Financier Frank Giustra backing NexGold, Signal Gold merger plan
NexGold Mining Corp. [NEXG-TSXV] and Signal Gold Inc. [SGNL-TSX, SGNLF-OTCQX] have signed a definitive deal to combine the two companies and create a top near-term gold developer, advancing NexGold’s Goliath Gold Complex in northern Ontario and Signal’s Goldboro Gold Project in the historic Goldboro Gold District in Nova Scotia.
With Environmental Approvals in place, the aim is to attain production of over 200,000 ounces annually.
Under the terms of the transaction, NexGold will acquire all the issued and outstanding common shares of Signal in exchange for common shares of NexGold by way of a plan of arrangement under the Business Corporations Act (Ontario). Each Signal share will be exchanged for 0.1244 of a NexGold share. Upon completion, NexGold and Signal shareholders will own 71% and 29% of NexGold respectively.
In order to proceed, the transaction will require the approval of at least 662/3% of the votes cast by Signal shareholders and a simple majority of the votes cast by Signal shareholders.
Officers and directors of Signal, collectively holding 3.1% of the Signal shares issued and outstanding, have signed lock up agreements, pledging to support the transaction.
“I believe that the transaction brings together two cornerstone Canadian gold projects and presents an exciting opportunity to create a leading gold development company in Canada, during a time of increasing gold prices,’’ said Signal Gold President and CEO Kevin Bullock.
Details of the agreement were announced after the close of trading on October 9, 2024, when NexGold shares closed at 75 cents. The shares trade in a 52-week range of $1.07 and 46 cents.
On October 9, 2024, Signal Gold shares closed at $0.085, and trade in a 52-week range of 19.5 cents and $0.07.
The companies said a concurrent non-brokered private placement financing of up to $11.5 million is planned with NexGold board and management subscribing for up to $1.0 million in the financing. In addition, financier Frank Giustra, who owns over 10% of NexGold, “will be participating in a meaningful way,” the companies said.
Signal is advancing the Goldboro project subject to a positive feasibility study which envisages an 11-year open pit mine life with average gold production of 100,000 ounces annually and an average diluted grade of 2.26 g/ gold. The project is located on tidewater, approximately 185 kilometres northeast of Halifax.
A 2021 Goldboro feasibility study is based on maiden open pit probable reserves of 1.15 million ounces of gold and a mill capacity of 4,000 tonnes per day. The study pegged the initial capital cost at $271 million and life of mine sustaining capital at $63.1 million.
The study envisages the creation of 345 direct full-time jobs during construction and 215 full-time jobs will the mine is in operation, generating $226 million in federal and provincial tax payments.