The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Auryn Resources Inc. June 13 said it has entered into a binding arrangement to acquire Homestake Resource Corp. in an all-share arrangement valued at C$8.9 million.
Under the arrangement, Homestake shareholders would receive one Auryn share for each 17 Homestake common shares held.
As of June 13, Auryn was trading at C$2.68 per share.
The acquisition price represents a 31 percent premium to the volume weighted average price of Homestake shares on the TSX Venture Exchange for the 20-day period prior to June 14.
The roughly 3.3 million Auryn shares to be issued would be roughly 5.72 percent of that company's outstanding shares after completion of the arrangement.
The acquisition is not expected to be subject to Auryn shareholder approval.
Homestake directors and officers are required to enter into support agreements concurrently with execution of a definitive arrangement agreement to be entered into between Auryn and Homestake within about 30 days.
Homestake's key asset is Homestake Ridge, a high-grade gold project in northwestern British Columbia.
According to a 2013 calculation, the three main deposits at Homestake hosts 604,000 metric tons of indicated resource averaging 6.4 grams per metric ton (124,000 ounces) gold; 48.3 g/t (939,000 oz.) silver; and 0.18 percent (2.4 million pounds) copper.
Additionally, these deposits host 6.77 million metric tons of inferred resource averaging 4.2 g/t (911,000 oz.) gold; 93.6 g/t (20.37 million oz.) silver; and 0.11 percent (16.3 million lbs.) copper.
Auryn President and CEO Shawn Wallace said, "The acquisition of Homestake is the next step in our stated goal of acquiring high-grade gold projects in stable jurisdictions.
We look forward to leveraging the C$35 million of exploration work completed by Homestake to date and fully unlocking the mineral potential of this highly prospective project." Pursuant to the agreement, Homestake is subject to customary non-solicitation covenants and has agreed to pay a termination fee of C$200,000 to Auryn in the event it terminates the agreement in favor of a superior offer or completes any alternative transaction within six months of termination for any reason.
Homestake's board of directors has unanimously determined that the arrangement is in the best interests of Homestake and its security holders.
Homestake Chairman Lawrence Page said, "The proposed arrangement with Auryn provides our company with a depth of financial and professional expertise contained within Auryn to bring the Homestake project to its full potential within a realistic time frame and allows Homestake shareholders the ability to profit from the development of other mineral properties owned by Auryn which are currently under exploration and development." Auryn's portfolio includes the Committee Bay gold project in Nunavut and gold properties in Peru.
During the arrangement process, Auryn has agreed to provide to Homestake a loan of up to C$150,000 on an interest free, unsecured basis.
The transaction is expected to close before the end of September.
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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