Following the closing of the merger, the existing G Mining Ventures and Reunion Gold shareholders will hold around 57% and 43% of the combined company

G Mining Ventures Reunion Gold

G Mining Ventures to merge with Reunion Gold in $638m deal. (Credit: Matthias Wewering from Pixabay)

Mining company G Mining Ventures and gold explorer Reunion Gold have signed a definitive agreement to combine the two companies in a deal with an equity value of C$875m ($638m).

Under the terms of the deal, shareholders of both parties will receive common shares of a newly formed company equal to Reunion Gold’s shareholders being issued 0.285 G Mining Ventures common shares for each Reunion Gold common share.

Besides, shareholders of Reunion Gold will get common shares in a newly formed gold explorer that will own all of Reunion Gold’s assets other than the Oko West gold project in Guyana.

G Mining Ventures will finance the newly formed entity with $15m ($11m).

The shareholders of Reunion Gold will receive an estimated consideration of $0.65 ($0.47) per Reunion Gold common share.

Following the closing of the merger, the existing G Mining Ventures and Reunion Gold shareholders will hold around 57% and 43% of the combined company. It is based on a fully diluted in-the-money before the concurrent $50m equity financing.

The shareholders of the merged entity and Reunion Gold will own 19.9% and 80.1%, respectively, of the outstanding common shares of the newly formed gold explorer.

Reunion Gold CEO, president and director Rick Howes said: “We believe that this Transaction not only delivers our shareholders an attractive upfront premium, but also the ability to participate with significant ongoing ownership in the combined company, having the opportunity to participate in an expected future re-rating as Oko West is advanced towards production.”

The transaction will create an Americas-focused leading intermediate gold producer, said the parties.

Through the acquisition, G Mining Ventures will acquire the Oko West project. The company intends to move the gold project quickly through technical studies to a construction decision.

It will be executed by utilising the considerable amount of exploration, development, and permitting work that has already been completed by Reunion Gold.

Located within the Guiana Shield region, the Oko West project is said to be one of the most significant gold discoveries in the region and has the potential to support a large, long-life mine complex.

G Mining Ventures CEO, president and director Louis-Pierre Gignac said: “Oko West has all the key attributes GMIN is looking for in its next leg of growth.

“We are well-positioned to accelerate value creation at Oko West leveraging our unique expertise in building and operating mines on schedule and on budget in the Guiana Shield, deep knowledge of and network in the region, and over US$480M anticipated near-term free cash flow from Tocantinzinho.”