VANCOUVER (miningweekly.com) – The TSX-listed equity of Midas Gold jumped nearly 19% following an announcement by Barrick Gold that it will increase its position in the company to 19.9%.
Barrick sees the investment as a strategic move to gain access to the Stibnite gold project, in Idaho, which Barrick president Kelvin Dushnisky said offers a “compelling investment proposition”, with low geopolitical risk, potential for production of more than 300 000 oz of gold a year at competitive operating costs, and with added exploration upside.
The companies have signed a subscription agreement for Barrick to acquire 46.55-million Midas common shares in a nonbrokered private placement at a price of C$1.06 a share, for gross proceeds of $38.06-million.
So long as Barrick maintains a minimum of 10% ownership in Midas, Barrick will have a right to appoint one director to an expanded board from seven to eight and it will be appointing an independent director to fill that position.
The company will also have future participation and nondilution rights and a right of first refusal for gold concentrates.
Paulson & Co and Teck Resources have both provided notice to Midas that they do not intend to exercise their antidilution rights in respect of this transaction.
The transaction is expected to close on Tuesday.
Midas Gold's TSX-listed equity rose to a new 52-week high on Wednesday morning to C$1.15 a share.