Signal Gold mulls strategic options for Nova Scotia mine

Signal Gold Inc. [SGNL-TSX, SGNLF-OTCQX], facing a challenging market, said it has launched a process with BMO Capital Markets, as its financial adviser, to evaluate strategic alternatives to advance the company’s Goldboro gold project in Nova Scotia.

Signal Gold shares were active on the news, rising 5.8% or $0.005 to $0.09 on volume of 225,750. The shares trade in a 52-week range of 35 cents and $0.08.

It said the strategic alternatives review could include, among other things, a joint venture transaction, a sale of the company, the project or all the assets of the company, a merger or other business combination, or another form of strategic transaction. No decision has been made on any of these options.

As outlined in a January 11, 2022, feasibility study, Godboro is a robust, high-grade project with significant leverage in an increasing gold price environment. The positive feasibility study envisages an 11-year open pit mine life with average gold production of 100,000 ounces annually and an average diluted grade of 2.26 g/ gold. The project is located on tidewater, approximately 185 kilometres northeast of Halifax.

However, in this challenging environment in which management believes Goldboro’s intrinsic value is being substantially discounted, the company is focused on being capital efficient, with an emphasis on minimizing shareholder dilution and maximizing value, the company said.

“Signal Gold recognizes that a larger, better capitalized or cash-flow generating company could be better positioned to advance or assist in the advancement of Goldboro over the development timeline,’’ the company added.

Signal went on to say that it has successfully progressed Goldboro through several technical studies and permitting milestones while significantly growing the mineral resource and demonstrating the growth upside of the project. Environmental assessment approval was received in August, 2022. The company has now submitted all key remaining permit applications, including the industrial approval, Fisheries Act authorization and Schedule 2 amendment, and the mining and Crown land leases, and remains committed to working to obtain all remaining key project permits within the next 12 months.

A 2021 Goldboro feasibility study is based on maiden open pit probable reserves of 1.15 million ounces of gold and a mill capacity of 4,000 tonnes per day. The study pegged the initial capital cost at $271 million and life of mine sustaining capital at $63.1 million.

The study envisages the creation of 345 direct full-time jobs during construction and 215 full-time jobs will the mine is in operation, generating $226 million in federal and provincial tax payments.

Back in August, 2022, the Goldboro project received its environmental assessment approval from the Nova Scotia Minister of Environment and Climate Change, a significant regulatory milestone which enables the company to commence site-specific permitting processes, including the Industrial Approval, and Crown Land Lease and Mining Lease applications.