VANCOUVER–Only a few months after manoeuvring a takeover of Fury Explorations (FUR-V, FURXF-O), tungsten producer Golden Predator Mines (GP-T, GPDRF-O) is signing onto a merger with Midway Gold (MDW-V, MDW-X).
The proposed merger, which will create a mid-sized, Nevada-based explorer and producer of precious and specialty metals, would see shareholders receive one Midway share for each Golden Predator share held. Outstanding options, warrants, and convertible securities of Golden Predator would be converted into or exchanged for corresponding Midway holdings. When the transition is complete, Midway will change its name to Golden Predator Mines.
The merger term sheet also suggests Midway shareholders receive a dividend of one share-purchase warrant for each share held. Warrants would be exercisable at $2.05 for 18 months.
In addition, Golden Predator has agreed to provide a $5-million loan to Midway to be used in developing its Pan and Midway projects.
The resulting company would hold quite the store of assets. Golden Predator would contribute the Springer tungsten mine and mill complex in northwest Nevada. A historical resource of 3 million tonnes grading 0.458% WO3 sits at Springer, accessible via a 1,300-ft. vertical shaft and mine workings, as does a 1,200-ton-per-day mill built by General Electric in the early 1980s. The mill ran for less than a year in 1982 before failing tungsten prices forced closure; the complex has been on care and maintenance ever since. Golden Predator has applied for permits to restart the facility and hopes to start commissioning shortly.
But Golden Predator plans to produce more than just tungsten at Springer. The company also aims to build a carbon-in-leach gravity gold mill at the complex to process high-grade ore from its projects in the surrounding area. Northwest Nevada’s Great Basin is a known gold district and is home to some advanced-stage exploration projects, several of which Golden Predator owns.
At Golden Predator’s Fostung project in Ontario, a 2007 estimate pegged resources at 12.4 million inferred tonnes grading 0.125% WO3. A preliminary mining study prepared in 1981 predicted a strip ratio of 2.2:1 for an open-pit operation. The company plans to drill this property later in the year to probe resource expansion at depth and in stepouts while also testing for coincident molybdenum mineralization.
Golden Predator also brings to the table advanced tungsten projects in Nevada and Montana, as well as 23 property interests — claims and royalties– covering 283 sq. km. The property interests are part of the Lyle Campbell royalty trust and include significant portions of Barrick Gold’s (ABX-T, ABX-N) Bald Mountain and US Gold’s (UGX-T, UXG-N) Tonkin Springs.
And, pending approval at an August shareholder meeting, Golden Predator will take over Fury Explorations. Fury also works in Nevada, focused on its Taylor project. Taylor hosts a modern mill ready to process ore from an open-pittable resource of 5.8 million measured and indicated tonnes grading 59.4 grams silver per tonne and 686,740 inferred tonnes grading 65.3 grams silver. Fury is in the process of re-permitting Taylor for production.
Midway holds seven gold-silver properties totalling over 150 sq. km of mineral holdings along three gold trends in Nevada. Four of Midway’s properties host defined gold resources.
The largest resource is at Spring Valley, a new diatreme-porphyry hosted gold discovery in Pershing Cty. A recent estimate pegged resources at 45.9 million tonnes grading 0.49 gram gold per tonne. Midway has drilled roughly 80 holes since the resource estimate and continues to drill, focused on expanding the deposit, and plans to complete another 100 holes this summer.
The Pan project in central Nevada is a Carlin-style system on the Battle Mountain-Eureka gold trend where oxidized gold mineralization starts at surface.
The project already unites the two proposed merger partners: Golden Predator owns the claims covering Pan and leases the area to Midway. Pan hosts 17.2 million measured and indicated tonnes grading 0.49 gram gold plus 7.5 million tonnes grading 0.44 gram gold. During the last year, drilling has uncovered four new gold zones outside the defined resource area.
And the company’s namesake project, the Midway high-grade epithermal quartz-gold vein property in south-central Nevada, is home to 4.8 million inferred tonnes grading 1 gram gold. Since the 2005 resource estimate, Midway has discovered and delineated several new areas, completing more than 200 holes. The company is awaiting approval todrivean underground decline and collect a 45,000-tonne bulk sample from five high-grade veins. The underground workings would provide the opportunity to develop another 58 veins.
The junior also holds the Afgan and Gold Rock properties, which are located along the same trend as Pan and contain small historic gold resources. And just a few miles south of Midway is the Thunder Mountain project, an early stage gold property in which Kinross Gold (K-T, KGC-N) has an option to earn a 75% interest.
In late May, Midway signed on to acquire a 75% interest in Kinross’s Golden Eagle property. The junior then moved to acquire Hecla Mining’s (HL-N) 25% interest, a deal which is expected to close shortly. Midway owns Golden Eagle through a wholly owned subsidiary.
Golden Predator and Midway have agreed that, prior to closing their merger, 80.1% of the shares of the wholly owned subsidiary will be spun offtocurrent Midwayshareholders. The new Golden Predator will hold the rest of the new company.
News of the proposed merger, which is still subject to shareholder and regulatory approvals, lifted Golden Predator’s share price by 5 in mid-day trading but by day’s end left it unchanged at $1.70. The company has a 52-week trading range of $1.63-2.74 and has 44.2 million shares issued. Midway’s share price lost three pennies on news of the merger to close at $1.87. Midway has a 52-week trading range of $1.62-4.48 and has 51.4 million shares issued.