Benchmark Metals Inc. (TSX-V:BNCH, OTCQX:BNCHF) and Thesis Gold Inc (TSX-V:TAU) have proposed a merger to create one of the largest precious metals development and exploration companies in British Columbia’s prolific Toodoggone Mining District.
By combining their operations, the companies said in a statement that they will consolidate Benchmark's Lawyers project with the adjacent high-quality exploration targets on Thesis' Ranch Project. This has the potential to enhance Benchmark's current 3.14 million ounces (Moz) of gold equivalent (AuEq) measured and indicated mineral resources and 0.415 Moz AuEq inferred mineral resources at Lawyers with high-grade, near-surface mineralization at Ranch, they added.
"The merger of Benchmark and Thesis will create a district-scale development and exploration project with significant growth potential,” Thesis Gold president and CEO Ewan Webster said in a statement.
The companies said they aim to define a new combined Lawyers and Ranch resource estimate by the first or second quarter of 2024 as they focus on resource growth, exploration and discovery through 50,000 metres of drilling in 2023. Following that, they have targeted 3Q 2024 for an updated Preliminary Economic Assessment.
“For the new PEA, the combined company anticipates increased per year production, high-grade starter pits, rapid capital payback, materially improved Net Present Value (NPV) and Internal Rate of Return (IRR) and extended mine life,” Webster added.
“These milestones and timelines have been developed to unlock substantial value and solidify the potential of these two deposits into one world-class project."
Other benefits of the merger include combining two of the leading gold exploration and development teams with a proven track record of success across exploration, construction, capital markets, and mergers and acquisitions (M&A); efficient capital resource management benefiting from anticipated financial synergies; and increased access to capital that will fuel growth and development plans to further enhance shareholder value.
Merger terms
Under the terms of the transaction, Benchmark will acquire all of the issued and outstanding common shares of Thesis on an exchange ratio of 2.5584 Benchmark shares for each Thesis share held.
Based on the closing price of Benchmark’s shares on the TSX Venture Exchange on June 2, 2023, the company said the exchange ratio implies consideration of C$0.96 per Thesis share, implying a premium of approximately 26.2% to the company’s closing price on the same date.
On completion of the transaction, existing shareholders of Benchmark and Thesis will own approximately 60% and 40%, respectively, of the outstanding shares of the combined company.
The combined company's board of directors will consist of seven directors, four of whom will be nominated by Benchmark, consisting of John Williamson (who will be appointed chair), Keith Peck, Peter Gundy and Jody Shimkus, and three of whom will be nominated by Thesis, consisting of Ewan Webster, Nicholas Stajduhar and Thomas Mumford.
Special committees appointed by the boards of both companies determined that the arrangement was in the best interests of both sets of shareholders, following independent fairness opinions.
Plan of arrangement
The arrangement will be effected by way of a court-approved plan of arrangement under the Business Corporations Act which requires the approval of the Supreme Court of British Columbia as well as shareholders of both companies.
Following the completion of the arrangement, the combined company will implement a 2.6:1 share consolidation of its common shares and change its name to Thesis Gold Inc, the companies said.
“The merger of these companies establishes a leading precious metals development and exploration project in British Columbia with a strong balance sheet, remarkable scale, significant growth potential, synergistic advantages, cost efficiencies, and, ultimately, the potential to deliver an exceptional new world-class mining venture in a geographically desirable location,” commented Benchmark independent director and chair of the Benchmark Special Committee Keith Peck.
Contact the author at stephen.gunnion@proactiveinvestors.com