McEwen (TSX:MUX,NYSE:MUX) has agreed to acquire Canadian Gold (TSXV:CGC,OTCQB:STRRF) in an all-share transaction that values Canadian Gold at a 96.7 percent premium over its pre-announcement trading price.
The deal, announced on Tuesday (October 14) and finalized under a definitive arrangement agreement signed on October 10, will see McEwen acquire Canadian Gold through a statutory plan of arrangement.
Once completed, Canadian Gold will become a wholly owned subsidiary of McEwen, strengthening the miner’s Canadian project portfolio with a high-grade, former-producing mine in Manitoba.
Under the terms of the agreement, Canadian Gold shareholders will receive 0.0225 McEwen shares for each Canadian Gold share held. Upon completion, existing McEwen shareholders will own approximately 92 percent of the combined company, while Canadian Gold shareholders will hold about 8 percent.
McEwen will continue to trade under its existing ticker symbol, “MUX,” on both the NYSE and TSX.
Canadian Gold’s flagship asset is the Tartan Lake gold mine project, located near Flin Flon, Manitoba. The property is a past-producing, high-grade gold mine with established infrastructure and strong exploration potential.
The site is situated near an experienced mining workforce and requires no construction of a new camp, a logistical advantage that McEwen says aligns with its existing operational model.
The acquisition offers benefits for both sets of shareholders, according to the companies. For Canadian Gold investors, the transaction will provide access to McEwen’s diversified operations, technical expertise and the liquidity of a dual-listed stock. For McEwen shareholders, the deal adds another advanced-stage Canadian project with geological similarities to the company’s Fox complex in Ontario, bolstering its exploration and production pipeline.
“The Tartan Mine has significant potential and complements our development strategy,” Chairman and Chief Owner Rob McEwen said in a press release, noting possible synergies with Fox. The boards of both companies unanimously approved the deal following recommendations from independent special committees.
In compliance with NYSE rules, Rob McEwen will not receive newly issued McEwen shares representing over 1 percent of the company’s current shares without prior shareholder approval, which will be sought at the next annual meeting.
Should approval not be obtained, McEwen will pay cash in lieu of excess shares.
The deal includes customary closing conditions, regulatory approvals and a C$2.195 million break fee payable to McEwen if Canadian Gold accepts a superior proposal. A detailed information circular outlining the terms of the proposed transaction will be mailed to Canadian Gold shareholders ahead of a December special meeting.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.