PERTH (miningweekly.com) – ASX-listed junior Matador Mining has announced plans to acquire an 80% interest in the Cape Ray gold project, in Newfoundland.

The project is estimated to contain more than 500 000 oz of gold within its 100 km² of secured tenure.

“We believe the acquisition of the Cape Ray gold project by Matador has the potential to create a significant midtier gold company located in a mine-friendly jurisdiction with a world-class exploration potential,” Matador ED Scott Patrizi said on Thursday.

“Canada is poised to become the second-largest gold producer globally, and this positioning can only benefit and further justify pursuing these types of projects, particularly given the current state of the Canadian junior mining sector, where a focus on cryptocurrency and medicinal marijuana has left many juniors starved for capital.”

The project is currently majority owned and operated by TSX-V listed Benton, with the remaining interest held by Nordmin Engineering. Grant Davey also holds an exclusive option to acquire the project.

Under the terms of the agreement, Matador will pay Benton a A$50 000 exclusivity fee and further cash consideration of A$3.2-million on completion of the transaction.

The ASX-listed company will also issue eight-million fully paid ordinary shares, and 833 333 options exercisable at 30c each, within two years of the date of issue. Benton will also be granted an ongoing 1% net smelter royalty on future production from the tenements.

Subject to the Benton transaction, Matador will also acquire Nordmin’s interest in the project for A$250 000 in cash, and the issue of 833 333 fully paid ordinary shares, and 2.6-million options, with an expiry date of two years and an exercise price at a premium to Matador’s trading price at the time of issue.

Some 1.6-million of these options can be exercised at a 30% premium, with the remaining to be exercised at a 50% premium.

Once acquired, the project will be held in a subsidiary of Matador. Matador will issue Maple Mining, which is controlled by Davey, a 20% interest in Matador Canada, and will issue him with a further one-million fully paid ordinary shares, as well as options, in conjunction with his proposed appointment to the Matador board.

The minority interest to be held by Maple will be free carried by Matador until either an initial spend of A$15-million or the completion of a bankable feasibility study.

In conjunction with the proposed acquisition, Matador will also undertake a A$5-million capital raise via a share placement, which will be priced at no less than 25c a share.

The company will seek shareholder approval for the placement, as well as for the acquisition.