eResearch – Revival Gold Inc. (TSXV: RVG | OTCQX: RVLGF) has entered into a definitive agreement to acquire all issued and outstanding shares of Ensign Minerals Inc., a private company.
The total consideration for the acquisition is approximately $21.9 million, with each Ensign share being exchanged at a rate of 1.1667 Revival shares. The deal values each Ensign share at C$0.4164 and the company at an Enterprise Value to Resource (gold ounce) of $13.35/ounce.
Upon the completion of this transaction, Revival Gold will have 174,535,673 shares outstanding on an undiluted basis. This will result in former Ensign shareholders holding approximately 35% of the combined entity.
This strategic acquisition will merge Ensign‘s Mercur Gold Project in Utah with Revival Gold’s Beartrack-Arnett project in Idaho. The addition of the Mercur Gold Project is expected to substantially increase Revival Gold’s production potential and accelerate its timeline towards becoming a mid-tier heap leach gold producer in the US, with a targeted production increase to approximately 150,000 ounces of gold per year.
Overview of Ensign Minerals
Ensign Minerals is focused on the development of the Mercur Gold Project. Ensign controls a land area of approximately 6,255 hectares in this region, primarily on privately held patented claims.
The Mercur Gold Project hosts an Inferred Mineral Resource estimated to contain approximately 1.64 million ounces of gold. This estimate is based on 89.6 million tonnes with an average grade of 0.57 grams per tonne of gold. The resource estimate is broken down as follows:
- Main Mercur: 74.1 million tonnes at 0.57 g/t gold, containing about 1.35 million ounces.
- South Mercur: 15.6 million tonnes at 0.59 g/t gold, containing about 290,000 ounces.
This project has historically been a significant site for gold mining. The integration of this project under Revival Gold is set to enhance the resource base and also streamline operations due to its geographic and strategic fit with Revival Gold‘s existing assets.
Overview of Revival Gold
Revival Gold is a growth-focused gold exploration and development company primarily engaged in the advancement of its Beartrack-Arnett Gold Project located in Idaho, US.
The Beartrack-Arnett Gold Project’s mineral resource estimate (MRE) includes:
- Measured and Indicated Mineral Resources: 86.2 million tonnes at 0.87 g/t gold, containing about 2.4 million ounces.
- Inferred Mineral Resources: 50.7 million tonnes at 1.34 g/t gold, containing about 2.19 million ounces.
The Beartrack-Arnett Gold Project recently completed a Preliminary Feasibility Study (PFS). The PFS considers a restart of open pit heap leach operations, which were part of the historical operations at Beartrack. Additionally, there is potential for underground mining at Beartrack-Arnett, based on deeper resources that were part of the PFS considerations.
This project is notable for being one of the largest past-producing gold mines in Idaho, and Revival Gold has positioned itself through extensive exploration and development initiatives to restart operations leveraging existing infrastructure.
FIGURE 1: Beartrack-Arnett and Mercur Gold Projects Location Map
Key Transaction Highlights
- Resource Expansion: The transaction is expected to boost Revival Gold‘s mineral resources by adding 1.64 million ounces of Inferred mineral resources, on top of Revival Gold’s existing Measured and Indicated mineral resources of 2.4 million ounces of gold and Inferred mineral resources of 2.19 million ounces of gold at Beartrack-Arnett.
- Acceleration of Production: The strategic location of the Mercur project, along with existing infrastructure, positions Revival Gold to expedite its production timeline. The combined operations are targeted to produce approximately 150,000 ounces of gold per year initially, potentially increasing to over 250,000 ounces annually.
- Synergies and Efficiency: The proximity of the merged assets will likely unlock various operational and administrative efficiencies, reducing risks and increasing the value per share as the business scales up.
- This deal aims to position Revival Gold among the top gold development companies in the United States.
$7 Million Concurrent Financing to Fund Development
The transaction includes a concurrent offering aimed at raising C$7 million to bolster financial and operational capacity.
This financing and existing cash balances are expected to be used to complete a Preliminary Economic Assessment (PEA) on the Mercur Gold Project, advance permitting and continued exploration for high-grade material at Beartrack-Arnett, and for working capital and general corporate purposes.
This funding is important in supporting the engineering and economic studies at Mercur, which are crucial for fast-tracking it to production.
Next Steps to Close the Deal
The transaction is subject to approval by Ensign’s shareholders, scheduled for the end of April 2024, and regulatory bodies, including the TSX Venture Exchange.
Ensign’s Board, management, and other shareholders representing approximately 27% of its shares, have entered into voting support agreements in favor of the acquisition by Revival Gold.
Closure of the deal is contingent upon various conditions, including the successful completion of the concurrent financing with a minimum of $5 million in proceeds.
This acquisition underscores Revival Gold’s strategy to consolidate and expand its position within the US gold mining sector, aiming for increased shareholder value through accelerated production capabilities and resource expansion.
Final Thoughts
The acquisition of Ensign Minerals marks a transformative phase for Revival Gold, setting the stage for it to become a mid-tier heap leach gold producer in the US.
This strategic move, coupled with its concurrent financing and a focus on operational efficiencies, underscores Revival Gold’s commitment to growth and value creation.
FIGURE 2: Mercur Gold Project Mineral Resource Estimate
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