Paramount Gold Nevada acquiring Calico Resources and its Grassy Mountain Project

Paramount Gold Nevada Corp. [PZG-(NYSE] Calico Resources Corp. [CKB-TSXV] have entered into a definitive agreement under which Paramount will acquire all of the issued and outstanding shares of Calico. Pursuant to the Plan of Arrangement, Paramount will acquire each share of Calico from Calico’s shareholders in exchange for 0.07 of a share of Paramount stock. The transaction implies a value of US $0.085 per Calico share based on the closing prices of each company’s shares on March 11, 2016. Based on the volume-weighted average price of each of the companies on the 20 prior trading days ending on March 11, 2016, the Exchange Ratio represents a premium of approximately 46.5% to Calico’s 20 day VWAP share price.

Upon completion of the transaction, Paramount is expected to issue approximately 7,171,209 shares to Calico shareholders, with Paramount stockholders to hold approximately 54% of the pro forma entity’s stock, and Calico shareholders to hold the remaining 46%. Paramount stockholder will hold 57% of the pro forma entity’s stock on a fully-diluted basis, and Calico shareholders to hold the remaining 43%. All outstanding options and warrants of Calico not exercised prior to the completion of the Transaction will be cancelled.

Calico holds a 100% interest in the Grassy Mountain Gold Project which consists of approximately 9,300 acres located on private land in Malheur County, eastern Oregon. The Grassy Mountain Project contains a gold-silver deposit for which a Preliminary Economic Assessment (PEA) has been prepared and key permitting milestones accomplished.

Glen Van Treek, Paramount’s President and CEO, said, “Grassy Mountain is an impressive, advanced-stage project with a high-grade core averaging 5.32 g/t gold that could be extracted at a very low cash cost per ounce. We believe that advancing the project to prefeasibility will add significant value to our shareholders. This acquisition is consistent with Paramount’s strategy of acquiring mineral properties with known deposits in safe jurisdictions and advancing them towards production.”

Highlights:

The addition of the Grassy Mountain Project would increase Paramount’s global measured mineralized material by 61% to 4 million contained gold ounces and its global indicated mineralized material by 14.4% to 1.1 million contained gold ounces.Comparing the measured plus indicated mineralized materials included in the PEA mine plans for both Sleeper and Grassy, this acquisition doubles the company’s contained gold ounces;

The Grassy Mountain PEA base case scenario contemplates the following:

  • 10-year underground mining operation averaging annual production of 53,000 oz gold and 82,000 oz silver;
  • The higher grade underground material which averages 5.32 g/t (0.155 oz/ton) gold is a significant factor behind the low projected cash operating cost per ounce in the PEA;
  • Life-of-Mine (LOM) cash operating costs of US $578/oz gold equivalent;
  • An estimated Pre-Tax NPV of US $144.2 Million at a 5% discount rate;
  • A pre-tax IRR of 32.6% assuming $1,300/oz Au and $17.50/oz Ag;
  • Grassy Mountain is host to near surface mineralized material which presents additional open pit mining throughput opportunities not included in the PEA’s mine plan;
  • Baseline data studies submitted to DOGAMI (Oregon Department of Geology and Mineral Industries) are complete and may be used to support both the consolidated application for a mining permit, and environmental evaluation.

 

Grassy Mountain Mineral Inventory

 

MEASURED
tons (000s) Au opt Au g/T Ounces Au (000s) Ag opt Ag g/T Ounces Ag (000s)
Underground 3,157 0.155 5.33 491 0.263 9.0 829
Open Pit 52,645 0.020 0.67 1,027 0.072 2.5 3,784
Total 55,802 0.027 0.93 1,518 0.083 2.8 4,613
INDICATED
tons (000s) Au opt Au g/T Ounces Au (000s) Ag opt Ag g/T Ounces Ag (000s)
Underground 88 0.149 5.13 13 0.163 5.6 14
Open Pit 12,803 0.010 0.33 122 0.027 0.9 350
Total 12,891 0.010 0.36 135 0.028 1.0 364
MEASURED PLUS INDICATED
tons (000s) Au opt Au g/T Ounces Au (000s) Ag opt Ag g/T Ounces Ag (000s)
Underground 3,246 0.155 5.32 504 0.260 8.9 843
Open Pit 65,447 0.018 0.60 1,149 0.063 2.2 4,133
Total 68,693 0.024 0.82 1,653 0.072 2.5 4,977
INFERRED
tons (000s) Au opt Au g/T Ounces Au (000s) Ag opt Ag g/T Ounces Ag (000s)
Underground
Open Pit 221 0.007 0.24 2 0.010 0.3 2
Total 221 0.007 0.23 2 0.010 0.3 2

 

Paramount Gold Nevada owns a 100% interest in the Sleeper Gold Project in northern Nevada. The Sleeper Gold Project, which includes the former producing Sleeper Mine, totals 2,322 unpatented mining claims (approximately 60 square miles or 15,500 hectares).

Diamond drilling at the Grassy Mountain Gold Project in eastern Oregon. Source: Calico Resources Corp.

Diamond drilling at the Grassy Mountain Gold Project in eastern Oregon. Source: Calico Resources Corp.

Filed in: Gold, Resources

You might like:

Marathon’s deep drilling cuts 5.0 metres of 11.08 g/t gold at Valentine Lake Marathon’s deep drilling cuts 5.0 metres of 11.08 g/t gold at Valentine Lake
Pure Gold intersects 133.4 g/t gold over 2.0 metres at McVeigh Pure Gold intersects 133.4 g/t gold over 2.0 metres at McVeigh
Dalradian drills 28.23 g/t gold over 1.72 metres at Curraghinalt Dalradian drills 28.23 g/t gold over 1.72 metres at Curraghinalt
West Red Lake drills 3 metres of 72.6 g/t gold at Rowan West Red Lake drills 3 metres of 72.6 g/t gold at Rowan

Leave a Reply

Submit Comment

Solve Puzzle to Post Comment * Time limit is exhausted. Please reload CAPTCHA.

© 2017 Resource World Magazine . All rights reserved. XHTML / CSS Valid. For advertising and subscription information, call +1-877-484-3800 or email support(at)resourceworld.com