Moneta Gold (TSX: ME; OTCQX: MEAUF; FSE: MOPA) and Nighthawk Gold (TSX: NHK; OTCQX: MIMZF) are planning an at-market merger of the companies. Moneta will acquire all of the common shares of Nighthawk in exchange for common shares of Moneta. The combined company, for now referred to as MergeCo, will be one of the leading gold developers in Canada.
Moneta’s flagship property is its 100% owned Tower gold project near Timmins, Ont. The preliminary economic assessment (PEA) completed in September 2022 outlined a combined open pit and underground mining operation with a 7-million t/y conventional leach operation over a 24-year mine life. Approximately 4.6 million oz. of gold will be recovered, generating an after-tax net present value (NPV) at a 5% discount of $1.07 billion, an after-tax internal rate of return (IRR) of 31.7%, and a 2.6-year payback at a gold price US$1,600/oz.
The Tower project contains a total of 12.8 million oz. of gold. There are 149.8 million indicated tonnes grading 0.90 g/t gold (4.3 million contained oz.) recoverable by open pit methods and 802,000 indicated tonnes grading 4.67 g/t gold (122,000 contained oz.) recoverable from underground. The inferred resource is 235.6 million tonnes at 1.09 g/t gold (8.3 million contained oz.) about 95% of which can be mined with open pit methods.
Nighthawk’s properties are district-scale north of Yellowknife, NWT. The flagship asset is the historic Colomac gold project. The August 2023 PEA demonstrated the project's potential for 290,000 oz. per year operation over an 11.2-year mine life. The project could generate a $1.2 billion NPV with a 5% discount and an after-tax IRR of 35% based on a US$1,600/oz. gold price assumption.
Several deposits at Colomac suitable for either open pit or underground mining methods have been identified, and they contain a total of nearly 5.1 million oz. of gold. The deposits total 70,432 indicated tonnes grading 1.50 g/t gold (3.4 million contained oz.) and 24,434 inferred tonnes at 2.17 g/t gold (1.7 million contained oz.)
The merger agreement calls for each Nighthawk shareholder to receive 0.42 of a Monita share for each Nighthawk share. Existing Nighthawk and Moneta shareholders will own about 34% and 66%, respectively, of MergeCo.
In connection with the transaction, Nighthawk has entered into an agreement with a syndicate of underwriters led by SCP Resource Finance LP. They will purchase approximately 36.8 million Nighthawk subscription receipts at a price of $0.34 each on a bought deal basis. The gross proceeds of $12.5 million will be used by MergeCo to fund the advancement of the Tower and Colomac gold projects, for working capital, and for general corporate purposes.
The MergeCo board will consist of seven directors, four from Moneta and three from Nighthawk. The new company will be led by non-executive chair Josef Vejvoda (Moneta) and president and CEO Keyvab Salehi (Nighthawk).
The rational of the merger is explained in corporate presentations at both Moneta and Nighthawk.
April 25, 2024
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