Nevada Gold Mines (NGM) has entered into a definitive asset exchange agreement (the “Exchange Agreement”) to acquire from i-80 Gold Corp. the 40% interest in the South Arturo Joint Venture that NGM does not already own as well as a low-cost option to acquire the adjacent Rodeo Creek exploration property, in exchange for the Lone Tree and Buffalo Mountain properties and infrastructure which are currently in care and maintenance. The exchange transaction will have an effective date of June 1, 2021.
The transaction provides NGM with a number of key benefits:
- Allows NGM to consolidate production from the South Arturo open pit and the El Niño underground in the short term and capture 100% of the longer-term upside on both orebodies
- Provides NGM with flexibility to pursue other potential operational synergies at Goldstrike
- Provides NGM with a low-cost option to acquire 100% of the Rodeo Creek property comprised of exploration ground adjacent to South Arturo
- Removes NGM’s Lone Tree closure liability with i-80 Gold providing replacement bonding for reclamation obligations as a condition to closing
- Allows NGM to share in any future production at Lone Tree through a contingent payment of up to $50 million (described below)
“This is a win-win transaction for both Nevada Gold Mines and i-80” said Greg Walker, Executive Managing Director of NGM. “Through the acquisition of Lone Tree, an asset not being utilized by NGM has become a transformational asset for i-80. In return, NGM’s acquisition of i-80’s 40% of the South Arturo Joint Venture secures additional ounces with both open-pit and underground optionality for our Carlin operation. We are excited for the opportunities and growth this deal will bring to both parties which will strengthen the mining industry in Nevada providing benefits for all.”
The Exchange Agreement provides for payment to NGM of contingent consideration of up to $50 million based on mineral resources from the Lone Tree property. In connection with the asset exchange, NGM will also enter into toll-milling agreements providing i-80 Gold with interim processing capacity at NGM’s autoclave facilities until the earlier of the three-year anniversary of the asset exchange and the date on which the Lone Tree facility is operational and at NGM’s roaster facilities for a 10-year period. NGM has also agreed to reimburse i-80 Gold an amount of approximately $7.3 million for certain funding previously advanced by i-80 Gold in respect of South Arturo.
Conditional on the closing of the Exchange Agreement, NGM will subscribe for common shares in i-80 Gold, equal to the lesser of a 9.9% interest or subscription proceeds of $50 million, becoming one of i-80’s largest shareholders.
As a condition to closing of the Exchange Agreement, i-80 Gold will assume the environmental liabilities for the Lone Tree and Buffalo Mountain properties and will be responsible for securing replacement closure bonding and a release of NGM’s existing bonds. Similarly, NGM will assume the environmental liabilities and bonding obligations for South Arturo and Rodeo Creek.
Closing of the transactions contemplated by the Exchange Agreement is subject to the satisfaction of a number of conditions precedent, including clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “HSR Act”), arrangement by i-80 Gold of substitute sureties in respect of the Lone Tree and Buffalo Mountain reclamation obligations, and the approval of the Toronto Stock Exchange (“TSX”), among other customary conditions to closing.