Cadillac Mining's (TSX:V.CQX, Stock Forum) Carlin-type Goldstrike project is located in southwestern Utah at the southeast margin of the Great Basin, considered one of the world's most prolific gold-producing regions. The property was originally explored in the mid-80's by Tenneco Minerals and brought into production in 1988 with records showing that 209,835 oz gold and 197,654 oz silver were recovered between 1988 and 1994.
Unfortunately, due to falling gold prices, high royalties and tough economic times, exploration was constrained to areas of known mineralization and near-surface targets, and as a result left much of the prospective Tertiary and all of the underlying Paleozoic strata on the property largely untested.
Cadillac swooped in and wrapped up a re-consolidation of the historic Goldstrike District in 2011 by leasing several patented mining properties and staking a contiguous block of BLM claims totaling an approximate 4800 acres. Their hope was to apply advanced techniques and a better understanding of the Great Basin deposit model to follow their belief that there was substantial additional near-surface and deep-seated gold mineralization yet to be discovered at the property.
In 2012, the company produced drill results that sent the stock up over 200%, but with the fluctuating price of gold and the depressed junior mining sector, money for further exploration became rarer than a Jackalope. Cadillac was stuck and share prices dropped below $0.04 by 2014.
The company began reorganizing by bringing in a new director in March. Gary D. Nordin, a 40-year veteran in mining, had an extensive background in evaluation, acquisition, exploration and development related to mineral deposits, especially heap-leach gold projects, and Cadillac hoped he would has the necessary chutzpa to push Goldstrike forward.
Shareholders showed their faith in the company's move by pushing shares up to $0.12, but they were worried with the lack of communication from management and weren't willing to take no news as good news just yet.
The company responded to some investors about their radio silence via email, stating, “...we are delinquent in that regard……… not because we’re indifferent, but because we’re paying more attention to the business at hand than to fluffing the market. There are irons in the fire, and they’re interesting ones. As an investor, you deserve to be kept informed, and you will be.”
One of those irons paid off today with the company's announcement that it had entered into a arrangement agreement with Pilot Gold (TSX:PLG, Stock Forum) where Pilot has agreed to acquire all the issued and outstanding shares of Cadillac.
According to the news release, the transaction gives Cadillac shareholders ) 0.12195 of a Pilot Gold share and a ).12195 of a Pilot Gold share purchase warrant for each common share of Cadillac held, with warrants entitling holders to acquire one Pilot Gold share at an exercise price of $2.00 for a period of two years from closing.
Not only does this transaction give Cadillac shareholders a 121% premium over the closing price of the company's shares as of June 12, 2014, it will also retire Cadillac's working capital deficiency at the closing of the transaction.
Great news as this will give the company the ability to carry forward work at Goldstrike without incredibly diluting its share base as well as giving it the necessary push at its Cadillac Break project located in Quebec.
But it doesn't stop there, shareholders will also be participating in Pilot's exploration portfolio including Kinsley Mountain in Nevada and TV Tower and Halilaga in Turkey.
Considering the above, Cadillac's board gave unanimous approval to the transaction and have recommended shareholders vote in favor of Pilot's offer.
Things are definitely looking up for Cadillac and markets know it as shares soared 116.67% on the news to $0.195 per share.
Cadillac was in the news recently when the company clarified the granting of stock options at the end of March.
Currently there are 32.3m outstanding shares with a market cap of $6.3 million.