Maple Gold Mines Ltd. [MGM-TSXV; MGMLF-OTCQB; M3G-FSE] shares jumped by over 30% Thursday on news that the company has signed a binding term sheet with Agnico Eagle Mines Ltd. [AEM-TSX, NYSE]. The term sheet contemplates a 50-50 joint venture that combines Maple Gold’s Douay Project and Agnico’s Joutel Project in a consolidated joint property package.
The Douay and Joutel projects are contiguous properties located in the Abitibi region of Quebec. The Joutel project hosts Agnico’s past-producing Telbel Mine.
Agnico has also agreed to complete a $6.2 million strategic investment in Maple Gold by subscribing for 25.8 million units in a non-brokered private placement at 23.9 cents per share.
The strategic investment brings Agnico’s basic share ownership in Maple Leaf to 12.8%
As well as the strategic investment, Agnico has pledged to solely fund $18 million in exploration over a four-year term.
The shares rallied on the news, rising 29.4% or $0.05 to 22 cents on active volume of 9.36 million. Earlier in the day, the shares peaked at 23 cents after previously trading in a 52-week range of 22 cents and $0.04.
Under the private placement, each unit is comprised of one common share of Maple and one share purchase warrant. Each warrant is good to buy one common share at 34 cents for three years following the closing date.
However, at the option of Maple Gold, the expiry data can be accelerated in the event that the common shares trade above 60 cents for 20 consecutive days at any time following two years from the closing date of the private placement. Closing is expected to occur by October 9, 2020.
The Douay Gold Project covers an area of more than 390 km2 along the Casa Berardi Deformation Zone within the prolific Abitibi Greenstone Belt.
The company said Douay belongs to the alkaline-intrusive associated gold class of mineral deposits, which includes Holt-McDermott and Canadian Malartic.
It contains the Douay deposit, estimated to contain Indicated Resources of 8.6 million tonnes averaging 1.52 g/t gold. On top of that are Inferred Resources of 71.2 million tonnes averaging 1.03 g/t gold.
Upon the formation of the joint venture, Maple gold and Agnico will each be granted a 2% NSR royalty on the property that they contribute to the joint venture, each with aggregate buyback provisions of $40 million.
The two companies have also agreed to fund an additional $500,000 in exploration for volcanogenic massive sulphide targets on the western portion of the Douay Project.
“The strategic investment brings Maple Gold’s cash balance to more than $12 million which, when combined with the $18 million joint venture funding, results in a strong capital position to be directed at exploration, development and new corporate opportunities,” said Maple Gold President and CEO Matthew Horner.