Gold Resource Corp. (GORO) has entered into an agreement to acquire Aquila Resources. GORO will acquire all the issued and outstanding Aquila shares for 0.0399 of a GORO share per Aquila share. The exchange ratio represents consideration of C$0.09 per Aquila share, reflecting a premium of 12.5%, based upon the closing prices of the Aquila shares and the GORO shares on September 3. The agreement represents an aggregate acquisition price of approximately C$30.9 million. The company said the transaction offers an immediate and significant premium to Aquila’s shareholders of 29%.
Upon closing of the transaction, the existing GORO and Aquila shareholders will own approximately 85.1% and 14.9%, respectively, of the combined company. Aquila owns the gold and zinc‐rich Back Forty project in Michigan.
“We believe strongly that this transaction provides substantial immediate and long-term benefits to Aquila shareholders,” Executive Chair Barry Hildred said. “The business combination with GORO, a proven operator of a cash flowing mine in the Americas, materially derisks the financing and development of the Back Forty project. The transaction also allows our shareholders to maintain exposure to the value that is created as Back Forty advances toward production.”
The transaction is intended to result in the Back Forty project being placed into production on a more accelerated basis, funded by cash flow generation, thus elevating the combined company to intermediate producer status, according to the company.
GORO President and CEO Allen Palmiere said, “By combining our complementary assets, we will enhance our mineral inventory and add jurisdictional diversification to our project portfolio. The combined company will become a new intermediate gold producer following the commencement of production at Aquila’s Back Forty project, and its shareholders can look forward to the potential of a company that is expected to benefit from a peer leading growth profile, underpinned by a healthy balance sheet and strong cash flow capable of supporting the development of the Back Forty project.”
Through the transaction, GORO and Aquila shareholders will have the opportunity to participate in the ongoing growth of a multi-jurisdictional, diversified precious and base metal producer with exposure to gold, silver, zinc, copper and lead through GORO’s producing Don David Gold Mine in Oaxaca, Mexico, and Aquila’s Back Forty Project in Menominee County, Michigan. It is anticipated that Aquila’s previously announced sale of its Bend and Reef exploration properties will be completed prior to the completion of the transaction.
Aquila’s largest shareholder, Orion Mine Finance, which holds 28.6% of the issued and outstanding Aquila shares, has confirmed to GORO it is supportive of the transaction.
Osisko Bermuda Ltd., a wholly-owned subsidiary of Osisko Gold Royalties, which is a party to gold and silver stream agreements with Aquila relating to the Back Forty Project, has also confirmed it considers GORO to be an approved purchaser under those agreements, and that it is supportive of the proposed transaction.
The agreement has been unanimously approved by the boards of directors of both GORO and Aquila.
