A proposed merger of two Toronto-listed companies Golden Queen Mining and Glamis Gold will not proceed.
Glamis decided against the amalgamation despite a positive due diligence review of Golden Queen’s main asset, the Soledad Mountain gold project. Although Glamis concluded that the project, situated near Mohave, Calif., would be economic on a stand-alone basis, it says it is unable to justify the proposed acquisition price of 2.9 million shares.
The merger would have seen Glamis issue one share for every five shares of Golden Queen held.
The due diligence consisted of 49 drill holes which confirmed the existing reserves and even suggested a possible extension. Golden Queen’s president, Chester Shynkaryk, says one of the holes, situated some distance from the confines of the proposed pit, encountered significant mineralization.
Minable reserves for an open-pit, heap-leach operation are estimated at 15.6 million tons grading 0.029 oz. gold and 0.53 oz. silver per ton at a stripping ratio of 3-to-1.
However, preliminary metallurgical tests by Glamis were unable to confirm the projected long-term gold recovery of 80%.
Golden Queen has, in the meantime, entered discussions with two other companies regarding Soledad and has made preliminary arrangements for a US$30-million line of credit.
It has also acquired a parcel of land adjacent to the Soledad pit, where previous drilling, consisting of 25 holes, outlined a reserve estimated at 2.5 million tons grading 0.03 oz. gold with a stripping ratio of 1-to-1. Delineation drilling is planned.
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