STPGF - Steppe Gold Enters Into Share Exchange Agreement to Acquire Boroo Gold and Agrees to Sell the Tres Cruces Oxide Project | Benzinga
ULAANBAATAR, Mongolia, April 11, 2024 (GLOBE NEWSWIRE) -- Steppe Gold Ltd. (TSX:STGO) (OTCQX:STPGF) (FSE: 2J9) ("Steppe Gold") is pleased to announce that, further to its press releases dated January 22, 2024 and March 19, 2024, it has entered into a share exchange agreement (the "Share Exchange Agreement") pursuant to which Steppe Gold will acquire all of the issued and outstanding common shares (the "BG Common Shares") of Boroo Gold LLC ("Boroo Gold") from an indirect, wholly owned subsidiary of Boroo Pte Ltd. ("Boroo Singapore") in an all-share transaction (the "Boroo Gold Transaction").
Additionally, pursuant to separate definitive share purchase agreements (the "Share Purchase Agreements"), each between one of Steppe Gold's wholly-owned subsidiaries, on the one hand, and Boroo Singapore or one of its affiliates, on the other hand, each dated April 11, 2024, Steppe Gold will sell the Tres Cruces Oxide Project (the "Tres Cruces Project") to Boroo Singapore for approximately CAD$12 million in cash (the "Tres Cruces Transaction") payable over the next 18 months beginning as of the Closing Date (as defined in the Share Purchase Agreements).
Highlights
- The Boroo Gold Transaction will create Mongolia's leading gold producer
- Acquisition of a leading gold producer, Boroo Gold, will create Mongolia's leading gold producer
- Boroo Singapore will hold approximately 55.9% of the issued and outstanding common shares of Steppe Gold ("Steppe Common Shares") on a fully diluted basis, immediately following the completion of the Boroo Gold Transaction
- Immediate and strong cash flows to Steppe Gold
- Boroo Gold estimates over 400,000 oz of gold production from 2024 to 2031, with projected average annual production of approximately 60,000 oz in 2024, 2025 and 2026
- In 2023, Boroo Gold had revenue of US$132 million on production of 67,315 oz of gold, with an AISC of $847 per oz, at an average achieved gold price of $1,957 per oz
- Boroo Gold is forecasting similar production levels in 2024, albeit with higher sustaining costs
- Long standing and strong social license
- The Boroo gold mine comes with a long and proud history of positive impact in Mongolia:
- Over US$1,020 million in benefits to Mongolia since 2003 (taxes and fees, CAPEX, donations, payments to local companies for goods and services and salaries to national employees)
- Over US$17.5 million in donations and investments in local Soums between 2007 and 2023 under its framework of social responsibility
- The Boroo gold mine comes with a long and proud history of positive impact in Mongolia:
- Steppe Gold combined gold production in 2024 projected to be 90,000 oz, rising to an estimated annualized 150,000 oz in 2026 as the ATO Gold Mine Phase 2 Expansion is planned to come on stream in mid-2026
- Significant value upside from:
- Potential cost synergies from combined purchasing power and lower relative administration costs
- Increasing Reserves and Resources near the existing mines
- Divestment of the Tres Cruces Project to the likely highest value buyer, returning Steppe Gold's singular focus to Mongolia
Bataa Tumur-Ochir, Chairman and CEO of Steppe Gold, commented: "We are very pleased to announce the agreement to acquire Boroo Gold. This transaction accelerates our path to a multi-asset Mongolia-focused mining group and, importantly, immediately provides strong cash flow to support our growth plans, further improved with the recent strong gold prices. In connection with the completion of this transaction we expect to finish 2024 with a run rate of around 90,000 oz in gold production, moving to over 150,000 oz in 2026 on a pro forma basis. We have also decided to divest the Tres Cruces Project to further improve our liquidity and sharpen our focus on Mongolia."
Boroo Gold Transaction Details
Share Exchange Agreement
Pursuant to the Share Exchange Agreement, Steppe Gold will acquire all of the BG Common Shares in consideration for the issuance by Steppe Gold of 138,150,000 Steppe Common Shares, or that number of Steppe Common Shares that results in Boroo Singapore, directly or indirectly, holding 55.9% of the issued and outstanding Steppe Common Shares (calculated on a fully-diluted basis) upon completion of the Boroo Gold Transaction. Steppe Gold will seek approval for the issuance of Steppe Common Shares in connection with the Boroo Gold Transaction at Steppe Gold's annual general and special meeting of shareholders (the "Meeting"), which is expected to be held in June 2024.
The Boroo Gold Transaction is subject to customary closing conditions, including receipt of approval by Steppe Gold's shareholders at the Meeting, and certain regulatory approvals, including the approvals of the Toronto Stock Exchange and applicable Mongolian authorities. Additionally, it is a condition to the closing of the Boroo Gold Transaction that the Tres ...