The Canadian precious metals explorer Auryn Resources Inc. (ISIN: CA05208W1086 / TSX: AUG) and Eastmain Resources Inc. have entered into an agreement under which Auryn will acquire all of Eastmain’s issued and outstanding shares immediately following the spin-off of its Peruvian projects. As part of this transaction, in addition to Fury Gold Mines Limited, two independent spin-out companies will be established, which will receive Auryn’s Peruvian projects.
With the spin-off, Fury Gold will consolidate its shares at a ratio of 10: 7 so that after the acquisition of Eastmain (before funding) there will be around 110 million Fury Gold shares in circulation, of which 69% will be from Auryn shareholders and 31% held by Eastmain shareholders. Fury Gold is expected to remain listed on the TSX and NYSE American Exchange and will be led by new President and CEO Mike Timmins.
Auryn’s ‘Sombrero’ project will be incorporated into the new ‘SpinCo’ company Sombrero and Auryn’s ‘Curibaya’ and ‘Huilacollo’ projects will be incorporated into the ‘spin out’ Curibaya. A total of around CAD 7.5 million will be made available to finance future business activities. Auryn shareholders will receive 0.7 Fury Gold shares for every Auryn share held at the closing date of the transaction, plus one additional share for each newly incorporated company.
Auryn will combine its Canadian assets, Committee Bay in Nunavut and Homestake Ridge in British Columbia with the assets of Eau Claire and the Eleonore South joint venture in Quebec to create a developer platform in Canada with an aggressive growth strategy to accomplish.
For this purpose, the management has now released the power of attorney form and the associated documents (‘Proxy Circular’) for the general and special meeting of Auryn shareholders, which will take place on October 5, 2020. The proposed transactions to outsource the Peruvian projects to the two new companies and the subsequent 100% acquisition of Eastmain Resources Inc. are to be approved at the meeting. The deadline is October 9, 2020.
At the meeting, shareholders will be asked to review resolutions approving the reorganization arrangement, the Eastmain acquisition, and the financing. The reorganization agreement must be passed with at least a two-thirds majority.
The transactions include a whole range of advantages for the Auryn shareholders, such as the acquisition of the ‘Eau Claire’, a project that can generate added value for the shareholders very quickly thanks to its short development path. Fury Gold will have a diversified development platform that includes three Canadian gold projects. With a Canadian portfolio of projects, Fury Gold also benefits from synergies across its general and administrative expenses.
Fury Gold will also capitalize on strong internal growth potential and additional long-term development options from the Homestake Ridge and Committee Bay projects in Canada. The management also expects the reorganization to result in an expanded portfolio of assets and, as a result, an increased market presence. That also makes the share much more interesting for institutional investors.
Furthermore, the outsourcing of the Peruvian projects into an independent company will release synergies in the same jurisdiction, which means that the project values can be raised significantly faster.
Last but not least, the company also has a strong financial position as it is well endowed with approximately $ 20 million in cash. This will help unleash value that would have taken too long to lift within the many South and North American assets that were in one company. This reorganization enables the independent companies to concentrate much better on their individual project or projects.
The Auryn board of directors has unanimously recommended that they support the reorganization arrangement, acquisition and financing of Eastmain. Auryn directors and officers, who own approximately 15% of the company, have entered into support agreements in which they have committed, among other things, to vote in favor of the restructuring agreement.
Eastmain stockholders are entitled to 0.117 Fury Gold shares for each of their closing shares, which is approximately 0.165 Auryn shares prior to consolidation.
Adjusted for the assumed value of SpinCo shares based on an independent valuation report received by Auryn, the offering of $ 121 million is approximately $ 0.42 per Eastmain share, a premium of 137% over the closing price of Eastmain shares as of late July 2020. A whopping 123% premium based on the 20-day volume-weighted average price at the time of publication.
Fury Gold will begin a 50,000 meter drill program in Eau Claire shortly after the transaction is completed and will prepare updated exploration plans for Homestake Ridge and Committee Bay upon completion of the transaction.
The advantages are apparent!
For corporate development, Mike Timmins, former Agnico Eagle VP for corporate development, was won over as President, CEO and Director. He can look back on a long track record and has generated a lot of shareholder value for his shareholders several times.
In addition, the company has sufficient resources and is well financed to significantly accelerate exploration spending. Auryn shareholders will also benefit from the addition of the significant Eau Claire development project, an advanced high grade gold project in the immediate vicinity of Newmont’s Eleonore gold mine. Eastmain shareholders receive an immediate bonus and benefit from strong potential for revaluation. In addition, the risk of an individual asset is eliminated and the growth options are significantly increased.
The proposed new Board of Directors will be composed of current Auryn Directors Ivan Bebek, Jeffrey Mason and Steve Cook, current Eastmain Directors Michael Hoffman and Blair Schultz, and Mike Timmins as CEO and Executive Director.
Further expansion already planned!
Ivan Bebek, CEO and Director of Auryn, believes the division of Auryn will bring significant value to shareholders. The three commodity companies are ideally positioned for great discoveries, and that in an incipient bull market for precious metals:
“Auryn has invested a lot of time and money in developing a world-class exploration portfolio”, emphasizes the company boss and continues: “The combination of the high-grade gold projects ‘Committee Bay’ in Nunavut, ‘Homestake Ridge’ in British Columbia and ‘Eau Claire’ in Quebec provides investors with a gold-focused, resilient Canadian exploration and development company.”
‘Sombrero’ and ‘Curibaya’ are the most important exploration targets in Peru and they are currently in the final approval phase for the first drilling programs. There are plans to significantly increase the value of these companies in the months ahead of their listing, “By obtaining drilling permits, entering into additional community agreements that will allow access to additional areas, identifying additional priority targets and making additional value-adding acquisitions”, clarified Bebek.
Laurie Curtis, CEO of Eastmain states that the Board of Directors strongly supports the transaction, “As we believe it is in the best interests of all of our shareholders and stakeholders. Fury Gold will have the ability and access to capital to develop and fund Eau Claire. The time is ripe and Fury Gold opens up a new dimension for our stakeholders. “
She also noted that this transaction reflected Auryn’s long-term strategy of acquiring promising early-stage gold projects and leveraging a wide range of technical skills to deliver value for the company and its shareholders through targeted exploration and development. She is looking forward to working with a team of experienced and talented professionals who are capable of big steps.
These transactions, which are being carried out at Auryn, are ‘win-win’ situations for all companies and shareholders involved. We welcome these projects and are therefore relaxed and looking forward to a further, much faster development.
According to §34 WpHG I point out that Jörg Schulte, JS Research UG (limited liability) or employees of the company can buy or sell their own business in the shares of the companies presented at any time (e.g. long or short positions). This also applies to options and derivatives based on these securities. Any resulting transactions may, under certain circumstances, affect the company’s share price. The information, recommendations, interviews and company presentations published on the “websites”, the newsletter or the research reports are paid for by the respective companies or third parties (so-called “third parties”). The “third parties” include e.g. Investor relations and public relations companies, brokers or investors. JS Research UG (limited liability) or its employees can partly be rewarded directly or indirectly for the preparation, electronic distribution and other services by the discussed companies or so-called “third parties” with an expense allowance. Even if we prepare each report to the best of our knowledge, we advise you to use other external sources with regard to your investment decisions, such as Consult your house bank or a trusted advisor. For this reason, liability for financial losses that may result from using the information discussed here for one’s own investment decisions is categorically excluded. Particularly in the case of raw material and exploration stocks and low capitalized stocks, the depot shares of individual shares should only be so much that even in the event of a total loss, the total depot can only lose marginal value. In particular, stocks with low market capitalization (so-called “small caps”) and especially exploration stocks, as well as all listed securities in general, are subject to considerable fluctuations in some cases. The liquidity in the securities can be correspondingly low. When investing in the raw materials sector (exploration companies, raw material producers, companies developing raw material projects), additional risks must be taken into account. Below are some examples of specific risks in the raw materials sector: Country risks, currency fluctuations, natural disasters and storms (e.g. floods, storms), changes in the legal situation (e.g. export and import bans, punitive tariffs, prohibition of raw material extraction or raw material exploration, nationalization of projects), environmental requirements (e.g. higher costs for environmental protection, designation of new environmental protection areas, prohibition of various mining methods), fluctuations in raw material prices and considerable exploration risks.
Disclaimer: All information published in the report is based on careful research. The information does not represent an offer to sell the shares discussed, nor an invitation to buy or sell securities. This report only reflects the personal opinion of Jörg Schulte and is in no way to be equated with a financial analysis. Before making any investments, professional advice from your bank is essential. The statements are based on sources that the publisher and his staff consider to be trustworthy. Nevertheless, no liability can be assumed for the correctness of the content. No guarantee is given for the accuracy of the charts and data on the commodity, currency and stock markets shown. The source language (usually English) in which the original text is published is the official, authorized and legally valid version. This translation is included for better understanding. The German version can be shortened or summarized. No responsibility or liability is assumed for the content, correctness, appropriateness or accuracy of this translation. From the perspective of the translator, the message does not constitute a buy or sell recommendation! Read here – https://www.js-research.de/disclaimer-agb/ -. Please also note the original English message, if available.
Note: PERSONAL-FINANCIAL.COM publishes analyzes, columns and news from various sources in this section. PERSONAL-FINANCIAL.COM AG is not responsible for content that is recognizable as being posted by third parties in the “News” area of this website and does not adopt it as its own. This content can be identified in particular by a corresponding “from” label below the article heading and / or by the link “To read the full article, please click here.”; The named third party is solely responsible for this content.