/t (170,000 oz) gold.
Juby, also in Ontario, has 26.6 million metric tons of indicated resources averaging 1.28 g/t (1.09 million oz) gold; and 96.2 million metric tons of inferred resources averaging 0.94 g/t (2.91 million oz) gold.
Catherine Camp, a large land position east of Juby, is an earlier-staged gold property that will be fostered along in conjunction with the other properties in the three Ontario-Quebec gold camps.
It is currently unclear what plans New Oban has for Ryan Gold's eight Yukon Territory properties. Beyond its relationship with Dundee, Ryan Gold's C$21 million in cash and C$800,000 in marketable securities were a likely impetus for bringing the Yukon explorer into the fold.
Likewise, Corona Gold has roughly C$9 million in cash and C$6 million in marketable securities.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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