Mako Mining expands into South America with deal to acquire Goldsource

Nicaragua-focused gold producer Mako Mining (TSXV: MKO; US-OTC: MAKOF) plans to expand into South America with the all-share acquisition of Goldsource Mines (TSXV: GXS; US-OTC: GXSFF) and its Eagle Mountain project in Guyana.

The two companies struck an agreement on an all-share deal on Tuesday. Goldsource shareholders are to receive 0.22 of a Mako common share for each share held. Mako says this equates to an upfront premium of roughly 41% based on both companies’ 20-day volume-weighted average trading prices.

Mako’s shares traded down 5% this morning at $2.40 apiece for a market capitalization of $158 million. Goldsource Mines shares were up 19% at 47¢, for a market capitalization of $28 million.

Upon completion, Mako will own 84% of the combined company, which will continue to be listed as a Tier 1 mining issuer on the TSX Venture Exchange.

Both parties anticipate the deal to be completed in the second quarter. 

This acquisition, Mako says, creates a “clear path to over 100,000 ounces per year of gold production with a demonstrated record of fiscal discipline.”

It currently operates the high-grade San Albino gold mine in Nicaragua, which last year recovered 34,982 oz. of the metal, including a record 11,567 oz. in the fourth quarter. The mine began production in the second quarter of 2021.

The Eagle Mountain project adds another high-quality gold asset in a mining friendly jurisdiction to Mako’s portfolio.

A January 2024 preliminary economic assessment outlined a potential 15-year mine operation, with a phased development plan and resources of 1.2 million oz. in the indicated category. The project has an estimated after-tax net present value (discounted at 5%) of US$292 million and an internal rate of return of 57%.

“The scalability of Goldsource’s Eagle Mountain is a direct analogue to that of Mako’s San Albino mine,” said Akiba Leisman, CEO of Mako, in a release. “Both properties have district scale potential, with the ability to unlock that potential through cash flow.”

Leisman also noted that the teams at Mako and Goldsource have worked together as colleagues going back nearly two decades, which will make the integration seamless.

“This team has a solid track record and many decades of experience building mines, which is a unique offering for a junior gold producer and one that we believe is a great fit for our phased development plans at Eagle Mountain,” Goldsource executive chairman Eric Fier added.

To fund near-term activities at Eagle Mountain until the closing of transaction, Wexford, Mako’s largest shareholder, has provided Goldsource with a bridge loan of $2 million.