Oban Mining to Pick up Northern Gold

Northern Gold Mining (TSXV: NGM) is the fourth junior this year to sign a business combination agreement with Oban Mining Corp. (TSX: OBM), joining Eagle Hill, Ryan Gold and Corona Gold, which consolidated their properties in Ontario and Quebec under the Oban banner in September.

 

“We’d been looking at Northern Gold for a while,” says John Burzynski, Oban Mining’s president and chief executive officer. “It’s been in our area of interest for quite some time and is one of a number of acquisitions that we are looking at doing in the near future.”

 

Oban Mining’s goal is to consolidate areas in the historic mining camps of the Abitibi and then apply its exploration model to find gold and other metals, a strategy that Burzynski, Sean Roosen and Robert Wares used to great success after they founded Osisko Mining Corp. Osisko went on to build the Canadian Malartic mine in Quebec, which was sold in 2014 to Agnico Eagle Mines (TSX: AEM; NYSE-MKT: AEM) and Yamana Gold (TSX: YRI; NYSE-MKT: AUY) in a cash and share deal worth $3.9 billion.

 

Osisko Gold Royalties (TSX: OR), where Roosen serves as chief executive officer and chairman of the board, holds 17%-18% of Oban Mining’s shares. Burzynski is a director at Osisko Gold Royalties and the company’s senior vice president new business development.

 

“Our full intent is to go back to recreating the success we had with Osisko One, through the discovery and development of good projects,” Burzynski says. “When we formed Osisko, we started with an acquisition out of a bankruptcy sale and spent the next two years consolidating the camp at Malartic, and then started doing exploration and applying our models to it.”

 

As far as the latest proposed business combination with Northern Gold Mining is concerned, management “likes the property, likes the resource, but it’s just one piece of what is potentially a larger puzzle,” Burzynski says.

 

Northern Gold’s Golden Bear project in northeastern Ontario, part of the Golden Highway Camp, 90 km east of Timmins, contains the Jonpol and Garrcon deposits, and the Buffonta property. The company also owns the Gold Pike property, which it acquired during its recent amalgamation with Victory Gold Mines.

 

The flagship Golden Bear project is situated along the Destor-Porcupine Fault Zone and extend regionally across an area of 40 km. The Jonpol and Garrcon deposits together have measured and indicated resources of 30.07 million tonnes grading 1.24 grams gold per tonne for about 1.19 million oz. contained gold. Inferred resources add 7.83 million tonnes grading 3.19 grams gold for 808,000 oz. gold.

 

If Northern Gold’s shareholders approve the deal (Oban Mining will acquire all of the company’s shares in exchange for an aggregate of 4 million common Oban Mining shares), they will hold about 6.8% of Oban’s pro forma total shares. In addition, they will become part of a company that already has carved out a large swath of ground in traditional mining camps in Ontario and Quebec.

 

Through Oban Mining’s acquisition of Eagle Hill, Ryan Gold and Corona Gold, earlier this year, along with other properties in its stable, Northern Gold’s shareholders will hold stakes in the high-grade Windfall Lake gold deposit between Val-d’Or and Chibougamau in Quebec, a 100% undivided interest in a large area of claims in the Urban Barry area of Quebec, along with options held with other third parties to acquire a 100% undivided interest in the Cote property, the Golden Dawn project, the Hunter property, and others in the vicinity.

 

In addition, Oban Mining has a 100% stake in the Roach property in northern Ontario, and an option to acquire from Northstar Gold up to a 70% interest in the Miller project in southern Ontario. Oban Mining is also well financed, with $72-73 million in cash and equivalents.

 

Oban Mining's history dates to about five years ago, when Burzynski and Roosen created Oban Exploration and Braeval Mining Corp. as grass-roots exploration companies focused on South America. The two companies were combined in April 2014 to create Oban Mining, and following the merger and the decline in Canadian exploration markets, Oban Mining was re-focused on the Abitibi mining camps, where the Osisko group had had such a strong track record.

 

The same founders, management, and technical teams of geologists and engineers behind Osisko are involved in the direction, management and technical work at Oban Mining, Burzynski says, and the company intends to continue to grow through acquisition, exploration, discovery and development of gold deposits in Quebec and Ontario, and, in time, other jurisdictions in Canada.