Kodiak, Golden Goose set to merge

VANCOUVER — Junior gold explorers Kodiak Exploration (KXL-V) and Golden Goose Resources (GGR-V) have entered into a binding agreement to merge, bringing together several gold properties at various stages of development.

The deal will see Golden Goose shareholders receiving 1.2 shares of Kodiak and 0.25 of a Kodiak warrant for each share held. Full warrants are exercisable for three years at 45¢ and are subject to an acceleration clause.

Using Golden Goose’s 20-day volume-weighted opening price of 20¢ and Kodiak’s 21¢, and factoring in the warrants, the deal represents a 40% premium to Golden Goose shareholders.

The merger comes as both companies are near 52-week lows. Golden Goose has a share price range between 51¢ and 17¢, while Kodiak’s range is between 84¢ and 19¢.

The merger will combine Golden Goose’s historic Magino gold mine property in northern Ontario with Kodiak’s various gold and uranium properties around Canada.

The Magino mine is credited with production of 105,000 oz. gold between 1988 and 1992. Golden Goose formed in 1996 as an amalgamation of ownership between Magino mine owners, and has since been working to ready the property for production again.

Golden Goose released a resource estimate in May 2009 that outlined a measured and indicated resource of 2.1 million tonnes grading 6.74 grams gold per tonne for 454,000 contained ounces. The estimate contained a further 5.83 million inferred tonnes of 6.29 grams gold for 1.18 million oz. gold. All estimates were based on a cutoff grade of 3 grams gold.

The resource sits between the surface and 500 metres depth along a strike length of 1.2 km near the old workings. Magino lies 40 km north of Wawa, Ont., to the southeast of Kodiak’s Hercules gold property.

The Hercules property is Kodiak’s most advanced project, and sits 120 km northeast of Thunder Bay, Ont., in the Beardmore-Geraldton gold camp. The current Hercules resource, released in April, stands at 231,800 tonnes of 7.64 grams gold for 57,000 contained ounces gold. The inferred resource is 761,300 tonnes grading 3.04 grams gold for 74,400 oz. gold. Both estimates have a 60-gram gold cap and a 1-gram gold cutoff.

On the east section of the Beardmore- Geraldton belt, Kodiak has properties at various stages of exploration including its Milestone, West Geraldton, Wildgoose and Kaby Lake properties. Kodiak is also exploring for uranium in Saskatchewan and has an early-stage gold project in Manitoba.

Kodiak had $20.4 million in cash on hand at the end of June. The company plans to bring the Magino property to the scoping stage by the end of the year, assuming the merger goes as planned.

Golden Goose edged up 1.5¢ to close at 28¢ on the merger news, with 340,000 shares traded. Kodiak remained unchanged at 19¢ despite 3.1 million shares traded. Golden Goose currently has 51 million shares outstanding while Kodiak has 114 million shares outstanding.