Dayton purchase and share consolidation meet approval

Shareholders of Mirage Resources (MGP-T) have approved the amalgamation of Mirage with a wholly owned subsidiary of Dayton Mining (DAY-T).

Kinross Gold (K-T) holds a 53.8% interest in Vancouver-based Mirage, whose primary asset is El Dorado, a gold property near San Salvador, El Salvador. The high-grade banded quartz system has a resource of 4.2 million tonnes grading 6.6 grams gold and 48.4 grams silver per tonne, which includes 1.3 million tonnes grading 11 grams gold and 75 grams silver.

Under the deal, one share of Mirage will be exchanged for 0.667 share of Dayton. The exchange ratio represents a price of 7.5 per Mirage share, a 14% premium over the 30-day average trading price of Mirage and Dayton shares. As a result, Mirage will become a subsidiary of Dayton.

Meanwhile, Dayton’s shareholders approved the issuance of shares for the amalgamation, as well as for the acquisition of Kinross’s 49% interest in the Denton-Rawhide gold-silver mine, 190 km southeast of Reno, Nev.

At the same meeting, the shareholders confirmed and approved Dayton’s previously completed $9-million special-warrant financing, as well as the consolidation of Dayton’s outstanding common shares on a 1-for-20 basis.

Both deals are expected to wrap up by April 6. The consolidation should be completed at the same time, provided regulators approve.

Dayton’s principal asset is its Andacollo gold mine in central Chile. In February, Dayton received an independent audit of minable reserves at Andacollo. Based on a gold price of US$325 per oz., reserves are pegged at 17.8 million tonnes grading 0.88 gram gold, down from the 1998 year-end estimate of 31 million oz. grading 0.87 gram.