Caldas Gold to acquire Juby gold project in Ontario

Colombia-focused Caldas Gold (TSXV: CGC) is casting its eyes on Canada with plans to acquire the Juby gold project, 11 km southeast of the Timmins gold camp in Ontario in the southern part of the Abitibi greenstone belt.

The company’s flagship asset is its Marmato gold project in Colombia’s Middle Cauca gold district, 80 km south of Medellin. Caldas is a spin-off of Gran Colombia Gold (TSX: GCM; US-OTC: TPRFF).

Under a deal announced with South American Resources, Caldas will issue the privately held company 20 million common shares for the project. Caldas must also pay US$9.5 million due to Lake Shore Gold, a subsidiary of Pan American Silver (TSX: PAAS; NYSE: PAAS). (South American Resources had been part of an arrangement to acquire Juby from Lake Shore Gold).

In addition, South American Resources has an agreement with Lake Shore Gold to acquire a 25% stake in claims adjoining the Juby project, and under its deal with Caldas, those can be acquired for an additional US$500,000.

The Juby project, 100 km southwest of the town of Gowganda, consists of more than 14,000 acres of patented claims within the Shining Tree area of the Abitibi greenstone belt.

Caldas plans to carry out an exploration drilling program following the acquisition and update a February 2014 mineral resource completed by Temex Resources. According to that historic resource, Juby has indicated resources of 26.6 million tonnes grading 1.28 grams gold per tonne for 1.09 million oz. contained gold and inferred resources of 96.2 million tonnes grading 0.94 gram gold for 2.91 million ounces.

“The project has not seen much work since the Temex resource statement, having changed hands several times,” Mike Davies, Caldas’ chief financial officer, told The Northern Miner via email.

The transaction has been approved by the boards of Caldas Gold and South American Resources and is expected to close in mid-June.

“The Juby gold project lies south of the main Abitibi greenstone belt and features similar geology to the Kirkland Lake and Timmins camps,” Derek MacPherson, an analyst at Red Cloud Securities, wrote in a May 22 research note. “Juby comprises the Juby Main zone as well as the Hydro Creek and Big Dome deposit that are spread over a 10 km strike length…Notably, the deposit remains open for expansion along strike and at depth.”

MacPherson noted that the acquisition price “is reasonable” although “higher” than he would have expected.

“The combination of cash and shares implies an acquisition price of ~US$9 per oz.,” he stated. “Based on where similar assets currently trade and have previously transacted, the consideration is reasonable. However, this is higher than we would have expected this asset to transact for given it has seen little work since 2013 and that the 4 million oz. resource is unconstrained.”

Over the last year shares of Caldas Gold have traded within a range of $1.30 and $2.30. On May 27 they were trading at $2.00 per share.

The company has about 50.5 million common shares outstanding for a market cap of $212 million.