Barrick Gold (NYSE, TSX:ABX), the world’s top miner of the precious metal, said Tuesday is buying about $38 million in Midas Gold’s (TSX-V:MAX) shares, in a deal that gives the Canadian giant an almost 20%-stake in the junior as well as access to the promising Stibnite Gold project, in Idaho, US.
“Midas Gold’s Stibnite Gold project in Idaho offers a compelling investment proposition, with low geopolitical risk,” Barrick President, Kelvin Dushnisky, said in the statement.
Vancouver-based Midas is in the midst of renovating an old mining site in Idaho into a modern open pit mine, which is projected to create over $1 billion of economic value for the state and nearly 1,000 jobs.
Stibnite, which has the potential to produce over 300,000 ounces of gold per year, also contains antimony, used as a fire retardant and metal strengthener. That mineral, experts believe, may become a strategic asset for the US in its impending trade war with China.
Midas filed a plan for restoration and development of the site with authorities in 2016 and is currently completing a feasibility study for the project. It said it would use the proceeds from Barrick to complete the study and secure remaining permits for Stibnite.
“With our detailed plan for site restoration and protection of the environment, a large, long-life and low-cost operation, and a comprehensive proposal for the closure and reclamation of the site, Midas Gold is positioned to complete the critical milestones of feasibility study and permitting,” President and chief executive, Stephen Quin, said in a separate statement.
The non-brokered private placement values Midas’ stock at Cdn$1.06 and it’s expected to close on or about May 15, 2018. The deal also also gives Barrick the right to appoint one director to Midas’ board and participate in future equity issuances to maintain its holding.
Gold prospectors flocked to Idaho in 1899, during the Thunder Mountain gold rush and mined the area until around 1945. The Stibnite mine continued in production until 1990, leaving a trace of pollution and devastation behind, according to data from the US Environmental Protection Agency (EPA), which had to spend about $4 million to clean the area and restore the environment.