VANCOUVER (miningweekly.com) – TSX-listed gold producer AuRico Metals will buy royalty and project generator firm Kiska Metals in a cash-and-stock deal valued at C$9.6-million.
AuRico will acquire all the issued and outstanding securities of Kiska, paying about 0.0667 of an AuRico common share, plus C$0.016 in cash for each Kiska share held.
Based on AuRico's December 22, closing share price, the arrangement values the Kiska shares at about C$0.078 apiece. AuRico expects to issue about 8.2-million, assuming conversion of Kiska's in-the-money options and warrants, representing about 5.5% of the current issued and outstanding AuRico shares.
The arrangement represents a 95% premium to recent trading ranges of Kiska stock, providing shareholders with significantly enhanced trading liquidity.
The deal will take place under a statutory plan of arrangement under the Business Corporations Act of British Columbia.
"This transaction presents a unique opportunity to expand our royalty portfolio with a focus on Canadian assets. We are confident that this transaction represents a significant value creation opportunity and we are very pleased to bring this transaction forward to the benefit of both sets of shareholders,” AuRico president and CEO Chris Richter stated.
The combined company is envisioned to have paying royalties from the Kemess development project, in British Columbia, which is well advanced with a feasibility study recently released and an environmental assessment certificate expected in the near-term, as well as a high-quality portfolio of earlier-stage royalties and exploration projects with royalty generation potential.
As part of the agreement, AuRico has also agreed 12.9-million private placement of Kiska shares, representing about 9.9% of the outstanding Kiska shares following the placement. The Kiska shares are priced at C$0.055 each, for total gross proceeds to Kiska of about C$709 500.
potential.
AuRico has an advanced portfolio of precious metals royalties, while at the same time developing the Kemess project. Assets include a 1.5% net smelter return (NSR) royalty on the Young-Davidson Gold Mine, a 0.25% NSR royalty on the Williams Mine at Hemlo, and a 0.5% NSR royalty on the Eagle River mine – all located in Ontario, Canada. It also has a 2% NSR royalty on the Fosterville mine and a 1% NSR royalty on the Stawell mine, located in Victoria, Australia.