Newmont to buy GT Gold

Newmont (TSX: NGT; NYSE: NEM), the world’s No. 1 gold miner, is acquiring all the shares it doesn’t already own in Canadian explorer GT Gold (TSXV: GTT) in a cash deal valued at about US$311 million ($393 million).

The transaction will see the U.S. mining giant buying the remaining 85.1% of common shares of GT Gold it doesn’t already have for $3.25 per share in cash. The figure represents a 38% premium to the 20-day volume-weighted average price of GT Gold’s shares on the Toronto Stock Exchange as of March 9.

GT Gold’s primary asset is the wholly-owned, 47.5K hectare Tatogga gold-copper project, located in the Traditional Territory of the Tahltan Nation, about 14 km west of the Red Chris copper-gold mine.

“We are committed to continue building a constructive and respectful relationship with the Tahltan Nation, including with the community of Iskut, which is near the project, in anticipation of exploring this highly prospective area,” Newmont President and CEO Tom Palmer, said in a statement.

“We understand and acknowledge that Tahltan consent is necessary for advancing the Tatogga project and we will partner with the Tahltan Nation at all levels, and with the government of British Columbia to ensure a shared path forward.”

The acquisition of the Tatogga project adds to Newmont’s existing interest in the prolific golden triangle of British Columbia through the company’s 50% ownership in the Galore Creek project.

The copper-gold project, which includes the primary Saddle North asset, has the potential to contribute significant gold and copper annual production to Newmont’s overall output, the company said.

In addition to the known deposits at Saddle North, there are further exploration opportunities throughout the land package, Newmont said.

The Tahltan Nation’s territory spans 95,933 square kilometres, or 11% of B.C. and includes 70% ofo the province’s Golden Triangle, which has a thriving mineral exploration sector.

With gold prices bouncing back and a dearth of shovel-ready development projects in the pipeline, experts have said that 2020 could see a lot of merger and acquisition (M&A) activity in B.C.’s mining sector, especially in gold.

The last 12 months have been fairly busy for mining M&A, with  many of the deals involving Vancouver-based companies.

Last year New Gold (TSX; NGD; NYSE: NGD) completed the sale of its Blackwater property, south of Prince George, to Artemis Gold (TSXV: ARTG) for US$190 million.

In December, Seabridge Gold (TSX: SEA) bought the Snowfield project from Pretium Resources (TSX: PVG) for US$100 million in cash, a 1.5% net smelter return royalty (NSR) related to all production and a US$20 million contingent payment.

At the beginning of this year, Eldorado Gold (TSX: ELD; NYSE: EGO) acquired QMX Gold (TSXV: QMX) for US$132 million in a friendly acquisition.

Last month, Rick Rule, president and CEO of Sprott US Holdings, said he believes there has been such an underinvestment in in new discoveries that B.C. projects in more advanced stages of development could be prime targets. “The industry is sorely lacking high-quality exploration projects or development projects,” he said. “The consequence of that is, when somebody makes a good discovery, they can be taken at absolutely eye-popping multiples.”

The Newmont-GT Gold transaction is expected to close in the second quarter, subject to normal closing conditions.