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Fury Gold born as Auryn to acquire Eastmain

Aug 4, 2020

A new exploration company will focus on Quebec property. Auryn Resources Inc. and Eastmain Resources Inc. have entered into an agreement in which Auryn will acquire all of the issued and outstanding shares of Eastmain. The transaction will create Fury Gold Mines Limited and two independent spin-out entities which will hold Auryn’s Peruvian projects.

The deal will immediately follow a spin out of Auryn’s Peruvian projects to Auryn shareholders and completion of a concurrent financing.

Concurrent with the spin-out of the Peruvian projects, Fury Gold will consolidate its shares by approximately 10:7 such that approximately 110 million Fury Gold shares will be outstanding after the Eastmain acquisition (pre-financing), of which 69% will be owned by current Auryn shareholders and 31% will be owned by current Eastmain shareholders. Fury Gold is expected to remain listed on the TSX and NYSE American exchanges, and will be led by new President & CEO, Mike Timmins, whose bio follows below.

Eastmain shareholders as of the closing date of the Transaction will be entitled to receive approximately 0.117 of a Fury Gold share (approximately 0.165 of an Auryn share pre-consolidation) for each Eastmain share (the "Eastmain Exchange Ratio"). After adjustment for the assumed value of the SpinCo shares based on an independent valuation report received by Auryn, the C$121M offer represents approximately C$0.42 per Eastmain share, representing a premium of 137% to the closing market price of the Eastmain shares on July 29, 2020, and a premium of 123% based on the 20 day volume weighted average price of the Eastmain shares.

Transaction Highlights

  • Auryn to spin out Peruvian assets into two new SpinCo companies – "SpinCo Sombrero" consisting of the Sombrero project and "SpinCo Curibaya" consisting of the Curibaya and Huilacolloprojects described below. Auryn engaged Evans and Evans Inc. to provide a comprehensive valuation report on the value of the two SpinCos. The midpoint of Evans & Evans, Inc.’s value range for the SpinCos is US$45.5M.
  • Auryn shareholders to receive approximately 0.7 shares of Fury Gold together with one share in each SpinCo for each Auryn share held as of the closing date of the Transaction.
  • Auryn to combine its Canadian assets and operations (Committee Bay in Nunavut and Homestake Ridge in British Columbia) with Eastmain’s assets (Eau Claire and Eleonore South Joint Venture in Quebec) to create a Canadian developer platform with an aggressive growth strategy.
  • Mike Timmins, former Agnico Eagle VP of Corporate Development, to lead Fury Gold as President, CEO and Director.
  • Concurrent private placement of Fury Gold subscription receipts, raising a minimum of $15 million (the "Financing").
  • Fury Gold to commence a 50,000-meter drill program at Eau Claire shortly after closing of the Transaction.
  • Fury Gold will provide updated exploration plans for Homestake Ridge and Committee Bay after closing of the Transaction.

Further Particulars of Transaction 

Fury Gold will have approximately 110 million shares issued and outstanding (pre-financing) of which 69% will be owned by former Auryn shareholders and 31% will be owned by former Eastmain shareholders. Fury Gold will also have approximately 9 million options and warrants outstanding on completion of the Transaction. Any options or warrants exercised prior to the closing of the Transaction will not alter the 69%/31% ownership of Fury Gold.

The spin out of Auryn’s Peruvian assets will result in two independent companies, one holding the Sombrero property, and the second holding the Curibaya and Huilacollo properties, with approximately C$7.5 million in combined cash to fund their future operations. Auryn shareholders will receive, for each Auryn share held as of the closing date of the Transaction, a full share in each of these two companies, which will be reporting issuers in Canada. Stock exchange listings will not be immediately sought for either SpinCo.

Holders of Eastmain options will receive appropriately adjusted replacement options of Fury Gold and Eastmain’s outstanding warrants will be adjusted so that on exercise, holders will receive shares of Fury Gold adjusted to reflect the Eastmain Exchange Ratio. Holders of options and warrants of Auryn will receive appropriately adjusted replacement options and warrants of New Auryn, which will be exercisable into shares of Fury Gold and the two SpinCos as if exercised prior to completion of the Transaction.


Benefits to Shareholders of Both Companies

  • The combination of Eastmain’s portfolio with Auryn’s Canadian projects into one Canadian-focused gold exploration and development company;
  • An experienced leadership team with exploration and development pedigrees and a track record of creating shareholder value;
  • A strong technical team, led by SVP of Exploration, Michael Henrichsen, P. Geo, with access to a team of experts responsible for discovering and developing millions of ounces of gold globally; and
  • A well-funded company with ample resources for acceleration of step-out exploration, drilling and development.

Benefits to Auryn Shareholders

  • Adds a cornerstone development project in Eau Claire, an advanced staged high-grade gold project in close proximity to Newmont’s Eleonore gold mine;
  • Separation of Auryn’s opportunities by commodity and country, allowing for Canadian and Peruvian projects to be valued separately; and
  • 100% participation in the Peruvian projects through the SpinCos, each of which will hold sufficient cash for exploration and the obtaining of permits.

Benefits to Eastmain Shareholders

  • Immediate premium and strong re-rating potential;
  • Eliminates single asset risk and enhances growth optionality; and
  • Participation in the substantial upside of Committee Bay and Homestake Ridge.

A Message from Ivan Bebek, Executive Chairman & Director of Auryn:

"Auryn has spent a considerable amount of time and money developing a tier-one exploration portfolio. The splitting of Auryn should unlock considerable value for Auryn shareholders, and importantly, results in three, commodity-specific exploration companies well-positioned for major discoveries as we head into the bull market.

"Fury Gold will combine the high-grade gold projects; Committee Bay in Nunavut, Homestake Ridge in B.C and Eau Claire in Quebec, to offer investors a robust Canadian, gold-focused exploration and development company. We are very excited to welcome Mike Timmins as CEO of this new endeavour and believe that his impressive pedigree combined with our world-class technical team will successfully execute on our goal of creating significant shareholder value through discovery and development in all three jurisdictions.


Tags: Quebec / Deals & Financial / Gold / All Articles