Midas Shares Up After Barrick Announces US$38-million Investment

Shares of Midas Gold (TSX:MAX) climbed almost 19 percent after top gold producer Barrick Gold (TSX:ABX, NYSE:ABX) announced it will increase its stake in the Vancouver-based company.

Barrick will purchase 46.55 million Midas common shares at a price of C$1.06 per share for gross proceeds of US$38,065,907. The transaction will close around May 15, 2018, following which Barrick will own approximately 19.9 percent of the outstanding common shares of Midas, on a non-diluted basis.

“Midas Gold’s Stibnite Gold project in Idaho offers a compelling investment proposition, with low geopolitical risk, potential for production of over 300,000 ounces of gold per year at competitive operating costs, and exploration upside,” said Barrick President Kelvin Dushnisky.

“We are also impressed with the emphasis that Midas Gold has placed on building partnerships with local communities and share its strong commitment to environmental stewardship. We look forward to working with the Midas Gold team to explore opportunities to enhance the value of the project for all partners,” he added.

Barrick also has the potential to acquire additional common shares or other securities of Midas in the future.

According to the agreement, the Midas board will be expanded from seven to eight, giving Barrick the ability to appoint one director if it maintains a minimum of 10 percent ownership in Midas.

For Midas, entering into the agreement means support in the building and operating of the Stibnite gold project, which generates economic benefits to the local community.

“Midas Gold is in the midst of advancing the Stibnite Gold Project through completion of a feasibility study and permitting for site restoration and redevelopment,” said Stephen Quin, president and CEO of Midas Gold.

“With our detailed plan for site restoration and protection of the environment, a large, long-life and low-cost operation, and a comprehensive proposal for the closure and reclamation of the site, Midas Gold is positioned to complete the critical milestones of feasibility study and permitting. Barrick shares Midas Gold’s vision for the restoration of the site and focus on community engagement,” he added.

As of 1:40 p.m. EST on Thursday (May 10), shares of Midas Gold were trading at US$1.18 in Toronto.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.