Orla Mining (TSX: OLA) acquired Contact Gold (TSXV: C) and its two exploration-stage properties for USD$8.1 million.
Orla announced on Monday that it has reached a definitive agreement for an all-share transaction. In this deal, each Contact share will exchange for 0.0063 of an Orla common share, equaling CAD$0.03 per share.
This move allows for the combination of the Railroad-Pinion district by combining the South Railroad with Contact’s Pony Creek oxide gold project. Altogether, the new product spans 45 square kilometers and is located adjacent to South Railroad. Both projects are situated on Nevada’s renowned Carlin trend.
South Railroad is a feasibility-stage, open-pit mine project and Orla is presently advancing it towards a construction decision. Currently, it hosts 1.8 million ounces of measured and indicated resources at a grade of 0.74 grams per tonne of gold. Additionally, it holds 719,000 ounces of inferred mineral resources at a grade of 1.00 gram per tonne of gold.
Pony Creek could contribute to this resource because it comprises three mineralized zones with a total inferred resource of 433,000 ounces at a grade of 0.52 grams per tonne of gold.
“This transaction strengthens our land position in Nevada along the Carlin trend,” Jason Simpson, Orla CEO, said. “Contact’s Pony Creek property is a valuable complement to our South Railroad project, one our key growth opportunities.”
This purchase price signifies a 77 per cent premium based on the companies’ 20-day volume weighted average price as of the previous trading day. Upon completion, Contact shareholders will possess approximately 0.7 per cent of Orla’s outstanding shares.
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Contact Gold shares pop 83.3% on the news
The announcement caused shares in Contact Gold to surge 83.3 per cent to CAD$0.028 by midday Monday. Meanwhile, Orla Mining’s stock dipped 7.3 per cent to CAD$4.55 apiece.
The company compares the South Railroad project to its flagship Camino Rojo oxide mine in Mexico. The Mexican mine achieved commercial production in April 2022 and produced 109,596 ounces of gold that year, followed by 121,877 ounces in 2023.
Contact also possesses the Green Springs property at the southern end of Nevada’s Cortez trend. It’s positioned east of Calibre Mining Corp‘s (TSX: CXB) (OTCQX: CXBMF) Pan Mine and the feasibility stage Gold Rock Project. The property encompasses 19.5 square kilometers featuring three shallow past-producing open pits.
This property is an early-stage exploration project in which Centerra Gold Inc. (NYSE: CGAU) (TSX: CG) currently holds an earn-in right of 70 per cent through the completion of a four-year, CAD$10 million exploration program.
Nevada is one of the largest gold-producing regions in the world. The state consistently ranks as one of the top gold producers in the United States.
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