Mountain Lake Resources (CVE:MOA) (OTC:MLKRF) Thursday said it will be acquired by Marathon Gold (TSE:MOZ) in a $15.1 million deal that will see Marathon assume 100 per cent control of the two companies' Valentine Lake joint venture in Newfoundland.
The transaction will also see Mountain Lake's remaining projects
transferred to Mountain Lake Minerals Inc., a newly incorporated
Under the terms of the deal, Mountain Lake shareholders will receive
0.40 of a Marathon common share and 0.40 of a common share of the new
entity for each Mountain Lake common share held.
The share consideration values Mountain Lake at 30 cents per share,
20 per cent higher than the junior explorer's closing price yesterday.
The deal for 100 per cent of Mountain Lake is valued at $15.1 million,
not including the value of Mountain Lake Minerals.
"This is an exciting time and we hold the strongest belief that this
transaction is in the best interests of the shareholders of both
companies," said Mountain Lake president and CEO Allen Sheito.
"It positions the Valentine Lake project for rapid development under
100-percent ownership by Marathon and enables the Mountain Lake team to
refocus on building the new, Mountain Lake Minerals through the
advancement of our remaining portfolio of highly prospective,
Newfoundland exploration projects."
Mountain Lake said the newly incorporated company enables its
shareholders to retain equity exposure to 100 percent of the Glover
Island gold property, 100 percent of Little River gold and antimony
asset and 100 percent of the Bobby's Pond base metals property, all
located in Newfoundland.
These remaining projects will be transferred to the newly formed
company, which will be led by the existing management team and board of
In April, Mountain Lake reported the completion of an initial NI
43-101 resource estimate for the Lunch Pond area of its 100
percent-owned Glover Island gold property in Newfoundland.
Compared to historical resources, the company said the NI 43-101
resource for Lunch Pond indicates a 27.8 percent decrease in grade,
offset by a 57.4 percent increase in tonnage, resulting in a 14.1
percent increase in contained gold ounces.
The transaction will also see Marathon subscribe for units of the new
exploration company for a total of $300,000, representing around a 6.2
per cent stake. Directors and officers of Mountain Lake will also
subscribe for $360,000 of unit, for a 7.4 per cent stake.
At closing, Mountain Lake said its current shareholders will hold the
remaining 86.4 percent of Mountain Lake Minerals, which will include
the Glover Island asset.
Marathon Gold is a North American gold resource development company,
with projects located in Newfoundland and Labrador, the Coeur d'Alene
Mining District of Idaho and the Greenhorn District of Oregon.
"We are very pleased that the arrangement agreement has been signed
and look forward to the Mountain Lake shareholders approving the
completion of this transaction,” said Marathon president and CEO Phillip
"With 100 percent ownership of the Valentine Lake project and a 50
percent interest in the Golden Chest Mine [in Idaho], Marathon will now
boast 497,500 ounces of gold at a grade of 1.94 grams per tonne (g/t) in
the measured and indicated category and 421,650 ounces of gold at a
grade of 1.59 g/t in the inferred category."
The Valentine Lake property has a 30 kilometre strike length, with
the J. Frank Zone and Leprechaun gold deposit situated at the
southwestern end of a gold-bearing mineralized corridor that extends for
at least 23 kilometres in a northeasterly strike.
Recent drill results showed that step-out drilling in the northeast
area of the project’s Leprechaun deposit intersected multiple high-grade
intervals up to 60 metres down-dip from the Main Zone.
Hole VL-12-414 returned 9.07 grams per tonne (g/t) gold (Au) over
6.80 metres, including 66.63 g/t Au over 0.85 metres and 7.38 g/t Au
over 2.55 metres, including 22.05 g/t Au over 0.85 metres.
At the J. Frank Zone within the project, Mountain Lake said that new
near surface high-grade hanging wall mineralization included 6.46 g/t Au
over 3.0 metres including 19.14 g/t Au over 1.0 metres in hole
The Leprechaun deposit of the Valentine Lake project currently has an
NI 43-101 compliant measured and indicated resource of 6.4 million
tonnes grading 2.05 g/t gold for a total estimated 424,000 ounces of
gold and an associated inferred resource of 5.7 million tonnes grading
1.65 g/t gold for an estimated 305,000 ounces of gold.
The mineral resource was estimated using a 0.5 g/t Au minimum cut-off over a three metre minimum width.
"This strategic acquisition exemplifies Marathon's commitment to
building shareholder value by moving the company closer to the million
ounce resource threshold," said Walford.
The deal, which has been approved unanimously by both boards, is
targeted to close in July, subject to two thirds Mountain Lake
shareholder approval. A special meeting to approve the transaction is
expected to take place in July.
Shareholders of Mountain Lake representing around 7.1 per cent of
shares have already agreed to vote in favour of the deal. If the deal
does not complete, both parties could get a termination fee of up to
$500,000, under certain circumstances.
Marathon has a right to match competing offers.