The transaction will facilitate the construction of the Marathon project in Labrador.
Toronto-listed Calibre Mining and Marathon Gold have announced their combination, forming an America-focused midtier gold producer with average output of 500 000 oz/y.
In terms of the transaction, announced on Monday, Calibre will acquire all the shares of Marathon pursuant to a court-approved plan of arrangement.
The combined company will have a cash balance of $148-million and significant free cash flow from Calibre’s existing mines. The financial strength will facilitate the seamless construction of the Valentine gold project, in central Newfoundland.
Valentine will produce an average of 195 000 oz/y at a low projected all-in sustaining cost of $1 007/oz in the first 12 years of production, beginning in 2025.
“I have no doubt that the union of Marathon's experienced team and well-advanced Valentine project based in Canada, with Calibre's production assets, robust treasury, free cash flow, flawless track record in execution and high impact exploration opportunities will unlock significant value for the shareholders of both companies,” said Calibre chairperson Blayne Johnson.
He also thanked Clive Johnson and B2Gold for not only entrusting Calibre to progress the Nicaragua assets, but for the continued support of the team, including their vote supporting this transaction
“As founders of Calibre, we are as excited for the future of this combined company as we were when we merged Newmarket Gold with Kirkland Lake to establish a company of similar size and annual production,” said Johnson.
Meanwhile, Marathon president and CEO Matt Manson said that the business combination offered Marathon shareholders the opportunity to participate in the growth of a new midtier gold producer.
“The transaction offers the ability to fully realise the potential of Valentine without the limitations of the single asset project developer. Shareholders will continue to participate in the success of Valentine’s development, supplemented now with a renewed focus on exploration and discovery and the considerable upside potential of Calibre’s own proven operations and cash flow growth.
“We are proud of the work accomplished to date by the Marathon team, and strongly recommend this transaction in the interests of shareholders, Marathon’s employees and community partners, and the province of Newfoundland & Labrador.”