Eskay Mining Corp (TSX-V:ESK, OTCQX:ESKYF) has revealed plans to merge with TSX Venture Exchange-listed P2 Gold Inc (TSX-V:PGLD, OTCQB:CTIMF) in an all-stock deal.
The two companies entered into a non-binding letter of intent on June 4.
Eskay CEO Mac Balkam outlined the company’s rationale behind the proposed agreement.
"With this transaction, Eskay has taken a significant step toward finding the next major resource in the Golden Triangle,” Balkam told shareholders in a statement.
The CEO lauded the expertise of P2's leadership, led by Joe Ovsenek, noting the potential synergies in exploration efforts, particularly with the addition of the Gabbs property in Nevada.
In response, Joe Ovsenek, CEO of P2, highlighted the strategic significance of the Eskay-Corey Property in British Columbia's Golden Triangle.
"The Eskay-Corey property is the most prospective ground in the Golden Triangle without a major discovery to date," Ovsenek added, expressing confidence in leveraging their exploration and development experience to unlock its potential.
Per the terms outlined in the letter agreement, each outstanding common share of P2 will be exchanged for 0.2778 of a common share of Eskay, paving the way for Eskay to acquire P2. Upon the completion of the proposed transaction, Eskay shareholders are anticipated to hold approximately 80% ownership in the resulting entity, with P2 shareholders retaining approximately 20% ownership.
The combined company will see Ovsenek assuming the role of CEO, with Balkam serving as Chair. The Eskay-Corey Property will serve as the focal point of initial exploration efforts.
Simultaneously with the signing of the agreement, Eskay and P2 inked an exploration services agreement, entrusting P2 to orchestrate an exploration program on the Eskay-Corey property for the 2024 season. Additionally, P2's PEA-stage, gold-copper Gabbs Project in Nevada is poised to complement Eskay's portfolio, offering year-round accessibility for exploration and development endeavors.
Moving forward, the companies will progress towards finalizing a definitive arrangement agreement, which will delineate the comprehensive terms and conditions of the merger.