Timmins mine builder going private

Timmins mine developer Gowest Gold is buying out a group of shareholders to go private.

Ownership of the Toronto-based gold company is held by a small group of investors who control 91.5 per cent of the outstanding common shares. On June 21, Gowest announced it’s entered into a definite agreement to acquire all of the outstanding common shares of the not already owned by this majority interest.

The so-called 'acquiring group,' is comprised of Lush Land Investment Canada Inc., Greenwater Investment Hong Kong Limited, 1000216244 Ontario Inc., Debao Wang, Yun Zhao, Fortune Future Holdings Limited, Meirong Yuan, C. Fraser Elliott and CFE Financial, a corporation controlled by Elliott.

Gowest’s main asset is its Bradshaw Project, 30 kilometres northeast of Timmins. Over the years, the project has seen cash issues and frequent starts and stops in construction, including last fall. The company has often turned to this acquiring group to financially backstop the project.

The proposed cash consideration is $0.15 per common share. The company said it represents a 114 per cent premium to the $0.07 closing price of Gowest shares on the TSX Venture Exchange (TSX-V) on June 21. The payout amounts to $8.52 million.

In a statement. Gowest president-CEO Dan Gagnon said this the best avenue to proceed with developing the mine. 

“Gowest has faced significant challenges for a number of years in raising sufficient capital to carry out its objective of developing the Bradshaw deposit and ultimately bringing it into production. Operating as a public company is expensive and has become a constraint on the ability of the company to raise capital and operate efficiently.

“This transaction will allow a small group of our committed investors, who historically have been our most substantial source of capital, to bear the significant continuing exploration, financing and other risks facing the company going forward. At the same time, it will also provide our existing shareholders with liquidity and the opportunity to realize certainty of value for their common shares, in cash, at a significant premium to the company’s recent trading price. This transaction is intended to benefit not just shareholders, but all stakeholders of the company.”

A special meeting of Gowest shareholders will be called, but no date has been disclosed. Whenever this arrangement is completed, Gowest will be delisted from the TSX-V.