Luna Gold and JDL Gold Announce Merger to Create a Multi-Asset Mining Company and Concurrent C$27 Million (US$20 Million) Equity Financing
VANCOUVER, BC--(Marketwired - February 01, 2017) -
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All amounts are in United States dollars unless otherwise indicated.
Luna Gold Corp. (TSX: LGC) ("Luna Gold") and JDL Gold Corp. (TSX VENTURE: JDL) ("JDL") are pleased to announce that they have entered into an arrangement agreement (the "Agreement") to combine their businesses, creating a multi-asset mining company (the "Transaction"). The combined company intends to change its name to Trek Mining Inc. ("Trek") and expects to trade on the TSX Venture Exchange ("TSX-V") under the ticker symbol "TREK".
Trek Mining Highlights
- Strong leadership team: Combined executive team and directors have the financial, technical, construction and operations experience to advance the combined assets and build a leading mid-tier gold producer
- Significant cash position: Well capitalized with approximately C$66 M ($50 M) in cash and no cash debt
- Simplified balance sheet: All cash debt repaid or settled in equity
- Diversified asset portfolio: Asset portfolio anchored by near-term production from the Aurizona gold project in Brazil, increasing gold production from milling operations at the Koricancha Mill in Peru, and a pipeline of exploration-stage projects, providing a platform for growth
- De-risks Aurizona development: Strong cash position increases construction financing flexibility for Aurizona and allows for purchase of long-lead capital items following completion of the feasibility study
- Enhanced capital markets profile: Broad shareholder base with supportive and recognized investors and improved liquidity
Trek will be well-funded, with approximately C$66 million ($50 million) in cash and no cash debt, and will be strongly positioned to advance the Aurizona gold project ("Aurizona" or the "Aurizona Project") to production. The Transaction also accelerates exploration at Aurizona with a focus on the drill-ready targets directly along strike from the existing reserves and resources at the Piaba open pit. Trek's portfolio includes the gold-producing Koricancha Mill in Peru and a robust pipeline of gold and copper exploration assets in South and North America.
Christian Milau, CEO of Luna Gold said: "This transaction achieves a number of our near-term growth objectives and is the next step toward our vision of building a leading mid-tier gold producer. We have spent our first six months at Luna Gold focused on development of Aurizona. Our cash position post Transaction, together with a simplified balance sheet, will provide a solid foundation to advance Aurizona to production and accelerate exploration efforts. We see significant potential in JDL's asset portfolio and believe the combined company puts us on an exciting growth path."
David Lowell, Chairman of JDL and incoming Director of Trek, said: "We are excited to team with Luna Gold in building a meaningful new mining company. JDL's shareholders will participate in the near-term gold production and exceptional exploration upside at Aurizona. The exploration potential, both on trend and regionally, represents a substantial opportunity for extension of the mine life and new discoveries. I look forward to joining the Trek Mining board of directors and continuing to work for the benefit of all our stakeholders."
Lukas Lundin said: "I am pleased to support the merger of JDL and Luna Gold to create Trek Mining. I am enthusiastic about Trek's current portfolio of assets and am confident that this combination of management, assets and opportunity provides Trek with a strong foundation for success and momentum going forward."
Pacific Road Resources Fund ("Pacific Road") and Sandstorm Gold Ltd. ("Sandstorm"), the two largest shareholders of Luna Gold, and Lorito Holdings (Guernsey) Ltd. and Zebra Holdings and Investments (Guernsey) Ltd., the largest shareholders of JDL (both controlled by a trust settled by the late Adolf H. Lundin), have entered into support agreements to vote in favour of the Transaction.
Upon completion of the Transaction, Trek's asset base will consist of:
- Cash of approximately C$66 million ($50 million) including marketable securities 1
- 100% ownership of the feasibility-stage Aurizona Project in Brazil, a past-producing open-pit gold mine that is anticipated to recommence production by year-end 2018, targeting average annual gold production of 150,000 ounces for the first five years with all-in sustaining costs of $708/ounce 2
- 75% ownership of the Koricancha Mill, an operating gold ore processing facility in Peru 3
- 100% ownership of the Warintza copper-molybdenum exploration-stage project in Ecuador, with an inferred resource of 195 million tonnes at a copper equivalent grade of 0.61% 4
- 100% ownership of the high-grade past-producing Elk Gold project in British Columbia, Canada 5
- 100% ownership of the Ricardo Claim block in Chile, strategically located on the West Fissure fault that hosts numerous porphyry copper deposits including Escondida and Chuquicamata 6