Barrick signs agreement with Bullfrog Gold; announces plans to transition Hemlo to underground
Barrick Gold Corp. announced that it has agreed to sell all of its mining claims, historical resources, permits, rights of way and water rights in the Bullfrog Mine area to Bullfrog Gold Corp. (BFGC) along with plans for C$22 million in financing to be completed through Augusta Investments.
Barrick will receive 54.6 million units, each Unit is comprised of one share of common stock of BFGC and one whole warrant that entitles the holder to purchase one share of capital stock in BFGC at an exercise price of $0.30 for four years from the date of closing. On closing, Barrick will own approximately 16.8 percent of BFGC’s total issued and outstanding shares or approximately 19.9 percent of BFGC’s Shares on a fully diluted basis. BFGC will also grant to Barrick a 2 percent NSR royalty on all minerals produced from the claims, decreasing to a minimum 0.5 percent NSR royalty on certain claims already subject to royalties.
Barrick said in a statement that it is acquiring the Units in BFGC for investment purposes. Depending on market conditions and other factors, including BFGC’s business and financial condition, Barrick may acquire additional units or other securities of BFGC or dispose of some or all of the units or other securities of BFCG that it owns at such time.
In connection with the transaction, Barrick, Augusta and BFGC will enter into an investor rights agreement on closing pursuant to which, among other rights, so long as Barrick maintains a minimum of 10 percent ownership in BFGC, Barrick will be granted the right to appoint one director to BFGC’s Board of Directors and the right to participate in future BFGC equity issuances to maintain its then-current pro rata interest in BFGC.
Once closed, Bullfrog would be well funded to complete several exploration programs and expedite development of its namesake gold project.
The company would also continue to pursue other acquisitions and opportunities in the precious metal sector, it said.
Bullfrog Gold now hopes to access the 525,000 ounces of gold estimated to still remain on the site.
Barrick also announced plans to extend the life of the Hemlo gold mine by transitioning it to a modernized Tier Two asset with a purely underground operation are well underway as openpit mining at the mine starts winding down.
The Hemlo openpit has been mined since 1989 and has produced more than 2.8 million ounces of gold. It was originally used to produce blasted rock for the backfilling of the mine’s underground stopes but in 2002 a CAT 777 truck fleet and key personnel were seconded from Barrick’s Nevada mines to establish the pit as a separate division. In 2013, the David Bell mine closed, leaving the openpit and the Williams underground mine as the chief sources of ore for the mill feed. Over the next six years, the openpit ramped up and became the primary source of ore for Hemlo.
With mining at the openpit scheduled to wind down at the end of October with less than 200,000 tonnes of ore remaining, a transition plan has been put in place to transfer most of the 70 plus openpit employees to the current underground contractor, Barminco. The openpit crew has already worked with the contractor in digging a new portal from within the openpit, that will open up new mining fronts in the underground mine creating more flexibility and allowing the underground to ramp up throughput.
Catherine Raw, Barrick’s Chief Operating Officer for North America, said that by repositioning and expanding Hemlo as an underground operation, it would continue delivering benefits to the community, employees and other stakeholders for years to come.