Calibre Mining (TSX: CXB) and Marathon Gold (TSX: MOZ) are combining to create an Americas-focused mid-tier gold producer with an estimated average annual gold production of approximately 500,000 oz. in 2025-2026.
Per a definitive agreement signed Monday, Calibre will acquire Marathon in an all-stock deal, issuing 0.6164 of a common share for each Marathon share acquired. This gives Marathon an implied value of C$0.84 per share, or C$345 million on a fully diluted in-the-money basis.
This consideration represents a premium of 32% based on spot price of the companies’ shares, and a 61% premium over their 20-day volume-weighted average price.
Shares of Marathon Gold surged nearly 11% on Monday afternoon following the news, giving the company a market capitalization of C$285.6 million. Calibre Mining’s shares, meanwhile, were down 12% with a market capitalization of C$552.6 million.
Marathon’s main asset is the Valentine gold project located in the central region of Newfoundland and Labrador. It comprises a series of mineralized deposits along a 20-kilometre trend that combine to form what is now the largest undeveloped gold resource in Atlantic Canada.
A December 2022 feasibility study for Valentine outlined an open pit mining and conventional milling operation with an average gold production profile of 195,000 oz. of per year for the first 12 years of a 14.3-year mine life. Production is scheduled to begin production in early 2025.
The addition of Valentine would therefore nearly double Calibre’s existing annual production of 250,000-275,000 oz. from its Nicaraguan and US operations.
The combined company would have a significant combined mineral endowment of over 4 million oz. of mineral reserves, 8.6 million oz. of measured and indicated mineral resources (inclusive of mineral reserves) and 4 million oz. of inferred mineral resources
During 2024-2026, the company will also boast a peer-leading production growth of 80%, Calibre noted in Monday’s press release.
“This transformative merger creates a projected 500,000 oz. gold producer and offers our shareholders diversification and exposure to high-quality, long-life production in a tier-1 jurisdiction,” Calibre chairman Blayne Johnson stated.
“This transaction builds on that commitment, adding a high-quality gold asset in the final stages of construction with strong exploration upside in one of the top mining jurisdictions in the world,” CEO Darren Hall added.
According to Calibre, the combined company will have a strong balance sheet with a combined cash balance of $148 million and significant free cash flow generated from Calibre’s existing mines, ensuring the seamless completion of Valentine during the final 50% of construction.
“Through this Transaction, Valentine will be fully funded to production without additional debt, royalties, or shareholder equity,” Marathon CEO Matt Manson confirmed.
In connection with the merger, Calibre has also agreed to invest C$40 million in Marathon via a private placement financing of common shares priced at C$0.60 each. Upon completion, Calibre will own 14.2% of Marathon’s issued and outstanding shares.
Proceeds from the placement will be used by Marathon to fund the development and construction of Valentine, which is estimated to cost C$403 million.
