Nighthawk Gold Corp. [NHK-TSXV, OTC-MIMZF] and Moneta Gold Inc. [ME-TSX, MEAUF-OTCQX] have crossed a key hurdle en-route to completing a previously announced merger deal.
Institutional Shareholder Services (ISS) an independent proxy advisory firm, which provides voting recommendations to institutional shareholders, has recommended that Nighthawk Gold shareholders approve the proposed merger at an upcoming meeting on January 29, 2024.
Back on November 28, 2023, Nighthawk and Moneta said they had entered into a merger agreement, whereby Moneta will acquire all the outstanding shares of Nighthawk in a share exchange deal.
The companies said they believe the transaction will create a leading gold development company by combining two cornerstone assets in Canada. They include Nighthawk’s Colomac gold project in the Northwest Territories and Moneta’s 100%-owned Tower Gold project, which is located 100 kilometres east of Timmins, Ont.
Under the terms of the arrangement agreement, Nighthawk shareholders will receive 0.42 Moneta shares (on a pre-Moneta consolidation basis) for each Nighthawk share. The deal contemplates that Nighthawk and Moneta shareholders will own approximately 34% and 66% respectively of MergeCo. (prior to the completion of a concurrent financing).
In connection with the transaction, Nighthawk said it had struck a deal with an underwriting syndicate which had agreed to purchase on a bought deal basis 36.7 million subscription receipts of Nighthawk at 34 cents per subscription receipt, generating proceeds of $12.5 million.
Net proceeds of the concurrent financing are expected to be used by MergCo to fund the exploration and advancement of the Tower and Colomac projects and for working capital.
Nighthawk Gold’s key asset is a 100%-ownership of a district-scale land position within the Indin Lake Greenstone Belt, located approximately 200 kilometres north of Yellowknife.
The Indin Lake property, which covers 90,000 hectares and is thought to contain 20 gold deposits, includes the former Colomac open pit gold mine, which produced 528,000 ounces of gold between 1990 and 1997.
However, the company is aiming show that production could resume in the future. A preliminary economic assessment forsees average potential production of 290,000 ounces annually over an 11.2-year operating lifespan.
A preliminary economic assessment for the Tower Gold Project envisages an average production profile of 261,000 ounces of gold annually over the first 11 operating years.
The merger is expected to eliminate single asset risk for both companies, enabling a differentiated strategy to focus on improved economics and efficient capital deployment with achievable, value-creation milestones from the advancement of the project.
Nighthawk Gold shares were unchanged Friday at 28 cents and trade in a 52-week range of 74 cents and 26.5 cents. Moneta Gold was unchanged at 68 cents. The shares trade in a 52-week range of $1.73 and 65 cents.
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