Elgin Mining Inc TSXV:ELG and Gold-Ore Resources Ltd TSX:GOZ announced Elgin’s intention to acquire Gold-Ore. Under the agreement, Gold-Ore shareholders will receive one Elgin common share and one-half of one Elgin common share purchase warrant at a strike price of $1.30 per Elgin share with a two-year term. The transaction values Gold-Ore at $1.22 per common share, a premium of 66.5% based on the volume-weighted average prices of both companies for the 10 trading days ending January 31, 2012. Management of both companies support the transaction unanimously.
The combined company will have approximately $35 million in cash, the Bjorkdal Gold Mine in Sweden, which produced a cash flow of $12.1 million in 2011, as well as the past-producing Lupin Gold Mine and the Ulu Gold Project in Nunavut.
The transaction terminates an arrangement announced December 19, 2011, in which Gold-Ore was to acquire Astur Gold Corp TSXV:AST. Gold-Ore will pay Astur a break fee of $2.5 million.
Elgin Mining Inc
Gold-Ore Resources Ltd
by Greg Klein