Toronto-listed G Mining Ventures (GMIN) unveiled a significant move on Monday, announcing its acquisition of TSX-V-listed Reunion Gold, owner of the Oko West project in Guyana, in a C$875-million transaction.
The consolidation marks a strategic step for GMIN towards accelerating its vision of building a prominent intermediate gold producer, leveraging the acquisition of the globally significant Oko West gold discovery in the Guiana Shield.
GMIN’s existing asset, the 200 000 oz/y Tocantinzinho (TZ) project in Brazil, poised for commercial production in the latter half of the year, is anticipated to fuel the development of Oko West.
GMIN CEO, president and director Louis-Pierre Gignac said Oko West had all the key attributes that the company was looking for in its next leg of growth.
“We are well-positioned to accelerate value creation at Oko West leveraging our unique expertise in building and operating mines on schedule and on budget in the Guiana Shield, deep knowledge of and network in the region, and over $480-million anticipated near-term free cash flow from Tocantinzinho,” said Gignac.
GMIN plans is expedite Oko West through technical studies to a construction decision. The project boasts 4.3-million ounces of gold in indicated resources, grading 2.05 g/t and 1.6-million ounces in inferred resources grading 2.59 g/t.
Under the terms of the agreement, shareholders of GMIN and Reunion will receive common shares of a newly formed company, with Reunion shareholders receiving 0.285 GMIN common shares for each share held. In addition, Reunion shareholders will gain shares in a newly created gold explorer (SpinCo) that will hold all of Reunion’s assets other than Oko West. GMIN has agreed to fund SpinCo with C$15-million.
The transaction offers Reunion shareholders an estimated consideration of C$0.65 a share, representing a premium of 29%, based on the closing prices and a ten-day volume weighted average share price on the TSX and TSX-V on April 19, respectively.
Upon completion of the transaction, existing GMIN and Reunion shareholders will own about 57% and 43% of the combined company on a fully-diluted, in-the-money basis prior to the concurrent $50-million equity financing, and the combined company and Reunion shareholders will own 19.9% and 80.1%, respectively, of the outstanding common shares of SpinCo.
Reunion CEO, president and director Rick Howes lauded the transaction as a win-win for shareholders, noting the upfront premium and ongoing ownership of the combined entity.
“We are very pleased to announce this transaction today, which we believe is a testament to the outstanding work our team has done rapidly discovering and advancing Oko West over the last few years.
“We believe that this transaction not only delivers our shareholders an attractive upfront premium, but also the ability to participate with significant ongoing ownership in the combined company, having the opportunity to participate in an expected future re-rating as Oko West is advanced towards production.”