Newmont to buy GT Gold for $311 million

The Tatogga gold-copper project is located in the Stikine region of northwestern BC, Canada. (Image courtesy of GT Gold.)

Newmont (NYSE: NEM) (TSX: NGT), the world’s No. 1 gold miner, is acquiring all the shares it doesn’t already own in Canadian explorer GT Gold (TSX-V: GTT) in a cash deal valued at C$393 million ($311m).

The transaction will see the US mining giant buying the remaining 85.1% of common shares of GT Gold it doesn’t already have for C$3.25/share in cash. The figure represents a 38% premium to the 20-day volume-weighted average price of GT Gold’s shares on the Toronto Stock Exchange as of March 9.

GT Gold’s primary asset is the wholly-owned, 47.5K hectare Tatogga gold-copper project, located in the Traditional Territory of the Tahltan Nation, about 14km west of the Red Chris copper-gold mine in northwest British Columbia.

“We are committed to continue building a constructive and respectful relationship with the Tahltan Nation, including with the community of Iskut, which is near the project, in anticipation of exploring this highly prospective area,” Newmont President and CEO, Tom Palmer, said in a media statement.

“We understand and acknowledge that Tahltan consent is necessary for advancing the Tatogga project and we will partner with the Tahltan Nation at all levels, and with the government of British Columbia to ensure a shared path forward,” Palmer noted.

The acquisition of the Tatogga project adds to Newmont’s existing interest in the prolific golden triangle through the company’s 50% ownership in the Galore Creek project.

The copper-gold project, which includes the primary Saddle North asset, has the potential to contribute significant gold and copper annual production to Newmont’s overall output, the company said.

In addition to the known deposits at Saddle North, there are further exploration opportunities throughout the land package, Newmont said.

The Tahltan Nation’s territory spans 95,933 square km, or 11% of BC and includes 70% of the province’s Golden Triangle, which has a thriving mineral exploration sector.

BC in the spotlight

With gold prices bouncing back and a dearth of shovel-ready development projects in the pipeline, experts have said that 2021 could see a lot of merger-and-acquisition (M&A) activity in British Columbia’s mining sector, especially in gold.

The year has been a fairly busy one for mining M&As, with many of those deals involving Vancouver-headquartered companies.

New Gold (TSX, NYSE:NGD) completed in 2020 the sale of its Blackwater property, south of Prince George, to Artemis Gold (TSX-V:ARTG) for $190 million.

Seabridge Gold Inc. (TSX: SEA) bought in December the Snowfield project from Pretium Resources (TSX:PVG) for $100 million in cash, a 1.5% net smelter royalty related to all production and a $20 million future contingent payment.

At the beginning of 2021, Eldorado Gold (TSX:ELD)(NYSE:EGO) acquired QMX Gold Corp. (TSX-V:QMX) for $132 million in a friendly acquisition.

Rick Rule, president and CEO of Sprott US Holdings, believes there has been such an underinvestment in new discoveries that BC projects in more advanced stages of development could be prime targets.

“The industry is sorely lacking high-quality exploration projects or development projects,” Rule said in February. “The consequence of that is, when somebody makes a good discovery, they can be taken at absolutely eye-popping multiples.”

The Newmont-GT Gold transaction is expected to close in the second quarter of 2021, subject to meeting normal closing conditions.