Investors
Avidian Gold To Sell Its Alaskan Subsidiary To Contango Ore
TORONTO, Ontario, May 2, 2024 – Avidian Gold Corp. (“Avidian” or the “Company”) (TSX- V: AVG) is pleased to announce that it has entered into a binding Stock Purchase Agreement (the “Agreement”) with Contango ORE, Inc. (“Contango”) (NYSE-A: CTGO) pursuant to which Contango has agreed to purchase Avidian’s 100% owned Alaskan subsidiary, Avidian Gold Alaska Inc. (“Avidian Alaska”) for initial consideration of US$2.4 million (CDN$3.30 million), plus a potential future upside consideration of US$1.0 million, for a total consideration of up to US$3.4 million (CDN$4.68 million at current exchange rate of US$1 = CDN$1.376) (the “Transaction”). The consideration is a combination of cash plus Contango shares, as more fully described below.
Avidian Alaska owns and controls the Golden Zone and Amanita NE gold properties and has an option agreement to purchase 100% of the Amanita gold property. Golden Zone is a large, prospective property in between Anchorage and Fairbanks near rail and highway infrastructure. The Amanita and Amanita NE gold properties border Kinross Gold Corporation’s Fort Knox operation near Fairbanks.
Dino Titaro, Director and Chairman of Avidian Gold states, “On behalf of the Board of Directors, we are pleased to announce this transaction. 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. Contango is a soon to be producer of gold that is expected to be generating cash flow by mid to late 2024 from the high grade Manh Choh Gold Deposit, a 70:30 joint venture between Kinross Gold Corporation and Contango. Contango has the financial and technical strength to quickly advance these properties. 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.
This transaction is a win-win, particularly considering the current market investment climate for non-producing junior exploration companies like Avidian. We believe the Alaska properties will generate more value in Contango’s portfolio as a near term producer, as evidenced by Contango’s acquisition of these properties for a purchase price plus a future potential upside payment that well exceeded Avidian’s market capitalization at the time of negotiations, up to CDN$4.68 million vs a then market capitalization of less than CDN$2.0 million. 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.
At the conclusion of this transaction, should Shareholders approve, Avidian will be debt free with a clean balance sheet and will hold cash plus marketable securities, at current equity prices, on the order of CDN$3.0 million dollars, excluding the potential future upside payment on a production decision of US$1.0 million. Avidian will then focus on a value creation strategy for its 100% 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.”
Transaction Details
- Contango to acquire 100% of the capital stock of Avidian Gold Alaska Inc. from Avidian Gold Corp.;
- Contango will pay Avidian an initial purchase price of US$2,400,000 consisting of (i) US$400,000 in cash (the “Cash Consideration”) and (ii) US$2,000,000 in shares of Contango common stock (the (“Equity Consideration”). The Cash Consideration shall be paid in the following tranches: (i) a deposit US$50,000 (that has been received) (ii) US$150,000 due on the Closing Date, and (iii) US$200,000 due on or before the 6-month anniversary of the Closing Date. The number of shares of common stock constituting the Equity Consideration will be determined based on Contango’s NYSE-A, 10-day volume- weighted average price immediately prior to the Closing Date;
- If Contango makes a positive production decision on either of the Amanita or Golden Zone properties within 120 months of the Closing Date, Contango will pay Avidian an additional US$1,000,000 within thirty (30) days of such decision (the “Deferred Purchase Price”). The Deferred Purchase Price can be paid in either cash or shares of Contango at Contango’s sole discretion. If at any time prior to this production decision, within the 120-month period, Contango enters into a third party transaction on either of the Amanita or Golden Zone properties, Avidian will receive 20% of the consideration received by Contango (capped at US$500,000 per property), to be credited against the total Deferred Purchase Price; and
- The Transaction is subject to Avidian Shareholder approval, as well as the receipt of all required governmental and/or regulatory approvals, including that of the Toronto Venture Exchange and NYSE-A. Should Avidian Shareholders not approve this transaction the Agreement will terminate and a termination fee of US$175,000 will be paid to Contango, representing liquidated damages for the time, resources and opportunities lost in facilitating this transaction.
Both Avidian’s and Contango’s Board of Directors have unanimously approved the Transaction. The Board of Directors for Avidian unanimously recommends that shareholders vote in favor of the Transaction. The Annual General and Special Meeting of shareholders will be held on July 4, 2024. It is expected that closing of this Transaction will happen as soon as practically possible following the shareholder meeting that has approved the Transaction.
About Contango ORE Inc.
Contango ORE, Inc. (NYSE-A: CTGO) owns a 30% interest in the high grade Manh Choh gold project located in Alaska, in partnership with a subsidiary of Kinross Gold Corporation (“Kinross”). Kinross acts as manager and operator. The Manh Choh project has received all Federal and State permits and mining operations are underway. Mining started at Manh Choh in August of 2023 with ore stockpiled at site. Transportation of the ore from Manh Choh to Kinross’ existing Fort Knox mill complex located near Fairbanks, Alaska began in November 2023. Additional ore arrives daily to the stockpile at Fort Knox and first gold production is planned for the second half of 2024 . Annual gold production is expected to be 225,000 ounces with 30%, or approximately 67,500 ounces, credited to Contango’s account (see Technical Summary Report on the Manh Choh project, dated May 12, 2023 at www.contangoore.com).
The use of the Fort Knox mill has accelerated the development of the Manh Choh project and resulted in meaningfully reduced environmental impact and upfront capital without the need for separate milling and tailings storage facilities in addition to a shorter permitting and development timeline with less overall risk for the Manh Choh project. In addition to Manh Choh, Peak Gold LLC, the 30/70 joint venture between Contango and Kinross, has had a mining lease since 2008 on 675,000 acres of private lands owned by the Tetlin Tribe and administered by the Tetlin Tribal Council, which offer excellent exploration potential.
Ore is currently being stockpiled at the Manh Choh site and transported by highway ore haul trucks to a stockpile area at the Fort Knox mill complex. A stockpile of approximately 250,000 tons is being built prior to the start of milling in mid 2024.
Contango also controls the Lucky Shot project near Anchorage, Alaska, and through its subsidiary, has 100% ownership of approximately 8,000 acres of peripheral State of Alaska mining claims. The Lucky Shot project is a past high-grade gold producer in which Contango has outlined an initial indicated mineral resource of 226,963 tonnes at 14.5 grams per tonne (“g/t”) gold (“Au”) and inferred mineral resource of 82,058 tonnes at 9.5 g/t Au (see Technical Summary Report on the Lucky Shot project, dated May 26, 2023 at www.contangoore.com). Contango also owns a 100% interest in an additional 137,280 acres of State of Alaska mining claims through its wholly owned subsidiary, providing additional exploration potential.
Avidian Gold Closes Sale Of Alaskan Subsidiary To Contango Ore
TORONTO, Ontario, August 7, 2024 – Avidian Gold Corp. (“Avidian” or the “Company”)
(TSX-V: AVG) is pleased to announce, further to its press release of May 2, 2024, that it has closed
the sale of its 100% owned Alaskan subsidiary, Avidian Gold Alaska Inc. (“Avidian Alaska”) to
Contango ORE, Inc. (“Contango”) (NYSE-A: CTGO) for initial consideration of US$2.4 million
(CDN$3.3 million) (the “Initial Consideration”), plus potential future upside consideration of
US$1.0 million, for total consideration of up to US$3.4 million (CDN$4.7 million at current
exchange rate of US$1 = CDN$1.3858) (the “Transaction”). The Initial Consideration is
comprised of (i) US$400,000 in cash (the “Cash Consideration”) and (ii) US$2,000,000 in shares
of Contango common stock (the (“Equity Consideration”).
Avidian Alaska owns and controls the Golden Zone and Amanita NE gold properties and has an
option agreement to purchase 100% of the Amanita gold property. Golden Zone is a large,
prospective property in between Anchorage and Fairbanks near rail and highway infrastructure.
The Amanita and Amanita NE gold properties border Kinross Gold Corporation’s Fort Knox
operation near Fairbanks.
Dino Titaro, Director and Chairman of Avidian Gold states, “with this transaction now
completed the Company will commence shoring up its balance sheet and focus on a value creation
strategy for its 100% 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”.
The Transaction was put before shareholders and received an overwhelmingly approval of 98.38%
of votes casted at the Company’s annual general and special meeting of shareholders held on July
4, 2024. The Transaction constituted a Reviewable Disposition under Policy 5.3 – Acquisitions
and Disposition of Non-Cash Assets of the TSX Venture Exchange (the “Exchange”) remains
subject to the final approval of the Exchange.
Due to a delay from the United States Internal Revenue Service (the “IRS”) of issuing a certificate
(the “Certificate”) that Contango is not required to withhold any amount as a result of the
Transaction, which Certificate remains unissued, the Company entered into a side letter with
Contango and Avidian Alaska pursuant to which the parties agreed to amend the payment schedule
of the Initial Consideration and provide for an adjustment mechanism if the IRS determines that
any amount (the “Withholding Amount”) should be withheld (the “Withholding
Determination”) pursuant to the Internal Revenue Code of 1986.
US$50,000 of the Cash Consideration has previously been received by the Company as a deposit.
In the event the Withholding Amount is greater than nil, the remaining US$350,000 portion of the
Cash Consideration (the “Retained Consideration”) shall be reduced by the Withholding\
Amount. Assuming there is no Withholding Amount, US$150,000 of the Retained Consideration
shall be payable upon receipt of the Withholding Determination and the remaining US$200,000
shall be payable on or before February 6, 2025 (the “Deferred Payment Date”). If the
Withholding Determination is not received by the Deferred Payment Date, such payment shall be
deferred until receipt of the Withholding Determination. For certainty, if there is a Withholding
Amount such amount shall be deducted from the aggregate Retained Consideration.
As of the date hereof, the Company has received US$1,750,000 of the US$2,000,000 Equity
Consideration in the form of 78,511 common shares in the capital stock of Contango at a deemed
price of US$22.29 per share, based on the 10-day VWAP ending on the closing date of the
Transaction. The remaining US$250,000 of the Equity Consideration has been withheld by
Contango and will be issued to the Company upon receipt of the Withholding Determination. In
the event the Withholding Amount exceeds $350,000, such amount in excess of $350,000 will be
deducted from the remaining US$250,000 of the Equity Consideration based on the value of the
Contango’s shares at the time the Withholding Determination is received.
About Avidian Gold Corp.
Avidian brings a disciplined and veteran team of project managers with a focus on advanced-stage
gold exploration. The Company currently holds a 100% interest in the Jungo gold-copper property
in Nevada and is evaluating other transformational opportunities.
Avidian is a shareholder in High Tide Resources (CSE: HTRC), which is focused on and
committed to the development of mineral projects critical to infrastructure development using
industry best practices combined with a strong social license from local communities. Avidian
Gold controls approximately 28% of High Tide’s outstanding shares. High Tide owns a 100%
interest in the Labrador West Iron Project which hosts a NI 43-101 Inferred iron resource of 654.9
Mt @ 28.84% Fe and is located adjacent to the Iron Ore Company of Canada’s (“IOCC”) Carol
Lake Mine in Labrador City, NL operated by Rio Tinto PLC. This resource is exposed at surface
and was pit constrained for an open-pit mining scenario. The Technical Report was filed on
SEDAR on April 6, 2023 and was authored by Ryan Kressall M.Sc., P. Geo, Matthew Herrington,
M.Sc., P. Geo, Catharine Pelletier, P. Eng. and Jeffrey Cassoff P. Eng. The Company also owns
a 100% interest in the Lac Pegma copper-nickel-cobalt deposit located 50 kilometres southeast of
Fermont, Quebec.
Further details on the Company and the Jungo Property can be found on the Company’s website
at www.avidiangold.com.