G Mining to acquire Reunion Gold in $875 million deal

G Mining Ventures Corp. [GMIN-TSXV, GMINF-OTCQB] has reached a deal to buy Reunion Gold Corp. [RGD-TSXV] for roughly $875 million, adding the flagship Oko West gold project in Guyana to its portfolio.

The combination of the two companies is expected to set the stage or the creation of a leading intermediate gold producer.

Under the agreement Reunion will receive an estimated consideration of $0.65 for each common share held, implying an equity value of $875 million based on the closing price of G Mining shares on the Toronto Stock Exchange on April 19, 2024.

G Mining and Reunion shareholders will receive common shares of a newly formed company, equivalent to Reunion shareholders being issued 0.285 G Mining common shares for each Reunion share. In addition, Reunion shareholders will receive common shares of a newly created gold explorer that will hold all of Reunion’s assets other than Oko West. G Mining has pledged to fund SpinCo with $15 million.

Reunion Gold shares advanced on the news, rising 8.0% or $0.04 to 54 cents on volume of 2.98 million. The shares trade in a 52-week range of 59 cents and 32 cents.  G Mining shares eased 13.2% or 30 cents to $1.97 on volume of 427,970.

News of the deal comes also one year after G Mining announced details of a US$481 million construction financing package for its Tocantinzinho gold project in Para State, Brazil. The package was expected to provide a pathway to production for the Tocantinzinho mine.

Reunion’s flagship Oko West project is located in the Cuyuni Mining District, about 95 kilometres west of Georgetown and is accessible by roads and trails from the town of Bartica or by boat using the Cuyuni River.

The project covers 11,900 acres of mineral rights held by local Guyanese entrepreneurs. Reunion entered into agreements entitling it to conduct exploration activities and acquire a 100% in the project area.

Back in June, 2023, the company announced an initial pit-constrained mineral resource estimate for the Kairuni zone at Oko West. It consists of 2.47 million ounces of gold in the indicated mineral resource category, grading 1.84. g/t gold. On top of that is an inferred resource of 1.76 million ounces of gold at a grade of 2.02 g/t gold.

Franco Nevada Mining Corp. [FNV-TSX, NYSE] will subscribe for US$25 million worth of common shares of G Mining immediately prior to closing of the transaction. It is expected that Franco Nevada’s stake in G Mining will decrease from approximately 9.9% to 7.2%.

La Mancha Investments S.a.r.l., said it will exercise its anti-dilution right in connection with the transaction. As a result, it will subscribe for US$25 million in shares of G Mining, an investment that may be increased to US$35 million at La Mancha’s discretion.

La Mancha said it also intends to purchase up to an additional US$10 million worth of shares in G Mining in the open market.