Shares of Calibre Mining and Marathon Gold experienced contrasting movements following the announcement of their merger in a CAD 345 million deal. At 9:53 a.m. ET, Marathon Gold saw a 9.4% increase in shares, trading at CAD 0.70, whereas Calibre Mining shares dropped by 13% to CAD 1.19.
According to the terms of the agreement, each Marathon shareholder will receive 0.6164 of a Calibre common share for every one of their common shares. This equates to a value of CAD 0.84 per Marathon common share, representing a premium of 32% based on the spot price of the company’s stock, which closed at CAD 0.64 on Friday.
Marathon Gold has faced significant downward pressure in 2023, falling nearly 40% year-to-date from its high of CAD 1.25.
The coming together of the two companies is expected to result in a production of approximately 500,000 ounces of gold between 2025 and 2026. Calibre Mining and Marathon Gold believe that this merger will provide shareholders with increased diversification and access to high-quality, long-life production in Newfoundland and Labrador, Canada’s tier-1 jurisdiction.
“The financial strength resulting from this merger will enable the efficient construction of the Valentine Gold Project and a consistent flow of exciting drilling results, contributing to the growth of our resource base in Nicaragua, Nevada, and Newfoundland and Labrador,” commented the company.
Following the merger, existing shareholders of Calibre and Marathon will hold approximately 66% and 34% ownership stakes in the newly combined company, respectively.
Written by Adriano Marchese