Golden Queen Mining Co. Ltd. (
TSX: T.GQM,
Stock Forum) said Monday it has struck a deal with entities controlled by
Leucadia National Corp. (
NYSE: LUK,
Stock Forum) and certain members of the Clay family, a shareholder group which collectively owns 27% of the issued and outstanding shares of Golden Queen.
Subject to shareholder approval, Golden Queen will invest US$110 million in cash in exchange for a 50% joint venture interest in the Soledad Mountain Project, a fully-permitted, open pit, heap leach gold and silver project located in Kern County, California,
the company said in a press release.
The project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore.
Golden Queen shares rose 15% to $1.45, leaving the company with a market cap of $144.2 million, based on 99.5 million shares outstanding. The 52-week range is $1.99 and 62 cents.
Leucadia National shares advanced 0.61% to $26.31, leaving a market cap of $9.7 billion, based on 368.6 million. The 52-week range is $29.68 and $24.52.
Under the transaction agreement, Golden Queen will convert a wholly-owned subsidiary that is developing the Soledad Mountain Project, Golden Queen Mining Company Inc., into a California limited liability company (GQ California).
Gauss LLC, a joint venture to be owned 67.5% by Leucadia and 32.5% by Clay group, will acquire 50% of the membership interests of GQ California for US$110 million, payable in cash to GQ California.
Upon closing of the joint venture transaction, Golden Queen, through a wholly-owned subsidiary (GQ Holdco), and Gauss, will each own 50% of GQ California and will enter a joint venture deal that will govern the management of the project, the obligations of the parties in connection with further funding requirements and ownership of GQ California.
GQ California will be managed by a board of managers comprising an equal number of representatives of each of Gauss and GQ Holdco.