Royal Fox Gold (TSX-V:FOXG) Inc and Northern Superior Resources Inc have announced a deal whereby the former will be acquired for around C$17 million by the latter, further consolidating the exciting Chapais-Chibougamau mining district of Quebec.
Royal Fox shareholders, under a plan of arrangement, will receive 0.12 of a Northern Superior share for every share they hold, representing an initial premium of around 33% on the Royal Fox share closing price on September 2 this year.
There is also a maximum further consideration of 0.06 of a Northern Superior share if a resource of 2 million ounces of gold or more is declared in the measured, indicated or inferred categories at Royal Fox's Philibert project.
"Rarely are we presented with an opportunity to consolidate an emerging gold camp in such a favourable jurisdiction," said Simon Marcotte, the CEO of Royal Fox in a statement.
READ: Royal Fox Gold reports assay results for Fennec Fox Zone and Fault Zone from 2022 drill campaign at Philibert gold deposit
"The small radius within which the resources are being consolidated is expected to create synergies, which would improve the economic potential of the camp, and accelerate its development. I couldn’t be more excited to see this opportunity taking hold and look forward to working with our new partners."
Thomas Morris, the CEO of Northern Superior, added: "We believe that the Philibert deposit has tremendous potential, and we see significant upside from its upcoming mineral resource declaration scheduled to be released in 2023.
"Adding Philibert to our existing NI 43-101 compliant mineral resources at Croteau Est and Chevrier, along with the discovery at the Falcon Zone at Lac Surprise, groups together compelling gold resources all within a highly concentrated area."
He added: “The recent geological success we, and others, have had in the camp has demonstrated that this camp has the potential of Tier-1 mining scale.
"By assuming a leading role in the consolidation of the camp via the recent acquisition of Genesis Metals and now the acquisition of Royal Fox, not only have we consolidated four of the most important properties in the camp under one company but have dramatically increased and accelerated the potential value creation by increasing the scale of the operation, providing geological and operational synergies."
The issue of the contingent value right (CVR), which provides for the issue of further Norther Superior shares following the resource estimate gives "further upside" to Royal Fox Shareholders, noted the company.
"After giving effect to the contingent purchase price under the 2.0-million-ounce scenario, the total consideration represents an approximate 100% premium over the closing price of the Royal Fox Shares on the TSX-V on September 2, 2022, and an approximate 86% premium over Royal Fox’s VWAP over the 20 trading days prior to the announcement of the transaction," it added in the statement.
The Chapais-Chibougamau region has produced over 6.7 million ounces of gold and hosts several major deposits including IAMGOLD Corp (TSX:IMG)'s Nelligan deposit (inferred gold resource estimate of 3.2 million ounces at 1.02 g/t gold).
The deal means Northern Superior will have the largest land package of any active gold explorer in the region, thought to be over 62,000 hectares (Ha), including four major properties.
Royal Fox Gold is focused on the development of the Philibert project near Chibougamau, Québec, which consist of 110 mineral titles having a total area of around 5,393 Ha of highly prospective ground, 9km from IAMGOLD’s Nelligan asset which was awarded the “Discovery of the Year” by the Quebec Mineral Exploration Association (AEMQ) in 2019.
Contact the writer at giles@proactiveinvestors.com