The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - May 10, 2024
A drill tests a resource expansion target at the Golden Zone gold-silver project in Alaska.
Avidian Gold Corp. May 2 announced that it has entered into a binding agreement to sell its Alaskan subsidiary, Avidian Gold Alaska Inc., to Contango ORE Inc. for US$2.4 million (C$3.3 million), plus a potential future payment of US$1 million (C$1.4 million) if Contango takes either of Avidian's Alaska assets to a production decision.
"This transaction is a win-win, particularly considering the current market investment climate for non-producing junior exploration companies like Avidian. We believe the Alaska properties will generate more value in Contango's portfolio as a near term producer," said Avidian Gold Chairman Dino Titaro.
Avidian Gold Alaska holds three properties: the Golden Zone gold-silver project midway between Fairbanks and Anchorage and the Amanita and Amanita NE properties adjacent to Kinross Gold Corp.'s Fort Knox mine north of Fairbanks, Alaska.
Golden Zone hosts several precious and base metal targets along a roughly 12-mile (19 kilometers) trend. Breccia Pipe, the most advanced of these, is a deposit with 4.19 million metric tons of indicated resource averaging 1.99 g/t (267,400 ounces) gold and 10.38 g/t (1.4 million oz) silver.
Amanita and Amanita NE are early-staged gold properties where past sampling and drilling have indicated the potential for near-surface gold deposits.
To gain full ownership of these properties, Contango has agreed to pay Avidian US$400,000 in cash and C$2 million in Contango shares.
"We believe Avidian is well served by both the cash consideration to immediately strengthen its balance sheet and the Contango shares to better participate in the continued strength in the gold price," said Titaro. "Contango is a soon to be producer of gold that is expected to be generating cash flow by mid to late 2024 from the high grade Manh Choh gold deposit, a 70:30 joint venture between Kinross Gold Corporation and Contango."
For Contango, this transaction adds to its growing portfolio of gold assets, including the pending acquisition of HighGold Mining Inc., which was announced on the same day as the Avidian deal.
The purchase of Avidian's Alaska subsidiary requires Avidian shareholder approval at a shareholder meeting scheduled to be held on July 4.
Avidian's board of directors unanimously recommends that shareholders vote in favor of the transaction.
"At the conclusion of this transaction, should shareholders approve, Avidian will be debt free with a clean balance sheet and will hold cash plus marketable securities, at current equity prices, on the order of C$3 million dollars, excluding the potential future upside payment on a production decision of US$1 million," said Titaro. "Avidian will then focus on a value creation strategy for its 100% owned Jungo gold-copper project in Nevada and continue ongoing evaluation of a number of possible strategic opportunities/alternatives that could be transformational for the company."
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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