Saskatchewan’s largest gold producer, Claude Resources (CRJ-T), is acquiring fellow narrow-vein miner Madsen Gold (MGF-T), owner of the reopened Madsen gold mine in Ontario’s Red Lake camp.
Claude is acquiring Madsen by bidding for all of its issued and outstanding shares. The share-exchange ratio is 1 Claude share for every 3.5 Madsen shares.
On the date of the announcement (Feb. 13), the deal represented a premium of 37%, based on Claude’s and Madsen’s 20-day average closing share price.
Both company’s boards have approved the transaction. As well, Madsen President James Morlock will tender more than 2.2 million Madsen shares — about 15% of the issued and outstanding shares — to the bid.
As a condition of the friendly takeover, Claude will raise, by way of a special-warrant financing, between $10 million and $15 million, with the proceeds primarily being used for development work in the Madsen mine, retirement of debt and payables and working capital.
The deal, which will only go through if two-thirds of Madsen’s outstanding shares are tendered, is expected to close by the end of March.
Claude produces about 60,000 oz. gold annually at a cash cost of about US$210 per oz. at its recently upgraded Seabee underground gold mine in northern Saskatchewan. Reserves at the mine, which began producing in 1991, stand at more than 960,000 tonnes grading 9.86 grams gold per tonne.
Acquiring Madsen Gold and its mine will add about 50,000 oz. gold (produced at a cash cost of US$230) annually to Claude’s portfolio.
Proven and probable reserves at the Madsen mine stand at 1.1 million tonnes grading 9.26 grams gold per tonne, enough for seven years of production at current levels.
Claude says it intends to explore further the high-grade No. 8 zone at the Madsen mine.
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