Newrange Gold (NRG.V) was unable last year to close the deal to acquire the Coricancha polymetallic project in Peru, but has found a new purpose. It announced it has entered into a non-binding term sheet with Mithril Resources (MTH.AX) to combine both companies to strengthen the team focusing on the Mexican activities.
Mithril currently owns the Copalquin gold-silver project in Mexico’s Durango State. There is a historical JORC compliant resource estimate with almost 700,000 tonnes at 5.43 g/t gold and 114.2 g/t silver in the indicated resource category (for a total of 121,000 ounces of gold and 2.5 million ouncrs of silver) while the inferred resource category contains 1.7 million tonnes at an average grade of 4.55 g/t gold and 151.7 g/t silver for an additional 252,000 ounces of gold and 8.4 million ounces of silver. Although Newrange’s CEO Bob Archer is best known from his Great Panther Silver days, the Copalquin project appears to be predominantly gold while the silver is an attractive by-product.
Mithril currently owns 50% of the project and can acquire the remaining 50% stake for a US$10M cash or share payment by August 2026 (subject to a two year extension period). The vendor will also be issued a 2.5% NSR of which 1.5% can be repurchased by the company.
According to the deal terms, Newrange will be required to consolidate its shares on a 12:1 basis (broken down in a 6:1 consolidation before accessing the bridge financing followed by an additional 2:1 consolidation prior to the closing of the Reverse Take Over). As a result of the 12:1 share consolidation, Newrange will issue 18.08 of its post-consolidation shares for every 1,000 shares of Mithril. And when the dust settles, Mithril shareholders will own almost 79% of the post-merger share count.
Disclosure: The author has no position in Newrange Gold. Please read our disclaimer.
