Kilgore gold project Credit: Otis Gold[/caption]
TORONTO – Producer Excellon Resources has announced plans to acquire developer Otis Gold in an all-share deal worth an estimated $32.3 million, based on recent closing stock prices.
Excellon’s main producing asset is the high-grade underground silver-lead-zinc Platosa mine in Mexico whereas Otis holds the Kilgore gold project in Idaho. Based on a share exchange ratio of 0.23 Excellon shares for each Otis share, the transaction implies a 47% and 55% premium based on spot and 20-day weighted average prices, respectively.
“The acquisition of Otis Gold represents an exceptional opportunity to further Excellon’s vision of creating wealth,” Brendan Cahill, Excellon’s president and CEO said in a release. “Kilgore represents a low-cost, high-IRR (internal rate of return) development opportunity that complements and enhances our existing growth pipeline of production and exploration.”
Kilgore is a potential open-pit, heap leach project with indicated resources of 44.6 million tonnes grading 0.58 g/t gold for a total of 825,000 oz. and additional inferred resources of 9.4 million tonnes at 0.45 g/t gold for a total of 136,000 oz. A 2019 preliminary economic assessment for the project outlined an operation producing an average of 112,500 oz. of gold annually at an initial capital cost of US$81 million with an associated US$110 million net present value estimate, at a 5% discount rate.
A number of higher-grade step-out targets have been identified at Kilgore; the deposit is also open for expansion. Results from the 2020 exploration program will be incorporated into an updated resource estimate for the project.
“We are excited to partner with an experienced producer to aggressively move the Kilgore project forward,” Craig Lindsay, Otis Gold’s president and CEO added. “We believe that Kilgore is on the cusp of significant growth and we strongly feel that Excellon’s technical and management team are well-positioned to both re-imagine and fast-track the project’s development.”
Boards of both companies have recommended support for the transaction; 25% of Otis and 20% of Excellon shareholders have entered into voting support agreements. Shareholder meetings for voting on the transaction are expected in April. The agreement includes a reciprocal break fee of $1 million.
The combined company will be managed by individuals from both Excellon and Otis. Excellon shareholders will own 74% of the combined company.
For more information, visit www.ExcellonResources.com or www.OtisGold.com. 
April 18, 2024
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