Mako Mining (TSXV: MKO) is looking to again expand their portfolio. The company has entered into a binding term sheet with Sailfish Royalty Corp (TSXV: FISH) to acquire the Mt Hamilton Gold-Silver project in White Pine County, Nevada.
Under the proposed arrangement, Sailfish will acquire the asset from Mt Hamilton LLC, after which through a series of transaction Mako Mining will acquire the asset, in exchange for both a 2% NSR royalty and a gold stream. No equity is expected to be issued in connection with the transaction.
The Mt Hamilton Project is a project that has managed to obtain all major federal and state permits for the construction of an open pit heap leach gold and silver mine. The project is estimated to contain measured and indicated resources of 578,000 ounces of gold and 4.8 million ounces of silver at grades of 0.02 oz/ton and 0.166 oz/ton, respectively, alongside inferred resources of 21,000 ounces of gold and 260,000 ounces of silver at 0.015 oz/ton and 0.178 oz/ton, respectively. The project is also said to host a tungsten target below and independent of the gold and silver resource.
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Under the currently proposed arrangement, Sailfish is set to acquire the Mt Hamilton project in exchange for US$40.0 million in cash, which is to be financed via a non-revolving bridge finance facility from Wexford Capital. After this is completed, Mako will then acquire the property in exchange for a gold stream that will see the delivery of 341.7 troy ounces of gold per month at a price equal to 20% of the LBMA PM Fix price of gold for a period of 60 months, as well as a 2% NSR royalty.
Gold deliveries under the stream are expected to largely come from production at Mt Hamilton, however Mako retains the right to source monthly deliveries from its other projects as well to cover any shortfalls. A mechanism is also in place to ensure Sailfish receives at minimum US$738,000 in net equivalent margin from the transaction, and no more than US$1.01 million in net equivalent margin on a monthly basis.
The NSR royalty is expected to be granted upon the completion of the stream arrangement.
“The proposed Mt. Hamilton acquisition is a demonstration of how Mako can use all the tools it has available to make highly accretive acquisitions without having to issue equity. The permitted Mt. Hamilton Project is relatively high-grade (for an open pit heap leachable oxide deposit), which is straight down the fairway of the kind of projects our operating team is capable of delivering. All major permits are in place to allow construction and the Company is likely to make a construction decision early next year once it has all available technical information to support such a decision,” commented Akiba Leisman, CEO of Mako Mining, on the proposed transaction.
Mako Mining last traded at $7.32 on the TSX Venture.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
