Liberty Gold selling Utah mine to Heliostar for US$72.5 million
Liberty Gold Corp. [TSX: LGD; OTCQX: LGDTF] has announced a definitive deal to sell its Goldstrike Project in southern Utah to Heliostar Metals Ltd. [TSXV: HSTR; OTCQX: HSTXF; FSE: RGG1] for US$72.5 million. Under the agreement, Liberty is selling the issued and outstanding shares of its subsidiary, Specialty American Metals Inc., the company that owns the Goldstrike project to Heliostar. The transaction will provide Liberty Gold with additional capital to advance its flagship Black Pine Oxide Gold project in southern Idaho.
Liberty Gold shares advanced on the news, rising 9.3% or $0.09 to $1.06. The shares trade in a 52-week range of $1.68 and 26.5 cents.
Terms of the deal require Heliostar to pay the total amount in stages, starting with US$10 million in cash, plus approximately1.6 million Heliostar common shares (valued at US$2.5 million) on closing of the transaction. Further payments of US$20 million will occur within 18 months of closing. The final US$40 million becomes payable once certain infrastructure milestones have been achieved (or five years from closing). That includes US$25 million in cash to be paid on the earlier of release of a feasibility study, a construction decision or five years from closing.
Liberty Gold is focused on exploring for and developing open-pit oxide deposits in the Great Basin of the U.S., a region that stretches across Nevada and into Idaho and Utah. The company is advancing the Black Pine Project in southeastern Idaho, a past-producing, Carlin-style gold system with a large, growing resource and strong economic potential. The company was also actively de-risking and expanding the Goldstrike Project in southwestern Utah, a past-producing oxide gold system, which now includes the newly staked Antimony Ridge Prospect.
The sale of Goldstrike to Heliostar follows a previously announced plan to spin-out the Goldstrike project and adjacent Antimony Ridge discovery into a separate corporate entity named Specialty American Metals Inc. The move followed the discovery of a new 400 metre long, third zone of coarse-grained, high-grade antimony oxide mineralization, located 1,500 metres west of the previously identified high-grade mineralization.
Heliostar is a growing gold mining company with production from operating mines in Mexico. It aims to become a mid-tier producer with 500,000 ounces of annual production by the end of the decade. The company’s operating mines are the La Colorada and San Agustin in Mexico. The company also has a portfolio of development projects in Mexico and the United States, including the Ana Paula project in Guerrero, Mexico.
The Ana Paula Project deposit contains proven and probable minerals reserves of 1.08 million ounces of gold (630,000 proven and 451,000 probable ounces) at 2.38 g/t and 2.54 million ounces of silver at 5.61 g/t silver (1.32 million proven and 1.22 probable ounces).
On Monday, Heliostar shares jumped 10.3% or 19 cents to $2.02. The shares trade in a 52-week range of $3.47 and 80 cents.