Vancouver-based StrataGold Corporation (TSX: T.SGV, Stock Forum) and Toronto’s Victoria Gold Corp. (TSX: V.VIT, Stock Forum) announced Wednesday that they will combine the companies through an all share transaction.
Victoria has agreed to offer StrataGold shareholders 0.1249 of a Victoria common share for each StrataGold common share held, representing a 38.1% premium based on the 60 day volume weighted average trading price of StrataGold.
StrataGold main projects are Dublin Gulch, including the Eagle Zone and Mar-Tungsten Deposits, located along the Tintina Gold Belt in central Yukon and the Tassawini Project and the BRL Venture located in Guyana, while Victoria has 17 gold projects in Nevada.
"This proposed transaction is a strategic one for both companies and brings to StrataGold Victoria's northern project development expertise to advance our Dublin Gulch Project. Kinross Gold Corporation, which is a significant shareholder of Victoria, operates the Fort Knox mine in Alaska, which StrataGold and Victoria believe is geologically analogous to Dublin Gulch. The combination of the two companies provides Victoria with two additional advanced projects to add to its impressive pipeline of projects," says Roman Friedrich, StrataGold's executive chairman.
"This Transaction increases Victoria's total NI 43-101 compliant gold resources from 1,2 million ounces to approximately 4.3 million ounces with just 17% equity dilution. The rationale for our acquisition is StrataGold's Dublin Gulch Eagle Zone Deposit, but we have yet to assess the full development potential of their assets in Guyana and there has been significant interest in the Mar-Tungsten Deposit by Chinese interests," added Chad Williams, president and CEO of Victoria Gold Corp.
The companies say the transaction will be structured as an acquisition of all of the outstanding shares of StrataGold by Victoria by way of a plan of arrangement, and is conditional upon 66 2/3% shareholder approval and receipt of regulatory approval.
Victoria’s current president and CEO, Chad Williams, will remain the President and CEO of the combined company which will retain the “Victoria Gold Corp.” name.
Victoria has also agreed to extend StrataGold an initial $350,000 bridge facility and a further $400,000 irrevocable line of credit.
Shares of the companies were halted Wednesday, but resumed trading at 2:00pm EST with Victoria Gold unchanged at 38 cents, and StrataGold soaring 25% to five cents.
On the StrataGold Bullboard, BILLMINER gave some thoughts on the announcement, saying: “The new company will have about 50 million less shares out there also.. thats positive..Plus 1.2 million ounces in Nevada..Bids now outweigh the asks at 5 cents.. So obviously the markets dont mind it at..I think its a smart move that makes sense given how hard it is to raise money.. Ans with Kinross owning a good chunk, well that makes it easier to raise money in times like these[sic].”
Stockhouse member 082865 said: “Victoria may be a decent fit, but valuing us at less than 15% of book is crazy. There will be a white knight coming in very shortly to make Victoria ante up a lot more coin[sic].”
