From Stockwatch Gold-May 16th Steven Dean's -- soon to be St. Barbara Limited's -- Atlantic Gold Corp. (AGB) gained one cent to $2.89 on 20.22 million shares. On Wednesday, Atlantic's stock surged 79 cents to $2.88 on a whopping 64.56 million shares on word that St. Barbara is offering $2.90 in cash for each Atlantic Gold share in an $800-million friendly takeover. Mr. Dean, Atlantic's chairman and chief executive officer, says that the offer "delivers an immediate and attractive premium" to shareholders, although many of those shareholders used the market to avail themselves of a more immediate delivery.
Atlantic's shareholders -- those that are sticking around -- will still have shares in their portfolios, as the 18.6 million shares of Keith Henderson's Velocity Minerals Ltd. (VLC) that Atlantic acquired in mid-March at 21 cents per share will be spun off as a new company to Atlantic's shareholders. A second component of that spinoff will be the $5.09-million in secured convertible debentures concurrently acquired from Velocity. At the time, Mr. Dean had called the share and debenture purchases a $9-million strategic investment.
Atlantic Gold's main asset is the Moose River Consolidated gold mine, northeast of Halifax in Nova Scotia, which is expected to yield between 92,000 and 98,000 ounces of gold this year. Atlantic Gold has laid plans for the mine, however, with an expansion expected to boost annual gold production as high as 254,000 ounces in 2024 and average nearly 210,000 ounces per year from 2022 through 2027.
Mr. Dean says that the planned spinoff, which is still hobbled with the legalistic moniker SpinCo, will provide shareholders with "ongoing exposure to the Rozino project" in Bulgaria, which he believes has strong value potential. Rozino was the subject of a preliminary economic assessment last fall, based on its inferred resource of 13 million tonnes at 1.37 grams of gold per tonne, about 570,000 ounces.
That dream sheet projected a $98-million, six-year mine with a discounted net present value of $129-million, but Mr. Henderson said that Velocity's goal is a mine that would produce over 100,000 ounces of gold annually for more than 10 years. Investors are perhaps contemplating that Mr. Dean and his departing Atlantic Gold crew will take a greater interest in Velocity and Rozino: Velocity added two cents to 31 cents on 580,000 shares today.
Mr. Dean's departure from Atlantic presumably comes with a gold-plated parachute: He is entitled to twice his annual salary and bonus under the change of control provisions of his contract. At last report, that two-year payout would be about $1.72-million.