Steppe Gold Ltd. (TSX: STGO) (OTCQX: STPGF) (FSE: 2J9) (“Steppe Gold“) and Anacortes Mining Corp. (TSXV: XYZ) (OTCQX: XYZFF) (“Anacortes“) are pleased to announce they have entered into an arrangement agreement (the “Arrangement Agreement“) pursuant to which Steppe Gold will acquire all of the issued and outstanding common shares of Anacortes (the “Anacortes Common Shares“) by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), in an all share transaction (the “Transaction“).
Under the terms of the Arrangement Agreement, Anacortes shareholders will receive 0.4532 of a Steppe Gold common share (each, a “Steppe Common Share“) for each Anacortes Common Share, which represents consideration of approximately C$0.48 per Anacortes Common Share and a premium of 36% based on the closing prices of the Anacortes Common Shares on the TSX Venture Exchange (the “TSXV“) and the Steppe Common Shares on the Toronto Stock Exchange (the “TSX“), each as of the close of trading on March 3, 2023, the date that the Transaction was publicly announced. On the closing of the Transaction, shareholders of Steppe Gold and Anacortes will own approximately 79% and 21% of the combined company, respectively, on a basic basis.
The Transaction is anticipated to create a leading junior gold producer with significant near-term growth. In addition to current production from Steppe Gold’s ATO gold mine, which is expected to increase in scale with the current Phase 2 expansion, additional future growth would be supported by the development of the high-grade Tres Cruces oxide project in Peru, which is located approximately 10 km from the Lagunas Norte mine.
The Transaction has been unanimously approved by the board of directors of each of Steppe Gold and Anacortes, including, in the case of Anacortes, following receipt of the unanimous recommendation of a special committee of independent directors of Anacortes. Stifel Nicolaus Canada Inc. provided an opinion to the special committee of Anacortes to the effect that, as of the date of such opinion, the consideration to be received by Anacortes shareholders and warrant holders, as applicable, pursuant to the Transaction is fair, from a financial point of view, to the Anacortes shareholders and warrant holders, subject to the limitations, qualifications and assumptions set forth in such opinion. The board of directors of Anacortes unanimously recommends that Anacortes shareholders vote in favour of the Transaction.
Pursuant to the Arrangement Agreement, Anacortes’ officers, directors and significant shareholders holding approximately 22% of the Anacortes Common Shares entered into lock-up agreements with Steppe Gold, pursuant to which they will vote their respective Anacortes Common Shares in favour of the Transaction.
Matthew Wood, Executive Chairman of Steppe Gold, stated: “This Transaction transforms Steppe Gold into a multi asset, multi jurisdiction gold company with existing production and development projects in two of the most exciting and still untapped gold provinces in the world in both Mongolia and Peru. The new combined company will have a potential development profile of over 200,000 ounces and a resource base of over 4.5 million gold equivalent ounces.”
Bataa Tumur-Ochir, President and Chief Executive Officer of Steppe Gold, stated: “We are very pleased to add one of the highest-grade undeveloped oxide gold deposits in the world to our development pipeline. Having recently built a heap leach gold mine in Mongolia and now in production since 2020, this next project works well in our sequence of production growth to come online in the next few years. Our vision is to build a 200,000 oz gold equivalent production profile, with our ATO Phase 2 expansion project expected to come online in 2025 and the Tres Cruces Mine moving to production soon thereafter. The Tres Cruces project has many similarities to our ATO project, with an oxide deposit at surface that can be quickly brought into production with significant upside in the underlying fresh rock.”
James A. Currie, President and Chief Executive Officer of Anacortes, stated: “The Transaction offers our shareholders with an immediate and attractive premium, in addition to meaningful ongoing ownership in the combined company. We see this as an excellent opportunity for our shareholders to participate in a growing junior gold producer that will have an enhanced ability to advance and develop the Tres Cruces project. I am proud of the Anacortes team for their efforts and look forward to our participation in the ongoing success of the Steppe Gold team as they surface meaningful value from the combined asset base.”
