MAS Gold to be acquired by Southern Empire Resources
MAS Gold Corp. [MAS-TSXV] and Southern Empire Resources Corp. [SMP-TSXV; 5RE-FSE] have entered into a binding agreement dated July 11, 2020 whereby Southern Empire has agreed to acquire all of the issued and outstanding common shares of MAS Gold.
Highlights of the Transaction
MAS Gold has two advanced stage gold deposits having NI 43-101 mineral resources located in the La Ronge Gold Belt of Saskatchewan.
The North Lake Gold Deposit contains 417,000 oz gold is comprised of an Inferred Resource of 14,110,000 tonnes grading 0.92 g/t gold.
The Greywacke North Gold Deposit contains 95,600 oz gold is comprised of an Indicated Mineral Resource of 255,500 tonnes of 9.92 g/t gold, plus an Inferred Resource of 59,130 tonnes of 7.42 g/t gold, at a cut-off grade of 5 g/t gold.
There is significant potential for resource expansion exists at both Greywacke North and North Lake. Excellent exploration potential also exists for MAS Gold’s Preview-North Property (which hosts the Point gold deposit), Henry Lake and Elizabeth Lake properties.
The combined entity will have a strong balance sheet, with no debt and a cash position of approximately $5.5 million, which will be used to target expansion of the current NI 43-101 resources as well as exploration and development on all of Southern Empire’s projects.
CEO of Southern Empire, Dale Wallster, stated, “With this transaction, Southern Empire will emerge as a company having NI 43-101 gold resources in Saskatchewan, annually ranked as one of the best mining jurisdictions in the world, which we will target to expand and enhance. Together with our Oro Cruz and Eastgate gold projects in the southwestern U.S.A., we will be a multi-asset, advanced stage gold exploration and development company with holdings in some of the best mining jurisdictions in the world. Southern Empire has a strong treasury, an award-winning technical team and management with strong track records in the capital markets.”
Under the terms of the agreement, each shareholder of MAS Gold will receive 1 common share of Southern Empire for every 8.5 common shares of MAS Gold. Assuming completion, and none of the options or share purchase warrants of MAS Gold being exercised prior to closing of the transaction, Southern Empire will issue a total of 5,828,090 Southern Empire Shares to the shareholders of MAS Gold.
Based on a price of $1.19 per Southern Empire Share, being the closing price of Southern Empire on July 10, 2020, the 8.5 to 1 conversion ratio represents an offer price of $0.145 per MAS Share, being a premium of 21% of MAS Gold’s closing price on July 10, 2020.
Following completion of the transaction, Southern Empire will have 56,734,890 issued and outstanding shares, of which the former shareholders of MAS Gold will hold approximately 10.3%.
All outstanding options and warrants of MAS Gold will remain outstanding (if not exercised prior to closing of the transaction) and will be adjusted to give effect to the transaction.
MAS Gold’s board of directors concluded that the Transaction is in the best interests of MAS Gold and has approved the agreement. Similarly, after taking into consideration, among other things, the terms of the transaction, the Southern Empire board of directors has concluded that the transaction is in the best interests of Southern Empire and has approved the agreement.
The transaction will require the approval by at least 66 2/3% of the votes cast on the special resolution by MAS Gold shareholders and, if required, Southern Empire shareholders present in person or represented by proxy at the shareholder meetings.
Ron Netolitzky is Chairman and director of Southern Empire and CEO, President and a director of MAS Gold and Andrew Davidson is Chief Financial Officer of each of Southern Empire and MAS Gold.
The transaction is subject to due diligence, shareholder and regulatory approvals. The transaction is expected to close in the second half of 2020.