The transaction will create a combined entity focused on advancing two gold projects in the country: NexGold’s Goliath gold complex in Northern Ontario and Signal’s Goldboro project in Nova Scotia.
The deal will bring together approximately 4.7 million gold ounces in the measured and indicated categories, plus an additional 1.3 million gold ounces categorized as inferred resources.
The companies’ goal is to ultimately produce over 200,000 ounces of gold per year.
“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,” said Morgan Lekstrom, president of NexGold, in last week’s press release.
“Not only do we have a path to construction on both Projects when project financing is obtained, but both historic gold districts have demonstrated tremendous expandability and upside potential that could contribute to larger, longer-life Projects,” he continued, adding that the companies see the combination as transformative.
Under the terms of the merger, NexGold will acquire Signal in an all-share transaction. Each Signal share will be exchanged for 0.1244 shares of NexGold, which will mean that existing NexGold shareholders will own approximately 71 percent of the new company, while Signal shareholders will hold the remaining 29 percent.
To support the merger, both companies will conduct concurrent non-brokered private placements aiming to raise total gross proceeds of up to C$11.5 million. NexGold will raise C$5 million, while Signal will raise C$6.5 million.
Once combined, the new entity will focus on growth at the Goliath and Goldboro properties through exploration drilling, while assessing additional opportunities for corporate growth.
A February 2023 prefeasibility study for NexGold’s Goliath project outlines a nine year mine life with average annual production of approximately 109,000 ounces. It is being remediated as an open-pit and underground mine.
Meanwhile, Signal’s Goldboro project, which is projected to be an open-pit mine, has an ancipated 11 year life with estimated annual output of around 100,000 ounces.
The merger comes at a time of gold price strength, with the yellow metal hitting record levels this year.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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