Orefinders Resources Inc. [ORX-TSXV, OTC-ORFD] said Tuesday April 3 that it has entered into a definitive agreement to acquire a 100% interest in the McGarry Mine and Barber-Larder properties from Kerr Mines Inc. [KER-TSX]. They are collectively known as McGarry.
“We are very pleased to announce this acquisition and see this transaction as excellent value for our shareholders,” said Orefinders CEO Stephen Stewart.
Under the agreement, Orefinders will issue 8 million common shares to Kerr. The shares are subject to a lock-up agreement with Kerr and are scheduled to be free trading over a two-year period.
The McGarry property is located in Virginiatown, northern Ontario, within the Abitibi Greenstone Belt and spans 2.4 km on one of the world’s most prolific gold structures, the Cadillac Larder-Lake Break. The property covers 681 hectares and is comprised of 46 patented mining claims and five mining licenses.
“We were able to negotiate favourable terms with Kerr as they believe in the company’s vision and strategy to acquire established resources in the Abitibi while focusing on shareholder value with minimum dilution,” Stewart said.
He went on to say that McGarry’s combination of its existing resources, its proximity to major mines (the Kerr-Addison Mine) and orebodies, its mine infrastructure, ease of access, and its significant exploration upside opportunity make this a highly accretive transaction for shareholders.
Orefinders shares rose 4.17% or $0.005 to 12.5 cents in early afternoon trading, Tuesday. The 52-week range is 17 cents and $0.045.
Stewart said McGarry fits right in line with Orefinders’ Mirado Mine and Knight projects, all of which are in Abitibi, have known resources, former production, significant resource expansion potential and access to infrastructure.
“We like to take advantage of work that’s been done in the past, then apply our geologic understanding and approach designed to ultimately define larger and new orebodies.”
Meanwhile, the company is hoping to capitalize on investor interest in cobalt.
On March 26, 2018, Orefinders released an update on its spin off company Power Ore Inc., which will acquire Orefinders’ past-producing silver-cobalt Mann Mines and MacMurchy properties via a court approved plan of arrangement.
The properties are located in the Cobalt-Gowganda District of northeast Ontario, and form part of the company’s plan to create a pure play battery metals company.
Power Ore also announced the pricing for its seed round of financing, which is available to accredited investors. Total gross proceeds for Power Ore’s seed round will be up to $1 million.
“We see this transaction as a win-win for Orefinders balancer sheet as this is akin to a non-dilutive financing,” said Orefinders CEO Stephen Stewart.
“Additionally, all Orefinders shareholders who will be receiving distributed shares in Power One, and the new shareholders coming into Power One will have direct exposure to a series of acquisitions in Canada’s cobalt and battery metal sector,’’ Stewart said.
Companies like Orefinders hope to benefit from predictions that the price of cobalt will continue to rise after a 120% increase in 2017. BMO Capital Markets, for example, has said a doubling of the cobalt spot price over the coming years is not out of the question.