Nayarit Gold and Oro Gold property locations:
Capital Gold takes over Nayarit
News follows favourable economic assessment of Sackville exploration company’s Orion project
By JUDY MYRDEN Business Reporter
Fri. Feb 12 - 4:54 AM
thechronicleherald.ca
As the price of gold sparkles, a New York gold company has swooped in to take over a Nova Scotia firm with a potentially mineral-rich property in Mexico.
Capital Gold Corp. has agreed to take over Nayarit Gold Inc. of Lower Sackville in an all-stock transaction for $45 million that will boost Capital’s gold-focused portfolio, the companies announced Thursday.
"Basically it’s bringing the strengths of both companies from an asset and management standpoint and putting them together, creating a vehicle to grow the company," Colin Sutherland, Nayarit president and chief executive officer, said Thursday.
Under the agreement, Nayarit shareholders will own approximately 20 per cent of Capital Gold stock.
When the deal closes, which is expected sometime in May, the main office will be in Manhattan with a satellite office in Halifax, said Sutherland.
Capital Gold president John Brownlie will serve as president and Nayarit executives Sutherland and Bradley Langille will join Capital Gold as senior officers. The board of directors of Capital Gold will consist of its existing directors and one nominee of Nayarit.
Shares of Nayarit were down two cents to 50 cents Thursday on the Toronto Stock Exchange, while Capital Gold was down eight cents a share to $3.65.
Each company intends to call a special meeting of shareholders for approval of the deal.
Capital Gold owns and operates the El Chanate open pit gold mine in Sonora, Mexico, which is currently producing 60,000 ounces of gold per year.
The company, which was founded in 1982, achieved profitability within six months of operation and today is one of the lowest-cost gold producers, according to the company’s website.
Nayarit, a junior exploration company, was formed in 2005 and has focused on developing its sole asset, the Orion project, on a 102,000-hectare mining concession in the Mexican state of Nayarit.
The takeover news comes just days after Nayarit released a favourable economic assessment of the Orion project.
Nayarit Gold released a report Monday by SKR Consulting of Denver, which found that the proposed project would cost $35 million and had good economics.
"On a comparative basis, it is quite a robust project," said Sutherland earlier this week.
Sutherland said the report found the project had "no fatal flaws" and should proceed.
Sutherland said the mining consultants found there are about 250,000 gold equivalent ounces of production, or 50,000 ounces of gold equivalent per year, at the site and the cost to recover it is about $320 an ounce.
With gold selling at over US$1,000 an ounce, Nayarit is keen to proceed.
"It gives our shareholders the opportunity to participate in a gold producer right away. It combines the strengths of our respective assets and management teams and gives us the ability to use their free cash flow from their operations to fund the construction of our mine in Mexico," said Sutherland.
( jmyrden@herald.ca) |
