Steppe Gold Ltd. (TSX: STGO) and Anacortes Mining Corp. have entered into a binding letter of intent pursuant to which Steppe Gold will acquire the latter and the rich Tres Cruces oxide project.
Under the agreement Steppe will acquire all of the issued and outstanding common shares of Anacortes by way of a court approved plan of arrangement under the Business Corporations Act (British Columbia), in an all-share transaction.
Under the terms of the Binding Agreement, Anacortes shareholders will receive 0.4532 of a Steppe Gold common share for each Anacortes Common Share, which represents consideration of approximately C$0.48 per Anacortes Common Share and a premium of 36% based on the closing prices of the Anacortes Common Shares on the TSXV and the Steppe Common Shares on the TSX, each as of the close of trading on March 3, 2023. Shareholders of Steppe Gold and Anacortes will own 79% and 21% of the combined company, respectively, on a basic basis.
The proposed Transaction is anticipated to create a leading junior gold producer with significant near-term growth. In addition to current production from Steppe Gold’s ATO gold mine, which is expected to increase in scale with the current Phase 2 expansion, additional future growth would be supported by the development of the high-grade Tres Cruces oxide project in Peru, which is located approximately 10 km from the Lagunas Norte mine.
The Anacortes board of directors have approved the Binding Agreement and unanimously recommends that Anacortes shareholders vote in favour of the Transaction. Further, pursuant to the Binding Agreement, Anacortes officers and directors holding approximately 7.6% of the Anacortes Common Shares will enter into lock-up agreements with Steppe Gold, pursuant to which they will vote their respective Anacortes Common Shares in favour of the Transaction. The board of directors of Steppe Gold have also approved the Transaction.
Stifel GMP has provided a fairness opinion to Anacortes that based upon and subject to the assumptions, limitations, and qualification stated in such opinion, the Transaction is fair from a financial point of view to Anacortes.
“This transaction transforms Steppe Gold into a multi asset, multi jurisdiction gold company with existing production and development projects in two of the most exciting and still untapped gold provinces in the world in both Mongolia and Peru,” Executive Chairman of Steppe Gold, Matthew Wood, said.
“The new combined company will have a potential development profile of over 200,000oz and a resource base of over 4.5 million gold equivalent ounces.”
Steppe Gold CEO, Bataa Tumur-Ochir, said the agreement will see his company add one of the highest-grade undeveloped oxide gold deposits in the world to its development pipeline.
“Having recently built a heap leach gold mine in Mongolia and now in production since 2020, this next project works well in our sequence of production growth to come online in the next few years.
“Our vision is to build a 200,000 oz gold equivalent production profile, with our ATO Phase 2 expansion project expected to come online in 2025 and the Tres Cruces Mine moving to production soon thereafter.
“The Tres Cruces project has many similarities to our ATO project, with an oxide deposit at surface that can be quickly brought into production with significant upside in the underlying fresh rock.”
Benefits for Steppe Gold shareholders:
- Adds the Tres Cruces project to the growth pipeline – an attractive and technically straightforward development project in Peru with low capital intensity and the potential to add 68,000 ounces of gold production per year at average all-in sustaining cash costs of US$734 per ounce.
- Diversifies the asset portfolio with the addition of another development project and provides entry into one of the world’s most prolific gold mining belts in Peru, thereby allowing the potential for Steppe Gold to become a multi asset and multi-jurisdictional gold company.
- Further reinforces the value proposition of Steppe Gold, with the Tres Cruces project having an underlying NPV of approximately US$170M at US$1,700 gold (per the preliminary economic assessment filed in March 2022).
- Tres Cruces adds a large and underexplored land package that current hosts indicated resources of approximately 2.5Moz at 1.65g/t and inferred resources of 104 kozs at 1.26g/t, inclusive of 630kozs of high grade 1.28g/t leachable gold.
- This adds to the existing asset base at the ATO Gold Mine where it recently reported Proven and Probable Reserves of 1.7moz Au Eq and Resources of 2.05Moz Au Eq.
For further information please visit: https://steppegold.com