Wesdome sells Ontario gold project to Goldshore for $57 million

Wesdome Gold Mines Ltd. [WDO-TSX; WDOFF-OTC] has agreed to sell a 100% interest in its Moss Lake Project to privately-owned Goldshore Resources Inc. in a transaction worth a minimum of $57 million.

Goldshore and Sierra Madre Developments Inc. [SMG.H-TSXV] also said Tuesday January 26 that they have struck a deal that will result in Sierra Madre acquiring all of the issued and outstanding shares of Goldshore in a reverse takeover.

The Moss Lake property is located in Moss Twp., about 100 km west of Thunder Bay, Ontario. It hosts a large tonnage, low-grade deposit that Wesdome said is amenable to surface bulk mining methods. The deposit hosts an indicated gold resource of 1.4 million ounces, plus a further 1.8 million ounces in the inferred category.

Wesdome shares advanced on the news, rising 2.2% or 20 cents to $9.32 on volume of 247,613. The shares currently trade in a 52-week range of $15 and $5.85. Sierra Madre shares were unchanged at 11 cents.

Under the agreement, Wesdome will receive $12.5 million cash on closing and an amount equal to the greater of $19.5 million and 30% of the issued and outstanding shares of Goldshore upon closing.

In addition, Wesdome will receive $20 million in shares of Goldshore in the form of milestone payments consisting of $5 million within 12 months of closing, $7.5 million upon the earlier of Goldshore completing a pre-feasibility study, or 30 months from the closing date.

Wesdome can pick up another $7.5 million upon the earlier of Goldshore completing a feasibility study, or when Goldshore announces a development decision, or 48 months after closing.

Under the deal, Wesdome retains a 1.00% NSR royalty on all metal production from Moss Lake. However, Goldshore will have the right to repurchase the royalty for $5 million within 30 months of closing or $7.5 million between 30 and 48 months from closing.

Wesdome is a Canada-focused with a pipeline of projects in various stages of development. Its aim is to become Canada’s next intermediate gold producer, with output of 200,000 plus ounces annually from two mines located in Ontario and Quebec.

Utilizing a central mill, Wesdome’s Eagle River Complex in Wawa, Ontario is currently producing from two gold mines, the Eagle Underground mine and the Mishi Open pit.