Auryn prepares acquisitions

Complex realignment offers significant added value and opens up massive potential in the short term!

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.

Approval recommended!

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.

Best wishes


Jörg Schulte

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