Montreal-based G Mining Ventures (TSX: GMIN) announced plans to acquire Reunion Gold’s (TSXV: RGD) Oko West gold project in Guyana for $638 million in an all-share deal. The acquisition will significantly bolster G Mining’s presence in South America.
The deal, valued at C$875 million, represents a 29% premium to Reunion’s closing share price on April 19, 2024. Following the acquisition, G Mining shareholders will hold a 57% stake in the combined entity, while Reunion shareholders will hold the remaining 43%. The transaction is subject to approval by a two-thirds majority of shareholders from both companies.
G Mining Leverages Expertise to Advance Oko West Project
G Mining plans to leverage its experience and financial strength to accelerate the development of the Oko West project. The company intends to utilize $480 million in near-term free cash flow from its Tocantinzinho gold project in Brazil to advance Oko West through technical studies and toward a construction decision. Tocantinzinho is on track to begin commercial production later this year, with an expected annual output of approximately 200,000 ounces of gold.
As part of the agreement, G Mining and Reunion will establish a new spin-off company to house Reunion’s assets beyond the Oko West project. G Mining will hold a 19.9% interest in the spin-off for a C$15 million investment, while Reunion will retain an 80.1% stake. The new company will focus on acquiring and exploring gold exploration properties in Guyana, excluding a 20-kilometer area surrounding Oko West, and in neighboring Suriname. This region has proven to be highly prospective for gold mining, with established mines like Iamgold’s Rosebel and Newmont’s Merian operating there. The spin-off company will also target other promising gold deposits in Suriname, including Saramacca, Overman, Benzdorp, and Lely.
Combined Entity Well-Positioned for Growth in the Guiana Shield
The acquisition of Oko West and the establishment of the spin-off company solidified G Mining’s position as a key player in the Guiana Shield region. G Mining CEO Louis-Pierre Gignac expressed confidence in the company’s ability to create significant value at Oko West, leveraging its proven track record of developing mines on schedule and within budget. Gignac’s family has a long history of success in the region. He previously led Cambior, which was acquired by Iamgold in 2006, in building its first South American mine in Guyana during the early 1990s. Additionally, G Mining Services, a company owned by the Gignac family, successfully constructed Newmont’s Merian gold mine in Suriname ahead of schedule and under budget.
Financial Backing Strengthens Acquisition
The acquisition is further bolstered by significant financial backing. London-based resources investment advisor La Mancha Investments has committed to investing up to $45 million in the new G Mining entity, acquiring an 18.7% stake. Franco-Nevada, a royalty and streaming company, is also participating in the deal, purchasing $25 million of shares in G Mining, although its ownership will decrease slightly from 9.9% to 7.2%.
The deal has garnered support from key stakeholders. Roughly 29% of Reunion’s shareholders have pledged their approval, including directors, senior management, La Mancha, and Toronto-based mining investor Dundee. G Mining has also secured the backing of 60% of its shareholders, including its three largest shareholders – La Mancha, Eldorado Gold, and Franco-Nevada.
News of the acquisition sent Reunion’s stock price up 8% to C$0.54 per share on the Toronto Stock Exchange, valuing the company at C$663.9 million. Reunion’s shares have traded between C$0.32 and C$0.61 over the past year. Conversely, G Mining’s stock price fell nearly 14% to C$1.96 per share, valuing the company at C$874.2 million. G Mining’s shares have ranged from C$1.67 to C$2.34 in the last 52 weeks.
Source: Mining.com
