Golden Shield Resources (CSE:GSRI, OTCQB:GSRFF) announced it has struck an agreement to acquire private company Tucano Gold and its gold mining operation, Mina Tucano, in Amapá, Brazil.
A non-binding letter of intent (LOI) signed Tuesday outlines the preliminary terms of the all-stock deal, which is intended to strengthen Golden Shield’s exploration portfolio and enhance its strategic position in the gold sector.
Mina Tucano is an open-pit operation with potential for underground development, boasting advanced infrastructure and the capability to process up to 3.5 million tonnes of ore annually.
Currently, the project is under care and maintenance, with a planned production restart in Q4 2024.
Golden Shield’s Executive Chairman, Leo Hathaway, told investors that the transaction provides Golden Shield with continued exposure to the exploration upside at Marudi, Golden Shield’s flagship project in Guyana, as well as a near-producing high-grade gold asset in Brazil.
“Geologically, Marudi and Tucano Gold lie in the same poorly understood gold belt, and the resultant company will have a strong knowledge, operational and strategic advantage in making future discoveries,” Hathaway said in a statement.
Tucano Gold's CEO, Jeremy Gray, called the deal a “great fit” for the two companies.
“The combination will help unlock the exciting potential of Golden Shield's exploration projects in Guyana and create a platform for future growth as Mina Tucano starts generating significant cash flow amidst a backdrop of record gold prices."
As per the LOI, Golden Shield’s shares will be consolidated on a 10-to-one basis, and Tucano Gold shareholders will receive one Golden Shield share for each Tucano Gold share held. This exchange ratio values Golden Shield shares at C$0.08 and Tucano Gold shares at C$0.80.
Post-transaction, the combined entity is projected to have approximately 55 million shares outstanding, with Golden Shield and Tucano Gold shareholders owning approximately 12.9% and 87.1% of the company, respectively.
The transaction remains subject to the negotiation and execution of a definitive agreement, expected to be finalized within 60 days of the LOI. Both parties have committed to exclusive negotiations and completing due diligence within this period.