Steppe Gold Ltd to Acquire Anacortes Mining Corp to Create a Leading Diversified Precious Metals Producer
Steppe Gold Ltd to Acquire Anacortes Mining
Corp to Create a Leading Diversified Precious
Metals Producer
Ulaanbaatar, Mongolia--(Newsfile Corp. - March 6, 2023) - Steppe Gold Ltd. (TSX: STGO) (OTCQX:
STPGF) (FSE: 2J9) ("
Steppe Gold
") and Anacortes Mining Corp. (TSXV: XYZ) (OTCQX: XYZFF)
("
Anacortes
") are pleased to announce that they have entered into a binding letter of intent (the
"
Binding Agreement
") pursuant to which Steppe Gold, either directly or through a wholly-owned
subsidiary, will acquire all of the issued and outstanding common shares (the "
Anacortes Common
Shares
") of Anacortes 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 Binding 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-V and the Steppe
Common Shares on the TSX, each as of the close of trading on March 3, 2023. Shareholders of Steppe
Gold and Anacortes will own 79% and 21% of the combined company, respectively, on a basic basis.
The proposed 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 Anacortes board of directors have approved the Binding Agreement and unanimously recommends
that Anacortes shareholders vote in favour of the Transaction. Further, pursuant to the Binding
Agreement, Anacortes officers and directors holding approximately 7.6% of the Anacortes Common
Shares will enter into lock-up agreements with Steppe Gold, pursuant to which they will vote their
respective Anacortes Common Shares in favour of the Transaction. The board of directors of Steppe
Gold have also approved the Transaction.
Stifel GMP has provided a fairness opinion to Anacortes that based upon and subject to the
assumptions, limitations, and qualification stated in such opinion, the Transaction is fair from a financial
point of view to Anacortes.
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, CEO 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."
Benefits of the Transaction
The Transaction is expected to provide meaningful benefits to shareholders of both companies.
For Steppe Gold shareholders:
Adds the Tres Cruces project to the growth pipeline - an attractive and technically straightforward
development project in Peru with low capital intensity and the potential to add 68,000 ounces of
gold production per year at average all-in sustaining cash costs of US$734 per ounce.
Diversifies the asset portfolio with the addition of another development project and provides entry
into one of the world's most prolific gold mining belts in Peru, thereby allowing the potential for
Steppe Gold to become a multi asset and multi-jurisdictional gold company.
Further reinforces the value proposition of Steppe Gold, with the Tres Cruces project having an
underlying NPV of approximately US$170 million at US$1,700 gold (per the preliminary economic
assessment filed in March 2022).
Tres Cruces adds a large and underexplored land package that current hosts indicated resources
of approximately 2.5 million ounces at 1.65 g/t and inferred resources of 104 kozs at 1.26 g/t,
inclusive of 630 kozs of high grade 1.28 g/t leachable gold.
This adds to the existing asset base at the ATO Gold Mine where it recently reported Proven and
Probable Reserves of 1.7m oz Au Eq and Resources of 2.05m oz Au Eq.
For Anacortes shareholders:
Immediate and upfront premium of 36%.
Share exchange provides for meaningful retained ownership in the combined company and
ongoing exposure to near-term value catalysts, including the Phase 2 expansion at the ATO Gold
Mine and the future advancement and construction of the Tres Cruces project.
Participation in an established, low cost and growing producer with increased access to capital.
Opportune time to transact given the impending Phase 2 expansion at the ATO Gold Mine, which
is expected to increase annual production to approximately 100,000 of gold equivalent oz.
Transaction Details
The Transaction will be structured as a plan of arrangement of Anacortes pursuant to the
Business
Corporations Act
(British Columbia).
The Transaction is subject to, among other things, the execution of an arrangement agreement, the
receipt of all necessary regulatory, stock exchange and court approvals, and obtaining shareholder
approval of the Transaction at a meeting of the Anacortes shareholders, which is expected to be held in
Q2 2023. The Binding Agreement includes customary deal protections, including a non-solicitation
covenant in favour of Steppe Gold until April 17, 2023 and reciprocal expense reimbursement in certain
circumstances.
Execution of the arrangement agreement is expected to occur on or about April 14, 2023 and closing of
the Transaction is expected to occur on or about June 5, 2023.
Advisors
Steppe Gold's financial advisor is Maxit Capital LP and its legal counsel is Fasken Martineau DuMoulin
LLP. Anacortes' financial advisors are Medalist Capital Ltd. and Trinity Advisors Corporation, and its
legal counsel is Clark Wilson LLP.
Qualified Persons
The technical content of this news release regarding mineral properties of Anacortes has been reviewed
and validated by James Currie, PEng., a Qualified Person as that term is defined in National Instrument
43-101 -
Standards of Disclosure for Mineral Projects
. Mr. Currie is the President and CEO of
Anacortes.
About Steppe Gold
Steppe Gold is Mongolia's premier precious metals company.
About Anacortes
Anacortes is a growth-oriented gold company in the Americas, which owns a 100-per-cent interest in the
Tres Cruces gold project located in Peru. Tres Cruces is one of the highest-grade undeveloped gold
oxide deposits globally and hosts oxide plus sulphide indicated resources of 2,474,000 oz at 1.65 g/t
gold, inclusive of 630,000 oz of high-grade leachable gold at 1.28 g/t gold and inferred resources of
104,000 oz at 1.26 g/t gold. The PEA on the leachable resource at Tres Cruces released earlier in 2022
indicates a robust open-pit, heap leach project.
Cautionary Statement on Forward-Looking Information
This news release includes certain statements that constitute "forward-looking statements", and
"forward-looking information" within the meaning of applicable securities laws collectively "forward-
looking statements". These include statements regarding Anacortes' and Steppe Gold's intent, or the
beliefs or current expectations of the officers and directors of Anacortes and Steppe Gold (the
"
Companies
") for Steppe Gold's growth and valuation post-closing. When used in this news release,
words such as "anticipated", "expected", "future", "opportunity", "ongoing", "potential", "proposed",
"vision" and similar expressions are intended to identify these forward-looking statements as well as
phrases or statements that certain actions, events or results "could", "may", "should", "will", "would" or
the negative connotation of such terms. As well, forward-looking statements may relate to future outlook
and anticipated events, such as the consummation and timing of the Transaction; the satisfaction of the
conditions precedent to the Transaction; the strengths, characteristics and potential of the resulting
company; and discussion of future plans, projections, objectives, estimates and forecasts and the timing
related thereto, including with respect to the ATO gold mine. These forward-looking statements involve
numerous risks and uncertainties, including those relating to required shareholder and regulatory
approvals, exercise of any termination rights under the Binding Agreement, meeting other conditions in
the Binding Agreement, material adverse effects on the business, properties and assets of the
Companies, and such other risk factors detailed from time to time in the Companies' public disclosure
documents including, without limitation, those risks identified in Steppe Gold's annual information form
for the year ended December 31, 2021, which is available on SEDAR at www.sedar.com, and
Anacortes' management's discussion and analysis for three and nine months ended September 30,
2022 and 2021, which is available on SEDAR at www.sedar.com. Forward-looking statements are
based on information available at the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those expressed in or suggested by the
forward-looking statements. Forward-looking statements speak only as of the date those statements are
made. Except as required by applicable law, the Companies assume no obligation to update or to
publicly announce the results of any change to any forward-looking statement contained or incorporated
by reference herein to reflect actual results, future events or developments, changes in assumptions or
changes in other factors affecting the forward-looking statements. If either of the Companies updates any
one or more forward-looking statements, no inference should be drawn that the company will make
additional updates with respect to those or other forward-looking statements. All forward-looking
statements contained in this news release are expressly qualified in their entirety by this cautionary
statement.
Contact Information
Anacortes
Kin Communications Inc.
Tel: 604-684-6730
Email:
Steppe Gold
Bataa Tumur-Ochir, CEO and President
Shangri-La office, Suite 1201, Olympic Street 19A, Sukhbaatar District 1, Ulaanbaatar 14241, Mongolia
Tel: +976 7732 1914
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/157338