VANCOUVER – New Guinea Gold Corp (TSXV:NGG) and PNG Gold Corp. (TSXV:PGK) say they’re negotiating a potential combination of the two Canadian junior mining companies.
Under a letter of intent signed Oct. 28, which is non-binding, PNG Gold would acquire New Guinea Gold in return for common shares.
Both companies are focused on exploration and mining activities in Papua New Guinea, an island country in the South Pacific north of Australia.
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The letter of intent calls for shareholders of New Gunea Gold to receive one share of PNG Gold for each 5.714 common shares they have.
Based on Thursday’s prices at the TSX Venture Exchange, before the announcement, the offer would be worth about 11 cents per New Guinea Gold share or about $25.6 million.
However, because the market price of PNG Gold shares will change, the deal’s value will likely change fluctuate.
The companies said Friday they were announcing the negotiations because of unusually high trading volumes of Papual New Guinea shares on the public market.
They said the deal would benefit New Guinea Gold shareholders by providing them with a an immediate premium to New Guinea Gold’s recent stock price while PNG Gold will benefit from the acquisition of the Sinivit mine.
The addition and recapitalization of Sinivit will also enhance PNG Gold’s ability to advance its Imwauna property on Normanby Island in Papua New Guinea, the companies said.
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