Mongolia’s Steppe Gold Ltd. (TSX: STGO) (OTCQX: STPGF) (FSE: 2J9) has signed an arrangement agreement to acquire the Vancouver-based gold producer Anacortes Mining Corp. (TSX-V: XYZ) (OTCQX: XYZFF).
The companies announced the new agreement on Monday pursuant to which Anacortes shareholders will receive 0.45 of a Steppe common share for every share they own. Currently, Steppe shares are worth $1.04 on the Toronto Stock Exchange and Anacortes stocks are worth $0.44 on the TSX Venture Exchange.
The news follows Steppe signing a binding letter of intent when the transaction was originally announced at the beginning of March before further formalizing the deal this week with the new agreement. Upon closing of the all share deal, Steppe shareholders will own about 79 per cent of the combined company and Anacortes shareholders will own 21 per cent.
“The transaction is anticipated to create a leading junior gold producer with significant near-term growth,” said Steppe and Anacortes.
The transaction has now been unanimously approved by the board of directors at each company.
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Through the deal, Steppe will be obtaining the Tres Cruces gold project in Peru from Anacortes, the Vancouver miner’s flagship asset.
“We are very pleased to add one of the highest-grade undeveloped oxide gold deposits in the world to our development pipeline,” said Steppe’s President and CEO Bataa Tumur-Ochir.
Tres Cruces is expected to add an additional 68,000 ounces of gold per year to Steppe’s annual production yield. The project also has an underexplored land package that is estimated to host an indicated resource of 2.5 million ounces at 1.65 g/t.
“The new combined company will have a potential development profile of over 200,000 ounces and a resource base of over 4.5 million gold equivalent ounces,” said Steppe’s Executive Chairman Matthew Wood.
Anacortes believes it is an opportune time to sell the company as Steppe is currently in the midst of completing a Phase II expansion of its ATO Gold Mine which will increase annual production at that project to approximately 100,000 ounces per year, thereby generating substantial revenue.
“We see this as an excellent opportunity for our shareholders to participate in a growing junior gold producer that will have an enhanced ability to advance and develop the Tres Cruces project,” said James A. Currie, President and CEO of Anacortes.
In June last year, Anacortes qualified to trade on the OTCQX market, the OTC Markets Group Inc.’s (OTCQX: OTCM) best market.
Steppe mined 958,289 tonnes of ore in 2022 with an average gold grade of 1.82 g/t and an average silver grade of 12.06 g/t. In Q4 last year the company sold 10,172 ounces of gold and 19,347 ounces of silver.
rowan@mugglehead.com
