Cerrado Gold Inc. (TSXV: CERT) and Voyager Metals (TSXV: VONE) have entered into a definitive agreement pursuant to which Cerrado will acquire all the issued and outstanding shares which are not already owned by the company by way of a plan of arrangement under Business Corporations Act. Upon completion of the arrangement, Cerrado will, indirectly through a wholly owned subsidiary, own a 100% interest in the Mont Sorcier Iron and Vanadium project located near Chibougamou, Quebec.
Mark Brennan, CEO and co-chairman of the company, commented, “We continue to see strong production growth at our MDN operation, and we are very confident in delivering a strong Feasibility Study by the end of May for MDC. The addition of the Mont Sorcier project represents a significant opportunity to increase Cerrado’s long term cash generation, asset life and relevance to the mineral sector. Mont Sorcier is expected to be a very high margin, high return project similar to our very robust Monte Do Carmo project. In addition, we see tremendous synergies to reduce future equity requirements to develop the company’s assets and this will add significant value to all shareholders of the combined company.”
Mont Sorcier is a well advanced, large, long-life, and economically robust project in a tier one mining jurisdiction. In September 2022, Voyager completed a PEA on Mont Sorcier, which outlined a project with an after-tax NPV of US$1.6B and IRR of 43% producing 5.0Mtpa of iron concentrates over a mine life of 21 years with annual free cash flow of US$235M. The project is currently advancing towards completion of a bankable Feasibility Study expected by the end of 2023.
Under the terms of the arrangement agreement, Voyager shareholders would receive one (1) common share of Cerrado for every six common shares of Voyager.
The exchange ratio implies consideration of C$0.1523 per Voyager Share based on the 20-day volume weighted average price of the closing price of Cerrado common shares on the TSX Venture Exchange 3 March 2023, representing a 16.8% premium to 20-day VWAP of Voyager on the TSXV on 3 March 2023. Upon closing, the Arrangement would result in Voyager shareholders owning approximately 18% of the Cerrado Shares outstanding upon closing of the arrangement.
Holders of Voyager options will receive equivalent securities of Cerrado adjusted in accordance with the Exchange Ratio. Securityholders of Voyager are expected to receive an aggregate of approximately 15,496,022 Cerrado Shares and 1,266,666 Cerrado options. Outstanding Voyager warrants will remain outstanding and in accordance with their terms will be exercisable for up to 2,140,452 Cerrado Shares based on the Exchange Ratio following the closing of the arrangement.
In connection with the arrangement, Cerrado has entered into a subscription agreement pursuant to which Cerrado has agreed to subscribe for and purchase Voyager Shares at a price per Voyager Share equal to the transaction price, as part of a larger non-brokered private placement of Voyager for gross proceeds of up to C$4.725M to be completed prior to the closing of the arrangement.
Assuming the private placement is fully subscribed, it is anticipated that Cerrado will subscribe for and purchase C$3.7M of Voyager Shares and will own approximately 19.9% of the issued and outstanding Voyager Shares (on a non-diluted basis) prior to the completion of the Arrangement. If the private placement is not fully subscribed, Cerrado will subscribe for no more than that numer of Voyager Shares as will result in Cerrado owning 19.9% of the outstanding Voyager Shares upon completion of the private placement and prior to completion of the arrangement.
Proceeds of the private placement are intended to further advance Voyager’s ongoing development and feasibility study on its Mont Sorcier iron project near Chibougamau, Quebec, which the company has scheduled for completion by the end of 2023, to fund certain other short term payable obligations prior to closing of the arrangement and for general corporate purposes.
To find out more, please visit www.cerradogold.com or www.voyagermetals.com
