VANCOUVER, BC, June 8, 2022
/CNW/ - Montage Gold Corp. ("Montage" or the "Company")
(TSXV: MAU) (OTCPK: MAUTF) is pleased to announce that it has
entered into an agreement (the "Agreement") with a subsidiary of
Barrick Gold Corporation ("Barrick") and a subsidiary of Endeavour
Mining plc ("Endeavour"), pursuant to which Montage will acquire a
100% interest (the "Transaction") in the Mankono-Sissédougou Joint
Venture Project (as described below, and referred to as "Mankono"),
which consists of three properties contiguous to the Company's Koné
Gold Project ("KGP") in Côte d'Ivoire. Under the terms of the
Agreement, Montage will acquire 100% of the issued and outstanding
shares of Mankono Exploration Limited (a Jersey Company) ("MEL"),
which indirectly holds Mankono, for total consideration of
C$30,000,000 comprised of
C$14,500,000 in cash, 22,142,857
common shares of Montage, and the granting of a 2% NSR royalty
(allocated 70% to Barrick and 30% to Endeavour based on their relative ownership
interest in MEL).
Closing of the Transaction is subject to, among other things,
the granting by the government of Côte d'Ivoire of the Gbongogo
Exploration Permit which is currently an exploration permit
application which has been submitted by a subsidiary of MEL (see
Figure 1). Closing of the Transaction is expected to occur within
six months of this announcement.
HIGHLIGHTS
- Mankono property package adds 893km2 to the Koné
Gold Project
- Consolidates land position to 2,259km2 of contiguous
ground
- All areas within haulage distance of proposed Koné mill
location
- US$20M in historic exploration
spend with extensive database
- Over 65km of soil anomalies defined
- Exploration of Mankono will target high-grade satellite
potential
- Montage welcomes Barrick and Endeavour as new shareholders
- Barrick and Endeavour to own
9.93% and 4.26% of Montage, respectively, post-closing
- Transaction cash consideration to be funded via C$20 million bought deal private placement of
subscription receipts
Hugh Stuart, Montage CEO,
commented, "This is an important step for Montage, with the
addition of Mankono, our consolidated land position at the Koné
Gold Project will increase to over 2,250km2 in one of
the most prolific gold belts in West
Africa. Previous exploration at Mankono has identified a
number of target areas and Montage intends to explore these targets
aggressively with the objective of adding high grade satellite feed
into the KGP".
DETAILS
Transaction and Financing
Overview
Montage has signed a definitive share purchase agreement (the
"Agreement") with Barrick and Endeavour pursuant to which Montage will
acquire 100% of the outstanding shares of MEL in exchange for total
consideration (the "Consideration") of C$30,000,000, consisting of C$14,500,000 in cash and 22,142,857 common shares
of Montage (priced at C$0.70 per
common share), plus a 2% NSR royalty. The Consideration will be
split pro-rata on a 70/30 basis between Barrick and Endeavour.
Closing of the Transaction is subject to, among other things,
the award of the Gbongogo Exploration Permit, which is currently in
application (see Figure 1). The application has passed the
inter-ministerial subcommittee process and the Transaction is
expected to close as soon as the permit is formally awarded. The
Agreement provides for an outside closing date of December 7, 2022, unless otherwise extended by
the parties.
The Company has entered into an agreement with Stifel GMP on
behalf of a syndicate of underwriters (collectively, the
"Underwriters"), pursuant to which the Underwriters have agreed to
purchase, on a bought deal private placement basis, approximately
28.6 million subscription receipts (the "Subscription Receipts")
priced at C$0.70 per Subscription
Receipt, for gross proceeds of approximately C$20.0 million (the "Financing"). The Financing
is expected to close on July 7,
2022.
The Company intends to use the net proceeds of the Financing to
pay the cash portion of the consideration payable pursuant to the
Transaction and to fund the business plan of the Company in
respect of the acquired properties following closing of the
Transaction.
Each Subscription Receipt shall be deemed to be exchanged,
without payment of any additional consideration, into one common
share of the Company upon the satisfaction of certain conditions,
which includes the closing of the Transaction (the "Release
Conditions").
The gross proceeds from the sale of the Subscription Receipts
less 25% of the Underwriters' fee will be deposited and held in
escrow by Endeavour Trust Company, as subscription receipt and
escrow agent, pending the satisfaction or waiver of the Release
Conditions. If the Release Conditions are not satisfied
or waived prior to December 7, 2022
(the "Termination Date"), the escrowed proceeds will be returned to
the holders of Subscription Receipts, and the Subscription Receipts
will be cancelled and have no further force and effect.
The gross offering price of the Subscription Receipts will
accrue interest for the benefit of the Subscription Receipt holders
as follows:
- 10.0% per annum, payable in cash (the "Cash Interest") on the
earlier of (i) the satisfaction of the Release Conditions; and (ii)
the Termination Date; and
- 6.0% per annum, payable in common shares (the "Interest
Shares") to be issued at the then current "Market Price" (as
defined in the TSXV Corporate Finance Manual), on the two month
anniversary of the closing of Financing and on each subsequent two
month anniversary of the prior Interest Shares payment date (each
such two month period, a "Bi-Monthly Period") until the earlier of
(i) the satisfaction of the Release Conditions; and (ii) the
Termination Date; provided that no such interest shall accrue, and
no Interest Shares will be issuable for any partial Bi-Monthly
Period.
The Subscription Receipts will not be listed on any stock
exchange, though the Company has applied to list the common shares
issuable upon exchange of the Subscription Receipts and the
Interest Shares on the TSX Venture Exchange, which application
remains subject to the approval of the TSX Venture Exchange.
The 2% NSR royalty (the "Royalty") will apply only to the
permits and applications that currently comprise Mankono (see
Figure 1) and will be subject to a 1% buyback at the option of
Montage for a period of two years for a price of US$10 million. The Royalty will be documented
under two separate agreements, whereby Barrick will receive a 1.4%
royalty and Endeavour a 0.6%
royalty, reflecting their respective pro rata entitlements.
Upon completion of the Transaction (and assuming the exchange of
Subscription Receipts for common shares), Montage will issue a
total of 50,714,286 common shares and will have a pro forma share
count of 156,054,290 issued and outstanding common shares.
Insiders of the Company are expected to participate in the
Financing. Pursuant to Multilateral Instrument 61-101 Protection
of Minority Security Holders in Special Transactions ("MI
61-101"), the Financing constitutes a "related party transaction"
to the extent that insiders of the Company subscribe for
Subscription Receipts. The Company is relying on exemptions from
the formal valuation and minority approval requirements of MI
61-101, specifically: (i) the valuation requirement of MI 61-101 by
virtue of the exemption contained in Section 5.5(b), as the common
shares are not listed on a market specified in MI 61-101, and (ii)
the minority shareholder approval requirement of MI 61-101 by
virtue of the exemption contained in Section 5.7(1)(a) of MI 61-
101, as the fair market value of the Subscription Receipts and the
Escrow Interest being issued and paid to insiders will not exceed
25% of the Company's market capitalization (as determined under MI
61-101). The Financing was approved by all of the independent
directors of the Company.
The securities issued pursuant to the Financing and the
Transaction are subject to a four-month hold period under
applicable Canadian securities laws commencing on the closing date
of the Financing or the Transaction, as applicable.
Overview of Mankono-Sissédougou
Joint Venture Project
Mankono consists of the Sissédougou Exploration Permit (PR842,
387km2) issued in 2019, the Gbongogo permit application
and the Sisséplé permit application (400km2 and
106km2 respectively), all lying within the perimeter of
Montage's Koné Gold Project as shown in Figure 1.
Taken together with Montage's existing land holdings they form a
contiguous block of 1,295km2 in Exploration Permits and
a further 964km2 in exploration permit applications for
a total of 2,259km2.
The Gbongogo permit application area has been explored by
Randgold (Barrick) since 2013 and the Sissédougou and Sisséplé
areas by Endeavour and previously
La Mancha Resources since 2010. The Mankono Joint Venture was as
formed in 2017 and exploration has been managed by Barrick since
that time, with Barrick owning 70% of MEL as operator and
Endeavour owning 30%.
Figure 1: Property Map including KGP and Mankono
The database of the historic work includes over 36,000 soil
samples, 15,500m of trenching and
31,000m of air core drilling. Notably
only 6,000m of Reverse circulation
("RC") drilling and 8,560m of diamond
core drilling has been completed most of which is on the Gbongogo
prospect. Historic exploration spending on the combined land
package by all parties is approximately US$20 million. Further details of the historic
database will be released by the Company once all validation steps
are taken and ownership of the data transfers to Montage at
Closing.
Figure 2 shows the extensive soil anomalism on the Mankono land
package, which totals over 65km in linear strike length including
multiple anomalies grading over 100ppb in large areas. Montage
intends to explore these target areas aggressively following
Closing. Details of planned drilling and other exploration
activities will be disclosed by the Company at Closing.
Figure 2: Property Map with Soil Anomalies and Target Areas
ABOUT MONTAGE GOLD CORP.
Montage is a Canadian-based precious metals exploration and
development company focused on opportunities in Côte d'Ivoire. The
Company's flagship property is the Koné Gold Project, located in
northwest Côte d'Ivoire, which currently hosts a Probable Mineral
Reserve of 161.1Mt grading 0.66g/t for 3.42M ounces of gold. The Company released the
results of a definitive feasibility study (the "DFS") on the Koné
Gold Project on February 14, 2022,
outlining a 15-year gold project producing 3.06M ounces of gold with average annual
production of 207koz, and peak production of 320koz. Montage has a
management team and Board with significant experience in
discovering and developing gold deposits in Africa.
TECHNICAL DISCLOSURE
The mineral reserve estimate for the Koné Gold Project was
carried out by Ms. Joeline McGrath
of Carci Mining Consultants Ltd. who is considered to be
independent of Montage. Ms. McGrath is a member in good standing of
the Australian Institute of Mining and Metallurgy and has
sufficient experience which is relevant to the work which she is
undertaking to qualify as a Qualified Person under National
Instrument 43–101 ("NI 43-101"). The DFS was prepared by Lycopodium
Minerals Pty Ltd. and incorporates the work of Lycopodium and
Specialist Consultants, under the supervision of Sandy Hunter, MAusIMM(CP), of Lycopodium, a
Qualified Person pursuant to NI 43-101 who is independent of
Montage.
For further details of the data verification undertaken,
exploration undertaken and associated QA/QC programs, and the
interpretation thereof, and the assumptions, parameters and methods
used to develop the mineral reserve estimate for the Koné Gold
Project, please see the DFS, entitled "Koné Gold Project, Côte
d'Ivoire Definitive Feasibility Study National Instrument 43-101
Technical Report" and filed on SEDAR at www.sedar.com. Readers are
encouraged to read the DFS in its entirety, including all
qualifications, assumptions and exclusions that relate to the
details summarized in this news release. The DFS is intended to be
read as a whole, and sections should not be read or relied upon out
of context.
The technical contents of this press release have been approved
by Hugh Stuart, BSc, MSc, a
Qualified Person pursuant to NI 43-101. Mr. Stuart is the
Chief Executive Officer of the Company, a Chartered Geologist and a
Fellow of the Geological Society of London. Mr. Stuart is not independent of
Montage as he is an officer, director and shareholder of
Montage.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking information
and forward-looking statements within the meaning of Canadian
securities legislation (collectively, "Forward-looking
Statements"). All statements, other than statements of historical
fact, constitute Forward-looking Statements. Words such as "will",
"intends", "proposed" and "expects" or similar expressions are
intended to identify Forward-looking Statements. Forward looking
Statements in this press release include statements related to the
timing of closing of the Transaction, the terms and conditions of
the Financing, the Company's resource properties and resource
estimates, and the Company's plans, focus and objectives.
Forward-looking Statements involve various risks and uncertainties
and are based on certain factors and assumptions, including those
set out in the DFS. There can be no assurance that such statements
will prove to be accurate, and actual results and future events
could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from the Company's expectations include uncertainties
related to fluctuations in gold and other commodity prices,
uncertainties inherent in the exploration of mineral properties,
the impact and progression of the COVID-19 pandemic and other risk
factors set forth in the Company's continuous disclosure documents
filed from time to time on SEDAR. The Company undertakes no
obligation to update or revise any Forward-looking Statements,
whether as a result of new information, future events or otherwise,
except as may be required by law. New factors emerge from time to
time, and it is not possible for Montage to predict all of them, or
assess the impact of each such factor or the extent to which any
factor, or combination of factors, may cause results to differ
materially from those contained in any Forward-looking Statement.
Any Forward-looking Statements contained in this press release are
expressly qualified in their entirety by this cautionary
statement.
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SOURCE Montage Gold Corp