Dryden-area mine developer Treasury Metals is out to create a project pipeline with its proposed acquisition of Blackwolf Copper and Gold, owner of the Niblack project in Alaska.
The developer of the Goliath Gold project announced earlier this month that it had signed a definitive arrangement agreement with Blackwolf that would see the two companies merge this summer.
In a news release, Treasury said this merger will be beneficial in helping to advance its main Goliath Gold project toward production, east of Dryden.
According to terms of the deal, Treasury will acquire all of the issued and outstanding shares of Blackwolf. A Blackwolf share will be exchanged for 0.607 of a Treasury share. When the merger is complete, Treasury and Blackwolf shareholders will own 68.3 per cent and 31.7 per cent, respectively, of the new company.
The merger is expected to close during this year’s third quarter.
To create some financial wiggle room, Treasury has revised an agreement with a lender, Sprott Resources Streaming and Royalty, deferring quarterly minimum payments for the next four quarters. Treasury signed a royalty agreement with Sprott in 2022 to secure $25 million to get the project through the technical study, permitting and community consultation stages.
To this point, all of Treasury’s current assets have been in northwestern Ontario. Its flagship asset is Goliath, a close-to-shovel-ready open-pit and underground project, not far from the Trans-Canada Highway. The community of Wabigoon is five kilometres to the south.
On the regulatory front, the federal environmental assessment for Goliath is approved. The company expects to have its provincial permits and to sign impact benefit agreements with area First Nation communities over the next 15 months. A mine construction decision will be made in mid-2025.
Over the years, the Goliath project has grown in scale and gold ounces through land and project acquisition. Just to the northeast are two more gold projects, dubbed Goldlund and Miller, that Treasury envisions being part of a wider, district-scale series of mines on its 330-square-kilometre land package. Down the road, those projects are expected to add greater longevity beyond Goliath’s initial 13-year mine life.
Despite being around for 15 years, Goliath's biggest stumbling block has been project financing. Gold prices remain high — in excess of US$2,300 an ounce — but it remains a tough market to raise capital to build mines. Treasury needs $335 million up front to develop Goliath.
To access the markets, Treasury’s new strategy appears to be the creation of a string of mine projects that would be brought into production sequentially.
About a month ago, pre-merger, Treasury president-CEO Jeremy Wyeth dropped some hints in an online interview with Feneck Commodities Report.
Instead of having one cash-starved project, Wyeth saw the value and efficiencies in assembling a stable of projects while keeping the same mine-building teams in place over the long haul to develop one project after another.
“You bulk yourself up so that you get to where the equity’s accessible,” said Wyeth about building a project pipeline.
“We’re spending a lot of time looking for those types of opportunities that gives you the opportunity reuse the same team.”
Wyeth said Treasury is willing to entertain partnership or buyout offers from mid-tier, senior mining or strategic partners, but said their preference is to operate the Goliath project. Should a deep-pocketed large mining company want to take the operation out of their hands, Wyeth said they would do what's in the best interests of the project and Treasury's shareholders.
In Treasury’s news release, Wyeth called the merger a “positive evolution” for the company that brings Blackworth’s major financial backer, Frank Giustra, into the picture. The new strategy, he said, involves “heightened strategic corporate activity” and a “more aggressive exploration” approach across its portfolio of projects.
Blackwolf CEO Morgan Lekstrom said: “The combined financial strength and asset portfolio gives us the capital to move into a new stage of growth in a rising gold market. I look forward to working closely with the management team and shareholders to help the company gain the recognition it deserves.”
