Montage acquires African Gold for $170M

Montage Gold (TSX: MAU, US-OTC: MAUTF) is acquiring Australia’s African Gold (ASX: A1G) in a move that expands the company’s presence in Côte d’Ivoire and adds nearly 1 million oz. of inferred resources to its portfolio. The news sent Montage’s stock to a new high.

Under an Australian court-approved scheme of arrangement entered on Friday, Montage will acquire all the shares of African Gold that it does not currently own for 0.0628 of its own common shares. This share exchange ratio implies a A50¢-per-share acquisition price, representing a 54% premium to the 10-day volume-weighted average price and an implied transaction value of $170 million (C$237.5  million).

Upon completion, African Gold shareholders will own around 27.7 million or 7.1% of Montage’s shares.

Producer status upcoming

“With Montage expected to attain producer status in the next 12-18 months, we view this transaction positively as it starts to showcase the company’s ability to drive growth accretively and deliver additional value through further exploration upside,”  BMO Capital Markets analyst Raj Ray said in a note on Friday.

The acquisition strengthens Montage’s presence in Côte d’Ivoire with the addition of African Gold’s Didievi project, which is in the early exploration stage with an inferred resource of 12.4 million tonnes grading 2.5 grams per tonne gold, containing 989,000 ounces.

“With the build of our Koné project tracking on budget and well on schedule, we are pleased to further enhance our portfolio through the addition of the high-quality Didievi project, thereby strengthening our presence in Côte d’Ivoire,” Martino De Ciccio, CEO of Montage, stated.

Montage opened Friday’s session higher following the morning announcement, and shortly after surged to an all-time high of C$8.35 apiece  in Toronto, with a market capitalization of $3 billion.

Montage had already been operating Didievi after entering a partnership with African Gold in March, from which it acquired a roughly 17.3% stake in the Australian junior. Since then, it has gained a significant understanding of the project’s exploration upside and potential to become a standalone operation, the company said in a release.

‘Accretive to Koné’

The transaction, it added, would be “accretive” to its main Koné project, which is already in the construction stage and is expected to enter production in 2027. Koné has an estimated mine life of 16 years, with annual production projected at more than 300,000 oz. for the first eight years, according to a feasibility study published in 2024. 

Recently, Montage announced a 13% increase in its resource over last year’s feasibility after incorporating this year’s drilling results. The indicated resources now stand at 269 million tonnes grading 0.63 gram gold for 5.5 million oz. of contained gold.