JOHANNESBURG (miningweekly.com) – TSX-V-listed Transition Metals has established a new subsidiary Canadian Gold Miner (CGM) Corporation to advance and finance a portfolio of high-quality gold exploration projects in the southern Abitibi greenstone belt in Canada.
CGM would buy Transition Metals’ interest in a portfolio of five early-stage gold exploration projects – West Matachewan, Jumping Moose, Elephant Head, Golden Elk and New Kirkland – totalling 5 952 ha in the Larder Lake mining district of Ontario, in exchange for 15-million CGM shares.
Transition would also retain a 2% net smelter royalty on all properties not already encumbered by underlying royalties, of which CGM could buy back 1% by making a payment of $1.5-million to Transition at any point up until a production decision.
Transition was also entitled to receive a milestone payment of $1-million for each transferred property upon a production decision.
Further, CGM had entered into an agreement with Kiska Metals Corporation to acquire its interest in about 2 432 ha in Midlothian township, with the property, which is adjacent to the West Matachewan project, said to host an undrilled gold occurrence that has returned assay values from grab samples of up to 12.7 kg of gold per tonne.
It would issue Kiska one-million CGM shares upon signing the agreement, followed by the issue of a further $200 000 worth of shares on either the first anniversary of the agreement or CGM completing a minimum $2-million of financing.
Kiska would also receive a $2.5-million milestone payment within six months of the start of commercial production at the property.
Transition noted that the establishment of CGM enabled Transition to leverage its investment and expertise in the south-west Abitibi to assemble a district scale portfolio of very prospective gold exploration projects in one of the world’s premier and politically stable gold mining districts.
“We think now is the right time to consolidate quality gold exploration projects in the Abitibi. The formation of CGM is consistent with the project generator business model that Transition follows and is a proven mechanism to bring value to our shareholders while minimising equity dilution in the parent,” commented CEO and president Scott McLean.
The company used the project generator business model to acquire and advance multiple exploration projects simultaneously, thereby maximising shareholder exposure to discovery and capital gain.
Joint venture partners could earn an interest in the projects by funding a portion of higher-risk drilling and exploration, allowing Transition to conserve capital and minimise shareholders’ equity dilution.