On February 1, 2017, Luna Gold and JDL Gold (TSX-V: JDL) announced an agreement to combine their businesses, creating a multi-asset mining company. The combined company intends to change its name to Trek Mining Inc. and expects to trade on the TSX-V under the ticker symbol “TREK”.
The companies hosted a joint webcast and conference call on February 2. Investors can watch the archived webcast or download the presentation slides.
The combined company will have a diverse portfolio of assets anchored by near-term production from the Aurizona gold project in Brazil and increasing gold production from milling operations at the Koricancha Mill in Peru. In addition, exploration upside at Aurizona and the pipeline of exploration-stage projects with Warintza (Ecuador), Ricardo (Chile) and Elk Gold (BC, Canada) provide a platform for growth, setting Trek Mining on the path to its vision of becoming a leading mid-tier gold producer.
Upon completion of the Transaction, Trek’s asset base will consist of:
Cash of approximately C$66 million
100% ownership of the feasibility-stage Aurizona Project in Brazil, a past-producing open-pit gold mine that is anticipated to recommence production by year-end 2018
75% ownership of the Koricancha Mill, an operating gold ore processing facility in Peru
100% ownership of the Warintza copper-molybdenum exploration-stage project in Ecuador
100% ownership of the high-grade past-producing Elk Gold project in British Columbia, Canada
100% ownership of the Ricardo Claim block in Chile, strategically located on the West Fissure fault that hosts numerous porphyry copper deposits
Christian Milau, CEO of Luna Gold said: “This transaction achieves a number of our near-term growth objectives and is the next step toward our vision of building a leading mid-tier gold producer. We have spent our first six months at Luna Gold focused on development of Aurizona. Our cash position post Transaction, together with a simplified balance sheet, will provide a solid foundation to advance Aurizona to production and accelerate exploration efforts. We see significant potential in JDL’s asset portfolio and believe the combined company puts us on an exciting growth path.”
David Lowell, Chairman of JDL and incoming Director of Trek, said: “We are excited to team with Luna Gold in building a meaningful new mining company. JDL’s shareholders will participate in the near-term gold production and exceptional exploration upside at Aurizona. The exploration potential, both on trend and regionally, represents a substantial opportunity for extension of the mine life and new discoveries. I look forward to joining the Trek Mining board of directors and continuing to work for the benefit of all our stakeholders.”
Under the terms of the agreement, JDL will acquire all outstanding shares of Luna Gold pursuant to a plan of arrangement in exchange for 1.105 JDL common shares for each Luna Gold common share. This exchange ratio represents consideration of approximately C$2.20 per Luna Gold share based on the JDL share price as at the close of market on January 31, 2017, a premium of approximately 16% to Luna Gold’s 20-day volume weighted average price and 23% to Luna Gold’s share price as at the close of market on January 31, 2017.
The transaction is subject to shareholder approval. A joint information circular detailing the terms and conditions of the transaction has been filed with regulatory authorities and mailed to the securityholders of Luna Gold and shareholders of JDL in accordance with applicable securities laws. The special meetings of both companies will be held on March 24, with the expectation of completing the Transaction by the end of March 2017. More information about the special meeting and downloads of the meeting materials can be found here.
Additional information about JDL Gold and its asset base is available on JDL Gold’s website.