NYSE- and TSX-listed McEwen Mining has announced the acquisition of TSX-V-listed Timberline Resources, a move that will bolster its presence in Nevada’s mining sector.
Under the terms of the agreement, Timberline shareholders will receive 0.01 of a share of McEwen’s common stock for each share of Timberline’s stock.
The exchange ratio translates to a value of $0.102 a Timberline share, representing a 132% premium over Timberline’s 20-day volume-weighted average price on the OTCQB.
McEwen, which currently holds 6.25-million Timberline shares and warrants, expects to issue about 1.84-million shares upon closing, with a transaction value totalling $18.8-million.
Timberline’s board of directors has endorsed the merger, urging shareholders to support the deal. Further, directors, officers and principal shareholders of Timberline, who collectively hold about 40% of the company’s outstanding shares, have entered into agreements to vote in favour of the transaction.
To safeguard the agreement, customary deal-protection measures have been included, prohibiting Timberline from entertaining alternative acquisition offers. In the event of a valid termination by Timberline in favour of a superior offer, a termination fee of $400 000 will be payable to McEwen.
Timberline’s projects are focused in the Battle Mountain-Eureka trend of north-central Nevada. The company’s flagship project is the Lookout Mountain project, which contains a high-grade gold zone as part of a 500 000 oz/y resource that is open for expansion.
The company’s flagship project is the Lookout Mountain Project which contains a high-grade gold zone as part of a >500K oz (M&I) resource which is open for expansion.