Premier diversifies from Red Lake

In a deal worth US$36 million, Premier Gold Mines (PG-T) has bought Saddle Gold and its assets in Nevada’s Carlin trend in Elko County.

Premier is paying US$3.1 million in cash, issuing about 5.4 million shares and taking on US$12 million of Saddle Gold’s debt, which it must repay over seven years.

“It looks like good-quality resource ounces at a very good price,” Barry Allan, a mining analyst at Mackie Research, wrote in an email to The Northern Miner.

Premier’s shares closed up 9¢ or 1.9% on news of the deal at $4.81 per share.

“Saddle Gold represents everything we’re looking for in a U.S.- based exploration opportunity,” Ewan Downie, Premier’s president and chief executive, said in a press release.

Downie described the Carlin trend as North America’s “most productive accumulation of gold deposits” and noted that Saddle Gold is right in the heart of the Rain Mine trend.

Saddle Gold owns the mineral rights of a majority portion of the Saddle/NW Tess gold deposit and a 1.5% production royalty on Newmont Mining’s (NMC-T, NEM-N) nearby Emigrant Springs gold deposit, 2.4 km to the east.

Newmont discovered the Saddle deposit in the 1990s to the northwest and down-plunge of its Rain gold mine. The Rain mine, previously mined as an open pit and by underground methods, is host to a portion of the Saddle deposit. It also has underground infrastructure near the Saddle deposit.

Along with its royalty in PC Gold’s (PKL-T) Pickle Crow gold project in northwestern Ontario, Premier says, the company has the opportunity to consider growing a “royalty division” with potential “multiple income streams.”

Emigrant Springs is an advanced-stage project with 1.2 million oz. of undeveloped reserves, according to Premier.

About 80% of the Saddle deposit is on the property in which Saddle Gold has a 100% stake. The property has a historical resource of about 3.62 million tonnes grading 12.69 grams gold per tonne for contained gold of 1.5 million oz.

At presstime in Toronto, Premier’s share price was $4.60, trading within a 52-week range of $2.31- $5.42. The company has 98.5 million shares outstanding.