NioGold was well positioned in the Abitibi. The key project would be Malartic block adjacent to the Malartic mine of Agnico/Yamana. (Image: NioGold)

Oban Mining (OBM:TSXV) and Niogold (NOX:TSXV) - Oban continues to deliver on its objective of becoming a mining house in Canada with a focus on consolidating large land areas with a focus on Quebec's Abitibi region. This morning Oban has announced a deal to acquire Niogold in a share-based transaction.

The deal

  • Each Niogold shareholder will receive 0.4167 common shares of Oban
  • An implied offer of 50 cents per share based on Oban's closing price Friday (51% premium)

Astute mining investors could have seen this deal coming as its fits the mandate of consolidating in the Abitibi as well as the ties between Osisko Royalties and Oban. Osisko Royalties owns ~18.3% of Niogold stock.


Oban CEO John Burzyinski

John Burzynski, President and Chief Executive Officer of Oban, stated: "We are very pleased to announce today's business combination with NioGold. This transaction provides an excellent opportunity for NioGold and Oban shareholders to combine assets with strong access to capital, and our management groups experience and track record of building valued mining companies. With the successful conclusion of this deal, we will have two development stage projects in Quebec as well as the promising Garrcon and Jonpol deposits in Ontario. Today's merger with NioGold brings us another step closer to our goal of becoming Canada's next leading intermediate mining company."

He also commented that, "The Offering is expected to provide Oban with funds to continue to develop our key projects at Windfall Lake and Marban, even as market conditions remain challenging for gold exploration and development companies, and to further explore the projects recently acquired from Northern Gold Mining Inc."

John W.W. Hick, Chairman of the NioGold Special Committee, stated: "We are very pleased to be joining forces with Oban, which has both strong management and a strong balance sheet that will help move Marban forward. The combination of our teams and projects will be beneficial for the shareholders of both companies."

I look at this deal as a win/win for shareholders in both companies. Niogold shareholders receive a nice premium at ~50 cents (as high as the share price has been in the last 5 years!) and the chance to be a part of Oban.

Oban is well capitalized with $65 million in cash and will add Niogold's $4.5 million.  Also announced in the press release was an equity raise of $10 million.

With $79.5 million in the bank, Oban can easily move projects forward or look for new acquisitions.

Oban shares were down slightly this morning on the news, last trading at $1.16.

Read: Oban Mining to acquire Niogold, raise $10-million

Related: Oban Mining Corp brings consolidation to junior mining sector with five-way deal or Oban deal brings IDM Mining chief executive Rob McLeod back to Yukon

Join the conversation at CEO Chat, the investment conference in your pocket, which is becoming a powerful tool for crowd-sourced stock analysis.