An all-share merger between Geraldton-Beardmore explorer Sage Gold (SGX-V, SGGDF-O) and Consolidated Puma Minerals (CPW-V, CPMAF-O) will leave Sage with an extra $3.5 million in its coffers and the flexibility to go after other deals.
Sage Gold president and CEO Nigel Lees says the most attractive part of the deal was Puma’s strong cash position.
“In an environment of this nature, having a strong balance sheet is a very desirable thing,” Lees says. “We see a lot of opportunities in the marketplace in terms of properties and corporate deals that we would like to pursue.”
Puma’s only assets are its cash position and a platinum group metals project in Russia, but Sage plans to withdraw from Russia over time or to joint venture the project.
“It’s a property that would be tough to manage and deal with from here,” Lees says.
If the deal goes through, Puma shareholders will receive 1.137 Sage shares for every Puma share, amounting to an issuance of about 58.9 million shares. Puma shareholders will hold about 25% of the company and Sage will end up with 236 million shares outstanding.
Puma shares were unchanged on news of the deal at 7¢ apiece on a trading volume of 112,000 shares. The company has a 52-week trading range between $1.45 and 3.5¢.
Sage shares were also unchanged, trading at 6.5¢ apiece on a trading volume of 1.2 million shares. Sage’s 52-week trading range is between 27.5¢ and 4¢.
Puma’s president and CEO Vahan Kololian said in a statement that the deal was good for Puma shareholders.
“The combination of our companies enables Puma’s shareholders to acquire a 25 per cent share in a growing gold company in the Beardmore-Geraldton area of Ontario.”
Lees says Sage has about $1 million in working capital at the moment. Overall this year, the company has budgeted to spend $3 million on exploration.
Sage is focused on its Golden Extension project located on the Jacobus East property, 30 km northeast of Beardmore, Ont. Last August, Sage discovered multiple gold-bearing veins located just northwest of Kodiak Exploration’s (KXL-V) Golden Mile discovery.
“We were very active (last) summer discovering several vein structures with a lot of visible gold,” Lees says. “And this June we’ll be drilling on the property.”
The company will drill up to 1,500 metres in the first phase, drilling shallow holes in the hopes of intersecting more than one vein at a time.
And once Sage has more cash, it will be on the lookout for other deals — be they properties or entire companies with fairly advanced projects, Lees says.
He adds he’d like to find a project that could be brought into production in a short timeframe, giving Sage the extra cash to develop its other resources.
Sage has other projects in Nevada and Arizona, but the focus going forward will be Manitoba, Ontario and Quebec, Lees says.
“We like things we can drive to, projects with infrastructure,” Lees says. “We are not too keen on going anywhere (too remote).”
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