Troilus Gold Corp. [TLG-TSX; CHXMF-OTCQB] and UrbanGold Minerals Inc. [UGM-TSXV] have entered into a definitive agreement that will see Troilus acquiring all the issued and outstanding shares in UrbanGold that it does not already own.
UrbanGold is a gold and base metals exploration company with a focus on Quebec. The company specializes in project generation supported by substantial exploration expertise. On March 17, 2021, the company reported the remaining assay results from a 10-hole program on its 26,585-hectare Pallador property in the Regnault area of the Troilus-Frotet region.
The property is adjacent to ground where privately-owned Kenorland Minerals Ltd. reported a grassroots gold discovery on the Regnault target of its Frotet Project, highlighted by Drill hole 20RDD007, which intersected 29.08 metres at 8.47 g/t gold, including 11.13 metres at 18.43 g/t gold.
Troilus is also a Quebec-focused exploration and early-stage development company. It is aiming for a mineral expansion and potential restart of the former gold and copper Troilus mine.
Troilus already owns 6.15 million UrbanGold shares, or 9.7% of the company. On Tuesday, the shares rose 9.4% or $0.025 to 29 cents on volume of 1.46 million. The 52-week range is 45 cents and $0.05.
Troilus declined on the news, dropping 4.3% or $0.05 to $1.10 on volume of 512,120. The shares are currently trading in a 52-week range of $1.82 and 48 cents.
Under the agreement, UrbanGold shareholders will receive 0.3004 of a Troilus common share for each UrbanGold share. The exchange ration implies a consideration of 30 cents per UrbanGold share, based on a volume weighted average (VWA) price of the Troilus shares on the March 22, 2021. That amounts to a total consideration of $19 million on a 100% basis.
The exchange ratio also represents a 35.3% premium, based on the 20-day WVA of UrbanGold shares ending March 22, 2021. All of UrbanGold management and board (together holding 6.59%) have agreed to vote their shares in favour of the deal.
“The acquisition of UrbanGold aligns with Troilus’ focus on developing a near-term production asset while executing a growth strategy supported by a broad portfolio of exploration and early-development assets within the Frotet Evans Belt and Quebec,” said Troilus CEO Justin Reid.
Highlights of the transaction include the consolidation of near-term growth targets within the Frotet-Evans Greenstone Belt. Troilus said the acquisition of UrbanGold will add 35,100 hectares of land adjacent to Troilus’ existing 107,300-hectare Troilus property.