G Mining Ventures and Reunion Gold announce merger to forge leading gold producer in Americas
Mon April 22 2024
G Mining Ventures Corp (TSX-V:GMIN, OTCQX:GMINF) has entered into a definitive agreement with Reunion Gold Corporation (TSX-V:RGD, OTCQB:RGDFF) to create a leading intermediate gold producer.
The deal combines the strengths of both entities to unlock the potential of the burgeoning gold market in the Americas.
As part of the agreement, G Mining will acquire RGD’s flagship Oko West project situated in Guyana, within the highly coveted Guiana Shield region. Recognized as one of the most promising gold discoveries in the area, Oko West holds immense potential to evolve into a significant deposit capable of supporting a substantial, enduring mine complex.
Leveraging the expertise of G Mining’s adept management team, led by CEO Louis-Pierre Gignac, the merger is poised to expedite the value realization of Oko West.
Oko West has “all the key attributes” that G Mining would need for its next stage of growth, Gignac said in a statement.
“We are well-positioned to accelerate value creation at Oko West leveraging our unique expertise in building and operating mines on schedule and on budget in the Guiana Shield, deep knowledge of and network in the region, and over US$480 million anticipated near-term free cash flow from Tocantinzinho,” he said.
“The acquisition of Oko West is the second step towards our vision of becoming a leading intermediate gold producer, building on the team’s success at Tocantinzinho.”
The Tocantinzinho gold project, slated for commercial production in the latter half of 2024, promises substantial free cash flow, providing a solid financial foundation for Oko West's accelerated development.
Under the terms of the agreement, G Mining will issue common shares of a newly formed entity, New GMIN, to RGD shareholders, with an exchange ratio of 0.285 G Mining shares for each RGD share. Additionally, RGD shareholders will receive shares in a newly established gold explorer, SpinCo, earmarked to hold RGD's assets excluding Oko West. To further bolster SpinCo's operations, G Mining has committed to funding it with $15 million.
The transaction, valued at approximately $875 million, represents a significant premium for RGD shareholders, with an estimated consideration of $0.65 per RGD common share. Post-merger, existing G Mining and RGD shareholders are poised to hold approximately 57% and 43% of the combined company, respectively.
In anticipation of the merger, both G Mining and RGD have secured substantial support from key stakeholders. La Mancha Investments Sàrl and Franco-Nevada Corporation (TSX:FNV) have committed to injecting $25 million each into G Mining, demonstrating their confidence in the company's growth trajectory, in addition to La Mancha's intention to purchase up to US$10 million of GMIN shares in the open market.
Analysts at Jefferies view the G Mining-Reunion Gold deal "a sensible combination," building upon existing synergies between GMIN and Reunion Gold and leveraging longstanding relationships and regional expertise.
Notably, the transaction is perceived as advantageous for GMIN, with potential upside as the Oko West project progresses through derisking and development phases. Overall, the addition of this second asset is expected to bolster GMIN's growth trajectory, positioning it favorably in the competitive mining landscape.
"We believe this deal will not come as a surprise to the market," Jefferies analysts wrote.
"With the (Tocantinzinho) build coming to an end, GMIN was on the lookout for acquisitions...The second asset will keep New GMIN on a strong growth footing and propel it to intermediate status."
Source: https://www.proactiveinvestors.com/