Mega Precious Metals Inc. (
TSX: V.MGP,
Stock Forum) has agreed to be acquired by
Yamana Gold Inc. (
TSX: T.YRI,
Stock Forum) in a $17.5 million transaction that is expected to spur development of the Mega’s flagship Monument Bay gold-tungsten project in Manitoba.
Under a plan of arrangement announced on Friday, Yamana will acquire all of Mega’s outstanding shares by way of a plan of arrangement for 0.02092 of a Yamana share and $0.001 in cash for each share of Mega, based on the closing price of the company’s shares on April 23, 2015.
Yamana has also agreed to purchase the outstanding convertible debentures held by Pacific Road Capital Resources.
Mega Precious Metals shares rose 5.6% to 9.5 cents Monday, building on Friday's 100% gain, leaving a market cap of $16.4 million, based on 173.2 million shares outstanding. The 52-week range is 12 cents and 2.5 cents.
Mega Precious Metals is a Canadian precious metals exploration company with projects in Manitoba, Red Lake, Ontario, and Nunavut. The company’s flagship asset is the Monument Bay Project, which is located 570 kilometres northeast of Winnipeg.
If you look at Monument Bay, we own a district-size gold camp, with multi-million ounces of gold already defined. It comes with a tungsten kicker and a high grade starter pit. Over the past six months, we discovered multiple parallel (geological) structures that can host gold mineralization.
Mega President and CEO Glen Kuntz told Stockhouse recently that Monument Bay is essentially a district-size gold camp, with multi-million ounces of gold already defined. It comes with a tungsten kicker and a high grade starter pit.
“Over the past six months, we discovered multiple parallel (geological) structures that can host gold mineralization,” he said recently.
The company said the acquisition by Yamana represents a material progression in the advancement of Monument Bay from a grass roots exploration project when Mega began to explore the project in early 2011.
“The Monument Bay Project has grown into what we consider to be one of the best development assets in the industry and we are proud to be part of this story,’’ said Mega Chairman Mario Stifano.
“Our team has assembled a 338 square kilometre camp-sized land position, advanced the project to its current multi-million ounce resource, formulated a regional geological and targeting model, including the realization of a potential tungsten by-product and importantly, we have developed a positive and respectful relationship with the Red Sucker Lake First Nation,’’ Stifano said.
Yamana Gold is a Canadian gold producer with operations in Brazil, Argentina, Chile, Mexico and Canada. The company is expected to produce 1.3 million ounces of gold, 9.6 million ounces of silver and 120 million pounds of copper this year.
For its part, Yamana said the deal expands the company’s presence in Canada following the acquisition last year of Canadian Malartic and a portfolio of exploration properties in Quebec and Ontario.
“The significant existing mineral resource based at Mega’s Monument Bay and North Madsen Projects in particular provide an opportunity for further exploration to meaningfully increase the potential of these assets,’’ said William Wulftange, senior vice-president, exploration at Yamana.
Yamana shares eased 2.4% to $4.76 on Monday, leaving a market cap of $4.5 billion, based on 941.3 million shares outstanding. The 52-week range is $9.90 and $3.93.
FULL DISCLOSURE: Mega Precious Metals is a Stockhouse client.