West Africa-focused juniors Birim Goldfields (BGI-T) and Goldcrest Resources (GCL-V) have agreed to merge their companies into one after unanimous votes by both boards of directors.
It all started late last November at the annual Mines & Money conference in London, England, when a visit between old friends turned into serious merger talk.
Birim president and CEO Victor King and Goldcrest president and CEO Kevin Bullock first met each other while working in Ghana in the mid 1990s.
Like minded, with children close in age, their families hit it off, and King and Bullock have kept up with one another’s career pursuits ever since. Birim, an explorer in West Africa for 10 years, has 18 properties spread across the gold belts of Ghana and two in Burkina Faso while Goldcrest has five properties in Burkina Faso, where it’s been working for the last five years.
“We said, ‘Geez, it would make a lot of sense to put these two companies together,'” says King from his office near Oxford, England.
It’s not just the geology and geography that make these companies a good fit, King says.
Birim has more properties but limited funds while as of last August, Goldcrest has been looking to expand after selling its Youanmi project in Australia to
“It turned out to be quite a bit of cash so we started looking (for projects),” Bullock says.
The combined company, which would use an entirely new name, would have $16.5 million in cash and more than $10.5 million in marketable securities.
King points out that Birim and Goldcrest also have comparable market capitalizations. As of Jan. 29, before the merger agreement was announced, Goldcrest’s market cap was about $21.2 million outstanding and $22.8 million fully diluted, while Birim’s was $24.7 million outstanding and $28 million fully diluted.
After the merger was announced, Goldcrest shares inched up half a cent to 26.5 apiece on about 79,000 shares while Birim shares were up 2.5 to 39 on a trading volume of 107,000 shares.
The combined company would have about 53 million shares issued and outstanding, with about 48.9% held by former Birim shareholders and 51.1% held by former Goldcrest shareholders. Birim shares would be exchanged for new company shares on a ratio of 2.6 to 1 while 3 Goldcrest shares will be traded in for 1 share of the new company.
King also says the managements are complimentary.
If shareholders approve the deal at a meeting at the end of March, Bullock will head the new company from Toronto while King will remain in the UK taking on his preferred role as chief operating officer. His location is an ideal spot between Toronto and West Africa, as the latter can be an arduous journey from North America.
“I can be down there within a day,” King says of traveling to West Africa.
Birim runs its Burkina Faso exploration from its Ghana office so Goldcrest’s office in Burkina would be useful to the merged company.
Both Bullock and King noted that teaming up is a good way to add well-trained and talented staff to the roster, which are in short supply today.
“To do that would take us years,” Bullock says. “It was a no brainer for us.”
Bullock sees a lot of action in the days ahead if the merger is approved.
“We plan on being an explosion company,” he says. “We want to be the ‘go-to’ company.”
By this he means the new company, with all that money in the bank, will be looking at acquiring assets and joint ventures with companies that don’t have the funds to bring their projects forward.
Both companies are getting ready to start new drill programs in the next month or two on their respective properties, regardless of the merger.
Goldcrest will focus on its Gaoua copper-gold project, where mineralization extends over a strike length of more than 2 km and its early-stage Kampti gold project, both located in southern Burkina Faso.
Birim, which has properties spread over the Bui, Sefwi and Ashanti gold belts in Ghana and the Hounde gold belt in Burkina Faso, will continue its focus on the Bui belt by drilling the Far East gold deposit on its Tinga property, which has combined indicated and inferred resources of 2.1 million tonnes grading 3.51 grams gold per tonne for of 232,000 oz. gold. Birim will also focus on the Chert Ridge target from the Cluster property and the Tombe target on the Chenchu property.
Other work will be done on Birim’s Banda Ahenkor property by Newmont Mining (NEM-N, NMC-T) subsidiary Newmont Gold Ghana, which has a 49% interest with the right to earn up to 70% by spending US$1.5 million over four years, or up to 80% if it completes a feasibility study on the property.
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