Barrick sells Nevada land package to Bullfrog

Bullfrog Hills in southwestern Nevada. (Image: Wikimedia Commons.)

Bullfrog Gold’s shares (OTCMKTS: BFGC) jumped on Tuesday after Barrick Gold (TSX: ABX) (NYSE: GOLD) confirmed it was selling a land package in Nevada to the minor, along with plans for C$22 million in financing to be completed through Augusta Investments.

The deal includes the sale of Barrick’s mining claims, historical resources, permits, rights of way and water rights on the 1,500 acres adjoining Bullfrog’s project.

Barrick will receive, in exchange, 54.6 million units, which each contain one share in Bullfrog Gold and one warrant at an exercise price of 30 cents over four years.

Barrick now has a 16.8% stake in Bullfrog, as well as a 2% smelter royalty on minerals produced from the claims sold

The substantial share exchange will give Barrick a 16.8% stake in Bullfrog, as well as a 2% smelter royalty on minerals produced from the claims.

As part of the transaction, Barrick can also nominate a director to Bullfrog’s board as long as it keeps at least 10% in the company moving forward.

The gold giant gained the now closed Bullfrog gold mine when it acquired Lac Minerals in 1994. Barrick ran it until 1999, when it closed shop because costs exceeded the price of gold, which was trading below $300 an ounce.

Bullfrog finalized a cash-for-share deal with mining-focused management group Augusta Investments. Through the deal, Augusta will receive 110 million units in Bullfrog in exchange for a $22 million investment.

As a result, Augusta will own 31.9% of Bullfrog on an undiluted basis, or 40.2% on a fully-diluted basis.

Cost reduction

Once closed, Bullfrog would be well funded to complete several exploration programs and expedite development of its namesake gold project. The company would also continue to pursue other acquisitions and opportunities in the precious metal sector, it said.

Bullfrog Gold now hopes to access the 525,000 ounces of gold estimated to still remain on the site.

The land addition also allows Bullfrog to backfill nearly all mine waste in the south part of the pit, reducing environmental impacts and mining costs, the Colorado-based company said.

The transaction is in line with Barrick’s strategy of shedding non-core assets. Chief executive Mark Bristow said in August the company would continue with non-core disposals, having met its $1.5 billion target set in 2018.

The gold giant recently announced the sale of its stake in the Morila mine, in Mali.

Shares in Bullfrog jumped 4.8% to 24 cents on Tuesday by 10:40 am, following the announcement. Bullfrog’s market cap is currently $37.56 million.

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