GoGold Resources (TSX: GGD) is selling its Santa Gertrudis gold project in Sonora, Mexico, to Agnico Eagle Mines (TSX: AEM; NYSE: AEM) for US$80 million in cash in order to eliminate debt.
The junior retains a 2% net smelter return royalty but Agnico has the right to buy back 1% of the NSR for US$7.5 million.
“I can’t speak for Agnico, but obviously their technical people see something they very much like in the property and so it’s a win-win for both companies,” Brad Langille, GoGold’s co-founder, president and CEO, tells The Northern Miner. “It’s going to go into their pipeline of projects, and, for us, it was a way to de-lever our balance sheet, pay off our revolver with the Bank of Montreal, which is US$46.5 million, and also give our shareholders some upside to the project under our 2% NSR.”
GoGold, which acquired the project in April 2014 through its takeover of Animus Resources, subsequently completed 13,000 metres of drilling, updated a historic resource based on more than 2,000 drill holes, and completed a preliminary economic assessment.
Continue reading at The Northern Miner.