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Mega said Friday that it’s set to be acquired by Yamana Gold. Based on the company’s press release, it sounds like Yamana is mainly interested in Mega’s Manitoba-based Monument Bay gold-tungsten project.
Canada’s Mega Precious Metals (TSXV:MGP) ended the week on a high note with the announcement that it’s set to be acquired by gold exploration, development and production company Yamana Gold (TSX:YRI,NYSE:AUY).
The two companies have signed a definitive agreement under which Yamana will acquire all of Mega’s outstanding shares for 0.02092 of a Yamana share and cash of C$0.001 per Mega share — that’s equivalent to C$0.10 per Mega share based on the companies’ closing share prices on April 23, 2015. Total consideration for Mega shareholders is about C$17.5 million.
Investors have definitely taken well to the deal, with Mega’s share price shooting up 100 percent, to $0.09, on Friday. Yamana’s was down slightly, at $4.65 on the TSX and $3.83 on the NYSE; those are declines of 2.72 and 2.54 percent, respectively.
The transaction is also supported by management at Mega. The company’s board of directors has unanimously approved the deal, and all of Mega’s directors and officers, as well as shareholders owning 22 percent of its issued and outstanding shares, have entered into support agreements.
Indeed, in Friday’s press release Mega CEO Glen Kuntz spoke of the acquisition in a positive manner, noting, “[w]e believe this transaction is an excellent outcome for Mega shareholders as it provides a significant premium recognizing the value embedded in our projects. We look forward to joining their team and continuing the work we have successfully started.”
For his part, William Wulftange, senior vice president, exploration, at Yamana, commented, “[t]he acquisition of Mega Precious Metals advances Yamana’s strategy to expand our presence in Canada, which we established last year with the joint acquisition of Canadian Malartic and a portfolio of exploration properties in Quebec and Ontario.” He also noted that the company looks forward to “continuing the positive relations that have been established with the First Nations population.”
In terms of what in particular piqued Yamana’s interest in Mega, it looks like it was the company’s Monument Bay gold-tungsten project in Manitoba. It’s Mega’s most advanced project, and according to a November 2014 estimate holds measured and indicated resources of 2.1 million ounces at 1.52 g/t gold and 248,000 metric ton units (MTU) of WO3. Meanwhile, inferred resources sit at 0.51 million ounces at 1.58 g/t gold and 95,000 MTU WO3.
Describing the work Mega has done on the project since 2011, Chairman Mario Stifano said, “[o]ur team has assembled a 338km2 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.” It’s his belief — and Mega’s as a whole — that Yamana will be able to continue that work “unabated to the benefit of all stakeholders.”
Mega also holds the Domain project, which like Monument Bay is in Manitoba, the North Madsen and Headway properties in Ontario and the Nunavut-based Blue Caribou property. Yamana’s acquisition of the company is expected to close in late June 2015 following the satisfaction of conditions including shareholder and court approval.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.