Galiano Gold Inc. (TSX: GAU) (NYSE American: GAU) announced Thursday it entered into a binding share purchase agreement with the leading South African miner Gold Fields Limited (JSE: GFI) to acquire 45 per cent interest in one of Ghana’s largest gold mines.
The transaction is valued at USD$20 million in common shares, USD$65 million in cash and up to USD$85 million in future cash considerations. Galiano already owned 45 per cent of the mine and the deal positions the company as a robust gold producer in West Africa.
The Asanko Gold Mine is projected to yield an average annual gold production of approximately 240,000 ounces from 2024 through 2030, solidifying Galiano’s status as an emerging mid-tier gold producer.
Key highlights of the transaction include the creation of a unique high-growth gold producer. Consolidation of the Asanko Gold Mine doubles Galiano’s attributable gold production, cash flow, mineral reserves and mineral resources.
The transaction structure ensures limited equity dilution, with over 50 per cent of the total consideration deferred and paid following an expected period of elevated cash flows.
Upon the completion of the Acquisition, Galiano becomes a rapidly expanding gold producer with a strong financial foundation.
“This transaction marks a significant value-adding event for the shareholders of Galiano,” the company’s CEO, Matt Badylak said. He added that it transforms the company into a “relevant, emerging mid-tier gold producer,” consolidating one of the largest gold-producing mines in West Africa.
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Acquisition doesn’t require shareholder approval
The Asanko gold mine has a pro forma ownership structure of Galiano at 90 per cent and the Government of Ghana at 10 per cent. The Life-of-Mine average annual gold production is estimated at approximately 240,000 ounces, with a pro forma consolidated cash position of around USD$130 million and no debt.
Transaction details outline that Gold Fields receives USD$20 million in Galiano shares, representing a 19.9 per cent ownership stake, and retain USD$65 million in cash. Additional future considerations of up to $85 million, a 1 per cent net smelter return royalty, and an amended investor rights agreement further solidify the terms of the acquisition.
The acquisition is not subject to shareholder votes but requires regulatory approvals, including those from the TSX and NYSE American stock exchanges, and a No Objection Letter from the Ministry of Lands & Natural Resources of Ghana.
The transaction is anticipated to close in Q1 2024, marking a pivotal moment in Galiano Gold’s strategic growth trajectory.
