Wallbridge spins out nickel assets to focus on gold

Wallbridge Mining (TSX: WM; US-OTC: WLBMF) is selling its nickel assets to Archer Exploration (CSE: RCHR)  in an all-share deal worth $53.6 million.

The company said it wants to focus on its core gold projects Fenelon and Martiniere, and is selling its Grasset and RUM projects in Quebec and its Sudbury and NW projects in Ontario.

Under the deal, Wallbridge will receive about 198.6 million common shares of Archer and will own 19.9% of the company. Archer will grant Wallbridge a 2% royalty on the Grasset property and Wallbridge will have the right to nominate two directors to Archer’s board.

The two companies will also enter into an agreement to explore the Grasset property. If the results from either Wallbridge or Archer’s exploration work establish a mineral resource that consists of primary gold mineralization, then the companies will form a joint venture with Walbridge having a 70% interest, otherwise, Archer will own 70% of the venture.

 “Our core focus remains on…our 100%-owned Fenelon gold property, located on the highly prospective Detour-Fenelon Gold trend in Quebec, where we are currently in the midst of a major drilling campaign to expand the multi-million-ounce resource,” the company’s CEO Marz Kord in a press release.

“The opportunity to have our portfolio of non-core nickel assets acquired by a focused, publicly-traded nickel development and exploration company led by a world-class team unlocks the value of these assets,” he said.

Archer Exploration said that the transaction would establish the company as a “leading Canadian nickel sulfide” exploration company and described the deal as “transformational.”

Archer noted that the 8,180-hectare Grasset project is Wallbridge’s core nickel asset.

Grasset, about 55 km from Matagami in Quebec, has an indicated resource of 5.5 million tonnes grading 1.22% nickel for 67,100 tonnes of the contained metal. Inferred resources add 217,000 tonnes grading 0.83% nickel for 1,800 tonnes.

Archer believes that the project has “significant expansion potential as demonstrated by open resource grade drill intercepts and untested surface and borehole electromagnetic conductor anomalies at depth and along strike.”

Keith Bodnarchuk, Archer’s interim CEO, said that the company searched worldwide for an advanced nickel sulphide resource with “apparent upside” and “an exciting pipeline of high-impact nickel sulphide exploration targets.” 

“The Grasset deposit and the 23 km long, target-rich regional package ticks these boxes,” he said in a press release. “This transaction is a direct result of an unrelenting, collaborative effort.”

In addition to the Grasset deposit, Archer will acquire the 8,966-hectare RUM project in Quebec, about 150 km northwest of Matagami.

At Wallbridge’s  30,984-hectare Sudbury  project, Archer believes that offset dykes, especially at the Parkin and Trill areas of the project,  may retain “considerable upside discovery potential for high-grade nickel that remains open at depth with insufficiently drilled high-grade ore shoots present at variable depths.”

The nickel assets also include a 15,555 hectare grassroots exploration package, called the NW projects, located within the Archean Lumby Lake greenstone belt near Thunder Bay.

BMO analyst Andrew Mikitchook described the deal as a positive for Wallbridge.

“We assign minimal value to Wallbridge’s nickel assets—the Fenelon and Martiniere gold projects are the company’s main assets,” he commented in a research note.

“The transaction therefore does not change our valuation, but opens the door for upside in the form of appreciation of Archer shares as that company advances exploration. The deal also allows Wallbridge to explore areas of the Grasset property for gold, and would create a joint-venture between the two companies if either establishes a gold mineral resource in the “gold cooperation area” at Grasset.”

At press time in Toronto shares of Walbridge Mining were trading at 16.8 cents, its lowest in a year. The company has 882.3 million common shares for a market cap of $145.5 million.