Trillium Gold Mines and Pacton Gold are merging to taking a “dominant” stake in the Red Lake mining district in northwestern Ontario.
The two Vancouver-based exploration companies inked an arrangement agreement on March 15.
In the proposed deal, Pacton will become a subsidiary of Trillium. Trillium shareholders will own 53 per cent of the new company, Pacton shareholders will own 47 per cent.
It brings together more than 15 exploration projects and more than 1,260-square kilometres of prospective ground across the prolific mining district.
That’s larger, a news release said, than the holdings of Evolution Mining, owners of the Red Lake mining complex, and Kinross Gold, the new owners of the Great Bear project.
There are “synergies” to be had with cost savings from merging the exploration programs. For example, Trillium’s Newman Todd Complex is situated within 20 kilometres of Pacton’s Red Lake Gold Project.
Pacton’s 28,000-hectare Red Lake Gold Project sits in the heart of the camp between Kinross’ Great Bear Project and Evolution’s Red Lake mine operations.
The release said the proposed merger will also help with access to cash with a greater combined market capitalization and a larger investor base.
“This combination literally changes the map of the prolific Red Lake Mining District,” said Russell Starr, Trillium president-CEO, in a statement.
“With the addition of Pacton’s neighbouring projects, Trillium will become the leading strategic landholder in the region. With over 1,260 km2 of prospective ground, we will effectively increase and diversify our opportunities, while realizing financial and operating synergies. Being the most dominant and strategic land holder in the jurisdiction for gold, we will also seek to leverage the lithium and critical element opportunities that exist throughout the combined land package.”
Pacton CEO Nav Dhaliwal said this proposed combination as a really good fit.
“The combination of Trillium and Pacton represents an all too rare outcome in our sector - real synergy. Our projects are proximal, our corporate philosophies are consistent and cost efficiencies will be realized. The new company shall be properly diversified and well positioned to achieve exploration success, while putting under one roof an extensive land position that we expect will present strategic value to other players in the industry.”
Pacton shareholders will vote at a special meeting to be held sometime in the second quarter. Pacton’s board of directors have unanimously approved of the merger, which will be subject to regulatory approvals, including from the TSX Venture Exchange.