Revival adds second US gold project with $21.9M deal for Ensign Minerals

Revival Gold (TSXV: RVG, US-OTC: RVLGF) is buying privately held exploration company Ensign Minerals in an all-stock deal worth $21.9 million, giving it a second gold asset in the United States.

Ensign’s flagship Mercur project in Utah is located 57 km southwest of Salt Lake City in the Oquirrh Mountains region, which is known to host sediment-hosted gold deposits. Bingham Canyon, one of the world’s largest copper-gold mines, is also situated here.

Revival also holds Beartrack-Arnett, a past-producing project in Idaho.

Mercur hosts an inferred resource totalling 89.6 million tonnes grading 0.57 gram per tonne gold for 1.6 million oz. of contained metal. The estimate is based on work by previous owners on mostly private land.

By adding the Mercur project, Revival’s gold resource base would grow to 3.8 million inferred ounces. Beartrack-Arnett also holds 2.4 million oz. measured and indicated oz. in 86.2 million tonnes grading 0.87 gram gold per tonne. Permitting preparations are underway at the project.

Revival CEO Hugh Agro says the combined resource will vault Revival Gold ahead to become one of the largest pure gold development companies in the U.S. With Mercur, he says the company is obtaining a “high-quality complementary project” at an attractive acquisition price of about US$10 per ounce in situ.

Revival will issue 61.4 million shares, more than half of those outstanding, to acquire Ensign’s 52.6 million outstanding shares. Upon completion, current Revival Gold shareholders would own 65% of the new company, with former Ensign holders owning the other 35%.

Ensign had previously agreed to a takeover by Vancouver-based Taura Gold (TSXV: TORA) last October for an implied value of $24 million. However, the deal fell through earlier this year due to disagreements over how the Mercur project resource was calculated.

Historically, about 2.6 million oz. of gold were mined from the Mercur district, including 1.5 million oz. by Getty Oil Company and later Barrick Gold between 1983-1998, after which it closed due to low gold prices.

From 2020 to 2022, Ensign entered various agreements to consolidate the Mercur project area, which now covers 62.6 sq. km divided between private land, federal claims, and state leases. Amongst the deals was an option to acquire Barrick’s interest in the area for US$20 million.

Revival Gold considers the large regional package at Mercur to “hold attractive potential for additional discoveries” based on the project’s track record of past production and the results of recent fieldwork undertaken by Ensign.

In the short term, its primary objective with Mercur over the next 6-12 months will be to advance metallurgy, optimize the project’s geological model and pursue a potential preliminary economic assessment (PEA), the company said.

While advancing towards a PEA, Revival Gold expects to continue the compilation of historical data, property-wide prospecting, geological mapping and planning for potential future exploration drilling.

Over the longer horizon, Agro said the addition of Mercur will shorten the estimated timeline to heap leach gold production while increasing the potential production scale of the company’s heap leach gold business to approximately 150,000 oz. per year.

There is also the potential to grow past 250,000 oz. of gold per year with the exploitation of Beartrack-Arnett underground mill material.

According to a prefeasibility study released last year Beartrack-Arnett could produce 65,300 oz. gold annually over eight years, generating a net present value of US$105 million (at a 5% discount rate) and an internal rate of return of 24.3%. The study projected a preproduction capital costs of US$109 million with life-of mine sustaining capital of US$100 million.

Revival Gold’s shares were up 1.1% at 38¢ by 10:30 a.m. ET on the news, giving the Toronto-based company a market capitalization of $42.4 million.