Canadian companies IDM Mining and Ascot Resources have entered into an agreement under which Ascot will acquire the issued and outstanding common shares of IDM.
Under the arrangement, each IDM shareholder will receive 0.0675 of a common share of Ascot for each share of IDM held.
The combination of Ascot’s Premier Gold project and IDM’s Red Mountain project is expected to create a high-grade gold development and exploration company in Golden Triangle, British Columbia.
IDM is valued at approximately C$0.086 ($0.065) per share, a premium of 54% to IDM shareholders based on the trailing 20-day volume weighted average price of each company as of the close of trading on January 4, 2019.
After the transaction, IDM shareholders will hold 16.7% of Ascot shares on an outstanding basis.
The transaction includes two, 15km early-Jurassic geological trends totaling 25,000 hectares consisting of multiple advanced deposits with new high-grade gold discoveries located 25km from each other.
All assets are located within Treaty territory of the Nisga’a Nation, near the mining communities of Stewart, British Columbia and Hyder, Alaska.
The acquisition will provide Ascot with access to development-stage resources at IDM’s Red Mountain project, and an infrastructure foundation at Premier, including a process mill, tailings storage facility, power and water treatment facilities.
Under the agreement, each IDM warrant will be converted into an Ascot warrant and IDM stock options will be exchanged for replacement options under Ascot’s stock option plan or cancelled without payment.
The agreement also provides for a C$2m ($1.5m) termination fee payable by IDM to Ascot, and a reciprocal expense reimbursement fee of C$500,000 ($376,450), both payable under certain circumstances.
Haywood Securities is acting as financial advisor, and Blake, Cassels & Graydon as legal counsel to Ascot.
Raymond James is acting as financial advisor and DuMoulin Black is acting as legal counsel to IDM, and Borden Ladner Gervais as legal counsel to IDM’s Special Committee.