In a March 23 research note, Laurentian Bank Securities analyst Jacques Wortman reported that Troilus Gold Corp. (TLG:TSX; CHXMF:OTCQB) entered a definitive agreement to acquire UrbanGold Minerals Inc. (UGM:TSX.V) for CA$19 million in an all-share transaction.
"While adding longer-term exploration potential, we are encouraged that the transaction will not dilute Troilus Gold's cash position and will have no impact on the timeline to completion of the prefeasibility study scheduled for later this year," commented Wortman.
Wortman highlighted that the transaction will expand the total hectares Troilus Gold owns in Quebec's Frôtet-Evans Greenstone Belt by 33% to 142,400. This added land encompasses the area to the southwest of the northeast-to-southwest mineralized trend along which lie the past-producing pits in the Z87 and J zones, the Southwest zone and the Beyan prospect.
Also, this added land is near prospective properties, the analyst noted, including UrbanGold's Pallador-Regnault, where maiden drilling encountered gold mineralization in four out of 10 holes, including "visible gold in a quartz vein," and Kenorland Minerals' Regnault, that yielded "encouraging high-grade assays" in April 2020.
In the transaction, Wortman noted that UrbanGold shareholders will receive "0.3004 TLG shares, implying a consideration of $0.30 per share, or a 35.3% premium to the 20-day VWAP." Of the outstanding UrbanGold shares, Troilus Gold already owns about 9.7% or about 6.2 million shares. "UrbanGold management and the Board, holding 6.6% of shares, have entered into support agreements to vote their shares in favour of the Amalgamation," the analyst wrote.
Laurentian has a Buy rating on Troilus Gold and a target price of CA$3.80 per share. The stock is currently trading at around CA$1.01.
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Laurentian Bank Securities, Troilus Gold Corp., March 23, 2021
Laurentian Bank Securities Inc. and/or its officers, directors, representatives, traders, analysts and members of their families may hold positions in the stocks mentioned in this document and may buy and/or sell these stocks on the market or otherwise.
The Research Analyst's compensation is based on various performance and market criteria and is charged as an expense to certain departments of Laurentian Bank Securities (LBS), including investment banking.
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