Northern Gold Mining (TSXV: NGM) is the fourth junior this year to sign a business combination agreement with Oban Mining (TSX: OBM), joining Eagle Hill, Ryan Gold and Corona Gold, which consolidated their properties in Ontario and Quebec under the Oban banner in September.
“We’d been looking at Northern Gold for a while,” Oban Mining’s president and CEO John Burzynski says. “It’s been in our area of interest for quite some time, and is one of a number of acquisitions that we are looking at doing in the near future.”
Oban Mining aims to consolidate areas in the historic mining camps of the Abitibi and apply its exploration model to find gold and other metals — a strategy that Burzynski, Sean Roosen and Robert Wares used to great success after they founded Osisko Mining Corp. Osisko went on to build the Canadian Malartic mine in Quebec, which was sold in 2014 to Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Yamana Gold (TSX: YRI; NYSE: AUY) in a cash-and-share deal worth $3.9 billion.
Osisko Gold Royalties (TSX: OR; US-OTC: OKSKF), where Roosen serves as CEO and chairman, holds 17–18% of Oban Mining’s shares. Burzynski is a director at Osisko Gold Royalties and the company’s senior vice-president of new business development.
“Our full intent is to go back to recreating the success we had with Osisko One, through the discovery and development of good projects,” Burzynski says. “When we formed Osisko, we started with an acquisition out of a bankruptcy sale and spent the next two years consolidating the camp at Malartic, and then explored and applied our models.”
As far as the latest proposed business combination with Northern Gold Mining is concerned, management “likes the property and likes the resource, but it’s just one piece of what is potentially a larger puzzle,” Burzynski says.
Northern Gold’s Golden Bear project in northeastern Ontario — part of the Golden Highway Camp, 90 km east of Timmins — contains the Jonpol and Garrcon deposits, and the Buffonta property. The company also owns the Gold Pike property, which it acquired during its recent amalgamation with Victory Gold Mines.
The flagship Golden Bear project is situated along the Destor–Porcupine fault zone and extends regionally across 40 km. The Jonpol and Garrcon deposits together have measured and indicated resources of 30.1 million tonnes grading 1.24 grams gold per tonne for 1.19 million contained oz. gold. Inferred resources add 7.8 million tonnes grading 3.19 grams gold for 808,000 oz. gold.
If Northern Gold’s shareholders approve the deal (Oban Mining will acquire all of the company’s shares in exchange for an aggregate 4-million common Oban Mining shares), they will hold 6.8% of Oban’s pro forma total shares. They will also become part of a company that has carved out a large swath of ground in traditional mining camps in Ontario and Quebec.
Through Oban Mining’s acquisition of Eagle Hill, Ryan Gold and Corona Gold earlier this year, along with other properties in its stable, Northern Gold’s shareholders will hold stakes in the high-grade Windfall Lake gold deposit between Val-d’Or and Chibougamau in Quebec, a 100% undivided interest in a large area of claims in the Urban-Barry area of Quebec and options held with other third parties to acquire a 100% undivided interest in the Côté property, the Golden Dawn project, the Hunter property and others nearby.
Oban Mining has a 100% stake in the Roach property in northern Ontario, and an option to acquire up to a 70% interest from Northstar Gold’s Miller project in southern Ontario. Oban Mining is also well financed, with $73 million in cash and equivalents.
Oban Mining’s history dates to five years ago, when Burzynski and Roosen created Oban Exploration and Braeval Mining Corp. as grassroots exploration companies focused on South America. The companies combined in April 2014 to create Oban Mining, and after the merger and the decline in Canadian exploration markets, Oban Mining refocused on the Abitibi mining camps, where the Osisko group had such a strong track record.
The same founders, management, and technical teams of geologists and engineers behind Osisko are involved in the direction, management and technical work at Oban Mining, Burzynski says, and the company intends to discover, acquire, explore and develop gold deposits in Quebec and Ontario, and in time, other jurisdictions in Canada.
Older miners still have lots to give ming in mucking operations and safety idea’s that are tried and true