Scorpio Gold set to amalgamate with Altus Gold

Scorpio Gold Corp. [SGN-TSXV] said it has agreed to amalgamate with Altus Gold Corp., a private company with an option to acquire a mineral exploration property in Esmeralda County, Nevada. Known as the Northstar property, it lies adjacent to Scorpio Gold’s Mineral Ridge Mine.

The amalgamation agreement supersedes the amended and restated letter of intent between Scorpio and Altus dated November 8, 2023. Under the terms of the agreement, Altus will amalgamate with Scorpio’s wholly owned subsidiary, 1455812 B.C. Ltd. (Subco), and Scorpio will acquire all of the outstanding common shares of Altus Gold in exchange for common shares of Scorpio on the basis of one common share of Scorpio for each common share of Altus Gold.

Closing of the transaction is subject to a number of conditions, including:

• The completion of a non-brokered private placement of Scorpio units that aims to raise $3.2 million.
• Approval of the transaction by the shareholders of Altus Gold
• The amendment of Altus Gold’s option agreement to acquire the Northstar property on terms agreed to between the company and Altus.
• The restructuring of outstanding convertible debentures of Scorpio on terms agreed to between the two companies.

The amalgamation agreement contemplates that upon completion of the transaction, the board of Scorpio Gold will be restructured to consist of five directors, two of which will be Altus Gold nominees, being Zayn Kalyan and Michael Townsend.

Kalyan, a director of Altus Gold, will be named CEO of the company. Chris Zerga, the current President and CEO of Scorpio will become the combined company’s chief operating officer.

Altus Gold has provided a non-interest-bearing secured $1 million loan (bridge loan) to the company in connection with the transaction, subject to the approval of the exchange. The bridge loan will be forgiven, if the amalgamation is completed. If the transaction does not complete, the bridge loan will be repayable in cash on demand by Altus Gold, or in certain circumstances, the bridge loan may be settled in common shares of Scorpio, subject to the approval of the exchange.

Details of the agreement were announced after the close of trading on January 18, 2024 when Scorpio shares were priced at 26 cents. The shares are trading in a 52-week range of 67 cents and 13.5 cents.

Scorpio holds a 100% interest in the Mineral Ridge gold project. Scorpio produced over 222,440 ounces of gold at Mineral Ridge between 2010 and until December 31, 2020. Mining was suspended in 2017 due to an uneconomic strip ratio for the heap leach operation.

However, Scorpio has continued to draw down from existing heaps, between 150 ounces and 300 ounces per month since that time. Back in January, 2018, the company released an updated feasibility study outlining positive economics for processing the residual heap leach material and mining higher grade material in the existing pits. The study envisages 7.5 years of additional mine life and 250,500 ounces of life of project gold production.