Oban Mining announced on June 9 the signing of binding letter agreements supporting share-exchange takeover bids by Oban of four Canadian junior gold exploration companies: Eagle Hill Exploration, Temex Resources, Ryan Gold and Corona Gold. Oban anticipated that completion of the transactions will create a leading Canadian gold exploration and development company, to be called New Oban, with major exploration assets in Ontario and Quebec.
Supporting the agreements, Osisko Gold Royalties has agreed to invest up to C$20 million in the merged company, lifting its combined cash assets to about C$65 million. Montreal-based Osisko also will provide New Oban with exploration, engineering and administrative services.
New Oban will be headquartered in Montreal and will have a Toronto corporate office. Assuming no unforeseen obstacles to completion of the agreements, Oban anticipates that the transactions will close in August.
Market capitalization of New Oban will be estimated at C$122 million. Ownership by prior shareholders of participating companies will be 24% Eagle Hill, 20% Ryan Gold, 16% Corona, 16% Osisko, 13% Temex, and 11% Oban.
Properties to be held by New Oban total about 114,000 ha and host about 2.54 million oz of gold in measured and indicated resources and 3.83 million oz of gold in inferred resources.
Eagle Hill’s Windfall Lake project, located between Val-d’Or and Chibougamau, Quebec, will be New Oban’s most advanced development project. A recently completed preliminary economic assessment assumes development of a 1,200-mt/d underground mine producing an average of 106,000 oz/y of gold over a 7.8-year mine life. Head grade to the mill would average 8.26 g/mt, with gold recoveries of 95.7% using flotation and leaching processing technology. A feasibility study is scheduled for completion by 2017.