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Timmins Gold Corp. (TSX:TMM,NYSEMKT:TGD) and Newstrike Capital Inc. (TSXV:NES) entered into a definitive arrangement agreement whereby Timmins Gold will acquire all of the issued and outstanding common shares of Newstrike.

Timmins Gold Corp. (TSX:TMM,NYSEMKT:TGD) and Newstrike Capital Inc. (TSXV:NES) entered into a definitive arrangement agreement whereby Timmins Gold will acquire all of the issued and outstanding common shares of Newstrike. The combination of Timmins Gold and Newstrike will have a leading growth profile driven by two economically robust development projects with manageable capital requirements, Newstrike’s Ana Paula gold project and Timmins Gold’s Caballo Blanco gold project.

As quoted in the press release:

Highlights of the Transaction:

  • Creates an emerging, Mexican-focused intermediate gold mining company with a portfolio of high-quality production and development assets all based in Mexico, including a producing mine, San Francisco, and two robust development assets, Ana Paula and Caballo Blanco
  • Greatly enhances Timmins Gold’s potential production growth and cash cost profile – life of mine annual average gold production expected to grow approximately 175%, reaching approximately 326,000 ounces of gold assuming both Ana Paula and Caballo Blanco are put into production at the levels estimated in the Ana Paula PEA and the Caballo Blanco PEA; all-in-sustaining cash costs per ounce are expected to be reduced by approximately 21% to less than US$780 per ounce gold
  • Timmins Gold believes the capital requirements will be manageable, initially supported by cash flow from San Francisco and the ability to efficiently sequence the development of Ana Paula and Caballo Blanco
  • Significant increase in global resource size and grade with 75% increase in total M&I gold resources and 34% increase in average M&I gold grade
  • Experienced management team with a proven track record of building and operating open-pit mines and long-standing in-country relationships; supported by a highly-qualified board of directors
  • Increased scale of the combined company will enhance its capital markets profile and liquidity and provides for strong re-rating potential
  • Strong support from Newstrike’s largest shareholders, two companies controlled by a trust settled by the late Adolf H. Lundin, and Timmins Gold’s largest institutional shareholder Sentry Investments Inc.

Newstrike Capital CEO Richard Whittall, said:

This transaction provides an attractive premium to Newstrike’s current share price, offers immediate leverage to gold production at the San Francisco mine and de-risks the future development of Ana Paula. We believe the consideration offered by Timmins Gold is highly attractive for our shareholders who will also have the opportunity to participate in the growth and re-rating potential of the combined company.

Click here to read the Newstrike Capital Inc. (TSXV:NES) press release
Click here to see the Newstrike Capital Inc. (TSXV:NES) profile.

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