Shares in TSX miner Monarch Gold (MRQ) have shot up this morning, after news
broke of a buyout deal with mining giant Yamana (YRI).
Yamana has pledged to buy all of Monarch's outstanding shares to get its
hands on the the Wasamac property and the Camflo property in Quebec's Abitibi
region.
Yamana will put up around C$152 million in cash and shares to complete the
deal, which repreents a 43 per cent premium on the current value of the
sharefloat.
Meanwhile, Monarch will spin-out its other assets that are not included in
the Yamana deal which will continue to be managed by its shareholders.
Turning to the assets in question, Monarch's flagship Wasamac property
currently has an existing proven and probable mineral reserves of 1.8 million
ounces of gold at an average grade of 2.56 grams per tonne.
The Camflo property on the other hand has not been operated in almost 30 years,
but Yamana has hopes that further exploration of the site could yield further
value.
Yamana has been eager to expand its reach in the region and believes its previous
experience in bulk underground mining operations will translate well to running
its two new assets.
Commenting on the sale, Monarch President and CEO Jean-Marc Lacoste said the
company has built, over the years, a great portfolio through acquisitions and
organic growth which led to this fruitful transaction within the diversified
portfolio of Yamana.
“A project the size of Wasamac needed a strategic alliance with a good
developer and operator with a track record of success in similar styled
mineralization and we believe this transaction is in the best interests of the
shareholders,” he added.
The transaction does not require shareholder approval and is expected to close
before January next year.
Monarch Gold (MRQ) is up 25 per cent and is trading at 55 cents per share, while Yamana Gold (YRI) has fallen 0.67 per cent to trade for $7.36 per share.