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  6.  | Contango ORE Acquiring More Alaska Gold Prospects

Contango ORE Acquiring More Alaska Gold Prospects

May 8, 2024 | Mining, News

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Avidian Gold is selling its Alaska subsidiary to Contango ORE, the company involved in the development of the Manh Choh mine near Tok and other precious metals prospects in the state. The binding stock purchase agreement for initial consideration of $2.4 million, plus a potential future upside consideration of $1 million, gives Contango control of Amanita NE property bordering the Fort Knox mine and the Golden Zone property between Fairbanks and Anchorage.

Putting Properties Closer to Development

The total consideration of up to $3.4 million, as a combination of cash plus Contango shares, includes an option agreement to purchase 100 percent of the Amanita gold property near Amanita NE.

“We believe Avidian is well served by both the cash consideration to immediately strengthen its balance sheet and the Contango shares to better participate in the continued strength in the gold price,” says Dino Titaro, director and chairman of Avidian Gold. “This at a time where Avidian and most other junior explorers have not benefited by improving gold prices and have not been able to raise the suitable equity to adequately advance exploration.”

Titaro adds that Avidian believes the Alaska properties stand a better chance with Contango, which is buying them for a “purchase price plus a future potential upside payment that well exceeded Avidian’s market capitalization at the time of negotiations.”

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Titaro notes that Contango is expecting to generate cash soon, now that the Manh Choh deposit is producing its first gold as a 70/30 joint venture with Fort Knox owner Kinross Gold Corporation. “We are of the opinion that this acquisition will enhance their future production growth strategy, which Avidian will participate in and greatly benefit from its share ownership,” Titaro states.

If Avidian shareholders approve the transaction, Titaro says the Toronto-based company will be debt-free and hold a clean balance sheet, along with cash and marketable securities, at current equity prices, of around $3 million Canadian dollars, not including the potential future upside payment of $1 million if a production decision is reached. “Avidian will then focus on a value creation strategy for its 100 percent owned Jungo gold-copper project in Nevada and continue ongoing evaluation of a number of possible strategic opportunities/alternatives that could be transformational for the company,” Titaro says.

Both Avidian’s and Contango’s boards of directors have unanimously approved the transaction. Avidian’s annual shareholder meeting is scheduled for July 4. The transaction could close soon after.

Contango owns a 30 percent interest in the Manh Choh gold project, while Kinross acts as manager and operator. Mining started at Manh Choh last August, and transport of the ore to the Fort Knox mill began in November. Additional ore arrives daily to the stockpile, and first gold production is planned for the second half of 2024. Annual production is expected to be 225,000 ounces, and 30 percent, or approximately 67,500 ounces, is credited to Contango’s account.

Contango is also exploring the Lucky Shot project near Hatcher Pass and, through its subsidiary, has 100 percent ownership of approximately 8,000 acres of peripheral State of Alaska mining claims.

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Making History

May 2024

The track of oil and gas development in Alaska shows the footprints of bold companies and hard-working individuals who shaped the industry in the past and continue to innovate today. The May 2024 issue of Alaska Business explores that history while looking forward to new product development, the energy transition for the fishing fleet, and the ethics of AI tools in business.

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