New Oroperu Resources Inc (CVE:ORO) (OTCMKTS:NOPUF) (FRA:OE6) has struck a business combination with capital pool company First Light Capital Corp (CVE:XYZ.P), which will see the creation of a new Americas-focused gold company called Anacortes Mining Corp.
First Light will change its name to Anacortes Mining, a company that aims to continue to advance New Oroperu's Tres Cruces project in Peru - one of the highest-grade gold oxide deposits in the world, with 2.474 million ounces of oxide plus sulphide gold at a grade of 1.65 grams per tonne (g/t).
READ: New Oroperu Resources eyes potential stand-alone development at Tres Cruces in Peru after new resource estimate
Experienced engineer Jim Currie, the CEO of First Light, will lead Anacortes as its new CEO and president, and shareholders will be asked to increase the number of directors to five from three.
The board of both companies believe the transaction, which will be carried out via a plan of arrangement, is in their best interests and recommend that their respective security holders vote in favour.
In connection with the deal, First Light intends to complete a concurrent C$20 million subscription receipt financing, the gross proceeds of which will be used to advance Tres Cruces and for general corporate purposes.
Under the terms of the arrangement, which was negotiated at arms-length, each New Oroperu shareholder will receive 5.815 common shares of First Light for each New Oroperu share they hold.
Based upon that exchange ratio, a total of 162.2 million First Light shares will be issued to New Oroperu shareholders based on a total of 27.9 million New Oroperu shares outstanding, which represents a total consideration of around C$76 million, based on a closing share price of First Light of C$0.47 on June 16, 2021.
The transaction constitutes a change of control of New Oroperu, and at closing New Oroperu will need to pay around C$2.3 million in cash change of control payments to five insiders.
It is anticipated that upon completion, current First Light and New Oroperu shareholders will own 16% and 84% of Anacortes, respectively, without giving effect to the private placing.
"This transaction culminates the hard work and dedication of New Oroperu and its partners since inception," said Wayne Livingstone, the CEO of New Oroperu in a statement.
"We look forward to seeing Tres Cruces advanced under the expertise of Jim and his team, and we are excited for the next chapter in a prolific gold camp that saw Barrick mine more than 10 million ounces at Lagunas Norte, approximately 10 km away."
Currie, the boss of First Light, added: "Our team has been aggressively pursuing a foundational asset for Anacortes and Tres Cruces meets several of our investment criteria.
"The asset provides an established resource base, significant exploration potential for both the oxides and sulphides, and several development opportunities. Through focused efforts on engineering and exploration, we believe we are well-positioned to generate significant value for the stakeholders of both First Light and New Oroperu."
Immediately following completion, Anacortes will consolidate its shares at a ratio of six pre-consolidation shares to one post-consolidation share.
Contact the author at giles@proactiveinvestors.com