Newrange Gold Corp (TSXV: NRG) and Mithril Resources (ASX: MTH) have proposed a “friendly merger”, which would create an “Americas-focused” exploration company.
If successful, the reverse takeover will see Newrange acquire 100% of Mithril’s issued capital – giving it an equity value of $11.8 million.
Mithril’s flagship asset is the Copalquin gold-silver project in Mexico’s Durango State.
The project is described as an entire mining district and covers 70 square kilometres of ground, with a maiden high-grade resource of 2.4 million tonnes grading 6.81 grams per tonne gold equivalent for 529,000 ounces of gold equivalent.
Copalquin hosts several historical gold and silver mines.
Meanwhile, Newrange is focused on district-scale exploration for precious metals across Ontario’s Red Lake region.
Newrange’s portfolio includes the past-producing Argosy gold mine, which remains open at depth and the adjacent North Birch project, which provides “additional potential”.
‘Mutually beneficial’ merger
Mithril chief executive officer and managing director John Skeet said the merger was an “exciting development” for growing the company’s flagship asset, while providing “additional upside” from Newrange’s Red Lake district properties and “highly regarded management”.
Mr Skeet said the merger was “mutually beneficial” with Mithril gaining “enhanced market presence” on the TSXV for its Mexican assets.
“The proposed merger will result in a new Americas and precious metals focused exploration and development company with a considerably experienced management team, enhanced market presence, a solid resource foundation, and significant growth potential.”
Commenting on Copalquin, Mr Skeet said it offers “excellent potential” for resource expansion plus additional discoveries.
“Newrange Gold’s existing North Birch and past-producing Argosy gold mine properties in the prolific Red Lake District of Ontario, Canada provide geographic diversity plus further discovery and resource development potential,” Mr Skeet added.
The proposed merger is currently non-binding and both Mithril and Newrange are completing due diligence on all assets, while negotiating final terms.
Under the initial proposed terms, Newrange will issue 18.08 consolidated shares for every 1,000 Mithril shares held.
This gives Mithril an estimated equity value of $11.8 million.
Another proposed term of the merger is current Mithril directors Mr Skeet, Stephen Layton and Garry Thomas becoming principals of Newrange.
It is expected Mr Skeet will become Newrange’s president and chief executive officer.
Present Newrange chief executive officer and president Robert Archer will become executive chair.
Existing Newrange directors Ron Schmitz and Colin Jones will remain on the board and David Cross will retain his company secretary and chief financial officer position.
To fund the acquisition, Newrange plans to complete a private placement to raise C$360,000.
The company will also complete a further private placement to generate C$3.6 million, which will be used for exploration and development activities at Copalquin.
Once the takeover is completed, Newrange will change its name to Pinnacle Silver and Gold Corp and the final entity will trade only on the TSXV.