Entree To Expand Nevada Holdings With Bid For PacMag

VANCOUVER–Looking to boost its resource count while consolidating a large Nevada land package, Entree Gold (ETG-T, EGI-X) is buying Australian explorer PacMag Metals (PMGZF-O, PMH-A) in a cash-and-stock deal worth $47 million.

PacMag’s flagship asset is the Ann Mason project in Nevada, which hosts the large, low-grade Ann Mason copper-molybdenum porphyry deposit. The resource at Ann Mason stands at 810 million inferred tonnes grading 0.4% copper and 0.004% molybdenum, for 7.1 billion contained pounds copper.

The Ann Mason acquisition consolidates a significant land package in the Yerington district for Entree. Over the summer, Entree picked up two other properties in the area, the Roulette and Blackjack properties, and the three projects now form a contiguous land package.

The 17.6-sq.-km Roulette property is an early stage prospect that contains numerous geochemical and geophysical targets. Similarly, the adjacent Blackjack property, which covers 40 sq. km, has geochemical and geophysical promise but has as yet seen limited work. Entree describes the region as one “experiencing renewed exploration activity” after several quiet decades following the close of Anaconda Copper’s Yerington mine, which produced almost 2 billion lbs. copper over its 25 years of operation.

To acquire PacMag, Entree is offering 0.102 of a share and 4.1¢ for each PacMag share. Entree will also acquire all of the outstanding PacMag options for total consideration of 294,000 shares and $343,000. The offer values PacMag at $47 million.

PacMag’s board of directors is unanimously recommending shareholders vote in favour of the takeover.

PacMag also brings to the table a 51% interest in the drilling-stage Blue Rose copper-gold-molybdenum project in South Australia, as well as full ownership of the sampling-stage Cork Tree and Arrino copper projects in Western Australia and the drilling-stage Sentinel uranium-germanium-molybdenum project in North Dakota.

The Ann Mason resource will significantly increase Entree’s existing inventory, which stems from its two copper-gold deposits at the Lookout Hill project in Mongolia. Both deposits were discovered by Ivanhoe Mines (IVN-T, IVN-N) under a joint-venture agreement and both sit on Lookout Hill lands now co-owned by Entree and Ivanhoe.

The Lookout Hill property completely surrounds Ivanhoe’s wholly owned Oyu Tolgoi project, which is home to the richest copper-gold porphyry deposit ever discovered. The massive Oyu Tolgoi resource lies within several deposits aligned on a northeast-southwest trend that extends into the surrounding joint-venture lands. To the northeast is the Hugo North Extension deposit, which hosts 117 million indicated tonnes grading 1.8% copper and 0.61 gram gold, plus 95.5 million inferred tonnes averaging 1.15% copper and 0.31 gram gold, for a combined total of 7 billion lbs. copper and 3.3 million oz. gold. To the southwest is the Heruga deposit, home to 760 million inferred tonnes grading 0.48% copper and 0.55 gram gold for 8 billion lbs. copper and 13.4 million oz. gold.

Entree recently completed a new induced-polarization (IP) survey at Lookout Hill that the company says indicates the Heruga deposit continues “to depth, well below the deepest mineralized intercept at 1,300 metres.” The IP results also indicate potential to expand the Hugo North Extension deposit at depth and along strike to the north.

Importantly, in October, the Mongolian government finalized the Oyu Tolgoi investment agreement, paving the way for Ivanhoe to develop a mine to tap into the project’s 79 billion lbs. copper and 45 million oz. gold. Rio Tinto (RTP-N, RIO-L) is a strategic partner in the mine, having purchased a 9.9% interest in Ivanhoe three years ago. Rio can expand its Ivanhoe stake to 43% by providing roughly $2.3 billion in development funding and could increase it to a maximum of 46.6% through purchases on the open market.

Adding the Ann Mason deposit will bring Entree’s resource base to 23 billion lbs. copper and almost 17 million oz. gold.

The company is also exploring the Lordsburg copper-gold porphyry project in New Mexico, where four of six recent drill holes intersected mineralization, returning intercepts ranging from 40 to 160 metres in length and grading, on average, just below 0.2% copper and 0.2 gram gold.

On news of the PacMag takeover, Entree’s share price lost a penny to close at $2.59. The company has a 52-week trading range of 65¢-$3.40 and 96 million shares outstanding.