Gold Resource to acquire Aquila for $30.9 million

Gold Resource to acquire Aquila for $30.9 million
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TORONTO – Aquila Resources Inc. [AQA-TSX, AQARF-OTCQB] said Monday it has agreed to be acquired by Gold Resource Corp. [GORO-NYSE American], a move that would create a diversified North American precious and base metals producer.

In keeping with that plan, Aquila said it has entered into a binding letter agreement with Gold Resource, setting out certain key terms of a proposed acquisition by Gold Resource of all the issued and outstanding shares of Aquila by way of a plan of arrangement.

Under the terms of the transaction, which is subject to the entering into of a definitive arrangement agreement, Gold Resource will acquire all the issued and outstanding Aquila shares for 0.0399 of a Gold Resource share for each Aquila share.

The exchange ratio represents a consideration of $0.09 per Aquila share or $30.9 million, reflecting a premium of 12.5%, based on the closing price of Aquila and Gold Resource shares on September 3, 2021.

The combined company is expected to become a new intermediate gold producer following the start of production at Aquila’s Back Forty project.

Aquila shares advanced on the news, rising 6.2% or $0.005 to $0.085 on volume of 358,020. The shares are currently trading in a 52-week range of 17 cents and $0.06.

Gold Resource is a gold and silver producer with operations in Oaxaca, Mexico, where it has a 100% ownership stake in six potential high-grade gold and silver properties.

The company recently said its Don David gold mine is expected to produce up to 23,000 ounces of gold and up to 1.3 million ounces of silver this year.

In the second quarter of 2021, the company reported revenue of US$30.8 million  and a net profit of US$1.3 million or $0.02 per share. Cash flow from operating activities was US9.3 million  in the second quarter of 2021, bringing the company’s cash position to US$30.5 million on June 30, 2021.

Aquila is a development stage company focused on high-grade gold rich projects in the Upper Midwest, U.S.  It is currently advancing pre-construction activities for its 100%-owned high grade and gold rich Back Forty Project in Michigan.

Back Forty is an open pit volcanogenic massive sulfide deposit with underground potential located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula. It contains approximately 1.1 million ounces of gold and 1.2 billion pounds of zinc in the measured and indicated resource categories.

Aquila has two other projects. They are the Reef Gold project in Marathon County, Wisconsin and the Bend Project in Taylor County, Wisconsin. Reef is a gold-copper property and Bend is a volcanogenic massive sulfide occurrence, containing copper and gold.

It is expected that Aquila’s previously announced sale of its Bend and Reef exploration properties will be completed prior to the completion of the transaction.

“The business combination with Gold Resource, a proven operator of a cash flowing mine in the Americas, materially de-risks the financing and development of the Back Forty project,’’ said Aquila executive Chair Barry Hildred.

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